Q3 2024 The Descartes Systems Group Inc Earnings Call

Good afternoon, ladies and gentlemen, and welcome to the Descartes just didn't group's quarterly results conference call. At this time all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time. During this call you had acquired the system.

Speaker 1: Good afternoon ladies and gentlemen and welcome to the Descartes System Group's Quarters Leads results conference call. At this time, all lines are now listened only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, December 5, 2023. I would now like to turn the conference over to Scott Pagan. Please go ahead.

Please press Star zero for operator. This call is being recorded on Tuesday December five 2000, and particularly I would now like to turn the conference over to Scott Pagan. Please go ahead.

Thank you and good afternoon, everyone. Joining me remotely on the call today are Ed Ryan CEO and Allan Brett CFO Trust that everyone has received a copy of our financial results press release that was issued earlier.

Speaker 2: Thank you. Good afternoon, everyone. Joining me remotely on the call today are Ed Ryan, the CEO , and Alan Brett, CFO . I trust that everyone has received a copy of our financial results press release that was issued earlier.

Speaker 2: Personally, today's call other than historical performance includes statements of forward looking information within the meaning of applicable securities laws. And these statements are made under the State Harvard provisions of those laws.

Portions of today's call other than historical performance include statements of forward looking information within the meaning of applicable securities laws and these statements are made under the safe Harbor provisions of those laws.

Speaker 2: These forward-looking statements include statements related to our assessment of the current and future impact of geopolitical and economic uncertainty on our business and financial condition, Descartes operating performance, financial results and condition, Descartes gross margins and any growth in those gross margins, cash flow and use of cash, business outlook, baseline revenues, baseline operating expenses and baseline calibration.

These forward looking statements include statements related to our assessment of the current and future impact of geopolitical and economic uncertainty on our business and financial condition.

<unk> operating performance financial results and condition.

<unk> gross margins on any growth in those gross margins cash flow and use of cash business outlook baseline revenues baseline operating expenses and baseline calibration.

Speaker 2: anticipated potential revenue losses in dings, anticipated recognition and expensing of specific revenues and expenses, potential acquisitions and acquisition strategy, cost reduction and the integration initiatives, and other matters that may constitute full looking statements.

Anticipated and potential revenue losses and gains.

Anticipated recognition and expensing of specific revenues and expenses potential acquisitions and acquisition strategy cost reduction and integration initiatives and other matters that may constitute forward looking statements.

Speaker 2: These forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, performance, or achievements of Descartes to differ materially from the anticipated results, performance, or achievements implied by such forward-looking statements.

These forward looking statements involve known and unknown risks uncertainties assumptions and other factors that may cause the actual results performance or achievements of descartes to differ materially from the anticipated results performance or achievements implied by such forward looking statements.

These factors are outlined in the press release and in the section entitled certain factors that may affect future results in documents filed and furnished with the Securities and Exchange Commission. The Interior Securities Commission and other securities commissions across Canada, including our management's discussion and analysis filed today.

Speaker 2: These factors are outlined in the press release and in the section entitled, certain factors that may affect future results and documents filed and furnished with the Securities and Exchange Commission. The Ontario Securities Commission and other Securities Commissions across Canada, including our management's discussion and analysis file today.

We provide forward looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future.

Speaker 2: We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future.

You are cautioned that such information may not be appropriate for other purposes.

Speaker 2: you're cautioned that such information may not be appropriate for other purposes.

Speaker 2: We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances in which any such statement is based. Except is required by law and with that, let me turn the call over to

We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward looking statements to reflect any change in our expectations or any change in events conditions assumptions or circumstances on which any such statement is based.

As required by law and with that let me turn the call over to Ed.

Hey, Thanks, Scott and welcome everyone to the call, we're coming off a great third quarter with record financial results good organic growth and strong operating margins. We're excited to grow over those with you and give you some perspective about the business environment. We see right now the first let me give you a roadmap for the call.

Speaker 3: Hey, thanks, Scott, and welcome everyone to the call. We're coming off a great third quarter with record financial results, good organic growth, and strong operating margins. We're excited to go over those with you and give you some perspective about the business environment we see right now. First, let me give you a roadmap.

Speaker 3: Start by hitting some highlights of last quarter and some aspects of how our business performed. All that handed over to Alan, who will go over our Q3 financial results and more to Pail. I'll then come back to provide an update on how we see the current business environment and how our business is calibrated as we enter Q4.

I'll start by hitting some highlights of last quarter and some aspects of how our business performed I'll, let hand, it over to Alan who will go over our Q3 financial results in more detail.

Then come back and provide an update on how we see the current business environment and how our business is calibrated as we enter Q4.

Speaker 3: And finally, we'll open it up to the operator to coordinate the Q&A portion of the call.

Finally, we'll open it up to the operator to coordinate the Q&A portion of the call.

So let's start with the quarter that ended on October 31 <unk>.

Speaker 3: So let's start with the quarters that ended on October 31st. Key metrics we monitor include revenue, profits, cash flow from operations, operating margins, and returns on our investment.

Key metrics. We monitor include revenue profits cash flow from operations operating margins and returns on our investments for.

Speaker 3: For this past quarter, we again have outstanding performance in each of those areas. Total revenues were up 19% from a year ago, the service revenues up 18%. Adjusted EBITDA was up 17% from a year ago. Adjusted EBITDA margin was at 44%. Back up to the levels before we bought Grand Cloud. And we generated $56 million in cash and operations representing 86% of adjusted EBITDA.

For this past quarter, we again had outstanding performance in each of those areas total revenues were up 19% from a year ago with service revenues up 18% adjusted EBITA was up 17% from a year ago. Adjusted EBITDA margin was at 44% back up to the levels before we bought Grand cloud and.

And we generated $56 million in cash from operations, representing 86% of adjusted EBITDA.

Speaker 3: At the end of the quarter, we had almost $280 million in cash, and we were debt-free with an under-armed $350 million line of credit. We remain well-capitalized, cash-during and reigning, cash-generating. We have strong organic growth, and remain ready to continue to invest in our business.

At the end of the quarter, we had almost $280 million in cash and we were debt free with an undrawn $350 million line of credit.

We remain well capitalized cash generating cash generating we have strong organic growth and remain ready to continue to invest in our business.

Speaker 3: We had a good quarter of organic growth in our course services revenues. Many of the drivers are similar to past periods. The biggest growth areas were in real time visibility, global trade intelligence, and Rodion scheduling solutions.

We had a good quarter of organic growth in our core services revenues. Many of the drivers are similar to past periods.

Biggest growth areas, where in real time visibility global trade intelligence and routing and scheduling solutions. So let me touch on each of those here for a minute.

Speaker 3: So let me touch on each of those here for a minute.

Speaker 3: First is real time visibility. When you're moving goods on other people's assets, their ships, planes, and trucks, it's a challenge to know where your goods are. This is even more difficult if you're not the one who's arranged the shipments. If instead you book through an intermediary like the broker freight forwarder or third party logistics provider.

First as real time visibility when you're moving goods on other people's assets the ships planes and trucks, it's a challenge to know where your goods are.

This is even more difficult if you're not the one who has a range of the shipments if instead you booked through an intermediary like a broker freight forwarder or third party logistics provider.

Speaker 3: To get this visibility, you need a network, the sources information from all these assets and parties, and present it in a way that makes business sense.

To get this visibility we need a network and sources of information from all of these assets and parties and presented in a way that makes business sense.

Speaker 3: Knowing the location of a shipment and when it's going to arrive is critical to serving your customers and running your business.

Knowing the location of a shipment and when it's going to arrive as critical to serving your customers and you're running your business.

Our visibility and transportation management solutions, which include macro point provide critical help to customers.

Speaker 3: Our visibility and transportation management solutions, which include macro point, provide critical help to customers.

Speaker 3: We're running more time visibility deals and seeing strong demand from our customers. And I think there's three key reasons for this.

Winning more time visibility deals <unk> seen strong demand from our customers and I think there's three key reasons for this.

Speaker 3: The first reason is our solutions are better at tracking loads. Simply put, we track a greater percentage of loads than our competitors can. Customers pay us based on the number of loads that we track. So we're motivated to have as many carriers and intermediaries as possible to source location information.

The first reason is our solutions are better at tracking loans simply put we track a greater percentage of loads than our competitors can customers pay us based on the number of loads that we track. So we're motivated to have as many carriers and intermediaries as possible 'cause source location information from.

Speaker 3: If they're not already connected, we've got self-connected tools that help our customers get even more location coverage across their network of carriers. We also have customer success personnel who help expand the network in more complex cases. The outcome has been a greater percentage of loads tracked, better data, happier customers, and strong growth in our business.

If they're not already connected guest self connect tools that help our customers get even more location coverage across their network of carriers. We also have customer success personnel, who help expand the network and more complex cases, the outcome has been a greater percentage of loads track better data happier customers and strong growth in our business.

Speaker 3: Visibility is embedded, the second reason is visibility is embedded in many dead carts to wish.

Visibility is embedded the second reason is visibility of embedded in many Descartes solutions.

Speaker 3: Some customers come to us just for visibility. But visibility is also embedded into many of our direct heart solutions. Our customers can make transportation management decisions including planning, who they tend to, consolidations and otherwise, and ensure they have visibility while those shipments are executed. We believe we offer a more comprehensive solution than our competitors in this regard.

Some customers come to us just for visibility the visibility is also embedded into many of our debit card solutions, our customers can make transportation management decisions, including planning with a tender to consolidations and otherwise and ensure they have visibility while those shipments are executed well.

Believe we offer a more comprehensive solution than our competitors in this regard.

The third reason is we are a reliable stable and growing partner our customers take a lot of comfort from working with Descartes has a larger public company with a long track record of financial stability also our customers value our linky experience operating secure cloud services across the globe.

Speaker 3: The third reason is we're a reliable, stable, and growing partner. Our customers take a lot of comfort from working with Descartes as a larger public company with a long track record of financial stability. Also, our customers value our lengthy experience operating secure cloud services across the globe. This makes us a service provider of choice in the real-time visibility market.

Makes us a server service provider of choice in the real time visibility market.

Okay.

Speaker 3: The second area where we're seeing strong growth is in global trade intelligence solutions. There's a lot of geopolitical conflict in the world right now. When that happens, it has an impact on supply chain and logistics. Goods move on new routes away from conflict areas, conflict areas. Sanctions are put in place for stripping who you do business with and what types of goods can be shipped. The duties and tariffs are adjusted to incentivize certain trading relationships.

The second area, where we're seeing strong growth in global trade intelligence solutions, there's a lot of geopolitical conflict in the world right now when that happens it has an impact on supply chain and logistics goods move on new Ralph away from conflict areas conflict areas sanctions are put in place restricting who you do business with and what types of goods can.

And be shipped the duties and tariffs are adjusted to incentivize certain trading relationships.

Speaker 3: We've continued to see strong demand from our customers for help with these challenges. Our solutions help them in three principal areas. The first is competitive intelligence. Our data-mind solutions provide information on trade flows, historical classifications of goods, and other logistics and supply chain intelligence. This information can be used to help make decisions about your own supply chain, but also to see how competitive you are with other companies' supply chain.

We've continued to see strong demand from our customers for help with these challenges our solutions help them in three principal areas first is competitive intelligence or data mining solutions provide information on trade flows historical classifications of goods and other logistics and supply chain intelligence. This information can be used to help make decisions about your own <unk>.

Apply chain, but also to see how competitive you are with other company's supply chains.

Speaker 3: Second area is tariff and duty data to make intelligence shipping decisions. We provide up to date data about tariff and duty rates and rules around the world, which can be used by leading global trade management systems to help want international supply.

Second area is tariff and duty data to make intelligent decisions.

We provide up to date data about tariff and duty rates and rules around the world, which can be used by leading global trade management systems to help them on international supply chains.

