Descartes Reports 35 Percent Increase in Revenues

Descartes Systems Group, a federated global logistics network, announced financial results for its fiscal 2011 second quarter (Q2FY11) ended July 31, 2010. All financial results referenced are in United States (US) currency and, unless otherwise indicated, are determined in accordance with US Generally Accepted Accounting Principles (GAAP).

Q2FY11 Financial Results

As described in more detail below, key financial highlights for Descartes in Q2FY11 included:
• Revenues of $25.2 million, up 35% from $18.6 million in the second quarter of last fiscal year (Q2FY10) and up 18% from $21.3 million in the previous quarter (Q1FY11), fuelled in part by recently-completed acquisitions;
• Services revenues of $23.9 million, up 40% from $17.1 million in Q2FY10 and up 18% from $20.2 million in Q1FY11. Services revenues comprised 95% of total revenues for the quarter;
• Gross margin of 66%, compared to 68% in Q2FY10 and 65% in Q1FY11;
• Net income of $2.0 million, up from $0.8 million in Q2FY10 and $0.2 million in Q1FY11;
• Earnings per share on a diluted basis of $0.03 compared to $0.02 in Q2FY10 and $0.00 in Q1FY11;
• Days-sales-outstanding (DSO) for Q2FY11 were 57 days, compared to 48 days in Q2FY10 and 68 days in Q1FY11;
• Adjusted EBITDA of $6.6 million, up 27% from $5.2 million in Q2FY10 and up 25% from $5.3 million in Q1FY11. Adjusted EBITDA as a percentage of revenues was 26% this quarter, compared to 28% in Q2FY10 before Descartes’ acquisition of Zemblaz NV (“Porthus”), and 25% in Q1FY11; and
• Adjusted EBITDA per diluted share for Q2FY11 was $0.11, compared to $0.10 in Q2FY10 and $0.08 in Q1FY11.

Adjusted EBITDA and Adjusted EBITDA per diluted share are non-GAAP financial measures provided as a complement to financial results presented in accordance with GAAP. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization (for which we include amortization of intangible assets, deferred compensation, stock-based compensation and related taxes), acquisition-related expenses and restructuring charges. These items are considered by management to be outside Descartes’ ongoing operational results. We define Adjusted EBITDA per diluted share as Adjusted EBITDA divided by the number of diluted shares used to calculate the GAAP measure of earnings per share. A reconciliation of Adjusted EBITDA and Adjusted EBITDA per diluted share to net income and earnings per share determined in accordance with GAAP, respectively, is provided later in this release.