Enghouse Releases Second Quarter Results
MARKHAM, ON, June 5, 2025 /CNW/ - Enghouse Systems Limited (TSX: ENGH) announces second quarter (unaudited) financial results for the period ended April 30, 2025. All figures are denominated in Canadian dollars unless otherwise indicated.
Second Quarter Financial Highlights:
- Revenue decreased 0.8% to $124.8 million from $125.8 million in Q2 2024 and increased 1.0% for the six-month period to $248.8 million from $246.3 million last year;
- Recurring revenue, which includes SaaS and maintenance services, increased 1.4% to $86.2 million compared to $85.0 million in Q2 2024, and represents 69.1% of total revenue. For the six-month period, recurring revenue increased to $174.1 million from $169.6 million in the prior period, an increase of 2.7%, as we continue to prioritize this revenue stream;
- Results from operating activities decreased to $25.1 million compared to $33.5 million in Q2 2024 and decreased for the six-month period to $56.1 million from $66.1 million in the comparable period;
- Net income was $13.5 million compared to $20.0 million in Q2 2024 and $35.4 million year to date compared to $38.1 million last year;
- Adjusted EBITDA decreased to $28.6 million compared to $35.7 million in Q2 2024, while achieving a 22.9% margin. Year to date Adjusted EBITDA was $61.7 million compared to $70.4 million in the prior year, a decrease of 12.4%;
- Net cash provided by operating activities, excluding changes in working capital and income taxes paid, was $25.5 million compared to $38.6 million in Q2 2024 and $63.3 million year to date compared to $74.2 million in the comparable period. Cash, cash equivalents and short-term investments were $263.5 million as at April 30, 2025.
During the second quarter Enghouse continued to execute on its long-term strategy amid heightened macroeconomic uncertainty. We have observed some demand-side hesitancy and delays in capital investment decisions from our customer base and remain focused on operational discipline, sustainable cash generation, and the integration of recent acquisitions to strengthen our foundation for future growth. We believe the current environment of global uncertainty creates opportunities, which combined with our strong cash position and proven experience with acquisitions, positions us well to act decisively.
Acquisitions remain a key pillar of our growth strategy. The integration of Margento, a provider of scalable Mobility-as-a-Service ("MaaS") solutions acquired earlier in the quarter, is largely complete. We also completed the acquisition of Trafi, a Lithuania-based MaaS platform provider offering a comprehensive, user-centric solution for complex transportation networks. These acquisitions enhance our transportation portfolio and support our broader mobility strategy within the Asset Management Group. We continue to evaluate additional opportunities that align with our strategic direction and long-term vision.
Enghouse ended the quarter with $263.5 million in cash, cash equivalents, and short-term investments, compared to $274.7 million as of October 31, 2024, after spending $33.4 million on acquisitions and $28.7 million on dividends year-to-date, while continuing to operate with no external debt financing. Our solid balance sheet supports our strategic priorities and allows us to respond swiftly to emerging opportunities, while maintaining financial resilience.
Quarterly dividends:
Today, the Board of Directors approved an eligible quarterly dividend of $0.30 per common share, payable on August 29, 2025, to shareholders of record at the close of business on August 15, 2025.
Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands of Canadian dollars)
For the period ended April 30 | Three months | Six months | |||||||||||
2025 | 2024 | Var ($) | Var (%) | 2025 | 2024 | Var ($) | Var (%) | ||||||