Speaker 3: And the third area is compliance. These solutions help our customers make sure they're not shipping things to people they should not be shipping them to. And this may be too specific people, to specific companies, to specific geographies, or in some cases, specific goods being shipped.

The third area is compliance.

Solutions help our customers make sure they're not shipping things to people that should not be shipping them too and this may be too specific people to specific companies to specific specific geographies or in some cases specific goods being shipped.

And the final area, we're seeing high growth at the moment that I outlined at the beginning is in our routing and scheduling solutions.

Speaker 3: And the final area we're seeing, high growth at the moment that outline beginning is in our routing and scheduling solutions.

Speaker 3: These solutions help you manage your own fleet of vehicles rather than hiring space on other people's vehicles. We believe we have the premier riding and scheduling solutions in the market. Our customers have faced pressure to use their vehicle efficiently, whether it's due to cost pressures, limited labor, or environmental concerns, so we've seen continued good demand.

Solutions help you manage your own fleet of vehicles, rather than hiring space on other People's vehicles. We believe we have the premier routing and scheduling solutions in the market our customers face pressure to use their vehicles efficiently whether its due to cost pressures limited labor or environmental concerns. So we've seen continued good demand.

Also our customers recognize that the delivery experience is a key part of the consumers' purchase experience. So they are very interested in being able to provide delivery recipients with time definite delivery windows and Uber like delivery visibility experience and the final miles.

Speaker 3: Also our customers recognize that the delivery experience is a key part of the consumers purchase experience.

Speaker 3: So they're very interested in being able to provide delivery recipients with time-definite delivery windows and an Uber-like delivery visibility experience in the final mile.

Our innovations in this area continue to drive customers with complex delivery challenges to us for our solutions.

Speaker 3: Our innovations in this area continue to drive customers with complex delivery challenges to us for our solutions.

We were able to show good organic growth in the quarter, even with some broader macro economic challenges in the supply chain and logistics market as we went into the quarter. The market was bracing for reduced transportation volumes in the quarter, we did see lower volumes, but not as bad as may have been initially expected our supply chain messaging and customs filing businesses.

Speaker 3: We were able to show good or bad growth in the quarter, even with some broader macro-acmonomic challenges in the supply chain and logistics market. As we went into the quarter, the market was bracing for reduced transportation value.

Speaker 3: In the quarter, we did see lower volumes, but not as bad as may have been initially expected.

Speaker 3: Our supply chain messaging and customs filing businesses saw something impact with lower transaction volumes, but not inconsistent with our plans. Overall, our business is designed to growth with fluctuations in transportation volumes, and the superior performance of the parts of our business that are less volume sensitive, combined with the addition of new customers, continue to drive our organic growth.

Saw some impact with lower transaction volumes, but not inconsistent with our plans overall, our businesses to sign designed to growth with fluctuations in transportation volumes and the superior performance of the parts of our business that are less volume sensitive combined with the addition of new customers continued to drive our organic growth.

Our organic growth was complemented by the contribution of recently completed acquisitions several of the actions acquisitions are performing better than we originally planned for resulting in more earn out being accrued in the quarter Alan will get into that in more detail in his section, but let me touch on the two most recent acquisitions.

Speaker 3: Our organic growth was complemented by the contribution of recently completed acquisitions. Several of the acquisitions are performing better than we originally planned for, resulting in more earn-out being accrued in the quarter. Alan will get into that and more to talent his section, but let me touch on the two most recent acquisitions.

Speaker 3: The first is Grand Club. We've got about eight months experience with Grand Clubs, Safety and Compliance Solution.

First as Grand Club, we've got about eight months experience with Brown clubs safety and compliance solutions around cloud helps us identify safety incidents based by drivers and provides a responsive and targeted video training on the challenges that driver space. They also help companies manage delivery obligations as they have.

Speaker 3: Ground Cloud helps us identify safety incidents faced by drivers and provides responsive and targeted video training on the challenges that drivers face. They also help companies manage delivery obligations as they have.

Speaker 3: as subcontractors to other delivery brands such as FedEx.

Subcontractors to other delivery brands such as Fedex.

Speaker 3: When we first combined with ground cloud, we indicated we anticipated some impact on our overall adjusted EBITDA margin, which we did in fact see in Q1 and Q2. We've made good progress on integration and our aggregate adjusted EBITDA margin is back up to 44% for Q3.

When we first combined with growing cloud, we indicated we anticipated some impact on our overall adjusted EBITDA margin, which we did in fact see in Q1 and Q2 we've.

We've made good progress on integration and our aggregate adjusted EBITDA margin is back up to 44% for Q3.

Speaker 3: We're also seeing good opportunity for cross-cell of the safety solutions into our existing routing customer base. And we're monitoring the impact of FedEx and increasing the number of shipments it moves through the independent contractor network. As that may increase demand from customers looking for to help FedEx.

We're also seeing good opportunity for cross sell of the safety solutions into our existing rounding customer base and we're monitoring the impact of Fedex is increasing the number of shipments that moves through the independent contractor network as that may increase demand from customers looking for to help Fedex.

The second acquisition was locals I spoke to this a bit earlier as local helps with the Uber like delivery experience for the final mile. If you're receiving a delivery you can track to vehicle in real time on a Mac as the goods arrive locals has been immediately incorporate it into our routing solutions and we saw good demand for combined.

Speaker 3: The second acquisition was locals. I spoke to this a bit earlier as locals helps with the Uber-like delivery experience for the final mile. If you're receiving a delivery, you can track the vehicle in real time on a map as the goods arrive. The locals has been immediately incorporated into our routing solutions, and we saw good demand for combined local's Descartes solutions. We're very happy with the technical capabilities and initial performance, and hope to be able to share more on progress in the upcoming quarter.

Locals Descartes solutions, we're very happy with the technical capabilities and initial performance and hope to be able to share more on progress in the upcoming quarters.

With that let me just summarize as I hand, it over to Alan to give the full financial deals in the quarter.

Speaker 3: With that, let me just summarize the handed over to Alan to give the full financial deals in the quarter.

Details of the quarter, we had record financial results the business performed well and we believe that's a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with almost $280 million in cash $350 million in available credit.

Speaker 3: We had record financial results. The business performed well, and we believe that's a good reflection of the value that our customers continue to get from our solutions. And the hard work that our team continues to put in for our customers. We ended the quarter with almost $280 million in cash, $350 million in available credit, and a market opportunity where we can continue to grow the business for our customers both organically and through acquisition.

And our market opportunity, where we can continue to grow the business for our customers both organically and through acquisition.

We remain focused on profitable growth. So that we can continue to ensure that our customers have a secure stable and growing technology partner that can help them with their challenge is well into the future.

Speaker 3: We remain focused on profitable growth so that we can continue to ensure that our customers have a secure, stable and growing technology partner that can help them with their challenges well into the future.

Many thanks to all Descartes team members for everything they've done to contribute to a great quarter and continuing to have our business in an enviable position for future success.

Speaker 3: Many thanks to all the CART team members for everything they've done to contribute to a great quarter and continue to have our business in an enviable position for future success.

Speaker 3: With that, I'll turn the call over to Alan to go through our Q3 financial results in more detail. Alan.

With that I'll turn the call over to Alan to go through our Q3 financial results in more detail.

Hey, Thanks, Ed as indicated I'm going to take you through our financial highlights for our third quarter, which ended on October 31.

Speaker 2: Hey, thanks Ed. As indicated, I'm gonna take you through our financial highlights for our third quarter, which ended on October 31st.

Speaker 2: We are pleased to report record quarterly revenue of 144.7 million this quarter, an increase of 19% from revenue of 121.5 million in Q3 last year.

We are pleased to report record quarterly revenue of $144 7 million this quarter, an increase of 19% from revenue of a $121 5 million in Q3 last year.

Speaker 2: While revenue from acquisitions completed in the past 12 months contributed nicely to this growth, similar to the past several quarters, our growth in revenue from new and existing customers from our existing solutions was the mean driver and growth again this quarter when compared to last year.

While revenue from acquisitions completed in the past 12 months contributed nicely to this growth similar to the past several quarters our growth in revenue from new and existing customers from our existing solutions was the main driver in growth again, this quarter when compared to last year.

Looking at our revenue details further our revenue mix in the quarter continued to be very strong with services revenue, increasing 18% to $134 million compared to $110 1 million in the same quarter last year, representing approximately 90% of total revenues in the third quarter.

Speaker 2: Looking at our revenue details further, our revenue mix in the quarter continue to be very strong with services revenue increasing 18% to 130.4 million compared to 110.1 million in the same quarter last year, representing approximately 90% of total revenues in the third quarter.

Speaker 2: Removing the impact of both the recent acquisitions as well as the impacts from foreign exchange on a light for light basis, we would estimate that our growth in services revenue from new existing customers would have been just over 9% this quarter would compare to the same quarter last year and fairly consistent with the first half this year.

Removing the impact of both the recent acquisitions as well as the impacts from foreign exchange on a like for like basis, we would estimate that our growth in services revenue from new and existing customers would've been just over 9% this quarter when compared to the same quarter last year and fairly consistent with the first half this year.

License revenue came in at $1 5 million or 1% of revenue in the quarter up slightly from last year, while professional services and other revenue came in at $12 8 million up 24% to 9% of total revenue compared to $10 3 million or 8% of total revenue in the third quarter last year as both prefer.

Speaker 2: License revenue came in at 1.5 million or 1% of revenue in the quarter, up slightly from last year, while professional services and other revenue came in at 12.8 million, up 24% to 9% of total revenue, compared to 10.3 million or 8% of total revenue in the third quarter last year, as both professional service hours and hardware revenues were higher this quarter.

<unk> service hours and hardware revenues were higher this quarter.

Speaker 2: For the nine months this year, revenue came in at 425 million, an increase of 18% from revenue of 361 million in the first nine months last.

For the nine months. This year revenue came in at $425 million, an increase of 18% from revenue of $361 million in the first nine months last year.

Gross margin came in at 76% of revenue for the third quarter down slightly from gross margin of 77% in the third quarter last year, but very consistent with the gross margins we've experienced since the completion of the ground cloud acquisition earlier this year.

Speaker 2: Gross margin came in at 76% of revenue for the third quarter, down slightly from gross margin of 77% in a third quarter last year. But very consistent with the gross margins we've experienced since the completion of the ground cloud acquisition earlier this year.

Operating expenses increased by approximately 19, 5% in the third quarter over the same period last year and this was heavily related to the cost impact from recent acquisitions, primarily the ground cloud business, but also operating costs increased from some additional investments we made in labor and non related non labor costs as we manage the organic growth.

Speaker 2: Operating expenses increased by approximately 19.5% in the third quarter over the same period last year and this was heavily related to the cost impact from recent acquisitions primarily the ground cloud business but also operating costs increased from some additional investments we made in labor and non labor costs as we manage the organic growth that we continue to see in our business

We continue to see in our business.

Speaker 2: So as a result of both revenue growth and solid cost control, balance with target investments in a business to manage growth. We continue to see strong adjusted EBITDA growth of 16.5% to a record 63.5 million or 43.9% of revenue, up from 54.5 million or 44.9% of revenue in the- 2.03 million or 20 million or 75.4 billion or 23.2 million or 42.83 billion. 47.6 millionS?? asmamoodanabedany. Camerader Reg currents

So as a result of both revenue growth and solid cost control balanced with targeted investments in our business to manage growth. We continued to see strong adjusted EBITDA growth of 16, 5% to a record $63 5 million or 43, 9% of revenue.

Up from $54 5 million or <unk> 44, 9% of revenue.

In the third quarter last year.

We should mention as a reminder, that while adjusted EBITDA margins are down slightly from Q3 last year to the dilutive impact of recent acquisitions we.

