Descartes says trade uncertainty impacting customer decisions

Supply chain software provider Descartes missed fiscal second-quarter expectations Wednesday after the market closed. However, the company said demand for its trade intelligence and regulatory compliance offerings has been strong given an uncertain trade landscape.

Descartes (NASDAQ: DSGX) reported earnings per share of 43 cents for the fiscal quarter ended July 31, which was 3 cents higher than the year-ago period but 8 cents below the consensus estimate.

Consolidated revenue increased 10% year over year to $180 million. Services revenue was 14% higher y/y at $167 million. The results included the benefit of recent acquisitions, but the sporadic nature of tariff implementations has been weighing on customer decision making.

“Our customers continue to face uncertainty in the costs of sourcing and moving goods across borders,” said Descartes CEO Ed Ryan in a news release. “This has also impacted their ability to make pricing and investment decisions in an uncertain economic environment.”

Descartes reported adjusted earnings before interest, taxes, depreciation and amortization of $80 million, which was 14% higher y/y. The company recorded an adjusted EBITDA margin of 44.6%, 140 basis points higher y/y.

The company generated $63 million in cash flow from operations in the quarter, an 82% y/y increase. It ended the period with $241 million in cash and an untapped line of credit of $350 million.

Descartes continues to use capital to make accretive acquisitions. It acquired e-commerce inventory management platform Finale Inventory for $40 million in early August.

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