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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' Q3 2025 Earnings: A Resilient Performance Amidst Challenges

Enghouse reported Q3 2025 financial results with $125.6M revenue, down year-over-year but up from Q2. Recurring revenue accounted for $87.8M (69.9%), Adjusted EBITDA was $32.3M (25.7% margin), and net income was $17.2M ($0.3096 diluted EPS), slightly missing estimates of $0.35. Operating cash flow (excluding working capital and taxes) reached $30.9M, with $271.6M in cash and no debt.

Publication Date: Sep -05

📋 Highlights
  • Revenue & Profitability:: Q3 revenue was $125.6M (down YoY), Adjusted EBITDA $32.3M (25.7% margin), net income $17.2M ($0.31 EPS), with $271.6M in cash reserves and no debt.
  • Restructuring Impact:: $3M restructuring charge reduced net income, but $2–2.5M quarterly savings expected in Q1 2024 post-implementation.
  • Recurring Revenue:: $87.8M (69.9% of revenue) from recurring streams, highlighting stable, subscription-based income.
  • Shareholder Returns:: $0.30 dividend ($16.5M) and $1.6M in share repurchases, prioritizing returns amid market challenges.
  • Strategic Acquisitions:: Trafi acquisition integrated into asset management division, enhancing transportation SaaS offerings and long-term growth.

Financial Highlights and Shareholder Returns

Shareholder returns included a $0.30 dividend ($16.5M) and $1.6M in share repurchases. The company's strong balance sheet supports strategic acquisitions and operational improvements despite industry-wide financial pressures. The dividend yield stands at 6.27%, indicating an attractive return for income-seeking investors.

Restructuring and Cost Efficiency

A $3M restructuring charge reduced net income, but the company anticipates ongoing benefits and improved profitability. Restructuring focused on non-sales functions, with $2-2.5M quarterly savings projected. Management highlighted resilience amid macroeconomic and geopolitical risks, emphasizing disciplined execution and a leaner cost structure entering Q4.

Strategic Initiatives and M&A

The Trafi acquisition integration was completed into the asset management group, enhancing transportation offerings and supporting vertical SaaS strategies. M&A activity remains a priority, with a focus on accretive deals and maintaining a 5–6 year payback threshold. The company's strong cash position and disciplined approach to acquisitions position it well for future growth.

Valuation and Outlook

With a P/E Ratio of 14.71 and a Dividend Yield of 6.27%, Enghouse's valuation reflects a balance between growth expectations and income return. The company's ROIC of 14.56% indicates efficient capital allocation. Analysts estimate next year's revenue growth at 5.3%, suggesting a moderate expansion trajectory.

3. NewsRoom

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Four Days Left Until Enghouse Systems Limited (TSE:ENGH) Trades Ex-Dividend

Nov -09

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Enghouse Acquires Sixbell's Telco Division

Nov -07

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Enghouse Systems Third Quarter 2025 Earnings: Misses Expectations

Sep -10

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Enghouse Systems (TSX:ENGH) Valuation in Focus After Q3 Miss and Dividend Reaffirmation

Sep -09

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S&P Dow Jones Indices Announces Changes to the S&P/TSX Composite Index

Sep -05

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Enghouse Systems Posts Third-quarter Miss; Dividend Declared

Sep -04

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Enghouse Releases Third Quarter Results

Sep -04

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Enghouse Systems Limited (TSE:ENGH) Shares Could Be 46% Below Their Intrinsic Value Estimate

Aug -22

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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
Immersion

A-Score: 6.0/10

Value: 9.3

Growth: 6.7

Quality: 6.0

Yield: 5.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Enghouse Systems

A-Score: 5.9/10

Value: 5.9

Growth: 5.1

Quality: 8.4

Yield: 8.0

Momentum: 0.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Clear Secure

A-Score: 5.8/10

Value: 3.7

Growth: 9.8

Quality: 7.6

Yield: 5.0

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Upbound

A-Score: 5.4/10

Value: 7.9

Growth: 3.9

Quality: 5.4

Yield: 9.0

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
SilverSun Technologies

A-Score: 4.5/10

Value: 5.6

Growth: 7.3

Quality: 3.8

Yield: 5.0

Momentum: 5.0

Volatility: 0.0

1-Year Total Return ->

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Stock-Card
Daily Journal

A-Score: 4.4/10

Value: 5.0

Growth: 4.7

Quality: 8.0

Yield: 0.0

Momentum: 5.0

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

20.11$

Current Price

20.11$

Potential

-0.00%

Expected Cash-Flows