Speaker 2: We should mention, as a reminder, that while adjusted EBITDA margins are down slightly from Q3 last year to the other, that had been packed of recent acquisitions, we did see a sharp increase in our adjusted EBITDA ratio in Q3 over Q2 of this year, increasing from 42.3% of revenue in Q2 to 43.9% of revenue in Q3. This increases the direct result of the continued operating leverage from organic growth, as well as a steady improvement in the margins from our recent acquisition.

We did see a sharp increase in our adjusted EBITDA ratio in Q3 over Q2 of this year, increasing from 42, 3% of revenue in Q2 to 43, 9% of revenue in Q3.

This increase is a direct result of the continued operating leverage from organic growth as well as a steady improvement in the margins from our recent acquisitions.

Speaker 2: For the first three quarters of the year, the adjusted EBITDA has increased 14% to 182 million from 160 million in the same nine month period last year.

For the first three quarters of the year adjusted EBITDA has increased 14% to $182 million from $160 million in the same nine month period last year.

Speaker 2: Looking at the other gap while Ion items on our in-con statement this quarter, other charges increased to 9.7 million, up from only 200,000 in Q3 last year. And this increases the result of two unique items.

Looking at the other gap line items on our income statement. This quarter other charges increased to $9 7 million up from only 200000 in Q3 last year and this increase was a result of two unique items.

Speaker 2: First, we approved an additional 7.8 million in anticipated earn out payments related to recent acquisitions as these businesses have performed better than our original expectations and therefore better than the estimates that were made at the time of the acquisition.

We accrued an additional $7 8 million in anticipated earn out payments related to recent acquisitions as these businesses have performed better than our original expectations and therefore better than the estimates that were made at the time of the acquisitions.

In addition, as part of our ongoing efforts to maintain an effective cost structure. We initiated a restructuring plan early in Q3 at a point of heightened macro uncertainty the restructuring involve the reduction of just under 2% of our labor force.

Speaker 2: In addition, as part of our ongoing efforts to maintain an effective cost structure, we initiated the Restructuring Plan early in Q3 at a point of heightened macro uncertainty. The restructuring involved a reduction of just under 2% of our labor force.

Speaker 2: and the closing in whole or in part of four of our offices as we continue to adopt a flexible work model for our employees and realize that we had certain facilities that were not going to be actively used by our employees going forward.

And the closing in whole or in part of four of our offices as we continue to adopt a flexible work model for our employees and realized that we had certain facilities that were not going to be actively used by our employees going forward.

Speaker 2: We would estimate that the cost savings from these completed restructuring efforts would be in the area of 4 million annually, and the resulting charge to P&L and third quarter was approximately 1 million.

We would estimate that the cost savings from these completed restructuring efforts would be in the area of $4 million annually.

And the resulting charged to P&L in the third quarter was approximately $1 million.

Speaker 2: As a result of the increased profits from the growth in the business, offset by this increase in other charges. From a gap earnings perspective, net income came in at 26.6 million or 31 cents per diluted common share in the third quarter. Very consistent with net income of 26.5 million or 31 cents per diluted common share in the third quarter last year.

As a result of the increased profits from the growth in the business offset by this increase in other charges from a GAAP earnings perspective, net income came in at $26 6 million or <unk> 31 per diluted common share in the third quarter very consistent with net income of 32.

$26 5 million or <unk> 31 cents per diluted common share in the third quarter last year.

Speaker 2: We should also note that the income tax expense for the third quarter came in at 8.2 million or 23.5% of free tax income, which is slightly lower than our blended statutory tax rate of 26.5. Mainly as a result of recognizing certain unrecorded tax benefits from past periods.

We should also note that the that the income tax expense for the third quarter came in at $8 2 million or 23, 5% of pre tax income, which is slightly lower than our blended statutory tax rate of $26 five mainly as a result of recognizing certain unrecorded tax benefits from past periods.

Speaker 2: Net income for the nine month period year to date was 84.1 million or 97 cents put diluted comment share

Net income for the nine month period year to date was $84 1 million or <unk> 97 per diluted common share.

Speaker 2: compared to 72.5 million or 82 cents per diluted comments year in the first nine months last year. Again, with the higher offering profits from our growing business being partially offset with the higher amount of other charges from the Irranoid Adjustments and the FY24 Restructuring.

<unk> to $72 5 million or <unk> 82 per diluted common share in the first nine months last year again with the higher operating profits from our growing business being partially offset with the higher amount of other charges from the earn out adjustments and the FY 'twenty for a restructuring plan.

With these solid operating results strong AR collections.

Speaker 2: With these solid operating results, strong AR collections and offset partially by the higher cash tax payments we incurred. Cash flow generated from operations came in at 56.1 million or 88% of adjusted EBITDA in the third quarter, an increase of 10% compared to 50.9 million of cash flow from operations in the third quarter last year.

And offset partially by the higher cash tax payments, we incurred cash flow generated from operations came in at $56 1 million or 88% of adjusted EBITDA in the third quarter, an increase of 10 10.

10% compared to $59 million of.

Cash flow from operations in the third quarter last year.

Speaker 2: For the nine months year to date, offering cash flow has been 157 million or 86% of adjusted EBITDA, up 11%. From 142 million in the same night.

For the nine months year to date operating cash flow has been 101.

$57 million or <unk>, 86% of adjusted EBITDA up 11% from $142 million for the same nine months period last year and.

Speaker 2: And we should mention that subject to unusual events and quarterly fluctuations. We expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80 and 90% of our adjusted EBITDA in the quarters ahead.

And we should mention that subject to unusual events and quarterly fluctuations. We expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80, and 90% of our adjusted EBITDA in the quarters ahead.

Speaker 2: As a reminder, the additional earn out payments that we've expense in other charges in the income statement, in the income statement, these past few quarters will be one of those types of unusual events. As these amounts will show as a reduction to cash flow from operations in future quarters when these higher earn out payments are made.

As a reminder, the additional earn out payments that we have expenses and other charges in the income statement and the income statement. These past few quarters will be one of those types of unusual events. As these amounts will show as a reduction to cash flow from operations in future quarters. When these higher earn out payments are made.

Speaker 2: Overall, as Ed said, we are once again very pleased with our quarterly operating results in the quarter, as strong organic growth and solid performance from our recent acquisitions resulted in strong growth in both revenue and adjusted EBITDA for the quarter.

Overall as Ed said, we are once again very pleased with our quarterly operating results in the quarter as strong organic growth and solid performance from our recent acquisitions resulted in strong growth in both revenue and adjusted EBITDA for the quarter.

If we turn our attention to the balance sheet, our cash balances totaled $280 million at the end of October up from approximately $227 million at the end of the second quarter in July.

Speaker 2: If we turn our attention to the balance sheet, our cash balance is totaled 280 million at the end of October , up from approximately 227 million at the end of the second quarter in July . This increase in cash is primarily related to the 56 million in cash flow from operations that we generated in the quarter.

This increase in cash is primarily related to the $56 million in cash flow from operations that we generated in the quarter.

Speaker 2: As a result, as Ed mentioned, we have 280 million in cash available to us as October 31st, as well as our unused $350 million credit facility available to deploy towards future acquisitions, consistent with our business.

As a result, as Ed mentioned, we have we have $280 million in cash available to us as of October 31, as well as our unused $350 million credit facility available to deploy towards future acquisitions, consistent with our business plan.

As we look to the final quarter of fiscal 2024, and we should note the following.

Speaker 2: As we look to the final quarter of fiscal 2024, we should note the follow.

Speaker 2: After incurring approximately 4.8 million in capital additions for the first nine months of the year, we expect to incur approximately one to 2 million in additional capital expenditures in the fourth quarter of this.

After incurring approximately $4 8 million in capital additions for the first nine months of the year, we expect to incur approximately $1 million to $2 million in additional capital expenditures in the fourth quarter of this year.

Speaker 2: At this point, we currently expect that in the fourth quarter, we will use approximately 23.3 million of our cash to pay additional contingent consideration on two past acquisition.

At this point, we currently expect that in the fourth quarter, we will use approximately $23 $3 million of our cash to pay additional contingent consideration.

On to past acquisitions.

Speaker 2: While this entire 23.3 million estimated contingent consideration to be paid as accrued for in our balance sheet, approximately 12.7 million of this balance relates to the portion of the urnode arrangement accrued for at the time of the acquisition and will be reflected in cash flow from financing activities.

While this entire $23 3 million estimated contingent consideration to be paid is accrued for in our balance sheet approximately $12 $7 million of this balance relates to the portion of the earn out arrangements accrued for at the time of the acquisition and will be reflected in cash flow from financing activities, while the remaining $10 6 million expected to be paid.

Speaker 2: While the remaining 10.6 million expected to be paid, will be reflected in cash from operating activities.

We will be reflected in cash flow from operating activities as the financial results from these acquisitions of both being better than our initial expectations and therefore, the earn out payments are higher than our original estimates made at the time of the acquisitions.

Speaker 2: As the financial results from these acquisitions have both been better than our initial expectations,

Speaker 2: And therefore the urnote payments are higher than our original estimates made at the time of the act.

After incurring amortization costs of $45 4 million in the first nine months of the year, we expect amortization expense will be approximately $14 7 million in the fourth quarter with this figure being subject to adjustment for foreign exchange and future acquisitions.

Speaker 2: After incurring amortization costs of 45.4 million in the first nine months of the year, we expect amortization expense will be approximately 14.7 million in the fourth quarter with this figure being subject to adjustment for foreign exchange and future acquisition.

Speaker 2: Our income tax rate for the first nine months of the year came in at approximately 24.5% of pre-tax income.

Income tax rate for the first nine months of the year came in at approximately 24, 5% of pretax income.

Looking ahead into the fourth quarter. We currently expect our overall tax rate will again come in below our blended statutory tax rate of 26, 5% and as a result, we will experience a tax rate in the range of 23% to 25% of pre tax income for the year.

Speaker 2: Looking ahead into the fourth quarter, we currently expect our overall tax rate will again come in below our blended statutory tax rate of 26.5%. And as a result, we'll experience a tax rate in the range of 23 to 25% of pre-tax income for the...

After incurring stock based compensation.

Speaker 2: After incurring stock based compensation of expense of 12.4 million in the first nine months of the year, we currently expect stock compensation to be approximately 4.4 million in the fourth quarter, subject to any forfeitures of stock options or sharing.

<unk> expense of $12 4 million in the first nine months of the year. We currently expect stock compensation to be approximately $4 4 million in the fourth quarter subject to any forfeitures of stock options or share units and with that I'll turn it back over to Ed who will give you some closing comments as well as our baseline calibration for Q4.

Speaker 2: And with that, I'll turn it back over to Ed with who will give you some closing comments as well as our baseline calibration for Q4.

Okay.

Speaker 3: The great thanks, Alan. So we're a month into Q4 and the end of our fiscal year. Generally areas are a business that benefit from end-of-year holiday sales, such as e-commerce and truck deliveries. We'll see an up-check in buying.

Great. Thanks Al.

So we're a month into Q4 and the end of our fiscal year.

General areas of our business the benefit from end of year holiday sales, such as E Commerce and truck deliveries.

See an uptick in volumes.

Speaker 3: Another area such as ocean transportation are at a seasonal low point and the inventories are already in store. Our forecasting and plans remain relatively cautious giving the general malaise and chicken vine seen in the previous quarters this year. However, we're also mindful of the pressure ports with initial positive statistics on Black Friday sales vine.

In other areas, such as Ocean transportation or at a seasonal low point in inventories are already in store, our forecasting and plans remain relatively cautious given the general malaise in shipment volumes during the previous quarters. This year. However, we're also mindful of the press reports with initial positive statistics on Black Friday sales volumes.

We keep these things in mind as you said our calibration for the quarter. Our business is designed to be predictable and consistent we believe that stability and reliability are valuable to our customers employees and our broader stakeholders.

