Mr. Edward Ryan reports

DESCARTES ANNOUNCES FISCAL 2024 FOURTH QUARTER AND ANNUAL FINANCIAL RESULTS

The Descartes Systems Group Inc. has released the financial results for its fiscal 2024 fourth quarter (Q4 2024) and year (fiscal year (FY) 2024) ended Jan. 31, 2024. All financial results referenced are in United States currency and, unless otherwise indicated, are determined in accordance with U.S. generally accepted accounting principles (GAAP).

"Global trade continues to be impacted by military conflicts, disruptions to major shipping routes and a growing list of sanctions from various governments around the world," said Edward J. Ryan, Descartes's chief executive officer. "Our global logistics network is designed to help shippers, carriers and logistics services providers adapt their supply chains to efficiently manage the life cycle of shipments in this increasingly dynamic landscape. As a result, our customers are trusting us with more of their business, which puts us in a strong financial position to continue to invest in our business."

FY 2024 financial results

As described in more detail below, key financial highlights for Descartes's FY 2024 included:

• Revenues of $572.9-million, up 18 per cent from $486.0-million in the same period a year ago (FY 2023);
• Revenues comprised services revenues of $520.9-million (91 per cent of total revenues), professional services and other revenues of $46.7-million (8 per cent of total revenues), and licence revenues of $5.3-million (1 per cent of total revenues). Services revenues were up 20 per cent from $435.7-million in FY 2023;
• Cash provided by operating activities of $207.7-million, up 8 per cent from $192.4-million in FY 2023. Cash provided by operating activities was negatively impacted by $12.6-million in FY 2024 and $5.6-million FY 2023, related to contingent consideration payments due to better-than-expected performance from recent acquisitions;
• Income from operations of $142.8-million, up 10 per cent from $130.4-million in FY 2023;
• Net income of $115.9-million, up 13 per cent from $102.2-million in FY 2023. Net income as a percentage of revenues was 20 per cent, compared with 21 per cent in FY 2023;
• Earnings per share on a diluted basis of $1.34, up 14 per cent from $1.18 in FY 2023;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $247.5-million, up 15 per cent from $215.2-million in FY 2023. Adjusted EBITDA as a percentage of revenues was 43 per cent, compared with 44 per cent in FY 2023.

Adjusted EBITDA and adjusted EBITDA as a percentage of revenues are non-GAAP (generally accepted accounting principles) financial measures provided as a complement to financial results presented in accordance with GAAP. The company define adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation (for which the company includes related fees and taxes) and other charges (for which the company 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 FY 2024 and FY 2023 (dollar amounts in millions).

Q4 FY 2024 financial results

As described in more detail below, key financial highlights for Q4 FY 2024 included:

• Revenues of $148.2-million, up 18 per cent from $125.1-million in the fourth quarter of fiscal 2023 (Q4 FY 2023) and up 2 per cent from $144.7-million in the previous quarter (Q3 FY 2024);
• Revenues comprised services revenues of $135.7-million (92 per cent of total revenues), professional services and other revenues of $11.1-million (7 per cent of total revenues), and licence revenues of $1.4-million (1 per cent of total revenues). Services revenues were up 20 per cent from $113.4-million in Q4 FY 2023 and up 4 per cent from $130.4-million in Q3 FY 2024;
• Cash provided by operating activities of $50.8-million, consistent with $50.6-million in Q4 FY 2023 and down from $56.1-million in Q3 FY 2024. Cash provided by operating activities was negatively impacted by $12.6-million in Q4 FY 2024 related to contingent consideration payments due to better-than-expected performance from recent acquisitions;
• Income from operations of $37.0-million, up 10 per cent from $33.6-million in Q4 FY 2023 and up 14 per cent from $32.4-million in Q3 FY 2024;
• Net income of $31.8-million, up 7 per cent from $29.8-million in Q4 FY 2023 and up 20 per cent from $26.6-million in Q3 FY 2024. Net income as a percentage of revenues was 21 per cent, compared with 24 per cent in Q4 FY 2023 and 18 per cent in Q3 FY 2024;
• Earnings per share on a diluted basis of 37 cents, up 9 per cent from 34 cents in Q4 FY 2024 and up 19 per cent from 31 cents in Q3 FY 2024;
• Adjusted EBITDA of $65.7-million, up 19 per cent from $55.4-million in Q4 FY 2023 and up 3 per cent from $63.5-million in Q3 FY 2024. Adjusted EBITDA as a percentage of revenues was 44 per cent, consistent with Q4 FY 2023 and Q3 FY 2024.

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 Jan. 31, 2024, Descartes had $321.0-million in cash. Cash increased by $41.4-million in Q4 FY 2024 and $44.6-million in FY 2024. An attached table provides a summary of cash flows for Q4 FY 2024 and FY 2024 in millions of dollars.

Conference call

Descartes's executive management team will hold a conference call to discuss the company's financial results at 5:30 p.m. ET on Wednesday, March 6. Designated numbers are 1-416-764-8658 or 1-888-886-7786 for North America toll-free, using passcode 26517286 followed by the pound key.

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 March 13, 2024, by dialling 1-416-764-8692 or toll-free for North America using 1-877-674-7070 with playback passcode 517286 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. The company's headquarters are in Waterloo, Ont., Canada, and the company has offices and partners around the world.