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1. Company Snapshot

1.a. Company Description

Enghouse Systems Limited, together with its subsidiaries, develops enterprise software solutions worldwide.It operates through two segments, Interactive Management Group and Asset Management Group.The Interactive Management Group segment provides customer interaction software and services to facilitate remote work, enhance customer service, increase efficiency, and manage customer communications across various types of interactions, including voice, email, web chats, text, and video.


Its technologies include contact center, video collaboration, interactive voice response, outbound dialers, attendant console, agent performance optimization, business intelligence, and analytics that deployed in private cloud, multi-tenant cloud, or on-premise environments.This segment serves insurance companies, telecoms, banks, business process service providers, as well as technology and health care companies.The Asset Management Group segment offers a portfolio of software and services to cable operators, network telecommunication providers, media, transit, defense, and public safety companies.


This segment's products include network infrastructure, operations support systems, and business support systems, as well as video and cloud TV solutions.This segment also provides fleet routing, dispatch, scheduling, transit e-ticketing and automated fare collection, communications, and emergency control center solutions for the transportation, government, first responders, distribution, and security sectors.Enghouse Systems Limited was incorporated in 1984 and is headquartered in Markham, Canada.

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1.b. Last Insights on ENGH

Recent negative drivers behind Enghouse Systems Limited's stock performance include the company's acquisition of Margento, a European provider of transit fare collection and payment solutions, which may not have been well-received by investors. Additionally, the company's acquisition of Aculab PLC in December 2024, which provided on-premise and cloud-based communications and AI software solutions, may have been a negative surprise, as there was no prior announcement. The lack of a Q1 2025 earnings release data point as of the last news update (March 3) does not provide any insights into the performance of the firm.

1.c. Company Highlights

2. Enghouse Systems Delivers Steady Results Amidst Challenging Economic Conditions

Enghouse Systems reported revenue of $124.5 million for Q4 2025, a slight decline from $125.7 million in the same quarter last year. For the full year, revenue totaled $498.9 million, just shy of $502.5 million in fiscal '24. The company's recurring revenue, comprising SaaS and maintenance streams, made up over 69% of total revenue for both Q4 and the year. Adjusted EBITDA for Q4 was $33.7 million, representing a margin of 27%, while for the year, adjusted EBITDA stood at $127.6 million with a margin of 25.6%. The company's EPS for Q4 came in at $0.3734, beating estimates of $0.3572.

Publication Date: Dec -20

📋 Highlights
  • Revenue Resilience:: Q4 revenue declined slightly to $124.5M (-1.0%) vs. $125.7M prior year, with full-year revenue at $498.9M (-0.7% YoY), maintaining 69% recurring revenue from SaaS/maintenance.
  • EBITDA Margin Stability:: Q4 adjusted EBITDA margin held at 27% ($33.7M) and full-year margin at 25.6% ($127.6M), reflecting operational efficiency despite macroeconomic pressures.
  • AMG Growth Outperforms:: Fourth-quarter AMG revenue rose 9.3% YoY to $55.7M, with full-year growth exceeding 10% to $213.1M, driven by transportation business strength.
  • Strategic Acquisition:: Post-year-end acquisition of Sixbell's Telecommunications division expanded Latin American foothold, aligning with disciplined growth strategy.
  • Shareholder Returns:: $61.8M returned via dividends (16% YoY increase) and $14.7M in share repurchases, with a $0.30/share dividend proposed for Q1 2026.

Segment Performance

The Asset Management Group (AMG), which includes the transportation business, was a highlight for the year, with Q4 revenue reaching $55.7 million, a 9.3% increase from $51 million in Q4 last year. For the year, AMG revenue grew to $213.1 million, up more than 10% year-over-year. This strong performance was a key factor in the company's overall resilience amidst challenging economic conditions.

Outlook and Strategic Initiatives

Enghouse expects efficiency gains to continue into fiscal '26 and is looking for opportunities to strengthen and diversify its business. The company recently acquired the Telecommunications division of Sixbell, expanding its presence in the Latin American market. This acquisition aligns with Enghouse's strategy of disciplined, accretive growth and positions the company to serve new customers and markets. As Stephen Sadler noted, "We're in tough markets... I would think 2026 fiscal year will be a good, stable year... We intend to get back to redeployment of our cash on acquisitions to a greater degree."

Valuation and Dividend

With a P/E Ratio of 15.41 and an EV/EBITDA of 6.73, Enghouse's valuation appears reasonable. The company's Dividend Yield stands at 5.66%, providing a relatively attractive return for income investors. Analysts estimate revenue growth of 1.7% for next year, and Enghouse's focus on adding shareholder value through strategic acquisitions and protecting its stock in uncertain times is likely to continue. As Stephen Sadler mentioned, "My guess is to increase the dividend slightly and repurchase more of our own stock." With a ROE of 12.17% and an ROIC of 11.25%, Enghouse is well-positioned to deliver steady progress and create value for its shareholders.

