Enghouse Releases First Quarter Results

About this update from Enghouse Systems Limited

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All figures are denominated in Canadian dollars unless otherwise indicated. Revenue increased 2.9% to $124 .0 million from $120.5 million in Q1 2024; Recurring revenue, which includes SaaS and maintenance services, grew 4.0% to $87.9 million compared to $84.6 million in Q1 2024, and represents 70.9% of total revenue, as we continue to prioritize this revenue stream; Results from operating activities decreased to $31.0 million compared to $32.6 million in Q1 2024; Net income was $21.9 million compared to $18.1 million in Q1 2024, as we grow our business with a focus on profitability; Adjusted EBITDA decreased to $33.1 million compared to $34.7 million , while achieving a 26.7% margin; Cash flow from operating activities, excluding changes in working capital, was $37.7 million compared to $35.6 million in the comparable period. Cash, cash equivalents and short-term investments were $271.1 million as at January 31, 2025 . The most recent quarter has brought about events that have created a great deal of uncertainty across the globe. There are new questions around trade flows, interest rates, commodity prices and other factors which point to increasing instability. Throughout this period, our first quarter operating performance continued its consistent positive trend and reflects our steady and disciplined approach to the business. In the quarter we achieved revenue of $124 .0 million, representing a 2.9% increase compared to the prior year, while net income increased by 20.8% to $21.9 million or $0.40 per diluted share from $18.1 million or $0.33 per diluted share in the comparative quarter. We remain focused on predictable recurring revenue streams with SaaS and maintenance services revenue increasing by 4.0% in the quarter. While transitioning from exclusively offering traditional on-premise solutions, we are strategically committed to offering customers a choice between on-premise and cloud solutions, which has allowed us to preserve both one-time and recurring revenue streams. Cash flows from operating activities, excluding changes in working capital, were $37.7 million compared to $35.6 million in the prior year. During the first quarter we returned $14.4 million to shareholders through dividends and repurchased $6.0 million of our common shares. In addition, on December 16, 2024 , Enghouse completed the acquisition of Aculab PLC, which provides a cutting-edge suite of solutions designed to elevate communication and security experiences, including AI-driven answering machine detection and advanced voice and face biometric technology. Even with these outflows, Enghouse closed the quarter with $271.1 million in cash, cash equivalents and short-term investments, down only marginally from our record of $274.7 million at October 31, 2024 . We continue to have no external debt financing. On March 4, 2025 , the Company announced the acquisition of Margento R&D d.o.o., a European provider of transit fare collection, account-based ticketing, automatic vehicle tracking, and payment solutions based in Slovenia . Margento has a scalable and easy to deploy Mobility as a Service platform providing a unique user-centric mobile transit experience. This will augment our existing transportation offerings in the Asset Management Group. Our strategic direction remains consistent and focused on long-term profitability and sustainability.  We will continue to balance market demand by offering both SaaS and on-premise solutions and will not sacrifice profitability for revenue growth, which is reaffirmed by our ability to generate positive cash flows. Our robust cash position continues to allow us to capitalize on acquisitions that meet our thresholds and provide continued returns to our shareholders, also enabling us to increase our annual dividend for the 17 th consecutive year. Quarterly dividends: Today, the Board of Directors approved an increase of 15.4% in the Company's eligible quarterly dividend to $0.30 per common share, payable on May 30, 2025 , to shareholders of record at the close of business on May 16, 2025 . Enghouse Systems Limited Financial Highlights (unaudited, in