Revenue | $ | 124,819 | $ | 125,813 | (994) | (0.8) | $ | 248,819 | $ | 246,302 | 2,517 | 1.0 | |
Direct costs | 45,985 | 43,201 | 2,784 | 6.4 | 90,448 | 84,783 | 5,665 | 6.7 | |||||
Revenue, net of direct costs | $ | 78,834 | $ | 82,612 | (3,778) | (4.6) | $ | 158,371 | $ | 161,519 | (3,148) | (1.9) | |
As a % of revenue | 63.2 % | 65.7 % | 63.6 % | 65.6 % | |||||||||
Operating expenses | 52,345 | 49,031 | 3,314 | 6.8 | 100,802 | 95,211 | 5,591 | 5.9 | |||||
Special charges | 1,401 | 106 | 1,295 | 1221.7 | 1,492 | 197 | 1,295 | 657.4 | |||||
Results from operating activities | $ | 25,088 | $ | 33,475 | (8,387) | (25.1) | $ | 56,077 | $ | 66,111 | (10,034) | (15.2) | |
As a % of revenue | 20.1 % | 26.6 % | 22.5 % | 26.8 % | |||||||||
Amortization of acquired software and customer relationships | (7,296) | (11,146) | 3,850 | 34.5 | (15,775) | (21,520) | 5,745 | 26.7 | |||||
Foreign exchange losses | (3,962) | (86) | (3,876) | (4507.0) | (1,653) | (1,803) | 150 | 8.3 | |||||
Interest expense – lease obligations | (131) | (148) | 17 | 11.5 | (259) | (298) | 39 | 13.1 | |||||
Finance income | 1,913 | 2,602 | (689) | (26.5) | 4,217 | 4,963 | (746) | (15.0) | |||||
Finance expenses | (24) | (12) | (12) | (100.0) | (27) | (12) | (15) | (125.0) | |||||
Other income | 1,201 | 220 | 981 | 445.9 | 1,500 | 106 | 1,394 | 1315.1 | |||||
Income before income taxes | $ | 16,789 | $ | 24,905 | (8,116) | (32.6) | $ | 44,080 | $ | 47,547 | (3,467) | (7.3) | |
Provision for income taxes | 3,328 | 4,931 | (1,603) | (32.5) | 8,715 | 9,440 | (725) | (7.7) | |||||
Net Income for the period | $ | 13,461 | $ | 19,974 | (6,513) | (32.6) | $ | 35,365 | $ | 38,107 | (2,742) | (7.2) | |
Basic earnings per share | 0.24 | 0.36 | (0.12) | (33.3) | 0.64 | 0.69 | (0.05) | (7.2) | |||||
Diluted earnings per share | 0.24 | 0.36 | (0.12) | (33.3) | 0.64 | 0.69 | (0.05) | (7.2) | |||||
Net cash provided by operating activities | 36,671 | 40,256 | (3,585) | (8.9) | 57,920 | 60,155 | (2,235) | (3.7) | |||||
Net cash provided by operating activities excluding changes in working capital and income taxes paid | 25,543 | 38,613 | (13,070) | (33.8) | 63,284 | 74,170 | (10,886) | (14.7) | |||||
Adjusted EBITDA | |||||||||||||
Results from operating activities | 25,088 | 33,475 | (8,387) | (25.1) | 56,077 | 66,111 | (10,034) | (15.2) | |||||
Depreciation | 647 | 551 | 96 | (17.4) | 1,300 | 1,045 | 255 | (24.4) | |||||
Depreciation of right-of-use assets | 1,430 | 1,570 | (140) | 8.9 | 2,808 | 3,076 | (268) | 8.7 | |||||
Special charges | 1,401 | 106 | 1,295 | (1221.7) | 1,492 | 197 | 1,295 | (657.4) | |||||
Adjusted EBITDA | $ | 28,566 | $ | 35,702 | (7,136) | (20.0) | $ | 61,677 | $ | 70,429 | (8,752) | (12.4) | |
Adjusted EBITDA margin | 22.9 % | 28.4 % | 24.8 % | 28.6 % | |||||||||
Adjusted EBITDA per diluted share | $ | 0.52 | $ | 0.64 | (0.12) | (18.8) | $ | 1.12 | $ | 1.27 | (0.15) | (11.8) | |
Condensed Consolidated Interim Statements of Financial Position | |||||
(in thousands of Canadian dollars) (unaudited) | As at April 30, | As at October 31, | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 263,285 | $ | 274,240 | |
Short-term investments | 236 | 487 | |||
Accounts receivable | 104,957 | 92,348 | |||
Prepaid expenses and other assets | 18,809 | 16,100 | |||
387,287 | 383,175 | ||||
Non-current assets: | |||||
Property and equipment | 4,359 | 4,192 | |||
Right-of-use assets | 11,376 | 11,473 | |||
Intangible assets | 99,162 | 98,594 | |||
Goodwill | 339,389 | 309,831 | |||
Deferred income tax assets | 27,100 | 26,228 | |||
481,386 | 450,318 | ||||
$ | 868,673 | $ | 833,493 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable and accrued liabilities | $ | 77,897 | $ | 70,087 | |
Income tax payable | 4,920 | 5,525 | |||
Dividends payable | 16,547 | 14,397 | |||
Provisions | 1,389 | 1,834 | |||
Deferred revenue | 130,884 | 114,080 | |||
Lease obligations | 5,664 | 5,344 | |||
237,301 | 211,267 | ||||
