Haywood Securities predicts Descartes will have a even better fourth quarter owing to Black Friday and Cyber Monday sales.
The software-as-a-service solutions company, which focuses on logistics, says that its revenues totaled US$70 million in Q3; that compares to US$67.1 million in the previous quarter and US$62 million in the same quarter last year.
Descartes reported net income of US$7.9 million in the quarter as compared to US$6.2 million in the year-ago quarter. The company says that its Global Logistics Network (GLN), a platform for multimodal, inter-enterprise data and document exchange designed for logistics, contributed the most towards its record revenues.
However, Descartes’ net income was down when compared with its net income of US$8.5 million in the second quarter of its current fiscal year. The company says that it benefited from a non-recurring tax recovery of US$1 million in the previous quarter.
“Logistics is a multi-party, multi-process problem, and it’s becoming increasingly complex with today’s dynamic global trade landscape,” Edward J. Ryan, CEO of Descartes, said in a release. “The GLN is a stable, reliable and trusted platform that we believe is poised for further growth as it continues to deliver incremental value to the supply chain community.”
The company also reported that its revenues on a year-to-date basis stand at US$204.1 million, which translates to a 17-percent increase from the same period in the previous year. In terms of its net income, Descartes reported the figure at US$23.4 million, which translates to a 16-percent increase from the previous year.
Descartes says it had US$32.8 million in cash as of October 31, with its cash position increasing by US$1.3 million in the current quarter. The company credits the increase to credit facility repayments, which were offset by cash from operations.
In an earnings call, Ryan said that the company is “well positioned” in terms of future growth, adding that Descartes is stable while also generating cash.
“We had another record quarter of operating results, and we’re very happy with our key metrics, demonstrating how we’re growing internally and successfully integrating acquisitions,” he said.
Haywood Securities Senior Technology Analyst Pardeep S. Sangha predicts that Descartes will have a better fourth quarter owing to Black Friday and Cyber Monday shopping days, along with a full quarter of contributions from PinPoint.
Descartes acquired PinPoint for US$11 million in August; it is a provider of fleet-tracking and mobile-workforce solutions, and Haywood says that the company’s revenues were aided by contributions from PinPoint.
“We like the fit with the recent PinPoint acquisition as it collects real-time location data on trucks and mobile workers to drive productivity, performance and compliance,” Sangha wrote in a report to clients.
Haywood forecasts the company will report revenues of US$72 million for the fourth quarter, while projecting US$276.2 million in revenues for the full fiscal year.
Following the announcement on Wednesday, shares of Descartes increased 3.2 percent and closed the session on Thursday (November 29) at US$28.91. The stock has a “sell” ranking on TradingView with 11 verticals against, 10 in neutral and seven in favor.
However, Descartes has a “strong buy” ranking on TipRanks, with an analyst target price of US$37.20 based on reports from eight analysts, including Haywood.
Haywood is maintaining its “buy” ranking with a target price of US$37.25. The firm mentions the company’s cashflow, high recurring revenues and consistent track record of delivering predictable results as the reasons for its ranking.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.