Highlights for the First Quarter ended
- Revenue increased 13.2% to
$120.5 million compared to revenue of$106.4 million . - Recurring revenue, which includes SaaS and maintenance services, grew 27.2% to
$84.6 million and now represents 70.2% of total revenue. - Results from operating activities improved to
$32.6 million from$29.9 million , while achieving a 28.8% EBITDA margin. Adjusted EBITDA was$34.7 million compared to$32.3 million . - Cash flows from operating activities, excluding changes in working capital, were
$35.6 million compared to$32 .6 million. - Net income was
$18.1 million compared to$17.0 million .
As the software markets continues its transitions towards SaaS offerings, we are generating an increasing proportion of recurring revenue streams within our overall revenue model, which now represents 70.2% of our total revenue in the first quarter of 2024.
Our operational expenditure has declined as a percentage of revenue, consistent with our objective of generating operational efficiencies despite the inflationary pressure on operating costs. This focus on efficiency is part of our broader objective of maintaining a lean operational model that supports our growth ambitions without compromising the bottom line. Despite these challenges, our cash position has increased in the quarter, providing the resources necessary to continue to pursue new acquisition opportunities that we believe will enhance our market position and offer long-term shareholder value.
A key advantage
Subsequent to quarter end, on
Quarterly dividends:
Today, the Board of Directors approved an increase in the Company's eligible quarterly dividend to
Financial Highlights
(unaudited, in thousands of Canadian dollars)
For the periods ended | Three months | ||||||||||||
2024 | 2023 | Var ($) | Var (%) | ||||||||||
Revenue | $ | 120,489 | $ | 106,435 | 14,054 | 13.2 | |||||||
Direct costs | 41,582 | 34,808 | 6,774 | 19.5 | |||||||||
Revenue, net of direct costs | $ | 78,907 | $ | 71,627 | 7,280 | 10.2 | |||||||
As a % of revenue | 65.5 % | 67.3 % | |||||||||||
Operating expenses | 46,180 | 41,710 | 4,470 | 10.7 | |||||||||
Special charges | 91 | 28 | 63 | 225.0 | |||||||||
Results from operating activities | $ | 32,636 | $ | 29,889 | 2,747 | 9.2 | |||||||
As a % of revenue | 27.1 % | 28.1 % | |||||||||||
Amortization of acquired software and customer relationships | (10,374) | (8,832) | (1,542) | (17.5) | |||||||||
Foreign exchange losses | (1,717) | (1,053) | (664) | (63.1) | |||||||||
Interest expense – lease obligations | (150) | (167) | 17 | 10.2 | |||||||||
Finance income | 2,361 | 976 | 1,385 | 141.9 | |||||||||
Finance expenses | - | (7) | 7 | 100.0 | |||||||||
Other expenses | (114) | (127) | 13 | 10.2 | |||||||||
Income before income taxes | $ | 22,642 | $ | 20,679 | 1,963 | 9.5 | |||||||
Provision for income taxes | 4,509 | 3,656 | 853 | 23.3 | |||||||||
Net income for the period | $ | 18,133 | $ | 17,023 | 1,110 | 6.5 | |||||||
Basic earnings per share | 0.33 | 0.31 | 0.02 | 6.5 | |||||||||
Diluted earnings per share | 0.33 | 0.31 | 0.02 | 6.5 | |||||||||
Operating cash flows | 19,899 | 29,262 | (9,363) | (32.0) | |||||||||
Operating cash flows excluding changes in working capital | 35,557 | 32,632 | 2,925 | 9.0 | |||||||||
Adjusted EBITDA | |||||||||||||
Results from operating activities | 32,636 | 29,889 | 2,747 | 9.2 | |||||||||
