Earnings release
Page 1
Record Revenues and Income from Operations WATERLOO, Ontario and ATLANTA, Georgia, September 10, 2026 (GLOBE NEWSWIRE) – The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) announced its financial results for its fiscal 2027 second quarter (Q2FY27). All financial results referenced are in United States (US) currency and, unless otherwise indicated, are determined in accordance with US Generally Accepted Accounting Principles (GAAP). “Today’s supply chains and logistics operations need to be agile in the face of an increasingly dynamic global trade environment,” said Edward J. Ryan, Descartes' CEO. “Having a broad scope of solutions on our Global Logistics Network is imperative to help isolate our customers from complexity, bringing together the data and domain expertise required to efficiently manage the lifecycle of shipments. Descartes Announces Fiscal 2027 Second Quarter Financial Results Posted Sep 10, 2026 Home News & Events Financial News
Page 2
We will continue to make investments into our business to add more capabilities and data onto our network, and we are looking forward to demonstrating the next generation of Descartes solutions at our Innovation Forum next month.” Q2FY27 Financial Results As described in more detail below, key financial highlights for Descartes’ Q2FY27 included: Revenues of $201.1 million, up 12% from $179.8 million in the second quarter of fiscal 2026 (Q2FY26) and up 4% from $193.6 million in the previous quarter (Q1FY27); Revenues were comprised of services revenues of $188.6 million (94% of total revenues), professional services and other revenues of $12.4 million (6% of total revenues) and license revenues of $0.1 million (less than 1% of total revenues). Services revenues were up 13% from $166.8 million in Q2FY26 and up 4% from $180.5 million in Q1FY27; Cash provided by operating activities of $81.3 million, up 28% from $63.3 million in Q2FY26 and up 8% from $75.1 million in Q1FY27. Cash provided by operating activities was negatively impacted in Q2FY26 by our Fiscal 2026 Restructuring Plan; Income from operations of $65.5 million, up 36% from $48.2 million in Q2FY26 and up 5% from $62.5 million in Q1FY27. Income from operations was negatively impacted in Q2FY26 by our Fiscal 2026 Restructuring Plan; Net income of $50.0 million, up 32% from $38.0 million in Q2FY26 and up 3% from $48.5 million in Q1FY27. Net income was negatively impacted in Q2FY26 by our Fiscal 2026 Restructuring Plan. Net income as a percentage of revenue was 25%, compared to 21% in Q2FY26 and 25% in Q1FY27; Earnings per share on a diluted basis of $0.57, up 33% from $0.43 in Q2FY26 and up 4% from $0.55 in Q1FY27; and Adjusted EBITDA of $94.4 million, up 18% from $80.2 million in Q2FY26 and up 5% from $89.8 million in Q1FY27. Adjusted EBITDA as a percentage of revenues was 47%, compared to 45% and 46% in Q2FY26 and Q1FY27, respectively. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures provided as a complement to financial results presented in accordance with GAAP. We define
Page 3
Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes) and other charges (for which we include restructuring charges, acquisition-related expenses, and contingent consideration incurred due to better-than-expected performance from acquisitions). These items are considered by management to be outside Descartes' ongoing operational results. We define Adjusted EBITDA as a percentage of revenues as the quotient, expressed as a percentage, from dividing Adjusted EBITDA for a period by revenues for the corresponding period. A reconciliation of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues to net income determined in accordance with GAAP is provided later in this release. The following table summarizes Descartes' results in the categories specified below over the past 5 fiscal quarters (unaudited; dollar amounts, other than per share amounts, in millions): Q2 FY27 Q1 FY27 Q4 FY26 Q3 FY26 Q2 FY26 Revenues 201.1 193.6 192.8 187.7 179.8 Servicesrevenues 188.6 180.5 180.1 173.7 166.8 Gross margin 78% 78% 78% 77% 77% Cashprovided by operatingactivities 81.3 75.1 75.9 73.4 63.3 Income from operations 65.5 62.5 59.0 56.6 48.2
Page 4