3. NewsRoom

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Cautious Broker Views On Enghouse (TSX:ENGH) Activity: A Clue About Its Segment Positioning?

Jan -22

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Top Picks 2026- Enghouse Systems Ltd. ENGH.CA

Jan -20

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Do Fundamentals Have Any Role To Play In Driving Enghouse Systems Limited's (TSE:ENGH) Stock Up Recently?

Jan -09

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Is Enghouse Systems (TSX:ENGH) Undervalued After Softer Earnings and a Shift Toward Buybacks and Acquisitions?

Dec -19

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Enghouse Systems Price Target Lowered at RBC, Raised at CIBC

Dec -17

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Does Softer Earnings and New Capital Priorities Change The Bull Case For Enghouse Systems (TSX:ENGH)?

Dec -17

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Enghouse Systems Ltd (EGHSF) Q4 2025 Earnings Call Highlights: Navigating Challenges with ...

Dec -16

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Enghouse Releases Fourth Quarter and Year End Results

Dec -15

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.83%)

6. Segments

Interactive Management Group

Expected Growth: 8%

Interactive Management Group's 8% growth is driven by increasing demand for contact center solutions, expansion into new markets, and strategic acquisitions. The group's focus on cloud-based offerings and integration with Enghouse Systems' broader portfolio also contribute to its growth. Additionally, the rising need for omnichannel customer engagement and workforce optimization solutions further fuels its expansion.

Asset Management Group

Expected Growth: 10%

Enghouse Systems Limited's Asset Management Group growth is driven by increasing demand for infrastructure management, rising adoption of cloud-based solutions, and strategic acquisitions. The group's expertise in transportation, public safety, and utilities has enabled it to capitalize on government investments in digital infrastructure. Additionally, its focus on data analytics and IoT has positioned it for growth in the smart city initiatives.

7. Detailed Products

Interactive Voice Response (IVR) Solutions

Enghouse Interactive's IVR solutions provide automated self-service capabilities to customers, allowing them to interact with a company's systems via phone, web, or mobile devices.

Contact Center Solutions

Enghouse Interactive's contact center solutions provide a comprehensive platform for managing customer interactions across multiple channels, including voice, email, chat, and social media.

Unified Communications (UC) Solutions

Enghouse Systems' UC solutions provide a single platform for integrating voice, video, messaging, and collaboration tools, enabling seamless communication and collaboration across an organization.

Network Security and Compliance Solutions

Enghouse Systems' network security and compliance solutions provide a range of tools and services to protect networks, data, and applications from cyber threats and ensure regulatory compliance.

Asset Management and Field Service Management Solutions

Enghouse Systems' asset management and field service management solutions provide a comprehensive platform for managing assets, scheduling maintenance, and optimizing field service operations.

Public Safety and Emergency Response Solutions

Enghouse Systems' public safety and emergency response solutions provide a range of tools and services to support emergency response, including computer-aided dispatch, records management, and emergency medical services.

8. Enghouse Systems Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Enghouse Systems Limited operates in a niche market with limited substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

Customers have some bargaining power due to the availability of alternative solutions, but Enghouse Systems Limited's strong brand reputation and customer loyalty mitigate this power.

Bargaining Power Of Suppliers

Enghouse Systems Limited has a diversified supplier base, reducing the bargaining power of individual suppliers.

Threat Of New Entrants

While there are barriers to entry in the industry, new entrants can still disrupt the market, but Enghouse Systems Limited's established position and brand reputation provide a competitive advantage.

Intensity Of Rivalry

The industry is highly competitive, with several established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 2.18%
Debt Cost 6.77%
Equity Weight 97.82%
Equity Cost 7.31%
WACC 7.30%
Leverage 2.23%

11. Quality Control: Enghouse Systems Limited passed 5 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

Stock-Card
Clear Secure

A-Score: 6.5/10

Value: 3.2

Growth: 9.8

Quality: 7.9

Yield: 5.0

Momentum: 9.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
Enghouse Systems

A-Score: 6.0/10

Value: 6.2

Growth: 4.2

Quality: 8.2

Yield: 8.0

Momentum: 1.0

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Immersion

A-Score: 5.9/10

Value: 10.0

Growth: 6.7

Quality: 6.1

Yield: 6.0

Momentum: 1.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Upbound

A-Score: 5.7/10

Value: 8.8

Growth: 3.9

Quality: 6.4

Yield: 10.0

Momentum: 1.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
SilverSun Technologies

A-Score: 3.9/10

Value: 4.6

Growth: 5.2

Quality: 2.8

Yield: 5.0

Momentum: 6.0

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
Daily Journal

A-Score: 3.9/10

Value: 4.6

Growth: 4.7

Quality: 8.0

Yield: 0.0

Momentum: 2.0

Volatility: 4.0

1-Year Total Return ->

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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

17.12$

Current Price

17.12$

Potential

-0.00%

Expected Cash-Flows