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Enghouse Systems Ltd

Enghouse Releases Third Quarter Results

MARKHAM, ON , Sept. 4, 2025 /CNW/ - Enghouse Systems Limited(TSX: ENGH) announces third quarter (unaudited) financial results for the period ended July 31, 2025. All figures are denominated in Canadian dollars unless otherwise indicated.

Third Quarter Financial Highlights:

  • Revenue was $125.6 million as compared to $130.5 million in Q3 2024 and for the nine-month period was $374.4 million compared to  $376.8 million last year;
  • Recurring revenue, which includes SaaS and maintenance services, was $87.8 million compared to $88.8 million in Q3 2024, and represents 69.9% of total revenue. For the nine-month period, recurring revenue was $261.9 million compared to $258.4 million in the prior period, an increase of 1.4%, as we continue to prioritize this revenue stream;
  • Results from operating activities was $27.3 million compared to $34.3 million in Q3 2024 and decreased for the nine-month period to $83.3 million from $100.4 million in the comparable period;
  • Net income was $17.2 million compared to $20.6 million in Q3 2024 and $52.5 million year-to-date compared to $58.7 million last year;
  • Adjusted EBITDA was $32.3 million compared to $37.7 million in Q3 2024, while achieving a 25.7% margin. Year to date Adjusted EBITDA was $93.9 million compared to $108.2 million in the prior year;
  • Net cash provided by operating activities, excluding changes in working capital and income taxes paid, was $30.9 million compared to $37.4 million in Q3 2024 and $94.2 million year-to-date compared to $111.5 million in the comparable period. Cash, cash equivalents and short-term investments were $271.6 million as at July 31, 2025.

In the third quarter, despite ongoing macroeconomic uncertainty and a difficult market environment, Enghouse continues to deliver positive net income and cash flows provided by operating activities, supported by a large recurring revenue base, which accounted for 70% of total revenue.

During the quarter, Enghouse undertook strategic measures to align costs with revenues, including operational adjustments and acquisition restructuring efforts, resulting in special charges of approximately $3.0 million. These actions were taken to improve profitability given the current market conditions. Cost management measures are expected to continue to yield benefits in the future as they take full effect. The Company reported net income of $17.2 million after including these charges.

Enghouse maintains a strong balance sheet, closing the quarter with $271.6 million in cash, cash equivalents, and short-term investments, and no external debt. The Company remains well positioned to leverage these cash resources to take advantage of buying opportunities in this market that meet our acquisition criteria. Enghouse enters the final quarter of fiscal 2025 remaining focused on completing accretive acquisitions, maintaining profitability, generating positive cash flows provided by operating activities, and adapting to evolving market conditions to drive sustainable long-term growth.

Quarterly dividends:
Today, the Board of Directors approved an eligible quarterly dividend of $0.30 per common share, payable on November 28, 2025, to shareholders of record at the close of business on November 14, 2025.

Enghouse Systems Limited
Financial Highlights
 (unaudited, in thousands of Canadian dollars)

 

For the period ended July 31

Three months


Nine months


2025


2024

Var ($) 

Var (%)



2025


2024

Var ($) 

Var (%)

Revenue

$

125,577

$

130,501

(4,924)

(3.8)


$

374,396

$

376,803

(2,407)

(0.6)















Direct costs


45,409


45,836

(427)

(0.9)



135,857


130,619

5,238

4.0

Revenue, net of direct costs

$

80,168

$

84,665

(4,497)

(5.3)


$

238,539

$

246,184

(7,645)

(3.1)

As a % of revenue


63.8 %


64.9 %





63.7 %


65.3 %

















Operating expenses


49,905


49,120

785

1.6



150,707


144,331

6,376

4.4

Special charges


3,008


1,243

1,765

142.0



4,500


1,440

3,060

212.5

Results from operating activities

$

27,255

$

34,302

(7,047)

(20.5)


$

83,332

$

100,413

(17,081)

(17.0)

As a % of revenue


21.7 %


26.3 %





22.3 %


26.6 %

















Amortization of acquired software and customer relationships


(7,032)


(9,663)

2,631

27.2



(22,807)


(31,183)

8,376

26.9

Foreign exchange losses


(580)


(1,747)

1,167

66.8



(2,233)


(3,550)

1,317

37.1

Interest expense – lease obligations


(132)


(132)

-

0.0



(391)


(430)

39

9.1

Finance income


1,807


2,333

(526)

(22.5)



6,024


7,296

(1,272)

(17.4)

Finance expenses


(16)


(29)

13

44.8



(43)


(41)

( 2)

(4.9)

Other income


125


407

(282)

(69.3)



1,625


513

1,112

216.8

Income before income taxes

$

21,427

$

25,471

(4,044)

(15.9)


$

65,507

$

73,018

(7,511)

(10.3)

Provision for income taxes


4,254


4,891

(637)

(13.0)



12,969


14,331

(1,362)

(9.5)