Speaker 3: We keep these things in mind as we set our calibration for the quarter. Our business is designed to be predictable and consistent. We believe that stability and reliability are valuable to our customers and employees and our broader stakeholds.

Speaker 3: To deliver this consistency, we continue to operate from the following print.

We deliver this consistency we continue to operate from the following principles.

Speaker 3: Our long-term plan is for our business to grow adjusted, even to 10 to 15% annual.

Our long term plan is for our business to grow adjusted EBIT of 10% to 15% annually.

Speaker 3: We grow through a combination of organic growth and acquisitions. We take a neutral party approach to building and operating solutions on our global logistics network. We don't favor any particular party. We run our business for all supply chain participants, connecting shippers, carriers, logistics service providers and customs authorities.

We grow through a combination of organic growth and acquisitions, we take a neutral party approach to building and operating solutions on a global logistics network, we don't favor any particular party, we run our business for all supply chain participants connecting shippers carriers logistics service providers and customers authorities.

When we over perform we try to reinvest that over performance back into our business, we focus on recurring revenues and establish relationships with customers for life and we thrive on operating a predictable business.

Speaker 3: When we overperform, we try to reinvest that overperformance back into our business. We focus on recurring revenues and establish relationships with customers for life. And we thrive on operating a predictable business that allows us to forward visibility to our revenues and investment payments.

That allows us to for to forward visibility to our revenues and investment payback.

And our Q3 report we provided a comprehensive description of baseline revenues baseline calibration and the limitations as of November 1st 2023.

Speaker 3: In our Q3 report, we provided a comprehensive description of baseline revenues, baseline calibration, and their limitations. As of November 1st,

Using foreign exchange rates of <unk> 72 to the Canadian dollar $1 six to the euro and $1 21 to the pound we estimate that our baseline revenues for the fourth quarter of 2024 or approximately $127 million on our baseline operating expenses are approximately $79 million.

Speaker 3: Using foreign exchange rates of 72 cents to the Canadian dollar, the dollar six to the euro, and a dollar twenty one to the pound. We estimate that our baseline revenues for the fourth quarter of 2024 are approximately $127 million.

Speaker 3: and our baseline operating expenses are approximately $79 million. We consider this to be our baseline adjusted ebit to calibration of approximately $48 million for the fourth quarter of 2024, or approximately 38% of our baseline revenues as at November 1st of 2023.

Consider this to be our baseline adjusted EBIT calibration of approximately $48 million for the fourth quarter of 2024 or approximately 38% of our baseline revenues as at November one 2023.

We continue to expect that will operate at an adjusted EBIT or operating margin range of 40% to 45% our margin can vary in that range, given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business.

Speaker 3: We continue to expect that we're operating in just the ebit to operating margin range of 40 to 45%. Our margin can vary in that range given such things as far in exchange movements and the impact of acquisitions as we integrate them into our business.

We've got lots of exciting things planned for our business. It remains an uncertain broader economic and supply chain environment, but we believe our proven track record of execution solid capital structure and customer focus will serve us well.

Speaker 3: We've got lots of exciting things planned for our business. It remains an uncertain, broader economic and supply chain environment, but we believe our proven track record of execution, solid capital structure, and customer focus will serve us well. Thanks to everyone for joining us on the call today, as always, we're available to talk to you about our business and whatever manner is most convenient for you. And with that, operator, I'll now turn it over to you to manage the Q&A portion of the call.

To everyone for joining us on the call today as always we're available to talk to you about our business in whatever manner is most convenient for you and with that operator, I'll now turn it over to you to manage the Q&A portion of the call. Thank you.

Thank you ladies and gentlemen, we'll now conduct the question and answer session. If you have a question. Please press star followed by the number one on your Touchtone phone you would hear equity bone broth acknowledging your request.

Speaker 1: Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press star followed by the number one on your touch tone phone. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request,

I would like to cancel your request please press star two.

Speaker 1: Your first question comes from the line of mad pa from William Blair. Your line is not open.

Your first question comes from the line of Matt <unk> from William Blair. Your line is now open.

Okay, Great I wanted to ask a question on competition and on the macro.

Speaker 4: Hey, great. I wanted to ask a question on competition and on the macro. So one of your public competitors had some notable struggles as past quarter. And there's another private competitor that went out of business, just wondering if you're seeing some of the same headwinds that they're seeing. And some of their struggles is having any impact on you competitively.

You know one of your public competitors had some notable struggled this past quarter and Theres. Another private competitor that went out of business. Just wondering if youre seeing some of the same headwinds that they are seeing and you have some.

Some of their struggles is having any impact on you competitively.

Thanks, Matt.

Speaker 3: Thanks Matt. I mean, I think we saw some other things at the impact of them. We obviously fought our way through and ended up a pretty good result. The two company you talked about may have

We saw some of the things that impacted them, we obviously fought our way through it and ended up with pretty good results.

The two companies you're talking about may have been in a different position in that.

Speaker 3: You know, things went bad maybe with transportation, transaction volumes and the customer suffers the result and they didn't have any other products and services to make up for it. We obviously were in a different situation and we were able to take advantage of that.

Things went bad maybe with transportation transaction volumes and when the customers suffered as a result, and they didn't have any other products and services to make up for it.

We obviously were wearing winter differences were in a different situation and we're able to take advantage of that.

Sometimes its competitors struggling ends up being good news for you just customers turn elsewhere and I would also make some potentially concerned about who they're doing business with them. When you were a strong company like Descartes that ends up playing in our favor.

Speaker 3: sometimes competitors struggling on the big good news for you because customers turn elsewhere and that also makes them potentially concerned about who they're going business with and when you're a strong company like they take a cart that ends up planned,"

Speaker 4: Got it and then just on the services revenue that did take down sequentially was that driven by some of the you know headwinds on the transaction side that you cited

Got it and then just on the services revenue that did tick down sequentially was that driven by some of the headwinds on the transaction side that you cited.

Speaker 3: I think so, yeah, I mean, you know, we we we had a very strong quarter, but it probably would have been better if if some of our customers, bonds were doing even better. They wasn't a horrible quarter. I think people predicting it was going to be a lot worse than it was in terms of our customers transportation, bimes. And we have the benefit of continuing to sign up new customers in the space of that. So, you know, we did all right in that period. Probably would have done even better if

I think so yes.

We had a very strong quarter, but.

Probably would have been better.

If you have.

Some of our customers' volumes are doing even better.

The.

Was it a horrible quarter I think you wont predicting was going to be a lot worse than it was in terms of our customers' transportation volumes.

And we have the benefit of continuing to sign up new customers in the face of that so.

We did all right in that period, probably would have been even better if Bob.

Speaker 3: If that part had gone well and we had a bunch of other parts of our business that I mentioned on the call that we're really doing well for that kind of more than made up for it. So we're happy with the results under the circumstances for sure.

If that part is going well and we had a bunch of other parts of our business what I mentioned on the call that we're really doing well for that kind of more than made up for it. So we're happy with the results.

Under the circumstances for sure.

Okay, great. Thank you appreciate it.

Hey, Thank you Mike.

Speaker 1: Your next question comes from the line I've just in long from Stephens. Your line is not open.

Your next question comes from the line of Justin Long from Stephens. Your line is now open.

Thanks, and good afternoon, Ed maybe building on that last question could you share what your how your transportation volumes performed on a year over year basis in the quarter and Allen I heard your commentary around organic growth for the services revenue line, but do you have the estimate or all in.

Speaker 5: Thanks and good afternoon. Ed, maybe building on that last question, could you share how your transportation volumes performed on a year-to-year basis in the quarter? And Alan, I heard your commentary around organic growth for the services revenue line, but do you have the estimate for all-in organic growth as well?

Organic growth as well.

I don't know that I have the exact numbers down year over year.

Speaker 3: I don't know that I have the exact numbers down year every year, but I do.

Okay.

Speaker 2: Yeah, so if we want to talk about organic growth numbers, we're just over 9% on the services side and just very, very similar to that overall in the business. There was certainly some slight negative impacts on FX that would have affected the question matches had with respect to our services revenue being down slightly quarter on quarter. That was, they were up actually neutral with FX, but roughly 9% in both services revenue and total revenue for the product.

Yes, so if we wanted to talk about organic growth numbers.

We're just over 9% on the services side and just very very similar to that overall in the business. There is a there was certainly some slight negative impacts on FX that would've affected.

The question, Matt just had with respect to our services revenue being down slightly quarter on quarter that was they were up actually neutral with FX, but roughly 9% in both services revenue and total revenue for the quarter.

Okay, and any sense on transactional volumes on that on a year over year basis, even if it's just kind of directionally. It sounds like maybe there was pressured year over year.

Speaker 5: Okay, and any sense on transactional volumes on a year of a year basis, even if it's just kind of directionally, it sounds like maybe there was pressure year over year or any additional color you can share there.

Any additional color you can share there.

Speaker 2: Yeah, there was definitely some pressure year on year. We certainly did better with our subscription services for software and databases. But as Ed said, at a couple of times in the prepared comments, we kind of expected that our businesses built to deal with those types of fluctuations. Those are not new for us. We'll see those types of things happen from time to time. Quite honestly, we've probably seen weaker transactions in the last 12 months.

There was definitely some pressure year on year.

Certainly better and get better with our subscription services for software and databases, but as Ed said it a couple of times in the prepared comments, we kind of expected that our business is built to deal with those types of fluctuations those are not new for US we will see those types of things happen from time to time quite honestly, we probably seen weaker transactions in the last 12 months.

Speaker 2: But, but overall, you know, what matters for us is the overall blend that growth rate and then businesses built to us.

But.

But overall what matters for US is the overall blended growth rate of that business is dealt to us too.

Speaker 2: to grow in the 9% overalls is more.

Two to grow in the 9% overall is our is as more of our focus.

Speaker 5: Got it. And I guess lastly, Ed, could you just talk about the acquisition pipeline curious what you're seeing today versus a quarter ago and your level of competence that we can see capital deployment pick up the next couple of quarters.

Got it and I guess lastly, Ed could you just talk about the acquisition pipeline curious what youre seeing today versus a quarter ago and your level of confidence that we can peak capital deployment pick up the next couple of quarters or so.

Yes, without getting into too much detail on it.

Speaker 3: Yeah, without getting into too much detail on it, we like the environment right now, a couple of years ago, there were...

We like the environment. We're in right now a couple of years ago there were.

Not many companies for sale and the ones that were in our estimation, where oftentimes trying to charge too much.

Made a difficult acquisition environment for us that things are certainly softening from that perspective, we're not creating opportunities for us to get more deals done and price ranges that we.

Speaker 3: made a difficult acquisition environment for us. That things are certainly softening from that perspective and great opportunities for us to get more deals done at increased ranges that we think are good value.

They are a good value.

Speaker 3: more companies are coming up for sale and as a result and maybe in addition to

More companies are coming up for sale.

And as a result, and maybe in addition to.

Companies are coming up for sale and with a more reasonable expectation on valuation and thats, creating an environment, where we think one of our position to get more deals done in the future.

Speaker 3: Companies are coming up for sale with a more reasonable expectation evaluation and that's creating an environment where we think we're in a very good position to get more guilds done in the future.

Okay I'll leave it there thanks for the time.

Hey, Thank you Justin.

Speaker 1: Your next question comes from the line of Daniel Chan from TV Cowan. Their line is not open.

Your next question comes from the line of Daniel Chan from DB Cowen. Your line is now open.

Speaker 2: You know how you get even me. Maybe to follow on that last question, the cash balance continues to grow, you know, at about $280 million and you do about $200 million of free cash flow year, which is more than you've typically spent on acquisitions in prior years. So any other considerations for that capital just given the strong cash balance and the strong cash flows, or do you think you'll be able to deploy that towards acquisitions when we're next?