Depreciation | 494 | 626 | (132) | 21.1 | |||||||||
Depreciation of right-of-use assets | 1,506 | 1,736 | (230) | 13.2 | |||||||||
Special charges | 91 | 28 | 63 | (225.0) | |||||||||
Adjusted EBITDA | $ | 34,727 | $ | 32,279 | 2,448 | 7.6 | |||||||
Adjusted EBITDA margin | 28.8 % | 30.3 % | |||||||||||
Adjusted EBITDA per diluted share | $ | 0.63 | $ | 0.58 | 0.05 | 8.6 |
Condensed Consolidated Interim Statements of Financial Position | |||||
(in thousands of Canadian dollars) (unaudited) | As at | As at | |||
ASSETS | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 246,752 | $ | 239,532 | |
Short-term investments | 671 | 827 | |||
Accounts receivable | 121,391 | 93,383 | |||
Prepaid expenses and other assets | 16,941 | 15,515 | |||
Income taxes recoverable | - | 114 | |||
385,755 | 349,371 | ||||
Non-current assets: | |||||
Property and equipment | 3,128 | 3,273 | |||
Right-of-use assets | 10,686 | 12,242 | |||
Intangible assets | 96,693 | 109,659 | |||
| 276,902 | 280,241 | |||
Deferred income tax assets | 26,906 | 28,884 | |||
414,315 | 434,299 | ||||
$ | 800,070 | $ | 783,670 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
Current liabilities: | |||||
Accounts payable and accrued liabilities | $ | 64,862 | $ | 67,769 | |
Income taxes payable | 3,158 | - | |||
Dividends payable | 12,188 | 12,156 | |||
Provisions | 1,417 | 2,238 | |||
Deferred revenue | 127,916 | 109,019 | |||
Lease obligations | 5,548 | 6,322 | |||
215,089 | 197,504 | ||||
Non-current liabilities: | |||||
Income taxes payable | - | 1,333 | |||
Deferred income tax liabilities | 12,772 | 13,340 | |||
Deferred revenue | 7,167 | 8,170 | |||
Net employee defined benefit obligation | 1,878 | 1,912 | |||
Lease obligations | 5,318 | 6,080 | |||
27,135 | 30,835 | ||||
242,224 | 228,339 | ||||
Shareholders' equity | |||||
Share capital | 112,867 | 107,701 | |||
Contributed surplus | 9,825 | 10,404 | |||
Retained earnings | 432,342 | 426,397 | |||
Accumulated other comprehensive income | 2,812 | 10,829 | |||
557,846 | 555,331 | ||||
$ | 800,070 | $ | 783,670 |
Condensed Consolidated Interim Statements of Operations and Comprehensive Income | |||||
(in thousands of Canadian dollars, except per share amounts) | |||||
(unaudited) | Three months | ||||
Periods ended | 2024 | 2023 | |||
Revenue Software licenses | $ 16,975 | $ 20,735 | |||
SaaS and maintenance services | 84,587 | 66,503 | |||
Professional services | 15,945 | 16,891 | |||
Hardware | 2,982 | 2,306 | |||
120,489 | 106,435 | ||||
Direct costs | |||||
Software licenses | 674 | 870 | |||
Services | 39,531 | 32,425 | |||
Hardware | 1,377 | 1,513 | |||
41,582 | 34,808 | ||||
Revenue, net of direct costs | 78,907 | 71,627 | |||
Operating expenses | |||||
Selling, general and administrative | 22,869 | 20,798 | |||
Research and development | 21,311 | 18,550 | |||
Depreciation | 494 | 626 | |||
Depreciation of right-of-use assets | 1,506 | 1,736 | |||
Special charges | 91 | 28 | |||
46,271 | 41,738 | ||||
Results from operating activities | 32,636 | 29,889 | |||
Amortization of acquired software and customer relationships | (10,374) | (8,832) | |||
Foreign exchange losses | (1,717) | (1,053) | |||
Interest expense – lease obligations | (150) | (167) | |||
Finance income | 2,361 | 976 | |||
Finance expenses | - | (7) | |||
Other expenses | (114) | ( 127) | |||
Income before income taxes | 22,642 | 20,679 | |||
