CIBC has revised its price target for Enghouse Systems (EGHSF, Financial), bringing it down to C$25.50 from the previous C$30. Despite the adjustment, the firm maintains a Neutral stance on the stock. This update reflects CIBC's latest assessment of the company's market performance and future outlook. Investors are advised to stay informed on key performance indicators to make well-rounded decisions.
EGHSF Key Business Developments
Release Date: June 06, 2025
- Revenue: $124.8 million for the quarter, a decline of 0.8% year over year; $248.8 million year-to-date, an increase of 1%.
- Recurring Revenue: $86.2 million, representing 69.1% of total revenue, up from 67.5% last year.
- Adjusted EBITDA: $28.6 million with a margin of 22.9%, compared to $35.7 million and a 28.4% margin in Q2 2024.
- Net Income: $13.5 million or $0.24 per diluted share, compared to $20 million or $0.36 per diluted share last year.
- Net Cash Provided by Operating Activities: $25.5 million, excluding changes in working capital and income taxes paid.
- Cash and Cash Equivalents: $263.5 million, with no external debt.
- Dividends: $14.3 million returned to shareholders.
- Acquisitions: $26.8 million invested, including Margento and Trafi acquisitions.
- Quarterly Dividend: $0.30 per common share, payable on August 29, 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Enghouse Systems Ltd (EGHSF, Financial) reported a year-to-date revenue increase of 1% to $248.8 million, indicating growth despite a challenging economic environment.
- Recurring revenue, including SaaS and maintenance services, increased to $86.2 million, representing 69.1% of total revenue, up from 67.5% last year, highlighting a strategic focus on predictable long-term revenue streams.
- The company maintains a strong balance sheet with $263.5 million in cash, cash equivalents, and short-term investments, and operates with no external debt, providing financial flexibility.
- Enghouse Systems Ltd (EGHSF) returned $14.3 million to shareholders through dividends and invested $26.8 million in acquisitions, demonstrating a commitment to shareholder value and growth.
- The acquisition and integration of Margento and Trafi enhance the company's transportation portfolio, aligning with its broader mobility strategy and supporting long-term growth.
Negative Points
- Revenue for the quarter declined by 0.8% year over year, reflecting challenges in the current economic climate.
- Adjusted EBITDA decreased to $28.6 million with a margin of 22.9%, down from $35.7 million and a 28.4% margin in Q2 2024, indicating pressure on profitability.
- Net income for the quarter fell to $13.5 million or $0.24 per diluted share, compared to $20 million or $0.36 per diluted share last year, due to increased operating costs and special charges.
- Foreign exchange volatility negatively impacted both revenue and expenses, contributing to financial uncertainty.
- The transition from 4G to 5G is progressing slower than expected, and AI monetization remains challenging, affecting growth in certain business segments.
