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The Descartes Systems Group Q3 2026 earnings summary
Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.Q3 2026 earnings summary3 Dec, 2025
Executive summary
Achieved record quarterly revenue of $187.7 million in Q3FY26, up 11% year-over-year, with strong growth in services and recurring revenues, outperforming internal plans amid logistics market volatility and tariff uncertainty.
Net income rose 20% year-over-year to $43.9 million, and income from operations increased 24%, reflecting robust operational performance.
Adjusted EBITDA reached a record $85.5 million, up 19% year-over-year, with margin expanding to 46%.
Cash from operations hit a record $73.4 million, up 22% year-over-year; ended quarter with $279 million in cash and no debt.
Completed the acquisition of Finale Inventory, enhancing e-commerce capabilities and expanding cloud-based inventory management offerings.
Financial highlights
Services revenue grew 16% to $173.7 million, representing 93% of total revenue.
Organic services growth (FX neutral) was approximately 7% in Q3, up from 4% in Q1 and Q2.
Gross margin improved to 77% from 74% year-over-year, driven by reduced low-margin hardware sales.
Operating expenses rose 11%, mainly due to recent acquisitions, partially offset by cost restructuring.
Adjusted EBITDA for the first nine months increased 15% to $241 million; nine-month FY26 revenues totaled $536.2 million, up 11% year-over-year.
Net income for the nine-month period was $118.2 million, up from $106 million year-over-year.
Outlook and guidance
Baseline Q4 revenues estimated at $161 million, with baseline adjusted EBITDA calibration of $62.5 million (39% margin).
Target adjusted EBITDA margin remains at 40%-45%, with potential for upward adjustment.
Expect Q4 tax rate in the 24%-28% range.
Continue to target 10%-15% annual adjusted EBITDA growth, with a strong track record of exceeding this range.
Management expects continued growth in logistics solutions demand, with ongoing focus on margin expansion and cash generation.
AI monetization strategy and pricing impact
Organic growth drivers beyond market share gains?
Acquisition vs. buyback priority now?
New CFO's M&A strategy
NCIB impact on acquisition funding
GLN demand from market uncertainty
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Frequently asked questions
The Descartes Systems Group Inc is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses. The Descartes Systems Group Inc cloud-based services provide end-to end support for domestic and international transportation, fulfillment management and warehouse operations, customs and regulatory compliance, as well as shipment rating and reconciliation.
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