Net income 50.0 48.5 45.6 43.9 38.0 Net income as a % ofrevenues 25% 25% 24% 23% 21% Earnings perdiluted share 0.57 0.55 0.52 0.50 0.43 Adjusted EBITDA 94.4 89.8 88.7 85.5 80.2 Adjusted EBITDA as a% of revenues 47% 46% 46% 46% 45% Year-to-Date Financial Results As described in more detail below, key financial highlights for Descartes’ six-month period ended July 31, 2026 (1HFY27) included: Revenues of $394.7 million, up 13% from $348.6 million in the same period a year ago (1HFY26); Revenues were comprised of services revenues of $369.1 million (94% of total revenues), professional services and other revenues of $23.9 million (6% of total revenues) and license revenues of $1.7 million (less than 1% of total revenues). Services revenues were up 14% from $323.4 million in 1HFY26; Cash provided by operating activities of $156.4 million, up 34% from $116.9 million in 1HFY26. Cash provided by operating activities was negatively impacted in 1HFY26 by our Fiscal 2026 Restructuring Plan; Income from operations of $128.0 million, up 36% from $94.4 million in 1HFY26. Income from operations was negatively impacted in 1HFY26 by our Fiscal 2026 Restructuring Plan; Net income of $98.5 million, up 33% from $74.3 million in 1HFY26. Net income was negatively impacted in 1HFY26 by our
Page 5
Fiscal 2026 Restructuring Plan. Net income as a percentage of revenues was 25%, compared to 21% in 1HFY26; Earnings per share on a diluted basis of $1.13, up 33% from $0.85 in 1HFY26; and Adjusted EBITDA of $184.1 million, up 19% from $155.3 million in 1HFY26. Adjusted EBITDA as a percentage of revenues was 47%, compared to 45% in 1HFY26. The following table summarizes Descartes’ results in the categories specified below over 1HFY27 and 1HFY26 (unaudited, dollar amounts in millions): 1HFY27 1HFY26 Revenues 394.7 348.6 Services revenues 369.1 323.4 Gross margin 78% 77% Cash provided by operating activities 156.4 116.9 Income from operations 128.0 94.4 Net income 98.5 74.3 Net income as a % of revenues 25% 21% Earnings per diluted share 1.13 0.85 Adjusted EBITDA 184.1 155.3
Page 6
Adjusted EBITDA as a % of revenues 47% 45% Cash Position At July 31, 2026, Descartes had $401.1 million in cash. Cash increased by $24.1 million in Q2FY27 and increased by $44.6 million in 1HFY27. The table set forth below provides a summary of cash flows for Q2FY27 and 1HFY27 in millions of dollars: Q2FY27 1HFY27 Cash provided by operating activities 81.3 156.4 Additions to property and equipment (2.0) (4.6) Acquisitions of subsidiaries, net of cashacquired (29.5) (59.2) Repurchase of common shares for cash, including purchasing costs (24.3) (45.1) Issuances of common shares, net of issuance costs 0.3 3.8 Payment of withholding taxes on net share settlements - (4.5) Effect of foreign exchange rate on cash (1.7) (2.2) Net change in cash 24.1 44.6
Page 7
Cash, beginning of period 377.0 356.5 Cash, end of period 401.1 401.1 Normal Course Issuer Bid On December 11, 2025, Descartes commenced a normal course issuer bid (“NCIB”) to purchase up to approximately 8.6 million common shares in the open market for cancellation. Under the NCIB, Descartes is permitted to repurchase for cancellation, at its discretion on or before December 10, 2026, up to 10% of the “public float” (calculated in accordance with the rules of the Toronto Stock Exchange (“TSX”)) of Descartes’ issued and outstanding common shares. Any purchases under the NCIB are subject to applicable terms and limitations and have been, and will be, made through the facilities of the TSX, Nasdaq, other designated exchanges and/or alternative Canadian trading systems, or by such other means as may be permitted by the Ontario Securities Commission or other applicable Canadian Securities Administrators. In the first half and second quarter of 2027, Descartes repurchased and cancelled 651,800 and 346,800 of its common shares under the NCIB, respectively, for an aggregate cost of $45.1 million and $24.3 million, respectively, including costs associated with the repurchase. Acquisition of TAI On August 21, 2026, Descartes acquired all of the shares of Transportation Applied Intelligence Software, LLC (“TAI”), a provider of advanced transportation management solutions for freight brokers. The purchase price for the acquisition was approximately $99.3 million, net of cash acquired, which was funded from cash on hand. Acquisition of Extensiv
Page 8