Hi, good evening, maybe to follow on that last question. The cash balance continues to grow at about $280 million you do about $200 million of free cash flow year, which is more than you've typically spent on acquisitions in prior years. So any other considerations for that capital just given the strong cash balance and strong cash flows or do you think youll be able to deploy.

That towards acquisitions over the next few years.

Speaker 3: Listen, you know, we're making more and more money every year. That's great. We only buy companies when we think it's a good deal and That means we have a good chance

Well listen I mean, we're making more and more money every year and that's great.

We only buy companies when we think it's a good deal.

And that means we have extra cash.

Cash or not.

Speaker 3: but apologize for that. We absolutely think that the winner in our space is going to continue to be acquitted, and we absolutely believe that there are many more companies that are acquisition candidate for us. So while we talk about it at our board level, we'll discuss every quarter. You know, should we...

I apologize for that.

We absolutely think that the winner in our space are going to continue to be equivalent acquisitive.

We believe that there are many more companies that are.

Acquisition.

Candidates for us.

While we talk about at our board level will discuss every quarter you know should we.

We havent dividends.

You know in some way humans make money back to shareholders share buyback whatever.

Speaker 3: Somebody give this money back to shareholders, share buy, buy whatever.

Speaker 3: But at the moment, and I think for the sustainable future, we believe that that money should go towards acquisitions. And it's not really going to harm us at the moment to have more cash in the bank. It's actually a good thing. Our company continues to make more money. And as we look forward and say, hey, we think we're going to like this future acquisition environment. And I go, hey, I think we'd be smart to hang on to it and be ready to act if a bunch of stuff comes up for sale at the same time.

But at the moment and I think for a sustainable future. When we believe that that money should go towards acquisitions.

And it's not really going to harm us at.

At the moment to have.

More cash in the bank, it's actually a good thing our company continues to make more money.

Yes.

We look forward and say Hey, we think we're going to like this future acquisition environment and go Hey, I think we would be smart to hang onto them and be ready to act if a bunch of stuff comes up for sale at the same time.

Speaker 3: Certainly think we have the team to negotiate, purchase, and integrate those types of companies when they come in. And we want to be ready when that happens. So.

Certainly I think we have the team too.

Negotiate purchased and integrate those types of companies when they come in and we wanted to be ready when that happens so.

That's why you see us holding onto our cash.

Speaker 3: I may have another question on the MACR environment. You talked about weaker volumes last quarter. Just wondering whether you saw that extend into the peak holiday shopping season over the last month. We've seen headlines that Black Friday, Cyber Monday volumes. Well, you know, we're not reporting on this month, but I have seen some of the transportation statistics unrelated to our transaction volumes.

That makes a lot of sense thanks for that.

Another question on the macro environment.

You talked about weaker volumes last quarter, just wondering whether you saw that extend into the peak holiday shopping season over the last month, we've seen headlines that black Friday, cyber Monday volumes well listen.

We're not reporting on this month, but I have seen some of the transportation statistics unrelated to our transaction volumes in.

I would say the I would say they look good.

Speaker 3: I'd say they look good. And you can probably see some of that as you read the paper right now. Black Friday was a pretty good black Friday, the report's on reading right now. And when I look at, and again, independent of our transactions lines, and I look at the transportation statistics that we would normally look at over the last month.

And.

You can probably see some of that as you read the paper right now Black Black Friday was a pretty good black Friday, the reports I'm reading right now.

When I look at and again independent of our transaction lines when I look at the transportation.

Statistics statistics that we would normally look at over the last month.

Speaker 3: They look good starting to things certainly we're starting to pick up an anticipation of black Friday. So that

They look good starting to things certainly we're starting to pick up in anticipation of that Black Friday. So that's good news.

That's helpful. Thanks, Ed.

Thank you too.

Speaker 1: Your next question comes from the line of Scott Group from Wolf Research. Your line is now open.

Your next question comes from the line of Scott Group from Wolfe Research. Your line is now open.

Hey, Thanks afternoon, so and I just wanted to follow up on that last point, because I think we're seeing.

Speaker 6: Hey, thanks afternoon. And I just want to follow up on that last point, because I think we're seeing, you know, a little bit of better import activity, better air freight rates. You're saying you're not reporting on that, but is that sort of reflected to the extent that you are seeing that? Is that, would that be reflected in your calibration?

A little bit of better import activity better air freight rates, youre, saying youre not reporting on that but is that sort of reflect to the extent that you are seeing that is that would that be reflected in your.

Calibration.

Speaker 3: The calibration was done as at the first day of the quarter. So technically now.

Calibration was done at.

The first day of the.

Quarter, so technically no.

Speaker 3: I might kind of about not reporting on it is just saying, hey, I'm reporting on, yes, through the end of the quarter, not the first month of the first quarter. And specifically to your question, our calibration this quarter was done as of the first day of the quarter.

And my comment about not reporting on it is just saying hey.

I am reporting on through the end of the quarter not the not the first month of the first quarter and specifically to your question. Our calibration. This quarter was done as of the first day of the quarter.

Okay that makes sense, okay I wanted to get your perspective.

Speaker 6: Okay, that makes sense. I wanted to get your perspective, a year ago we were talking about

A year ago, we were talking about.

Just in time is becoming just in case I'm wondering is.

Speaker 6: Justin Time is becoming just in case. I'm wondering is with much higher rates, are we just, is that sort of done, or are we back to Justin Time and how does that?

With much higher rates or are we just is that sort of done or are we back to just in time and how does that.

Is that a good thing or a bad we're probably I mean this is a bit of a guess on my part.

Speaker 3: Is that a good thing or a bad thing? We're probably having this a bit of a guess on my part. Or, you know, we're just getting...

Just getting.

No.

Some comments from customers about this but.

Speaker 3: Some comments from customer about this, but, but, you know, I don't know this perfectly, but we always believe that just in time.

I don't know this this perfectly but we always believe that just in time now.

Speaker 3: Now just in case we always believed it would end up gravitating towards back just in time You know people forget about how bad it was three years ago when the ports were all backed up And then they start going boy, I'm losing a lot of money and inventory carrot cost I've had all this extra stuff and now interest rates just went up significantly and so now that's a lot of money and I should be more careful

Now just in case, we always believed it would end up gravitating towards back just in time people forget about how bad it was three years ago and the ports were all backed up and then they start going boy I'm, losing a lot of money in inventory carry costs that have all this extra stuff and now interest rates just went up significantly and so now that's a lot of money and I should.

Be more careful and we always believed that was going to drift towards back debt and I'd say.

Speaker 3: And we always believed that it was gonna drift towards back that and I say

Speaker 3: I think that is why I have to venture to guess that we're probably somewhere approaching back to just in time on a lot of cases.

Da Vinci.

Probably somewhere approaching back to just in time and a lot of cases.

Because of high interest rates.

Speaker 3: because high interest rates and the warehouses are only so big and you can only hold so much inventory and you've got to make good approximations about what customers are going to buy in stores and companies are always going to try and do that. And I think it works.

And.

The warehouses are only so big and you can only hold so much inventory and you got to make.

Good.

Approximations about what customers are going to buy in stores in and companies are always going to try and do that and.

And I think we are drifting back towards just in time for sure.

Most cases.

It makes sense and then just lastly, and a nice step up in the EBITDA margin did we see the full impact of some of the cost actions this quarter or do we see more of that show up in Q4, and so maybe we see another further step up in the Marcellus.

Speaker 3: Makes sense. And then just lastly, you know, nice step up in the EBITDA margin. Did we see the full impact of some of the cost actions this quarter? Or do we see more of that? Show up in Q4? And so maybe we see another further step up in the margin. I'll flip that. Let me let me let down.

Let me, let Allen answer that more specifically.

Speaker 2: Yes, sure. So we did initiate our, our, our restortion plan earlier in the quarter. So for the most part, we've completed it and, and the results are in the quarter. There will be a little bit of an impact coming through Q, Q4 given that there'll be a full quarter impact for, for all the changes. But, but for the most part, Q3 had, had most of it baked in. If that helped. All right. Thank you.

Yes, sure. So we did initiate our restructuring plan earlier in the quarter. So for the most part we've completed it and the results are in the quarter, there will be a little bit of an impact coming through Q Q4, given that there'll be a full quarter impact for all of the changes, but but for the most part Q.

Q3.

<unk> had most of it baked in if that helps.

Alright. Thank you guys appreciate the time.

Okay. Thank you Scott.

As a reminder, if you have a question. Please press star followed by the number one and your Touchtone phone.

Speaker 1: Asadam Aindaur, if you have a question, please press star, followed by the number one in your touchstone phone.

Your next question comes from the line of Robert Young from Canaccord Genuity. Your line is now open.

Speaker 1: Your next question comes from the line of Robert Young from Canacard Genuity. Your line is not open.

Hi, good evening.

First question I was asking about the shutdown of a private competitor maybe just another question there.

A lot of reports.

In the news suggested that they really struggled to find a strategic buyer that there is.

Not a lot of activity out there and so like is there a big sea change or is there a bigger change in the number of buyers or the interest in the space that puts you in a better position competitively.

Speaker 3: that puts you to better, better, better, better, I, I, I, I, I, I, I, while I knew who they were talking about, when they asked the question a couple of questions ago, I,

While I knew who they were talking about let me ask the question a couple of questions ago.

I didn't bother disagreement but the question I don't know that were detected we.

Speaker 3: And I didn't bother to disagree with the question. I don't know that we're technically really competitor of the guy that he was talking about going out of the business. They're more of a freight broker. They had a business that was an electronic freight brokerage. And that's not something we would buy. That's a customer of ours. They were a small customer of ours. You know, and.

Competitor of.

Of the Guy that he was talking about going out of business. They are more of a freight broker. They had a business that was an electronics freight brokerage and thats not something we would buy that as a customer of ours. There were a small customer of ours.

And.

Speaker 3: You know, furthermore, when I, this has happened, like, I've watched this movie like 30 times in my life, where a company comes in that does the same thing as everybody else in an industry and says, I'm gonna be the automated guy that does that. And every time I hear that, I go, that's a misnomer. You're trying to pretend like your technology company went in this case, you're a freight broker. And you're saying that the reason that we should invest in your freight brokerage is,

Furthermore, when.

This has happened.

This movie like 30 times in my life, where a company comes in that does the same thing as everybody else in an industry and says I'm going to be the automated guy that does that and every time I hear that I go that's a misnomer youre trying to pretend like you are a technology company. When in this case, you're a freight broker and youre, saying that the reason that we should invest in your freight brokerage is.

Is because youre going to be more automated than everyone else and I always think that myself.

Speaker 3: It's because you're gonna be more automated than everyone else. And I always think to myself.

Speaker 3: Even if that creates an advantage for you for some period of time, it's not going to last long because your competitors are going to buy automations from people like us that provide awesome automation in this industry. And that advantage will evaporate in short order, and you'll be back to being a freight broker with no significant advantage ever anyone else. I think that's what happens here. I think, you know, in addition to that, because they raised a lot of money, they dumped a lot of money into becoming an automated freight broker and as a result,

Even if that creates an advantage for you for some period of time, it's not going to last fall because your competitors are going to buy automation from people like us that provide automation in this industry.

And that advantage to rollback rate in short order and you'll be back to being a freight broker with no significant advantage over anyone else I think thats what happened here.

In addition to that because they raised a lot of money they dumped a lot of money into becoming automated freight broker and as a result.

Yeah.

Speaker 3: You know, they had a big burn that was hard to overcome when things went back to normal. And as a result,

They had a big burn that was hard to overcome when things went back to normal and as a result.

Speaker 3: you know, they went out of business and you know, we didn't even look, you know, that's not something we would buy. And that's something maybe one of our competitors, or sorry, one of our customers would buy.

They went out of business.

We didn't even look we know that's not fair.

