Descartes CEO Art Mesher said he was happy with the quarter: “We’re metrics-driven and focused on results. By focusing first and foremost on the results our customers achieve using our technology and services, we’ve again delivered outstanding financial results in a challenging economic environment,” he said, adding: “We’re well positioned to continue to deliver on our plans with a healthy and well-calibrated business.”
Northern Securities analyst Sameet Kanade says the quarter bested his expectations. He says Descartes was facing strong foreign exchange headwinds (36% of Descartes total revenue in the quarter came from Europe, the Middle East and Africa) yet proved the resiliency of its business model to generate improved profitability and cash flows, even though the environment was sluggish. In a research update to clients today, Kanade reiterated his BUY recommendation and $10 target on Descartes.
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Waterloo-based Descartes has become a leader in global logistics technology; solutions that help its customers make and receive shipments. The company finds itself at the cutting edge of a trend; across the globe governments are looking to untangle and standardize their logistics operations. An increasing amount of evidence suggests a clear link between logistics performance and economics growth. The World Bank’s Logistics Performance Index showed that low and middle income countries such as Brazil and Columbia have given their economies a shot in the arm through improved logistics, while other emerging economies, such as Turkey, have been hurt by a lack of logistics infrastructure.
Descartes Systems’s revenue has grown from $66-million in fiscal 2009, to nearly $114-million in 2012.
Kanade says Descartes is now well on its way towards building a “…sizeable, and extremely profitable, leadership position in the integrated logistics enablement industry.” The company completed two acquisitions in the quarter, picking up Infodis, a Netherlands-based provider of software-as-a-service transportation management solutions, and customs broker Integrated Export Systems.
Shares of Descartes on the TSX closed today up 1.8% to $8.48.