MARKHAM, ON, Sept. 5, 2024 /CNW/ - Enghouse Systems Limited (TSX:ENGH) announces third quarter (unaudited) financial results for the period ended July 31, 2024. All figures are denominated in Canadian dollars unless otherwise indicated.
Third Quarter Financial Highlights:
Revenue increased 17.6% to $130.5 million from $111.0 million in Q3 2023 and 13.9% for the nine-month period to $376.8 million from $330.9 million last year;
Recurring revenue, which includes SaaS and maintenance services, grew 22.8% to $88.8 million compared to $72.3 million in Q3 2023, and represents 68.1% of total revenue. For the nine-month period, recurring revenue increased to $258.4 million from $210.4 million in the prior period, an increase of 22.8%, as we continue to prioritize this revenue stream;
Results from operating activities increased to $34.3 million compared to $30.9 million in Q3 2023 and increased for the nine-month period to $100.4 million, from $86.4 million in the prior period;
Net income was $20.6 million compared to $17.6 million in Q3 2023 and $58.7 million year to date compared to $47.1 million last year, as we grow our business with a focus on profitability;
Adjusted EBITDA increased to $37.7 million compared to $33.4 million, growing by 12.9%, while achieving a 28.9% margin. Year to date Adjusted EBITDA was $108.2 million compared to $95.9 million in the prior year, an increase of 12.8%;
Cash flow from operating activities, excluding changes in working capital, was $37.4 million compared to $35.5 million in the prior quarter and $111.5 million year to date compared to $97.0 million in the comparable period. Cash, cash equivalents and short-term investments reached near record highs at $258.7 million as at July 31, 2024.
Our third quarter operating performance continued its upward trend with revenue, profitability and operating cash flow, all exhibiting positive growth. Our commitment to operational efficiency, alongside our capability in executing and integrating acquisitions continues to deliver positive results. This quarter we completed the acquisition of SeaChange, expanding our IPTV market presence, a growing sector for Enghouse. We have effectively integrated SeaChange into our Asset Management Group, achieving profitability in its first quarter, post-acquisition, although not yet at our standard levels.
Our strategic direction remains steadfast as we continue to expand our business profitably. Offering both SaaS and on-premise solutions positions us uniquely in the marketplace. Operational enhancements across our existing businesses and recent acquisitions are driving positive outcomes, enabling us to maintain robust cash reserves while simultaneously increasing annual dividends, repurchasing shares and pursuing acquisitions.
Quarterly dividends:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.26 per common share, payable on November 29, 2024 to shareholders of record at the close of business on November 15, 2024.
Enghouse Systems Limited
Financial Highlights(unaudited, in thousands of Canadian dollars)
For the period ended July 31
Three months
Nine months
2024
2023
Var ($)
Var (%)
2024
2023
Var ($)
Var (%)
Revenue
$
130,501
$
110,997
19,504
17.6
$
376,803
$
330,893
45,910
13.9
Direct costs
45,836
35,872
9,964
27.8
130,619
108,786
21,833
20.1
Revenue, net of direct costs
$
84,665
$
75,125
9,540
12.7
$
246,184
$
222,107
24,077
10.8
As a % of revenue
64.9 %
67.7 %
65.3 %
67.1 %
Operating expenses
49,120
43,901
5,219
11.9
144,331
133,323
11,008
8.3
Special charges
1,243
331
912
275.5
1,440
2,360
(920)
(39.0)
Results from operating activities
$
34,302
$
30,893
3,409
11.0
$
100,413
$
86,424
13,989
16.2
As a % of revenue
26.3 %
27.8 %
26.6 %
26.1 %
Amortization of acquired software and customer relationships
(9,663)
(9,730)
67
0.7
(31,183)
(28,400)
(2,783)
(9.8)
Foreign exchange (losses) gains
(1,747)
356
(2,103)
(590.7)
(3,550)
(1,487)
(2,063)
(138.7)
Interest expense – lease obligations
(132)
(172)
40
23.3
(430)
(531)
101
19.0
Finance income
2,333
1,701
632
37.2
7,296
3,683
3,613
98.1
Finance expenses
(29)
(5)
(24)
(480.0)
(41)
(136)
95
69.9
Other income (expenses)
407
(1,312)
1,719
131.0
513
(1,967)
2,480
126.1
Income before income taxes
$
25,471
$
21,731
3,740
17.2
$
73,018
$
57,586
15,432
26.8
Provision for income taxes
4,891
4,164
727
17.5
14,331
10,460
3,871
37.0
Net Income for the period
$
20,580
$
17,567
3,013
17.2
$
58,687
$
47,126
11,561
24.5
Basic earnings per share
0.37
0.32
0.05
15.6
1.06
0.85
0.21
24.7
Diluted earnings per share
0.37
0.32
0.05
15.6
1.06
0.85
0.21
24.7
Operating cash flows
40,333
39,020
1,313
3.4
100,488
86,980
13,508
15.5
Operating cash flows excluding changes in working capital
37,363
35,481
1,882
5.3
111,533
96,988
14,545
15.0
Adjusted EBITDA
Results from operating activities
34,302
30,893
3,409
11.0
100,413
86,424
13,989
16.2
Depreciation
647
585
62
(10.6)
1,692
1,824
(132)
7.2
Depreciation of right-of-use assets
1,530
1,606
(76)
4.7
4,606
