Enghouse Releases Third Quarter Results

Executive Summary

• Enghouse Systems Limited reported unaudited financial results for the third quarter ended July 31, 2025, showing a decline in revenue and profitability compared to the prior year period.
• The company reported net income of $17.2 million for the quarter, down from $20.6 million in Q3 2024, impacted by $3.0 million in special charges related to operational adjustments and acquisition restructuring.
• The Board of Directors approved a quarterly dividend of $0.30 per common share, payable on November 28, 2025, while maintaining a strong balance sheet with $271.6 million in cash and no external debt.

Key Details

• Revenue: Total revenue was $125.6 million for Q3 2025, a 3.8% decrease from $130.5 million in Q3 2024. For the nine-month period, revenue was $374.4 million, a 0.6% decrease from $376.8 million.
• Recurring Revenue: Recurring revenue (SaaS and maintenance) was $87.8 million in Q3 2025 (69.9% of total revenue), compared to $88.8 million in Q3 2024. Year-to-date recurring revenue was $261.9 million, up 1.4% from $258.4 million.
• Profitability Metrics:
  • Net Income: $17.2 million in Q3 2025 (vs. $20.6 million in Q3 2024); $52.5 million year-to-date (vs. $58.7 million).
  • Adjusted EBITDA: $32.3 million in Q3 2025 (25.7% margin), compared to $37.7 million (28.9% margin) in Q3 2024. Year-to-date Adjusted EBITDA was $93.9 million (25.1% margin) vs. $108.2 million (28.7% margin).
  • Basic Earnings Per Share: $0.31 in Q3 2025 (vs. $0.37 in Q3 2024).
• Special Charges: The company incurred approximately $3.0 million in special charges in Q3 2025 related to operational adjustments and acquisition restructuring, compared to $1.2 million in Q3 2024.
• Cash Flow: Net cash provided by operating activities was $27.1 million in Q3 2025 (vs. $40.3 million in Q3 2024). Year-to-date operating cash flow was $85.0 million (vs. $100.5 million). Net cash provided by operating activities, excluding changes in working capital and income taxes, was $30.9 million in Q3 2025.
• Balance Sheet: Cash, cash equivalents, and short-term investments totaled $271.6 million as of July 31, 2025. The company has no external debt.
• Segment Performance (Q3 2025):
  • Interactive Management Group (IMG) Revenue: $69.6 million (vs. $77.5 million in Q3 2024).
  • Asset Management Group (AMG) Revenue: $55.9 million (vs. $53.0 million in Q3 2024).
• Dividend: A quarterly dividend of $0.30 per common share was declared, payable November 28, 2025, to shareholders of record on November 14, 2025.
• Acquisitions: Net cash used in investing activities for the nine months ended July 31, 2025, was $34.6 million, primarily due to acquisitions of $33.4 million (net of cash acquired).

Notable Quotes

• "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."
• "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."