Non-current liabilities: | |||||
Deferred income tax liabilities | 12,786 | 10,500 | |||
Deferred revenue | 9,997 | 8,094 | |||
Net employee defined-benefit obligation | 2,169 | 2,081 | |||
Lease obligations | 5,162 | 5,744 | |||
30,114 | 26,419 | ||||
267,415 | 237,686 | ||||
Shareholders' equity: | |||||
Share capital | 117,750 | 118,217 | |||
Contributed surplus | 10,311 | 9,764 | |||
Retained earnings | 445,731 | 446,748 | |||
Accumulated other comprehensive income | 27,466 | 21,078 | |||
601,258 | 595,807 | ||||
$ | 868,673 | $ | 833,493 | ||
Condensed Consolidated Interim Statements of Operations and Comprehensive Income | |||||
(in thousands of Canadian dollars, except per share amounts) | |||||
(unaudited) | Three months | Six months | |||
Periods ended April 30 | 2025 | 2024 | 2025 | 2024 | |
Revenue Software licenses | $ 16,885 | $ 20,492 | $ 34,666 | $ 37,467 | |
SaaS and maintenance services | 86,189 | 84,984 | 174,121 | 169,571 | |
Professional services | 17,625 | 17,401 | 33,733 | 33,346 | |
Hardware | 4,120 | 2,936 | 6,299 | 5,918 | |
124,819 | 125,813 | 248,819 | 246,302 | ||
Direct costs | |||||
Software licenses | 703 | 741 | 1,439 | 1,415 | |
Services | 43,431 | 40,951 | 85,928 | 80,482 | |
Hardware | 1,851 | 1,509 | 3,081 | 2,886 | |
45,985 | 43,201 | 90,448 | 84,783 | ||
Revenue, net of direct costs | 78,834 | 82,612 | 158,371 | 161,519 | |
Operating expenses | |||||
Selling, general and administrative | 24,980 | 24,812 | 48,616 | 47,681 | |
Research and development | 25,288 | 22,098 | 48,078 | 43,409 | |
Depreciation | 647 | 551 | 1,300 | 1,045 | |
Depreciation of right-of-use assets | 1,430 | 1,570 | 2,808 | 3,076 | |
Special charges | 1,401 | 106 | 1,492 | 197 | |
53,746 | 49,137 | 102,294 | 95,408 | ||
Results from operating activities | 25,088 | 33,475 | 56,077 | 66,111 | |
Amortization of acquired software and customer relationships | (7,296) | (11,146) | (15,775) | (21,520) | |
Foreign exchange losses | (3,962) | (86) | (1,653) | (1,803) | |
Interest expense – lease obligations | (131) | (148) | (259) | (298) | |
Finance income | 1,913 | 2,602 | 4,217 | 4,963 | |
Finance expenses | (24) | (12) | (27) | (12) | |
Other income | 1,201 | 220 | 1,500 | 106 | |
Income before income taxes | 16,789 | 24,905 | 44,080 | 47,547 | |
Provision for income taxes | 3,328 | 4,931 | 8,715 | 9,440 | |
Net income for the period | 13,461 | 19,974 | 35,365 | 38,107 | |
Item that may be subsequently reclassified to income: | |||||
Cumulative translation adjustment | (3,183) | 9,455 | 6,388 | 1,438 | |
Other comprehensive (loss) income | (3,183) | 9,455 | 6,388 | 1,438 | |
Comprehensive income | $ 10,278 | $ 29,429 | $ 41,753 | $ 39,545 | |
Earnings per share | |||||
Basic | $ 0.24 | $ 0.36 | $ 0.64 | $ 0.69 | |
Diluted | $ 0.24 | $ 0.36 | $ 0.64 | $ 0.69 | |
Condensed Consolidated Interim Statements of Cash Flows | |||||
(in thousands of Canadian dollars) (unaudited) | Three months | Six months | |||
Periods ended April 30 | 2025 | 2024 | 2025 | 2024 | |
OPERATING ACTIVITIES | |||||
Net income for the period | $ 13,461 | $ 19,974 | $ 35,365 | $ 38,107 | |
| |||||
Depreciation | 647 | 551 | 1,300 | 1,045 | |
Depreciation of right-of-use assets | 1,430 | 1,570 | 2,808 | 3,076 | |
Interest expense – lease obligations | 131 | 148 | 259 | 298 | |
Amortization of acquired software and customer relationships | 7,296 | 11,146 | 15,775 | 21,520 | |
Stock-based compensation expense | 427 | 501 | 535 | 778 | |
Provision for income taxes | 3,328 | 4,931 | 8,715 | 9,440 | |
Finance expenses and other (income) expenses | (1,177) | (208) | (1,473) | (94) | |
25,543 | 38,613 | 63,284 | 74,170 | ||
Changes in non-cash operating working capital | 16,261 | 6,651 | 4,370 | (6,489) | |
Income taxes paid | (5,133) | (5,008) | (9,734) | (7,526) | |
Net cash provided by operating activities | 36,671 | 40,256 | 57,920 | 60,155 | |