Net Income for the period

$

17,173

$

20,580

(3,407)

(16.6)


$

52,538

$

58,687

(6,149)

(10.5)















Basic earnings per share


0.31


0.37

(0.06)

(16.2)



0.95


1.06

(0.11)

(10.4)

Diluted earnings per share


0.31


0.37

(0.06)

(16.2)



0.95


1.06

(0.11)

(10.4)















Net cash provided by operating activities


27,087


40,333

(13,246)

(32.8)



85,007


100,488

(15,481)

(15.4)

Net cash provided by operating activities excluding changes in working capital and income taxes paid  


30,894


37,363

(6,469)

(17.3)



94,178


111,533

(17,355)

(15.6)















Adjusted EBITDA














Results from operating activities


27,255


34,302

(7,047)

(20.5)



83,332


100,413

(17,081)

(17.0)















Depreciation


594


647

(53)

8.2



1,894


1,692

202

(11.9)

Depreciation of right-of-use assets


1,393


1,530

(137)

9.0



4,201


4,606

(405)

8.8

Special charges


3,008


1,243

1,765

(142.0)



4,500


1,440

3,060

(212.5)

Adjusted EBITDA

$

32,250

$

37,722

(5,472)

(14.5)


$

93,927

$

108,151

(14,224)

(13.2)















Adjusted EBITDA margin


25.7 %


28.9 %





25.1 %


28.7 %

















Adjusted EBITDA per diluted share

$

0.58

$

0.68

(0.10)

(14.7)


$

1.70

$

1.95

(0.25)

(12.8)

 

 

Condensed Consolidated Interim Statements of Financial Position

(in thousands of Canadian dollars)

(unaudited)


   As at July 31,
2025

As at October 31,
2024

ASSETS






Current assets:






   Cash and cash equivalents


$

271,481

$

274,240

   Short-term investments



101


487

   Accounts receivable



85,735


92,348

   Prepaid expenses and other assets



17,069


16,100




374,386


383,175

Non-current assets:






   Property and equipment



4,127


4,192

   Right-of-use assets



10,888


11,473

   Intangible assets



95,263


98,594

   Goodwill



336,566


309,831

   Deferred income tax assets



27,716


26,228




474,560


450,318



$

848,946

$

833,493







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






   Accounts payable and accrued liabilities


$

72,096

$

70,087

   Income tax payable



5,940


5,525

   Dividends payable



16,526


14,397

   Provisions



2,651


1,834

   Deferred revenue



115,752


114,080

   Lease obligations



5,243


5,344




218,208


211,267

Non-current liabilities:






   Deferred income tax liabilities



12,565


10,500

   Deferred revenue



7,962


8,094

   Net employee defined-benefit obligation



2,463


2,081

   Lease obligations



5,069


5,744




28,059


26,419




246,267


237,686

 

Shareholders' equity:






   Share capital



117,603


118,217

   Contributed surplus



10,739


9,764

   Retained earnings



444,943


446,748

   Accumulated other comprehensive income



29,394


21,078




602,679


595,807



$

848,946

$

833,493

 

 

Condensed Consolidated Interim Statements of Operations and Comprehensive Income

(in thousands of Canadian dollars, except per share amounts)



(unaudited)                                            


Three months

Nine months

Periods ended July 31


2025

2024

2025

2024







Revenue

     Software licenses


 

$  17,290

$  19,579

 

$  51,956

$  57,046

     SaaS and maintenance services


87,753

88,812

261,874

258,383

     Professional services


17,156

18,231

50,889

51,577

     Hardware


3,378

3,879

9,677

9,797



125,577

130,501

374,396

376,803

Direct costs






     Software licenses


640

1,689

2,079

3,104

     Services


43,410

41,696

129,338

122,178

     Hardware


1,359

2,451

4,440

5,337



45,409

45,836

135,857

130,619

Revenue, net of direct costs


80,168

84,665

238,539

246,184







Operating expenses






     Selling, general and administrative


23,752

23,980

72,368

71,661

     Research and development


24,166

22,963

72,244

66,372

     Depreciation


594

647

1,894

1,692

     Depreciation of right-of-use assets


1,393

1,530

4,201

4,606

     Special charges


3,008

1,243

4,500

1,440



52,913

50,363

155,207

145,771







Results from operating activities


27,255

34,302

83,332

100,413







Amortization of acquired software and customer relationships     


(7,032)

(9,663)

(22,807)

(31,183)

Foreign exchange losses


(580)

(1,747)

(2,233)

(3,550)

Interest expense – lease obligations


(132)

(132)

(391)

(430)

Finance income


1,807

2,333

6,024

7,296

Finance expenses


(16)

(29)

(43)

(41)

Other income


125

407

1,625

513

Income before income taxes


21,427

25,471

65,507

73,018







Provision for income taxes


4,254

4,891

12,969

14,331






Net income for the period


17,173

20,580

52,538

58,687

 

Item that may be subsequently reclassified to income:





