Descartes Systems Group Inc. reported fiscal 2026 third‑quarter results that set new company records, with revenue reaching $187.7 million—an 11 % year‑over‑year increase and a 4 % rise from the prior quarter. Operating income climbed to $56.6 million, up 24 % YoY and 17 % QoQ, while adjusted EBITDA hit $85.5 million, a 19 % YoY gain and 7 % QoQ growth, giving the company a 45.6 % margin, the highest in its history. Earnings per share were $0.50, beating the consensus estimate of $0.46 by $0.04, or 8.7 %.
The record revenue was driven by robust demand across Descartes’ core segments. Global Trade Intelligence and customs‑compliance services grew strongly, supported by the recent acquisition of Finale, Inc., which added e‑commerce logistics capabilities and broadened the company’s cloud‑based platform. Transportation‑management revenue also expanded, reflecting continued client investment in end‑to‑end supply‑chain visibility amid tariff volatility and regulatory changes. The mix shift toward higher‑margin services and the integration of Finale’s technology helped lift overall profitability.
Margin expansion was largely a result of disciplined cost control and operational leverage. Descartes maintained a high level of gross‑margin efficiency while scaling revenue, and the acquisition of Finale contributed additional operating leverage without proportionate cost increases. The company’s focus on AI‑driven automation further reduced manual processing costs, allowing it to preserve a 45.6 % adjusted EBITDA margin even as it added new revenue streams. The 3‑percentage‑point lift over the prior year’s margin underscores the effectiveness of its cost‑discipline program.
Management reaffirmed its outlook for the remainder of the fiscal year, setting a baseline adjusted EBITDA target of $62.5 million for Q4 FY2026. The guidance reflects confidence in sustained demand for trade‑intelligence solutions and the continued integration of Finale’s offerings. CFO Allan Brett will transition out after the fiscal year, with Edward Gardner slated to take the helm, signaling continuity in financial stewardship while the company pursues its growth strategy.
CEO Edward J. Ryan highlighted the quarter as “ahead of our plans,” noting that tariff volatility and heightened regulatory scrutiny on sanctioned and restricted parties are driving demand for Descartes’ compliance solutions. He also emphasized the “meaningful impact” of AI on service delivery and operational efficiency, reinforcing the company’s commitment to technology‑enabled growth.
The earnings beat and record margins reinforce Descartes’ competitive position in the logistics‑software market, where its Global Logistics Network connects a vast ecosystem of partners. The company’s ability to capitalize on global trade complexities, coupled with strategic acquisitions and AI investments, positions it for continued expansion in a market that increasingly values real‑time compliance and visibility. The results suggest that Descartes is executing its growth plan effectively while maintaining disciplined cost management, providing a solid foundation for future performance.
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