On September 1, 2026, Descartes acquired all of the shares of 3PL Central, LLC, doing business as Extensiv, and its subsidiaries (collectively referred to as “Extensiv”), a provider of warehouse management and fulfillment solutions for third-party logistics providers and the brands they serve. The purchase price for the acquisition was approximately $119.9 million, net of cash acquired, which was funded from cash on hand. Conference Call Members of Descartes' executive management team will host a conference call to discuss the company's financial results at 5:30 p.m. ET on Thursday, September 10, 2026. Designated numbers are +1 289 514 5100 or Toll-Free for North America at +1 800 717 1738, using conference ID 96697. The company will simultaneously conduct an audio webcast on the Descartes website at www.descartes.com/descartes/investor- relations. A phone conference dial-in or webcast log-in is required approximately 10 minutes before the start. Replays of the conference call will be available until Thursday, September 17, 2026, by dialing +1 289 819 1325 or Toll-Free for North America using +1 888 660 6264 with Playback Passcode: 96697#. An archived replay of the webcast will be available at www.descartes.com/descartes/investor-relations. About Descartes Descartes powers more responsive, efficient, secure and sustainable international and domestic supply chains by uniting logistics-intensive businesses on its Global Logistics Network (“GLN”). Shippers, carriers, and logistics service providers connect and collaborate on the GLN, leveraging technology, data and artificial intelligence (“AI”) to manage last mile deliveries, domestic and international shipments, transportation rating and payment, global trade research, customs
Page 9
compliance and a variety of regulatory processes. Learn more about Descartes (Nasdaq:DSGX) (TSX:DSG) at www.descartes.com, and connect with us on LinkedIn and X. Descartes Investor Contact Laurie McCauley (519) 746-2969 investor@descartes.com Cautionary Statement Regarding Forward-Looking Statements This release may contain forward-looking information within the meaning of applicable securities laws ("forward-looking statements") that relates to Descartes' expectations concerning future revenues and earnings, and our projections for any future reductions in expenses or growth in margins and generation of cash; our assessment of the potential impact of geopolitical events, such as the conflict between Iran, Israel and the US (the “Iran Conflict”), and the ongoing conflict between Russia and Ukraine (the “Russia-Ukraine Conflict”), or other potentially catastrophic events, on our business, results of operations and financial condition; our assessment of the potential impact of tariffs, sanctions and other actions by individual countries on global trade and our business; continued growth and acquisitions including our assessment of any increased opportunity for our products and services as a result of trends in the logistics and supply chain industries; rate of profitable growth and Adjusted EBITDA margin operating range; demand for Descartes' solutions; growth of Descartes' GLN; customer buying patterns; customer expectations of Descartes; development of the GLN and the benefits thereof to customers; and other matters. These forward-looking statements are based on certain assumptions including the following: global shipment volumes continuing at levels generally consistent with those experienced historically; the Iran Conflict and the Russia-
Page 10
Ukraine Conflict not having a material negative impact on shipment volumes or on the demand and ability to pay for the products and services of Descartes by its customers; countries continuing to implement and enforce existing and additional customs and security regulations relating to the provision of electronic information for imports and exports; countries continuing to implement and enforce existing and additional trade restrictions and sanctioned party lists with respect to doing business with certain countries, organizations, entities and individuals; Descartes' continued operation of a secure and reliable business network; the continued availability, performance and security of third-party cloud hosting, telecommunications, data center and technology service providers upon which we rely; the stability of general economic and market conditions, currency exchange rates and interest rates; equity and debt markets continuing to provide Descartes with access to capital; Descartes' continued ability to identify and source attractive and executable business