And we were by desktop might be one of our competitors are already one of our customers would buy.

And.

They did it.

Speaker 3: They did it. I think the competitors probably thought, I'll just steal those customers from them, and that'll be the end of it. I'd do my guesses to what happened there.

The competitors, probably thought I'll, just still most customers from them and that will be the end of it.

My guess as to what happened there but.

Speaker 3: That, you know, for us, that business we were just looking at from afar. They were minor customer vars. We were aware what was going on, but not particularly interested in.

For us that business, where we're just looking at from Afar. They were minor customer of ours, we were aware of what's going on but not not particularly interested in the asset.

Speaker 4: Second question for me would be about, I think on the call you've been talking about maybe offsetting weaker transaction volumes than you expected with maybe better subscription side. And so as curious as that consolidation, is there any other, you know, what is there any other factor there, maybe to call out?

Okay.

Second question for me would be about I think on the call you've been talking about maybe offsetting weaker transaction volumes than you expected, but maybe better subscription side and so I was curious is that consolidation is there any other.

What is there any other factor there maybe to call out.

Speaker 3: Are customers? No, I mean, no, I will listen. We have a bunch of areas. Our business that are booming. We have transaction volumes that are you know, stuffed in like 30, a little over 30% of our business that

Our customers know.

No I'll go with us and we have a bunch of areas of our business that are booming we have.

Transaction volumes that are.

Stuffed unlike 30 little over 30% of our business.

Have always and will always fluctuate up and down a little bit every once in a while you seem fluctuate down a lot like in a way, but even that a lot of 8% that was they were they were down in all the way to 8% I think geez.

Speaker 3: have always and will always fluctuate up and down a little bit. Everyone's in the wild, you seem fluctuate down a lot, like in a way. But even that a lot is 8%. That was, they were down all the way 8%. And I think, geez, you know, why is that? Because most of the stuff that we use still has to ship. And, you know, maybe in the good times, we're all buying lobster. And at bad times, we're all buying chicken. But it's...

Why is that because most of the stuff that we use still has to ship.

And maybe good times, we're all buying lobster and in bad times, we're all buying chicken.

Speaker 3: It's the same shipping volume. Okay, one costs a lot more than the other. Maybe we don't buy boats and jet skis for a couple of years, but most of the stuff that we need to live and run our households.

It's the same shifting volume.

One cost a lot more than the other.

And maybe we don't buy both and Jeff you talked a couple of years, but.

But most of the stuff that we need to live and run our households.

Speaker 3: still gets shipped and we get that shipping volume. So even in the worst of times, we may percent down for the work that's ever gonna get is not that much. And I go, these variations in our business happen from time to time, guys, like us need to be prepared for it. And for us, we have a broad enough business where we have a bunch of other things that are really going great, so that when the transportation volumes are a little weak, like they were in the last six, eight months, while they were recovering, but not as strong as we'd like to see them.

Still get shifts and we get that shipping volumes, so even in the worst of times and 8% down for the work that's ever going to get is not that much.

Yes.

These variations in our in our business happened from time to time, guys like us need to be prepared for it and Fortunately for US we have a broad enough business, where we have a bunch of other things that are really going great. So that when the patient volumes are a little weak like they were in the last six to eight months, while they were recovering button, but not as strong as we'd like to see them.

Our business continues to perform well through that and I think that's a great sign of a resilient business that.

Speaker 3: You know, our business continues to perform well through that. And I think that's a great sign of a resilient business that, you know,

Uh huh.

Speaker 7: Something like volumes go down and we are answered to that as nothing to see here. We continue to do well. All right. Thanks for taking the question. Okay. Thank you, Ralph.

Something like volumes go down and our answer to that is nothing to see here, we continue to do well.

Alright, thanks for taking the question.

Okay. Thank you Ralph.

There are no further questions at this time please continue.

Speaker 3: All right, great. Thanks everyone for your time. We look forward to seeing you in the coming weeks and months and now reporting back to you next quarter with the Q4 results. That's great.

Alright, great. Thanks, everyone for your time, we look forward to seeing you in the coming weeks and months and reporting back to you next quarter with the Q4 results have a great day.

Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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Speaker 1: Good afternoon ladies and gentlemen and welcome to the Descartes System Group's Quarters Leads results conference call. At this time, all lines are now listened on the emotes.

Good afternoon, ladies and gentlemen, and welcome to the Descartes system group's quarterly results conference call. At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Speaker 1: Following the presentation, we will conduct a question and answer session.

Speaker 1: If at 10 a.m. during this call you require immediate assistance, please press star zero for the operator.

At any time during this call we had acquired.

Please press Star zero for operator this call is being recorded on Tuesday December five 2000, practically I would now like to turn the conference over to Scott Pagan. Please go ahead.

Speaker 1: This call is being recorded on Tuesday, December 5, 2020.

Speaker 1: I would now like to turn the conference over to Scott Bacon. Please go ahead.

Thank you and good afternoon, everyone. Joining me remotely on the call today are Ed Ryan CEO and Allan Brett CFO Trust that everyone has received a copy of our financial results press release that was issued earlier.

Speaker 2: Thank you. Good afternoon, everyone. Joining me remotely on the call today are Ed Ryan, CEO and Alan Brett, CFO . Nice. Trust that everyone has received a copy of our financial results. Press release was issued earlier.

Portions of today's call other than historical performance include statements of forward looking information within the meaning of applicable securities laws and these statements are made under the safe Harbor provisions of those laws.

Speaker 2: Personally, today's call other than historical performance includes statements of forward looking information within the meaning of applicable securities laws. And these statements are made under the State Harvard provisions of those laws.

These forward looking statements include statements related to our assessment of the current and future impact of geopolitical and economic uncertainty on our business and financial condition Descartes operating performance financial results and condition.

Speaker 2: These forward-looking statements include statements related to our assessment of the current and future impact of geopolitical and economic uncertainty on our business and financial condition, Descartes operating performance, financial results and condition, Descartes gross margins and any growth in those gross margins, cash flow and use of cash, business outlook, baseline revenues, baseline operating expenses and baseline calibration.

<unk> gross margins on any growth in those gross margins cash flow and use of cash business outlook baseline revenues baseline operating expenses and baseline calibration.

Speaker 2: Intispated and potential revenue losses and dings, anticipated recognition and expensing of specific revenues and expenses, potential acquisitions and acquisition and strategy, cost reduction and integration initiatives, and other matters that may constitute poor looking statements.

Anticipated and potential revenue losses and gains.

Anticipated recognition and expensing of specific revenues and expenses potential acquisitions and acquisition strategy cost reduction and integration initiatives and other matters that may constitute forward looking statements.

These forward looking statements involve known and unknown risks uncertainties assumptions and other factors that may cause the actual results performance or achievements of descartes to differ materially from the anticipated results performance or achievements implied by such forward looking statements.

Speaker 2: These forward-looking statements involve known and unknown risks and certainties of assumptions and other factors that may cause the actual results, performance or achievements of Descartes differ materially from the anticipated results, performance or achievements implied by such forward-looking statements.

These factors are outlined in the press release and in the section entitled certain factors that may affect future results in documents filed and furnished with the Securities and Exchange Commission. The Interior Securities Commission and other securities commissions across Canada, including our management's discussion and analysis filed today.

Speaker 2: These factors are outlined in the press release and in the section entitled certain factors that may affect future results and documents filed and furnished with the Securities and Exchange Commission. The Ontario Securities Commission and other Securities Commissions across Canada, including our management's discussion and analysis file today.

Speaker 2: We provide forward looking statements so that the purpose of providing information about management's current expectations and plans relating to the future.

We provide forward looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future.

Speaker 2: Your caution that such information may not be appropriate for other purposes.

You are cautioned that such information may not be appropriate for other purposes.

Speaker 2: We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances in which any such statement is based except is required by law. And with that, let me turn the collar over to Ed.

We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward looking statements to reflect any change in our expectations or any change in events conditions assumptions or circumstances on which any such statement is based except as required by law and with that let me turn the call over to Ed.

Hey, Thanks, Scott and welcome everyone to the call, we're coming off a great third quarter with record financial results good organic growth and strong operating margins. We're excited to go over those with you and give you some perspective about the business environment, We see right now, but first let me give you a roadmap for the call.

Speaker 3: Hey, thanks Scott and welcome everyone to the call. We're coming off a great third quarter with record financial results, good organic growth and strong operating margins. We're excited to go over those with you and give you some perspective about the business environment we see right now. But first, let me give you a roadmap for the call.

Speaker 3: Start by hitting some highlighted last quarter and some aspects of how our business performed. I'll then hand it over to Alan, who will go over our Q3 financial results and more to Pail. I'll then come back at the right update on how we see the current business environment and how our business is calibrated as we enter Q4.

I'll start by hitting some highlights of last quarter and some aspects of how our business performed I'll then hand, it over to Alan who will go over our Q3 financial results in more detail.

Then come back and provide an update on how we see the current business environment and how our business is calibrated as we entered Q4.

Speaker 3: Finally, we'll open it up to the operator to coordinate the Q&A portion of the call.

Finally, we'll open it up to the operator to coordinate the Q&A portion of the call.

So let's start with the quarter that ended on October 31 <unk>.

Speaker 3: So let's start with the quarters that ended on October 31st. Key metrics we monitor include revenue, profits, cash flow from operations, operating margins, and returns on our investment.

Key metrics. We monitor include revenue profit cash flow from operations operating margins and returns on our investments for.

Speaker 3: For this past quarter, we again have outstanding performance in each of those areas. Total revenues were up 19% from a year ago, the service revenues up 18%. Adjusted EBITDA was up 17% from a year ago. Adjusted EBITDA margin was at 44%. Back up to the levels before we bought Grand Cloud. And we generated $56 million in cash from operations representing 86% of adjusted EBITDA.

This past quarter, we again had outstanding performance in each of those areas total revenues were up 19% from a year ago with service revenues up 18% adjusted EBITA was up 17% from a year ago. Adjusted EBITDA margin was at 44% back up to the levels before we broke ground cloud and we generated 56.

And cash from operations, representing 86% of adjusted EBITDA.

Speaker 3: At the end of the quarter, we had almost $280 million in cash, and we were debt-free with an under-armed $350 million line of credit. We remain well capitalized, cash-during and generating. We have strong organic growth, and remain ready to continue to invest in our business.

At the end of the quarter, we had almost $280 million in cash and we were debt free with an undrawn $350 million line of credit.

We remain well capitalized cash drain in or any cash generating we have strong organic growth and remain ready to continue to invest in our business.

Speaker 3: We had a good quarter of organic growth in our course services revenues. Many of the drivers are similar to past periods. The biggest growth areas were in real time visibility, global trade intelligence, and Rodion scheduling solutions.

We had a good quarter of organic growth in our core services revenues. Many of the drivers are similar to past periods. The biggest biggest growth areas, where in real time visibility global trade intelligence and routing and scheduling solutions. So let me touch on each of those here for a minute.

Speaker 3: So let me touch on each of those here for a minute.

Speaker 3: First is real time visibility. When you're moving goods on other people's assets, their ships, planes, and trucks, it's a challenge to know where your goods are. This is even more difficult if you're not the one who's arranged the shipment. If instead you put through an intermediary like the broker, freight forwarder, or third party logistics provider.

First as real time visibility when you're moving goods on other people's assets, the shifts planes and trucks, it's a challenge to know where your goods or.

This is even more difficult if you're not the one who has a range of the shipments if instead you booked through an intermediary like a broker freight forwarder or third party logistics provider.

Speaker 3: To get this visibility, you need a network of sources, information from all these assets and parties and present it in a way that makes business sense.

To get this visibility you need a network and sources of information from all of these assets and parties and presenting it in a way that makes business sense.

Speaker 3: Knowing the location of a shipment and when it's going to arrive is critical to serving your customers and running your business.