Provision for income taxes | 4,509 | 3,656 | |||
Net income for the period | $ 18,133 | $ 17,023 | |||
Items that may be subsequently reclassified to income: | |||||
Cumulative translation adjustment | (8,017) | 9,743 | |||
Other comprehensive (loss) income | (8,017) | 9,743 | |||
Comprehensive income | $ 10,116 | $ 26,766 | |||
Earnings per share | |||||
Basic | $ 0.33 | $ 0.31 | |||
Diluted | $ 0.33 | $ 0.31 |
Condensed Consolidated Interim Statements of Cash Flows | |||||
(in thousands of Canadian dollars) (unaudited) | Three months | ||||
Periods ended | 2024 | 2023 | |||
OPERATING ACTIVITIES | |||||
Net income for the period | $ 18,133 | $ 17,023 | |||
| |||||
Depreciation | 494 | 626 | |||
Depreciation of right-of-use assets | 1,506 | 1,736 | |||
Interest expense – lease obligations | 150 | 167 | |||
Amortization of acquired software and customer relationships | 10,374 | 8,832 | |||
Stock-based compensation expense | 277 | 458 | |||
Provision for income taxes | 4,509 | 3,656 | |||
Finance and other expenses | 114 | 134 | |||
35,557 | 32,632 | ||||
Changes in non-cash operating working capital | (13,140) | 2,002 | |||
Income taxes paid | (2,518) | (5,372) | |||
Net cash provided by operating activities | 19,899 | 29,262 | |||
INVESTING ACTIVITIES | |||||
Net purchase of property and equipment | (360) | (105) | |||
Recovery of purchase consideration for prior-year acquisitions | 171 | - | |||
Purchase of short-term investments | - | (69) | |||
Net cash used in investing activities | (189) | ( 174) | |||
FINANCING ACTIVITIES | |||||
Issuance of share capital | 4,310 | 604 | |||
Repayment of lease obligations | (1,602) | (1,810) | |||
Dividends paid | (12,156) | (10,221) | |||
Net cash used in financing activities | (9,448) | (11,427) | |||
Impact of foreign exchange on cash and cash equivalents | (3,042) | 5,036 | |||
Increase in cash and cash equivalents | 7,220 | 22,697 | |||
Cash and cash equivalents ─ beginning of period | 239,532 | 225,104 | |||
Cash and cash equivalents ─ end of period | $ 246,752 | $ 247,801 |
Segment Reporting Information
(in thousands of Canadian dollars)
Three months ended | 2024 | 2023 | |||||||||||
IMG | AMG | Total | IMG | AMG | Total | ||||||||
Revenue | $ | 76,137 | $ | 44,352 | $ | 120,489 | $ | 57,852 | $ | 48,583 | $ | 106,435 | |
Direct costs | (25,406) | (16,176) | (41,582) | (16,431) | (18,377) | (34,808) | |||||||
Revenue, net of direct costs | 50,731 | 28,176 | 78,907 | 41,421 | 30,206 | 71,627 | |||||||
Operating expenses excluding special charges | (21,425) | (11,697) | (33,122) | (19,250) | (11,321) | (30,571) | |||||||
Depreciation | (377) | (117) | (494) | (537) | (89) | (626) | |||||||
Depreciation of right-of-use assets | (936) | (570) | (1,506) | (1,100) | (636) | (1,736) | |||||||
Segment profit | $ | 27,993 | $ | 15,792 | $ | 43,785 | $ | 20,534 | $ | 18,160 | $ | 38,694 | |
Special charges | (91) | (28) | |||||||||||
Corporate and shared service expenses | (11,058) | (8,777) | |||||||||||
Results from operating activities | $ | 32,636 | $ | 29,889 | |||||||||
About
Conference Call and Webcast
A conference call to discuss the results will be held on
+1-289-514-5100 or North American Toll-Free 1-800-717-1738. Confirmation code: 74715. 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
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