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1. Company Snapshot

1.a. Company Description

The Descartes Systems Group Inc.provides cloud-based logistics and supply chain management business process solutions that focuses on enhancing the productivity, performance, and security of logistics-intensive businesses worldwide.Its Logistics Technology platform offers a range of modular, cloud-based, and interoperable web and wireless logistics management applications, which unites a community of logistics-focused parties, allowing them to transact business.


The company provides a suite of solutions that include routing, mobile and telematics; transportation management and e-commerce enablement; customs and regulatory compliance; trade data; global logistics network services; and broker and forwarder enterprise systems.It offers its customers to use its modular, software-as-a-service, and data solutions to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access and analyze global trade data; research and perform trade tariff and duty calculations; file customs and security documents for imports and exports; and various other logistics processes.The company also provides cloud-based ecommerce warehouse management solutions; consulting, implementation, and training services; and maintenance and support services.


It primarily focuses on serving transportation providers, logistics service providers, and distribution-intensive companies, as well as manufacturers, retailers, distributors, and mobile business service providers.The company was incorporated in 1981 and is headquartered in Waterloo, Canada.

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1.b. Last Insights on DSG

Descartes Systems Group's recent performance was negatively impacted by softer global trade and muted volume. Despite this, the company reported robust financial performance with record revenues and cash flow in Q3 2026. The company's earnings and revenue beat estimates, with an 8.70% EPS surprise and 2.90% revenue surprise. RBC Capital Markets maintains an outperform rating with a $126 price target. Additionally, the company announced a normal course issuer bid, indicating a share buyback plan, which is a positive event for shareholders.

1.c. Company Highlights

2. Descartes Systems Group Q2 2026 Earnings Report Analysis

The company reported record Q2 revenues of $179.8M, a 10% YoY increase, with adjusted EBITDA of $80.2M, up 14% YoY. Earnings per share (EPS) came in at $0.43, a 7% YoY increase. Services revenue rose 14% YoY to $166.8M, constituting 93% of total revenue. The adjusted EBITDA margin expanded 2 points to 45%. Cash flow from operations was $63M, representing an 86% conversion rate excluding $5M in personnel costs.

Publication Date: Sep -07

📋 Highlights
  • Revenue & EBITDA Growth: Q2 revenue reached $179.8M (+10% YoY), with adjusted EBITDA at $80.2M (+14% YoY), driven by services growth and margin expansion.
  • Services Revenue Dominance: Services revenue rose 14% YoY to $166.8M (93% of total revenue), reflecting strong demand in logistics and regulatory solutions.
  • Global Trade & Customs Growth: Tariff complexity and de minimis rule changes boosted demand for real-time tariff data, Type 1/11 compliance tools, and FTZ solutions.
  • Acquisitions Strategy: Acquisition of PackageRoute ($40M base + $15M earn-out) and Finale Inventory ($40M) expanded logistics and e-commerce capabilities post-Q2.
  • Liquidity & Restructuring: $240M cash balance ($350M undrawn credit line) and $63M operating cash flow (86% EBITDA conversion) support restructuring and economic resilience.

Financial Performance Drivers

Key growth drivers included Global Trade Intelligence, Customs and Regulatory Solutions, and Transportation Management. The acquisition of PackageRoute and Finale Inventory strengthened logistics and e-commerce solutions. The company's capital position remained strong, with $240M in cash and a $350M undrawn credit line.

Valuation Metrics

Using the current P/E Ratio of 62.54 and EV/EBITDA of 32.52, it's evident that the market has high expectations for the company's future growth. The ROE of 10.41% and ROIC of 9.22% indicate a relatively efficient use of capital. The negative Net Debt / EBITDA ratio of -0.84 highlights the company's debt-free status and strong cash position.

Operational Highlights

Edward Ryan noted that despite ongoing uncertainty, subscription sales remained resilient, driven by demand for tools to navigate complexity. MacroPoint's tracking capabilities and the integration of 3GTMS drove growth in Transportation Management. The company's AI integration strategy will focus on logistics-specific tools, leveraging its extensive network and regulatory expertise.

Outlook and Guidance

The company expects to maintain its 10-15% adjusted EBITDA growth target, driven by revenue mix, FX impacts, and acquisitions. Restructuring savings of $2M in Q2 were largely completed, supporting future growth. The effective tax rate was 24%, with H2 guidance at 24-28%. Capex guidance for H2 is $3-4M, with $1.1M in earn-out payments.