Knowing the location of a shipment and when it's going to arrive as critical to serving your customers and running your business.

Speaker 3: Our visibility and transportation management solutions, which include macro point, provide critical help to customers.

Visibility and transportation management solutions, which include macro point provide critical help to customers.

Speaker 3: We're winning more time visibility deals and seeing strong demand from our customers. And I think there's three key reasons for this.

We're winning more time visibility deals <unk> seen strong demand from our customers and I think there's three key reasons for this.

The first reason is our solutions are better at tracking loans simply put we track a greater percentage of loads than our competitors can customers pay us based on the number of loads that we track. So we're motivated to have as many carriers and intermediaries as possible 'cause source location information.

Speaker 3: The first reason is our solutions are better at tracking loads. Simply put, we track a greater percentage of loads than our competitors can. Customers pay us based on the number of loads that we track. So we're motivated to have as many carriers and in our mean areas as possible, to source location information.

Speaker 3: If they're not already connected, we've got self-connected tools that help our customers get even more location coverage across their network of carriers. We also have customer success personnel who help expand the network in more complex cases. The outcome has been a greater percentage of loads tracked, better data, happier customers, and strong growth in our business.

If they're not already connected with guest self connect tools that help our customers get even more location coverage across their network of carriers. We also have customer success personnel, who help expand the network and more complex cases, the outcome has been a greater percentage of large track better data happier customers and strong growth in our business.

Speaker 3: Visibility is embedded, the second reason is visibility is embedded in many dead carts to wish.

Visibility is embedded the second reason is visibility of embedded in many Descartes solutions.

Speaker 3: Some customers come to us just for visibility. But visibility is also embedded into many of our direct heart solutions. Our customers can make transportation management decisions including planning, who they tend to, consolidations and otherwise, and ensure they have visibility while those shipments are executed. We believe we offer a more comprehensive solution than our competitors in this regard.

Some customers come to us just for visibility the visibility is also embedded into many of our debit card solutions, our customers can make transportation management decisions, including planning with a tender to consolidations and otherwise and ensure they have visibility while those shipments are executed.

Believe we offer a more comprehensive solution than our competitors in this regard.

Speaker 3: The third reason is we're a reliable, stable, and growing partner. Our customers take a lot of comfort from working with Descartes as a larger public company with a long track record of financial stability. Also, our customers value our lengthy experience operating secure cloud services across the globe. This makes us a service provider of choice in the real-time visibility market.

The third reason is we are a reliable stable and growing partner our customers take a lot of comfort from working with Descartes has a larger public company with a long track record of financial stability also our customers value our lunky experience operating secure cloud services across the globe. This makes US a server service provider of choice and the real time visibility market.

Yes.

Okay.

Speaker 3: The second area where we're seeing strong growth is in global trade intelligence solutions. There's a lot of geopolitical conflict in the world right now. When that happens, it has an impact on supply chain and logistics. Goods move on new routes away from conflicts areas, conflict areas. Sanctions are put in place, restricting who you do business with, and what types of goods can be shipped. The duties and tariffs are adjusted to incentivize certain trading relationships.

The second area, where we're seeing strong growth in global trade intelligence solutions, there's a lot of geopolitical conflict in the world right now when that happens it has an impact on supply chain and logistics goods move on new Ralph away from conflicts areas conflict areas. Thanks.

Or put in place restricting who you do business with and what types of goods can be shipped the duties and tariffs are adjusted to incentivize certain trading relationships.

Speaker 3: We've continued to see strong demand from our customers for help with these challenges. Our solutions help them in three principal areas. The first is competitive intelligence. Our data-mind solutions provide information on trade flows, historical classifications of goods, and other logistics and supply chain intelligence. This information can be used to help make decisions about your own supply chain, but also to see how competitive you are with other companies' supply chain.

We've continued to see strong demand from our customers for help with these challenges our solutions help them in three principal areas first is competitive intelligence or data mining solutions provide information on trade flows historical classifications of goods and other logistics and supply chain intelligence. This information can be used to help make decisions about your own <unk>.

Apply chain, but also to see how competitive you are with other company's supply chains.

Speaker 3: Second area is tariff and duty data to make intelligence shipping decisions. We provide up to date data about tariff and duty rates and rules around the world, which can be used by leading global trade management systems to help run international supply.

Second area is tariff and duty data to make intelligent decisions.

We provide up to date data about tariff and duty rates and rules around the world, which can be used by leading global trade management systems to help her on international supply chains.

Speaker 3: And the third area is compliance. These solutions help our customers make sure they're not shipping things to people they should not be shipping them to. And this may be to specific people, to specific companies, to specific geographies, or in some cases, specific goods being shipped.

The third area is compliance.

Solutions help our customers make sure they're not shipping things to people they should not be shipping them too and this may be too specific people to specific companies to specific specific geographies or in some cases specific goods being shipped.

And the final area, we're seeing high growth at the moment that I outlined at the beginning is in our routing and scheduling solutions.

Speaker 3: This final area we're seeing high growth at the moment that outline the beginning is in our routing and scheduling solution.

Speaker 3: These solutions help you manage your own fleet of vehicles rather than hiring space on other people's vehicles. We believe we have the premier riding and scheduling solutions in the market. Our customers have faced pressure to use their vehicles efficiently, whether it's due to cost pressures, limited labor or environmental concerns, so we've seen continued good demand.

Solutions help you manage your own fleet of vehicles, rather than hiring space on other People's vehicles. We believe we have the premier routing and scheduling solutions in the market our customers face pressure to use their vehicles efficiently whether its due to cost pressures limited labor or environmental concerns. So we've seen continued good demand.

Speaker 3: Also our customers recognize that the delivery experience is a key part of the consumers purchase experience.

Also our customers recognize that the delivery experience is a key part of the consumers' purchase experience. So they're very interested in being able to provide delivery recipients with time definite delivery windows and Uber like delivery visibility experience and the final miles.

Speaker 3: So they're very interested in being able to provide delivery recipients with time-definite delivery windows and an Uber-like delivery visibility experience in the final mile.

Speaker 3: Our innovations in this area continue to drive customers with complex delivery challenges to us for our solutions.

Our innovations in this area continue to drive customers with complex delivery challenges to us for our solutions.

Speaker 3: We were able to show good organic growth in the quarter, even with some broader macro-aconomic challenges in the supply chain logistics market. As we went into the quarter, the market was bracing for reduced transportation value.

Yeah.

We were able to show good organic growth in the quarter, even with some broader macro economic challenges in the supply chain and logistics market as we went into the quarter. The market was bracing for reduced transportation volumes in the quarter, we did see lower volumes, but not as bad as may have been initially expected our supply chain messaging and customs filing business and saw some impact.

Speaker 3: In the quarter, we did see lower volumes, but not as bad as may have been initially expected. Our supply chain messaging and customs filing businesses saw something impact with lower transaction volumes, but not inconsistent with our plans. Overall, our business is designed to grow through fluctuations in transportation volumes, and the superior performance of the parts of our business that are less volume-sensitive, combined with the addition of new customers, continue to drive our organic growth.

<unk> with lower transaction volumes, but not in consistent with our plans overall our business is designed to grow through fluctuations in transportation volumes and the superior performance of the parts of our business that are less volume sensitive combined with the addition of new customers continued to drive our organic growth.

Speaker 3: are again, a growth was complemented by the contribution of recently completed acquisitions. Several of the acquisitions are performing better than we originally planned for, resulting in more earn out being accrued in the quarter. Allen will get into that and more to talent his section, but let me touch on the two most recent acquisitions.

Our organic growth was complemented by the contribution of recently completed acquisitions several of the actions acquisitions are performing better than we originally planned for resulting in more earn out being accrued in the quarter Alan will get into that in more detail in his section, but let me touch on the two most recent acquisitions.

Speaker 3: The first is Ground Club. We've got about eight months experience with Ground Club's safety and compliance solution.

First as Grand Club, we've got about eight months experience with Brian clubs safety and compliance solutions around cloud helps us identify safety incidents based by drivers and provides responsive and targeted video training.

Speaker 3: Ground Cloud helps us identify safety incidents faced by drivers and provides responsive and targeted video training on the challenges that drivers face. They also help companies manage delivery obligations as they have.

The challenge is the driver space. They also help companies manage delivery obligations as they have.

Speaker 3: as subcontractors to other delivery brands such as FedEx.

Our subcontractors to other delivery brands such as Fedex.

Speaker 3: When we first combined with ground cloud, we indicated we anticipated some impact on our overall adjusted EBITDA margin, which we did in fact see in Q1 and Q2. We've made good progress on integration and our aggregate adjusted EBITDA margin is back up to 44% for Q3.

When we first combined with growing cloud, we indicated we anticipated some impact on our overall adjusted EBITDA margin, which we did in fact see in Q1 and Q2 we've.

We've made good progress on integration and our aggregate adjusted EBITDA margin is back up to 44% for Q3.

Speaker 3: We're also seeing good opportunity for cross-cell of the safety solutions into our existing routing customer base. And we're monitoring the impact of FedEx and increasing the number of shipments it moves through the independent contractor network as that may increase demand from customers looking to help FedEx.

We're also seeing good opportunity for cross sell of the safety solutions into our existing rounding customer base and we're monitoring the impact of fed actions, increasing the number of shipments that moves through the independent contractor network as that may increase demand from customers looking for to help Fedex.

The second acquisition was locals I spoke to this a bit earlier as local helps with the Uber like delivery experience for the final mile. If you're receiving a delivery you can track the vehicle in real time on a Mac as the goods arrive locals has been immediately incorporate it into our routing solutions and we saw good demand for combined.

Speaker 3: The second acquisition was local. I spoke to this a bit earlier as local helps with the Uber-like delivery experience for the final mile. If you're receiving a delivery, you can track the vehicle in real time on a map as the goods arrive. The local has been immediately incorporated into our routing solutions, and we saw good demand for combined local's Descartes solutions. We're very happy with the technical capabilities and initial performance, and hope to be able to share more on progress in the upcoming quarter.

Locals Descartes solutions, we're very happy with the technical capabilities and initial performance and hope to be able to share more on progress in the upcoming quarters.

Speaker 3: With that, let me just summarize the hand of the over to Alan to give the full financial deals in the quarter.

With that let me just summarize as I hand, it over to Alan to give the full financial deals in the quarter.

Details on the quarter.

Speaker 3: We had record financial results. The business performed well, and we believe that's a good reflection of the value that our customers continue to get from our solutions, and the hard work that our team continues to put in for our customers. We ended the quarter with almost $280 million in cash, $350 million in available credit, and a market opportunity where we can continue to grow the business for our customers both organically and through acquisition.

Record financial results the business performed well and we believe that's a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with almost $280 million in cash $350 million in available credit on our market opportunity, where we can continue.

To grow the business for our customers both organically and through acquisition.

Speaker 3: We remain focused on profitable growth so that we can continue to ensure that our customers have a secure stable and growing technology partner that can help them with their challenges well into the future.

We remain focused on profitable growth. So that we can continue to ensure that our customers have a secure stable and growing technology partner that can help them with their challenge is well into the future.

Speaker 3: Many thanks to all the CART team members, everything they've done to contribute to a great quarter and continue to have our business in an end-bable position for future success.

Many thanks to all Descartes team members for everything they've done to contribute to a great quarter and continuing to have our business in an enviable position for future success.

Speaker 3: But that will turn the call over to Alan to go through our Q3 financial results in more detail. Alan.

With that I'll turn the call over to Alan to go through our Q3 financial results in more detail.

Speaker 2: Hey, thanks Ed. As indicated, I'm gonna take you through our financial highlights for our third quarter, which ended on October 31st.

Hey, Thanks, Ed as indicated I'm going to take you through our financial highlights for our third quarter, which ended on October 31.