thousands of Canadian dollars) For the periods ended January 31 Three months 2025 2024 Var ($) Var (%) Revenue $     124,000 $     120,489 3,511 2.9 Direct costs 44,463 41,582 2,881 6.9 Revenue, net of direct costs $ 79,537 $ 78,907 630 0.8 As a % of revenue 64.1 % 65.5 % Operating expenses 48,457 46,180 2,277 4.9 Special charges 91 91 0 0.0 Results from operating activities $ 30,989 $ 32,636 (1,647) (5.0) As a % of revenue 25.0 % 27.1 % Amortization of acquired software and customer relationships (8,479) (10,374) 1,895 18.3 Foreign exchange gains (losses) 2,309 (1,717) 4,026 234.5 Interest expense – lease obligations (128) (150) 22 14.7 Finance income 2,304 2,361 (57) (2.4) Finance expenses (3) - ( 3) - Other income (expense) 299 (114) 413 362.3 Income before income taxes $ 27,291 $ 22,642 4,649 20.5 Provision for income taxes 5,387 4,509 878 19.5 Net income for the period $ 21,904 $ 18,133 3,771 20.8 Basic earnings per share 0.40 0.33 0.07 21.2 Diluted earnings per share 0.40 0.33 0.07 21.2 Cash flows from operating activities 21,249 19,899 1,350 6.8 Cash flows from operating activities excluding changes in working capital 37,741 35,557 2,184 6.1 Adjusted EBITDA Results from operating activities 30,989 32,636 (1,647) (5.0) Depreciation 653 494 159 (32.2) Depreciation of right-of-use assets 1,378 1,506 (128) 8.5 Special charges 91 91 0 0.0 Adjusted EBITDA $ 33,111 $ 34,727 (1,616) (4.7) Adjusted EBITDA margin 26.7 % 28.8 % Adjusted EBITDA per diluted share $ 0.60 $ 0.63 ( 0.03) (4.8) Condensed Consolidated Interim Statements of Financial Position (in thousands of Canadian dollars) (unaudited) As at January 31, 2025 As at October 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 270,304 $ 274,240 Short-term investments 784 487 Accounts receivable 114,592 92,348 Prepaid expenses and other assets 19,061 16,100 404,741 383,175 Non-current assets: Property and equipment 4,059 4,192 Right-of-use assets 11,771 11,473 Intangible assets 96,552 98,594 Goodwill 320,997 309,831 Deferred income tax assets 27,273 26,228 460,652 450,318 $ 865,393 $ 833,493 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 67,970 $ 70,087 Income taxes payable 7,849 5,525 Dividends payable 14,340 14,397 Provisions 1,777 1,834 Deferred revenue 132,397 114,080 Lease obligations 5,381 5,344 229,714 211,267 Non-current liabilities: Deferred income tax liabilities 10,486 10,500 Deferred revenue 9,903 8,094 Net employee defined benefit obligation 2,075 2,081 Lease obligations 6,115 5,744 28,579 26,419 258,293 237,686 Shareholders' equity Share capital 117,750 118,217 Contributed surplus 9,878 9,764 Retained earnings 448,823 446,748 Accumulated other comprehensive income 30,649 21,078 607,100 595,807 $ 865,393 $ 833,493 Condensed Consolidated Interim Statements of Operations and Comprehensive Income (in thousands of Canadian dollars, except per share amounts) (unaudited) Three months Periods ended January 31 2025 2024 Revenue Software licenses $  17,781 $  16,975 SaaS and maintenance services 87,932 84,587 Professional services 16,108 15,945 Hardware 2,179 2,982 124,000 120,489 Direct costs Software licenses 736 674 Services 42,497 39,531 Hardware 1,230 1,377 44,463 41,582 Revenue, net of direct costs 79,537 78,907 Operating expenses Selling, general and administrative 23,636 22,869 Research and development 22,790 21,311 Depreciation 653 494 Depreciation of right-of-use assets 1,378 1,506 Special charges 91 91 48,548 46,271 Results from operating activities 30,989 32,636 Amortization of acquired software and customer relationships (8,479) (10,374) Foreign exchange gains (losses) 2,309 (1,717) Interest expense – lease obligations (128) (150) Finance income 2,304 2,361 Finance expenses (3) - Other income (expense) 299 (114) Income before income taxes 27,291 22,642 Provision for income taxes 5,387 4,509 Net income for the period $  21,904 $  18,133 Items that may be subsequently reclassified to income: Cumulative translation adjustment 9,571 (8,017) Other comprehensive income (loss) 9,571 (8,017) Comprehensive income $  31,475 $  10,116 Earnings per share Basic $      0.40 $      0.33 Diluted $      0.40 $      0.33 Condensed Consolidated Interim Statements of Cash Flows (in thousands of Canadian dollars) (unaudited) Three