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) increase 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 [phone] or North American Toll-Free [phone]. Confirmation code: 61977. 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 Enghouse Systems Limited

For further information please contact: Sam Anidjar, Vice President, Corporate Development, [phone], [email protected]