Cumulative translation adjustment


1,928

5,929

8,316

7,367







Other comprehensive income


1,928

5,929

8,316

7,367







Comprehensive income


$  19,101

$    26,509

$  60,854

$  66,054

Earnings per share






Basic


$      0.31

$      0.37

$      0.95

$      1.06

Diluted


$      0.31

$      0.37

$      0.95

$      1.06

 

 

Condensed Consolidated Interim Statements of Cash Flows

(in thousands of Canadian dollars)

(unaudited)


 

Three months

 

Nine months

Periods ended July 31


2025

2024

2025

2024

 

OPERATING ACTIVITIES






Net income for the period


$    17,173

$    20,580

$    52,538

$    58,687


Adjustments for non-cash items











   Depreciation


594

647

1,894

1,692

   Depreciation of right-of-use assets


1,393

1,530

4,201

4,606

   Interest expense – lease obligations


132

132

391

430

   Amortization of acquired software and customer relationships 


7,032

9,663

22,807

31,183

   Stock-based compensation expense


425

298

960

1,076

   Provision for income taxes


4,254

4,891

12,969

14,331

   Finance expenses and other income


(109)

(378)

(1,582)

(472)



30,894

37,363

94,178

111,533







Changes in non-cash operating working capital


(700)

6,243

3,670

(246)

Income taxes paid


(3,107)

(3,273)

(12,841)

(10,799)

Net cash provided by operating activities


27,087

40,333

85,007

100,488







INVESTING ACTIVITIES






Net purchase of property and equipment


(372)

(683)

(1,179)

(1,461)

Acquisitions, net of cash acquired*


-

(30,854)

(33,399)

(43,448)

Recovery of purchase consideration for prior-year acquisition


-

-

-

171

Net cash used in investing activities


(372)

(31,537)

(34,578)

(44,738)







FINANCING ACTIVITIES






Issuance of share capital


-

1,412

-

6,095

Normal course issuer bid share repurchases


(1,579)

(1,759)

(7,529)

(2,906)

Repayment of lease obligations


(1,561)

(2,347)

(4,770)

(5,747)

Dividends paid


(16,547)

(14,398)

(45,284)

(38,742)

Net cash used in financing activities


(19,687)

(17,092)

(57,583)

(41,300)

 

Impact of foreign exchange on cash and cash equivalents


1,168

3,091

4,395

 

3,731







In crease (decrease) in cash and cash equivalents


8,196

(5,205)

(2,759)

18,181

Cash and cash equivalents - beginning of period


263,285

262,918

274,240

239,532

Cash and cash equivalents - end of period


$  271,481

$  257,713

$  271,481

$  257,713

*Acquisitions are net of cash acquired of $Nil and $9,287 for the three and nine months ended July 31, 2025, and $245 and $742 for the three and nine months ended July 31, 2024, respectively. 

Enghouse Systems Limited
Segment Reporting Information
 (in thousands of Canadian dollars)

Three months ended July 31


2025


2024

IMG

AMG

Total

IMG

AMG

Total

Revenue

$

69,625

$

55,952

$

125,577

$

77,522

$

52,979

$

130,501

Direct costs


(24,822)


(20,587)


(45,409)


(27,981)


(17,855)


(45,836)

Revenue, net of direct costs


44,803


35,365


80,168


49,541


35,124


84,665

Operating expenses excluding special charges  


(22,230)


(14,259)


(36,489)


(21,257)


(14,190)


(35,447)

Depreciation


(356)


(238)


(594)


(389)


(258)


(647)

Depreciation of right-of-use assets


(865)


(528)


(1,393)


(997)


(533)


(1,530)

Segment profit

$

21,352

$

20,340

$

41,692

$

26,898

$

20,143

$

47,041

Special charges






(3,008)






(1,243)

Corporate and shared service expenses






(11,429)






(11,496)

Results from operating activities





$

27,255





$

34,302















 

Nine months ended July 31


2025


2024

IMG

AMG

Total

IMG

AMG

Total

Revenue

$

216,964

$

157,432

$

374,396

$

234,189

$

142,614

$

376,803

Direct costs


(76,346)


(59,511)


(135,857)


(79,960)


(50,659)


(130,619)

Revenue, net of direct costs


140,618


97,921


238,539


154,229


91,955


246,184

Operating expenses excluding special charges


(68,833)


(41,194)


(110,027)


(66,166)


(37,637)


(103,803)

Depreciation


(1,151)


(743)


(1,894)


(1,158)


(534)


(1,692)

Depreciation of right-of-use assets


(2,701)


(1,500)


(4,201)


(2,930)


(1,676)


(4,606)

Segment profit

$

67,933

$

54,484

$

122,417

$

83,975

$

52,108

$

136,083

Special charges






(4,500)






(1,440)

Corporate and shared service expenses






(34,585)






(34,230)

Results from operating activities





$

83,332





$

100,413

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, September 5, 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: 05742. 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