months Periods ended January 31 2025 2024 OPERATING ACTIVITIES Net income for the period $    21,904 $    18,133 Adjustments for non-cash items Depreciation 653 494 Depreciation of right-of-use assets 1,378 1,506 Interest expense – lease obligations 128 150 Amortization of acquired software and customer relationships 8,479 10,374 Stock-based compensation expense 108 277 Provision for income taxes 5,387 4,509 Finance expenses and other (income) expense (296) 114 37,741 35,557 Changes in non-cash operating working capital (11,891) (13,140) Income taxes paid (4,601) (2,518) Net cash provided by operating activities 21,249 19,899 INVESTING ACTIVITIES Net purchase of property and equipment (404) (360) Acquisitions, net of cash acquired* (6,586) - Recovery of purchase consideration for prior-year acquisitions - 171 Net cash used in investing activities (6,990) (189) FINANCING ACTIVITIES Issuance of share capital - 4,310 Normal course issuer bid share repurchases (5,950) - Repayment of lease obligations (1,374) (1,602) Dividends paid (14,397) (12,156) Net cash used in financing activities (21,721) (9,448) Impact of foreign exchange on cash and cash equivalents 3,526 (3,042) (Decrease) increase in cash and cash equivalents (3,936) 7,220 Cash and cash equivalents ─ beginning of period 274,240 239,532 Cash and cash equivalents ─ end of period $  270,304 $  246,752 *Acquisitions are net of cash acquired of $2,620 for the three months ended January 31, 2025 and nil for the three months ended January 31, 2024. Enghouse Systems Limited Segment Reporting Information (in thousands of Canadian dollars) Three months ended January 31 2025 2024 IMG AMG Total IMG AMG Total Revenue $ 73,221 $ 50,779 $ 124,000 $ 76,137 $ 44,352 $ 120,489 Direct costs (25,713) (18,750) (44,463) (25,406) (16,176) (41,582) Revenue, net of direct costs 47,508 32,029 79,537 50,731 28,176 78,907 Operating expenses excluding special charges (22,602) (11,978) (34,580) (21,425) (11,697) (33,122) Depreciation (402) (251) (653) (377) (117) (494) Depreciation of right-of-use assets (909) (469) (1,378) (936) (570) (1,506) Segment profit $ 23,595 $ 19,331 $ 42,926 $ 27,993 $ 15,792 $ 43,785 Special charges (91) (91) Corporate and shared service expenses (11,846) (11,058) Results from operating activities $ 30,989 $ 32,636 About Enghouse Enghouse is a Canadian publicly traded company (TSX: ENGH) that provides a wide range of mission critical vertically focused enterprise software solutions. Our core technologies are used for contact centers, video communications, virtual healthcare, education, telecommunications networks, IPTV, public safety and transit. The Company's two-pronged strategy to grow earnings focuses on both organic growth and acquisitions, which, to date, have been funded only through cash flows from operating activities as the Company has no outstanding external debt financing. The Company is organized around two business segments, the Interactive Management Group ("IMG") and the Asset Management Group ("AMG") due to their unique customer segments and technology offerings. Further information about Enghouse may be obtained from the Company's website at www.enghouse.com . Conference Call and Webcast A conference call to discuss the results will be held on Tuesday, March 11, 2025 at 8:45 a.m. EST . To participate, please call Local +1-289-514-5100 or North American Toll-Free 1-800-717-1738. Confirmation code: 35790. A webcast is also available at: https://www.enghouse.com/investors.php . **** The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA as a measure of operating performance. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated based on results from operating activities adjusted for depreciation of property and equipment and right-of-use assets, and special charges for acquisition related restructuring costs. Management uses Adjusted EBITDA to evaluate operating performance as it excludes amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, foreign exchange gains and losses, other income and restructuring costs primarily related to acquisitions. SOURCE Enghouse Systems Limited View original content: http://www.newswire.ca/en/releases/archive/March2025/10/c7795.html

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