combination opportunities; Descartes' ability to develop solutions that keep pace with the continuing changes in technology including AI, and to adapt to evolving legal, regulatory, operational and cybersecurity risks associated with the use of AI and our continued compliance with third party intellectual property rights. These assumptions may prove to be inaccurate. Such forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Descartes, or developments in Descartes' business or industry, to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, Descartes' ability to successfully identify, execute and complete acquisitions; to integrate acquired businesses, assets, personnel and technologies; to realize anticipated strategic, operational and financial benefits and synergies from acquisitions; the impact of network failures, information security breaches or other cyber-security threats; disruptions in the movement of freight and a
Page 11
decline in shipment volumes including as a result of the impact of current and future trade barriers, including tariffs, sanctions, export controls, further protectionist measures, retaliatory measures and other governmental restrictions affecting cross-border trade, The Iran Conflict, the Russia-Ukraine Conflict, or contagious illness outbreaks; a deterioration of general economic conditions or instability in the financial markets accompanied by a decrease in spending by our customers; the ability to attract and retain key personnel and the ability to manage the departure of key personnel and the transition of our executive management team; changes in trade or transportation regulations that currently require customers to use services such as those offered by Descartes; changes in customer behaviour and expectations; Descartes’ ability to successfully design and develop enhancements to our products and solutions; departures of key customers; the impact of foreign currency exchange rates; Descartes' ability to retain or obtain sufficient capital in addition to its debt facility to execute on its business strategy, including its acquisition strategy; ; the potential for future goodwill or intangible asset impairment as a result of other-than-temporary decreases in Descartes' market capitalization; and other factors and assumptions discussed in the section entitled, "Certain Factors That May Affect Future Results" in documents filed with the Securities and Exchange Commission, the Ontario Securities Commission and other securities regulatory authorities across Canada, including Descartes' most recently filed annual and subsequent interim Management's Discussion and Analysis which are available under Descartes’ profile through the EDGAR website at http://www.sec.gov or through the SEDAR+ website at http://www.sedarplus.com/. If any such risks actually occur, they could, among other consequences, materially adversely affect our business, financial condition or results of operations. In that case, the trading price of our common shares could decline, perhaps materially. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Forward-looking statements are
Page 12
provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. Except as required by applicable law, we do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues We prepare and release quarterly unaudited and annual audited financial statements prepared in accordance with GAAP. We also disclose and discuss certain non-GAAP financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls as a complement to results provided in accordance with GAAP. We believe that current shareholders and potential investors in our company use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, in making investment decisions about our company and measuring our operational results. The term “Adjusted EBITDA” refers to a financial measure that we define as earnings before certain charges that management considers to be non-operating expenses and which consist of interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes) and other charges (for which we include restructuring charges, acquisition-related expenses, and contingent consideration incurred due to better-than- expected performance from acquisitions). Adjusted EBITDA as a percentage of revenues divides Adjusted EBITDA for a period by the revenues for the corresponding period and expresses the quotient as a percentage.
