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Enghouse Systems Ltd

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,
2025

As at October 31,
2024

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


Adjustments for non-cash items











   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) in crease 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. 

****

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