3. NewsRoom

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The Descartes Systems Group Inc (DSGX) Q3 2026 Earnings Call Highlights: Record Revenue and ...

Dec -04

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Descartes Systems Group Outperform Rating and US$126 Price Target Confirmed at RBC On Q3 Results

Dec -04

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Toast upgraded, PayPal downgraded: Wall Street's top analyst calls

Dec -04

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DSGX Q3 Earnings Top, Sales Up Y/Y Amid a Volatile Global Supply Chain

Dec -04

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Descartes Systems Group Upgraded to Outperform at Raymond James

Dec -04

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Compared to Estimates, Descartes Systems (DSGX) Q3 Earnings: A Look at Key Metrics

Dec -04

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Descartes reports record results in FQ3

Dec -03

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Descartes Systems (DSGX) Q3 Earnings and Revenues Beat Estimates

Dec -03

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.13%)

6. Segments

Services

Expected Growth: 12.3%

Growing e-commerce demand, increasing complexity in global trade, and rising need for real-time visibility in logistics drive the growth of logistics and supply chain management services, with Descartes Systems Group well-positioned to capitalize on these trends.

Professional Services and Other

Expected Growth: 10.2%

Growing demand for logistics optimization, increasing adoption of digital technologies, and rising need for supply chain visibility drive growth in professional services and other segment.

Licenses

Expected Growth: 12.3%

Growing demand for digital logistics and customs compliance solutions, increasing adoption of cloud-based services, and expansion into new markets drive growth for Descartes Systems Group Inc.

7. Detailed Products

Global Trade Data

A comprehensive database of global trade information, providing insights into trade patterns, market trends, and supply chain dynamics.

Route Optimization

A software solution that optimizes routes for delivery, transportation, and logistics companies, reducing miles driven, lowering costs, and improving customer satisfaction.

Visibility and Tracking

A real-time visibility platform that provides end-to-end tracking and monitoring of shipments, enabling proactive issue resolution and improved supply chain efficiency.

Global Logistics Network

A cloud-based platform that connects logistics providers, shippers, and carriers, enabling seamless collaboration, automation, and optimization of logistics operations.

Customs Compliance

A comprehensive solution that automates customs clearance, compliance, and trade compliance, ensuring accuracy, speed, and reduced risk.

Supply Chain Visibility

A platform that provides real-time visibility into supply chain operations, enabling proactive issue resolution, improved collaboration, and optimized logistics operations.

8. The Descartes Systems Group Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Descartes Systems Group Inc. is medium due to the presence of alternative logistics and supply chain management solutions.

Bargaining Power Of Customers

The bargaining power of customers for The Descartes Systems Group Inc. is low due to the company's strong market position and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The Descartes Systems Group Inc. is medium due to the company's dependence on a few key suppliers for certain components and services.

Threat Of New Entrants

The threat of new entrants for The Descartes Systems Group Inc. is low due to the high barriers to entry in the logistics and supply chain management industry.

Intensity Of Rivalry

The intensity of rivalry for The Descartes Systems Group Inc. is high due to the competitive nature of the logistics and supply chain management industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.56%
Debt Cost 7.68%
Equity Weight 99.44%
Equity Cost 7.68%
WACC 7.68%
Leverage 0.56%

11. Quality Control: The Descartes Systems Group Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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SS&C Technologies Holdings

A-Score: 5.9/10

Value: 3.9

Growth: 6.1

Quality: 6.8

Yield: 2.0

Momentum: 7.0

Volatility: 9.7

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A-Score: 5.7/10

Value: 3.2

Growth: 8.1

Quality: 8.5

Yield: 0.0

Momentum: 7.5

Volatility: 6.7

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Value: 3.8

Growth: 8.3

Quality: 6.8

Yield: 0.0

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Descartes Systems

A-Score: 4.5/10

Value: 0.7

Growth: 7.7

Quality: 8.8

Yield: 0.0

Momentum: 2.5

Volatility: 7.3

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A-Score: 4.2/10

Value: 0.7

Growth: 6.9

Quality: 6.6

Yield: 0.0

Momentum: 7.0

Volatility: 4.0

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A-Score: 3.4/10

Value: 4.4

Growth: 7.1

Quality: 3.8

Yield: 0.0

Momentum: 0.5

Volatility: 4.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

128.26$

Current Price

128.26$

Potential

-0.00%

Expected Cash-Flows