Page 13
Management considers these non-operating expenses to be outside the scope of Descartes’ ongoing operations and the related expenses are not used by management to measure operations. Accordingly, these expenses are excluded from Adjusted EBITDA, which we reference to both measure our operations and as a basis of comparison of our operations from period-to-period. Management believes that investors and financial analysts measure our business on the same basis, and we are providing the Adjusted EBITDA financial metric to assist in this evaluation and to provide a higher level of transparency into how we measure our own business. However, Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues should not be construed as a substitute for net income determined in accordance with GAAP or other non-GAAP measures that may be used by other companies, such as EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues does have limitations. In particular, we have completed eight acquisitions since the beginning of fiscal 2026 and may complete additional acquisitions in the future that will result in acquisition-related expenses and restructuring charges. As these acquisition-related expenses and restructuring charges may continue as we pursue our consolidation strategy, some investors may consider these charges and expenses as a recurring part of operations rather than expenses that are not part of operations. The table below reconciles Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues to net income reported in our unaudited Consolidated Statements of Operations for Q2FY27, Q1FY27, Q4FY26, Q3FY26, and Q2FY26, which we believe is the most directly comparable GAAP measure.
Page 14
Q2FY27 Q1FY27 Q4FY26 Q3FY26 Q Net income,as reported onConsolidated Statements of Operations 50.0 48.5 45.6 43.9 Adjustments to reconcile toAdjusted EBITDA: Interestexpense 0.2 0.2 0.2 0.2 Investmentincome (3.3) (3.0) (2.6) (2.0) Income tax expense 18.6 16.8 15.8 14.5 Depreciation expense 1.6 1.5 1.5 1.5 Amortization of intangibleassets 18.1 17.3 20.9 20.7 Stock-based compensationand related taxes 8.0 7.4 6.2 6.0 Other charges 1.2 1.1 1.1 0.7
Page 15
AdjustedEBITDA 94.4 89.8 88.7 85.5 Revenues 201.1 193.6 192.8 187.7 Net incomeas % of revenues 25% 25% 24% 23% AdjustedEBITDA as % ofrevenues 47% 46% 46% 46% The table below reconciles Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues to net income reported in our unaudited Consolidated Statements of Operations for 1HFY27 and 1HFY26, which we believe is the most directly comparable GAAP measure. (US dollars in millions) 1HFY27 1HFY26 Net income, as reported onConsolidated Statements of Operations 98.5 74.3 Adjustments to reconcile to Adjusted EBITDA: Interest expense 0.5 0.5
Page 16
Investment income (6.3) (3.5) Income tax expense 35.3 23.1 Depreciation expense 3.1 2.9 Amortization of intangible assets 35.4 39.6 Stock-based compensation and related taxes 15.3 9.8 Other charges 2.3 8.6 Adjusted EBITDA 184.1 155.3 Revenues 394.7 348.6 Net income as % of revenues 25% 21% Adjusted EBITDA as % of revenues 47% 45% The Descartes Systems Group Inc. Condensed Consolidated Balance Sheets (US dollars in thousands; US GAAP; Unaudited)
Page 17
July 31, January 31, 2026 2026 ASSETS CURRENT ASSETS Cash 401,057 356,526 Accounts receivable (net) Trade 63,463 64,771 Other 25,698 26,453 Prepaid expenses and other 33,638 34,317 523,856 482,067 OTHER LONG-TERM ASSETS 27,839 27,346 PROPERTY AND EQUIPMENT, NET 14,049 13,507 RIGHT-OF-USE ASSETS 7,442 8,173 DEFERRED INCOME TAXES 6,129 6,720
Page 18
