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
Increase (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
[phone] or North American Toll-Free [phone]. Confirmation code: 05742. 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]