MARKHAM, ON, March 10, 2025 /CNW/ - Enghouse Systems Limited (TSX: ENGH) announces first quarter (unaudited) financial results for the period ended January 31, 2025. 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 17th 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.