INVESTING ACTIVITIES | |||||
Net purchase of property and equipment | (403) | (418) | (807) | (778) | |
Acquisitions, net of cash acquired* | (26,813) | (12,594) | (33,399) | (12,594) | |
Recovery of purchase consideration for prior-year acquisition | - | - | - | 171 | |
Net cash used in investing activities | (27,216) | (13,012) | (34,206) | (13,201) | |
FINANCING ACTIVITIES | |||||
Issuance of share capital | - | 373 | - | 4,683 | |
Normal course issuer bid share repurchases | - | (1,147) | (5,950) | (1,147) | |
Repayment of lease obligations | (1,835) | (1,798) | (3,209) | (3,400) | |
Dividends paid | (14,340) | (12,188) | (28,737) | (24,344) | |
Net cash used in financing activities | (16,175) | (14,760) | (37,896) | (24,208) | |
Impact of foreign exchange on cash and cash equivalents | (299) | 3,682 | 3,227 | 640 | |
(Decrease) increase in cash and cash equivalents | (7,019) | 16,166 | (10,955) | 23,386 | |
Cash and cash equivalents - beginning of period | 270,304 | 246,752 | 274,240 | 239,532 | |
Cash and cash equivalents - end of period | $ 263,285 | $ 262,918 | $ 263,285 | $ 262,918 | |
*Acquisitions are net of cash acquired of $6,667 and $9,287 for the three and six months ended April 30, 2025, and $497 for the three and six months ended April 30, 2024, respectively. |
Enghouse Systems Limited
Segment Reporting Information
(in thousands of Canadian dollars)
Three months ended April 30 | 2025 | 2024 | |||||||||||
IMG | AMG | Total | IMG | AMG | Total | ||||||||
Revenue | $ | 74,118 | $ | 50,701 | $ | 124,819 | $ | 80,530 | $ | 45,283 | $ | 125,813 | |
Direct costs | (25,811) | (20,174) | (45,985) | (26,573) | (16,628) | (43,201) | |||||||
Revenue, net of direct costs | 48,307 | 30,527 | 78,834 | 53,957 | 28,655 | 82,612 | |||||||
Operating expenses excluding special charges | (24,001) | (14,957) | (38,958) | (23,483) | (11,751) | (35,234) | |||||||
Depreciation | (393) | (254) | (647) | (392) | (159) | (551) | |||||||
Depreciation of right-of-use assets | (927) | (503) | (1,430) | (997) | (573) | (1,570) | |||||||
Segment profit | $ | 22,986 | $ | 14,813 | $ | 37,799 | $ | 29,085 | $ | 16,172 | $ | 45,257 | |
Special charges | (1,401) | (106) | |||||||||||
Corporate and shared service expenses | (11,310) | (11,676) | |||||||||||
Results from operating activities | $ | 25,088 | $ | 33,475 | |||||||||
Six months ended April 30 | 2025 | 2024 | |||||||||||
IMG | AMG | Total | IMG | AMG | Total | ||||||||
Revenue | $ | 147,339 | $ | 101,480 | $ | 248,819 | $ | 156,666 | $ | 89,636 | $ | 246,302 | |
Direct costs | (51,524) | (38,924) | (90,448) | (51,979) | (32,804) | (84,783) | |||||||
Revenue, net of direct costs | 95,815 | 62,556 | 158,371 | 104,687 | 56,832 | 161,519 | |||||||
Operating expenses excluding special charges | (46,603) | (26,935) | (73,538) | (44,909) | (23,447) | (68,356) | |||||||
Depreciation | (795) | (505) | (1,300) | (769) | (276) | (1,045) | |||||||
Depreciation of right-of-use assets | (1,836) | (972) | (2,808) | (1,933) | (1,143) | (3,076) | |||||||
Segment profit | $ | 46,581 | $ | 34,144 | $ | 80,725 | $ | 57,076 | $ | 31,966 | $ | 89,042 | |
Special charges | (1,492) | (197) | |||||||||||
Corporate and shared service expenses | (23,156) | (22,734) | |||||||||||
Results from operating activities | $ | 56,077 | $ | 66,111 | |||||||||
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 growth strategy to grow earnings focuses on both organic growth and acquisitions, which, to date, have been funded only through net cash provided by 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 Friday, June 6, 2025 at 8:45 a.m. EST. To participate, please call +1-289-514-5100 or North American Toll-Free +1-800-717-1738. Confirmation code: 61977. A webcast is also available at: https://www.enghouse.com/investors.php.
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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
