Q3 2026 Enghouse Systems Limited Earnings Call Transcript
Key Points
- Revenue improved sequentially to $117.6 million in Q3 2026 from $114.3 million in Q2 2026, driven by stronger software sales, favorable foreign exchange, and the timing of certain transactions.
- Recurring revenue remained stable at approximately 69.5% of total revenue, providing a strong foundation for the business.
- Adjusted EBITDA increased to $30.8 million in Q3 2026 from $26.5 million in Q2 2026, with EBITDA margin improving to 26.2% from 23.2% in Q2 2026.
- Operating expenses, excluding special charges, declined to $45.7 million from $49.9 million in the prior year, reflecting successful cost management initiatives.
- Enghouse Systems Ltd (EGHSF) generated $28.4 million of operating cash flow before changes in working capital and income taxes paid, and ended the quarter with $267.8 million in cash, cash equivalents, and short-term investments while carrying no external debt.
- The company returned capital to shareholders through $16.9 million of dividends and $7.5 million of share repurchases, and declared a quarterly dividend of $0.31 per common share.
- Segment profit in the Asset Management Group increased to approximately $18.5 million from $15.3 million in Q2 2026, and in the Interactive Management Group increased to approximately $21.5 million from $18.5 million in Q2 2026.
- Churn moderated during the quarter and renewal performance improved, with declines in Lifesize and Qumu reducing in magnitude compared to prior periods.
- Revenue for Q3 2026 was $117.6 million, down from $125.6 million in the prior year period, reflecting continued revenue pressure.
- The global business environment remains uncertain due to ongoing geopolitical tensions, evolving trade dynamics, and broader economic caution, which continues to impact customer spending.
- The company recorded a $4.6 million restructuring charge during the quarter, the most significant this fiscal year, with benefits expected to phase in over future quarters.
- Maintenance revenue remained below prior year levels, and Lifesize and Qumu continued to experience declines, though the magnitude has reduced.
- Monetizing AI investments remains difficult in Enghouse Systems Ltd (EGHSF)'s markets, with customer interest not yet translating into significant revenue uptake.
- The contact center market is challenging, with major competitors in financial difficulty keeping margins down and engaging in aggressive pricing to survive.
- No new acquisitions were completed in the quarter, and private market valuations remain at a premium to public market valuations, limiting M&A opportunities.
- The company expects mid-20s EBITDA margins to be more realistic in the current environment, rather than the high 20s, due to competitive pressures and market conditions.
Good morning, ladies and gentlemen, and welcome to the Enghouse Q3 2026 conference call. (Operator Instructions) This call is being recorded on Friday, September 11, 2026.
I would now like to turn the conference over to Stephen Sadler. Please go ahead.
Good morning, everybody. I am here today with Todd May, VP, Legal Counsel; Vinh Lien, VP, Finance and Accounting; and Rob Medved, Chief Financial Officer, is also on the call, but he is actually in Croatia. This will be Rob's last conference call for Enghouse as he moves to a new adventure.
Before we begin, I will have Todd read our forward disclaimer.
Certain statements made may be forward-looking. By their nature, such forward-looking statements are subject to various risks and uncertainties, including those in Enghouse's continuous disclosure filings, such as its AIF, which could cause the
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