INTANGIBLE ASSETS, NET 336,959 332,069 GOODWILL 1,042,635 1,025,783 1,958,909 1,895,665 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable 16,428 20,852 Accrued liabilities 109,535 73,881 Lease obligations 3,329 3,471 Income taxes payable 6,419 7,133 Deferred revenue 123,874 117,887 259,585 223,224 LEASE OBLIGATIONS 4,213 4,892 DEFERRED REVENUE 751 1,175 INCOME TAXES PAYABLE 6,685 6,019 DEFERRED INCOME TAXES 41,085 41,443
Page 19
312,319 276,753 SHAREHOLDERS’ EQUITY Common shares – unlimited shares authorized; Shares issued and outstanding totaled85,548,553 at July 31, 2026 (January 31, 2026 – 86,022,028) 592,930 590,734 Additional paid-in capital 516,560 509,190 Accumulated other comprehensive loss(20,067) (7,987) Retained earnings 557,167 526,975 1,646,590 1,618,912 1,958,909 1,895,665 The Descartes Systems Group Inc. Condensed Consolidated Statements of Operations (US dollars in thousands, except per share and weighted average share amounts; US GAAP; Unaudited) Three Months Ended Six Months Ended
Page 20
July31, July 31, July31, July 31, 2026 2025 2026 2025 REVENUES 201,108 179,815 394,729 348,554 COST OF REVENUES (exclusive ofamortization presentedseparately below) 44,398 41,588 87,844 81,335 GROSSMARGIN 156,710 138,227 306,885 267,219 EXPENSES Sales and marketing 24,338 20,522 47,590 39,372 Research anddevelopment 28,286 26,752 55,684 51,821 General andadministrative 19,284 17,147 37,939 33,459 Other charges 1,259 5,119 2,334 8,568
Page 21
Amortization ofintangible assets 18,072 20,504 35,336 39,618 91,239 90,044 178,883 172,838 INCOME FROMOPERATIONS 65,471 48,183 128,002 94,381 INTEREST EXPENSE (240) (243) (476) (479) INVESTMENT INCOME 3,322 1,550 6,309 3,512 INCOME BEFORE INCOMETAXES 68,553 49,490 133,835 97,414 INCOME TAXEXPENSE Current 18,462 5,674 35,028 17,925 Deferred 62 5,796 302 5,225 18,524 11,470 35,330 23,150 NET INCOME 50,029 38,020 98,505 74,264 EARNINGS PER SHARE
Page 22
Basic 0.58 0.44 1.15 0.87 Diluted 0.57 0.43 1.13 0.85 WEIGHTEDAVERAGE SHARESOUTSTANDING (thousands) Basic 85,701 85,833 85,857 85,756 Diluted 87,060 87,590 87,216 87,588 The Descartes Systems Group Inc. Condensed Consolidated Statements of Cash Flows (US dollars in thousands; US GAAP; Unaudited) Three Months Ended Six Months Ended July 31, July 31, July 31, July 31, 2026 2025 2026 2025 OPERATINGACTIVITIES Net income 50,029 38,020 98,505 74,264
Page 23
Adjustmentsto reconcile net income tocash provided by operatingactivities: Depreciation 1,586 1,501 3,073 2,951 Amortizationof intangible assets 18,072 20,504 35,336 39,618 Stock-based compensation expense 7,772 4,453 14,769 8,819 Other non- cashoperating activities (56) 162 93 128 Deferred taxexpense 62 5,796 302 5,225 Changes inoperating assets and liabilities 3,797 (7,100) 4,328 (14,066) Cash provided byoperating activities 81,262 63,336 156,406 116,939 INVESTINGACTIVITIES
Page 24
Additions toproperty and equipment (1,990) (1,240) (4,570) (3,102) Acquisition of subsidiaries,net of cash acquired (29,451) (2,277) (59,174) (114,604) Cash used ininvesting activities (31,441) (3,517) (63,744) (117,706) FINANCING ACTIVITIES Payment ofdebt issuance costs - - - (38) Repurchase of common shares forcash, includingpurchasing costs (24,330) - (45,110) - Issuance ofcommon shares forcash, net of issuance costs 329 4,808 3,837 8,366 Payment of withholdingtaxes on net share settlements - - (4,538) (6,487)
Page 25
Payment ofcontingent consideration - (1,170) - (1,170) Cash provided by(used in) financing activities (24,001) 3,638 (45,811) 671 Effect of foreignexchange rate changes on cash (1,741) 764 (2,320) 4,590 Increase in cash 24,079 64,221 44,531 4,494 Cash, beginning of period 376,978 176,411 356,526 236,138 Cash, end of period 401,057 240,632 401,057 240,632