Speaker 2: We are pleased to report record quarterly revenue of 144.7 million less quarter, an increase of 19% from revenue of 121.5 million in Q3 last year.

We are pleased to report record quarterly revenue of $144 $7 million. This quarter, an increase of 19% from revenue of a $121 5 million in Q3 last year.

Speaker 2: While revenue from acquisitions completed in the past 12 months contributed nicely to this growth, similar to the past several quarters, our growth in revenue from new and existing customers from our existing solutions was the mean driver and growth again this quarter when compared to last year.

While revenue from acquisitions completed in the past 12 months contributed nicely to this growth.

The past several quarters, our growth in revenue from new and existing customers from our existing solutions was the main driver in growth again, this quarter when compared to last year.

Speaker 2: Looking at our revenue details further, our revenue mix in the quarter continue to be very strong with services revenue increasing 18% to 130.4 million compared to 110.1 million in the same quarter last year, representing approximately 90% of total revenues in the third quarter.

Looking at our revenue details further our revenue mix in the quarter continued to be very strong with services revenue, increasing 18% to $130 4 million compared to $110 1 million in the same quarter last year, representing approximately 90% of total revenues in the third quarter.

Speaker 2: Removing the impact of both the recent acquisitions as well as the impacts from foreign exchange on a light for light basis, we would estimate that our growth in services revenue from new existing customers would have been just over 9% this quarter, would compare to the same quarter last year, and fairly consistent with the first half this year.

Removing the impact of both the recent acquisitions as well as the impacts from foreign exchange on a like for like basis, we would estimate that our growth in services revenue from new and existing customers would have been just over 9% this quarter when compared to the same quarter last year and fairly consistent with the first half this year.

Speaker 2: License revenue came in at 1.5 million or 1% of revenue in the quarter, up slightly from last year, while professional services and other revenue came in at 12.8 million, up 24% to 9% of total revenue, compared to 10.3 million or 8% of total revenue in the third quarter last year. As both professional service hours and hardware revenues were higher this quarter.

License revenue came in at $1 5 million or 1% of revenue in the quarter up slightly from last year, while professional services and other revenue came in at $12 8 million up 24% to 9% of total revenue compared to $10 3 million or 8% of total revenue in the third quarter last year.

Professional service hours and hardware revenues were higher this quarter.

Speaker 2: For the nine months this year, revenue came in at 425 million, an increase of 18% from revenue of 361 million in the first nine months last.

For the nine months. This year revenue came in at $425 million, an increase of 18% from revenue of $361 million in the first nine months last year.

Speaker 2: Gross margin came in at 76% of revenue for the third quarter, down slightly from gross margin of 77% in a third quarter last year. But very consistent with the gross margins we've experienced since the completion of the ground cloud acquisition earlier this year.

Gross margin came in at 76% of revenue for the third quarter down slightly from gross margin of 77% in the third quarter last year, but very consistent with the gross margins we've experienced since the completion of the ground cloud acquisition earlier this year.

Speaker 2: Operating expenses increased by approximately 19.5% in the third quarter over the same period last year and this was heavily related to the cost impact from recent acquisitions. Primarily the ground cloud business, but also operating costs increased from some additional investments we made in labor and non labor costs. As we manage the organic growth that we continue to see in our business.

Operating expenses increased by approximately 19, 5% in the third quarter over the same period last year and this was heavily related to the cost impact from recent acquisitions, primarily the ground cloud business, but also operating costs increased from some additional investments we made in labor and non related non labor costs as we manage the organic growth.

We continue to see in our business.

Speaker 2: So as a result of both revenue growth and solid cost control, balance with targeted investments in a business to manage growth. We continued to see strong adjusted EBITDA growth of 16.5% to a record 63.5 million, or 43.9% of revenue, up from 54.5 million, or 44.9% of revenue in the- 64.9% of revenue in the-

As a result of both revenue growth and solid cost control balanced with targeted investments in our business to manage growth. We continued to see strong adjusted EBITDA growth of 16, 5% to a record $63 5 million or 43, 9% of revenue up from $54 5 million or <unk> 44, 9% of <unk>.

Revenue.

In the third quarter last year.

Speaker 2: We should mention as a reminder that while adjusted EBITDA margins are down slightly from Q3 last year to the either the impact of recent acquisitions, we did see a sharp increase in our adjusted EBITDA ratio in Q3 over Q2 of this year, increasing from 42.3% of revenue in Q2 to 43.9% of revenue in Q3.

We should mention as a reminder, that while adjusted EBITDA margins are down slightly from Q3 last year to the diluted dilutive impact of recent acquisitions.

We did see a sharp increase in our adjusted EBITDA ratio in Q3 over Q2 of this year, increasing from 42, 3% of revenue in Q2 to 43, 9% of revenue in Q3.

Speaker 2: This increases the direct result of the continued operating leverage from organic growth, as well as a steady improvement in the margins from our recent acquisition.

This increase is a direct result of the continued operating leverage from organic growth as well as a steady improvement in the margins from our recent acquisitions.

Speaker 2: For the first three quarters of the year, the Adjusted EBITDA has increased 14% to 182 million from 160 million in the same nine month period last year.

For the first three quarters of the year adjusted EBITDA has increased 14% to $182 million from $160 million in the same nine month period last year.

Speaker 2: Looking at the other gap line items on our income statement this quarter, other charges increased to 9.7 million, up from only 200,000 in Q3 last year. And this increase was result of two unique items.

Looking at the other gap line items on our income statement. This quarter other charges increased to $9 7 million up from only 200000 in Q3 last year and this increase was a result of two unique items.

Speaker 2: First, we approved an additional 7.8 million in anticipated earn out payments related to recent acquisitions as these businesses have performed better than our original expectations and therefore better than the estimates that were made at the time of the acquisition.

We accrued an additional $7 8 million in anticipated earn out payments related to recent acquisitions as these businesses have performed better than our original expectations and therefore better than the estimates that were made at the time of the acquisitions.

Speaker 2: In addition, as part of our ongoing efforts to maintain an effective cost structure, we initiated a restructuring plan early in Q3 at a point of heightened macro uncertainty. The restructuring involved the reduction of just under 2% of our labor force.

In addition, as part of our ongoing efforts to maintain an effective cost structure. We initiated a restructuring plan early in Q3 at a point of heightened macro uncertainty the restructuring involve the reduction of just under 2% of our labor force.

Speaker 2: and the closing in whole are in part of four of our offices as we continue to adopt a flexible work model for our employees and realize that we had certain facilities that were not going to be actively used by our employees going forward.

And the closing in whole or in part of four of our offices as we continue to adopt a flexible work model for our employees and realized that we had certain facilities that were not going to be actively used by our employees going forward.

Speaker 2: We would estimate that the cost savings from these completed restructuring efforts would be in the area of 4 million annually. And the resulting charge to P&L and third quarter was approximately 1 million.

We would estimate that the cost savings from these completed restructuring efforts would be in the area of $4 million annually.

And the resulting charged to P&L in the third quarter was approximately $1 million.

Speaker 2: As a result of the increased profits from the growth in the business, offset by this increase in other charges. From a gap earnings perspective, net income came in at 26.6 million or 31 cents per diluted common share in the third quarter, very consistent with net income of 26.5 million or 31 cents per diluted common share in the third quarter last year.

As a result of the increased profits from the growth in the business offset by this increase in other charges from a GAAP earnings perspective, net income came in at $26 6 million or <unk> 31 per diluted common share in the third quarter.

Consistent with net income of 30.

$26 5 million or <unk> 31 cents per diluted common share in the third quarter last year.

Speaker 2: We should also note that the income tax expense for the third quarter came in at 8.2 million or 23.5% of free tax income, which is slightly lower than our blended statutory tax rate of 26.5. Mainly as a result of recognizing certain unrecorded tax benefits from past periods.

We should also note that the that the income tax expense for the third quarter came in at $8 2 million or 23, 5% of pre tax income, which is slightly lower than our blended statutory tax rate of $26 five mainly as a result of recognizing certain unrecorded tax benefits from past periods.

Speaker 2: Net income for the nine month period year to date was 84.1 million or 97 cents per diluted comment share

Net income for the nine month period year to date was $84 1 million or <unk> 97 per diluted common share.

Speaker 2: compared to 72.5 million or 82 cents per dollar to comment share in the first nine months last year. Again, with the higher operating profits from our growing business being partially offset with the higher amount of other charges from the urinot adjustments and the FY24 restructuring.

<unk> to $72 5 million or <unk> 82 per diluted common share in the first nine months last year again with the higher operating profits from our growing business being partially offset with the higher amount of other charges from the earn out adjustments and the FY 'twenty for a restructuring plan.

Speaker 2: With these solid operating results, strong AR collections and offset partially by the higher cash tax payments we incurred. Cash flow generated from operations came in at 56.1 million or 88% of adjusted EBITDA in the third quarter, an increase of 10% compared to 50.9 million of cash flow from operations in the third quarter less.

With these solid operating results strong AR collections.

And offset partially by the higher cash tax payments, we incurred cash flow generated from operations came in at $56 1 million or 88% of adjusted EBITDA in the third quarter, an increase of 10%, 10% compared to $50 9 million of.

Cash flow from operations in the third quarter last year.

Speaker 2: For the nine months year to date, offering cash flow has been 157 million or 86% of adjusted EBITDA, up 11% from 142 million in the same night.

For the nine months year to date operating cash flow has been 100 $157 million or <unk>, 86% of adjusted EBITDA up 11% from $142 million for the same nine months period last year and.

Speaker 2: And we should mention that subject to unusual events and quarterly fluctuations. We expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80 and 90% of our Adjusted EBITDA in the quarters ahead.

And we should mention that subject to unusual events and quarterly fluctuations. We expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80, and 90% of our adjusted EBITDA in the quarters ahead.

Speaker 2: As a reminder, the additional earn out payments that we've expense in other charges in the income statement, in the income statement, these past few quarters will be one of those types of unusual events. As these amounts will show as a reduction to cash flow from operations in future quarters when these higher earn out payments are made.

As a reminder, the additional earn out payments that we have expenses and other charges in the income statement and the income statement. These past few quarters will be one of those types of unusual events. As these amounts will show as a reduction to cash flow from operations in future quarters. When these higher earn out payments are made.

Speaker 2: Overall, as Ed said, we are once again very pleased with our quarterly operating results in the quarter, as strong organic growth and solid performance from our recent acquisitions resulted in strong growth in both revenue and adjusted EBITDA for the quarter.

Overall as Ed said, we are once again very pleased with our quarterly operating results in the quarter as strong organic growth and solid performance from our recent acquisitions resulted in strong growth in both revenue and adjusted EBITDA for the quarter.

If we turn our attention to the balance sheet, our cash balances totaled $280 million at the end of October up from approximately $227 million at the end of the second quarter in July.

Speaker 2: If we turn our attention to the balance sheet, our cash balance is totaled 280 million at the end of October , up from approximately 227 million at the end of the second quarter in July . This increase in cash is primarily related to the 56 million in cash flow from operations that we generated in the quarter.

This increase in cash is primarily related to the $56 million in cash flow from operations that we generated in the quarter.

Speaker 2: As a result, as Ed mentioned, we have 280 million in cash available to us as October 31st, as well as our unused $350 million credit facility available to deploy towards future acquisitions, consistent with our-

As a result, as Ed mentioned, we have we have $280 million in cash available to us as of October 31, as well as our unused $350 million credit facility available to deploy towards future acquisitions, consistent with our business plan.

Speaker 2: As we look to the final quarter of fiscal 2024, we should note the follow.

As we look to the final quarter of fiscal 2024, and we should note the following.

Speaker 2: After incurring approximately 4.8 million in capital additions for the first nine months of the year, we expect to incur approximately one to 2 million in additional capital expenditures in the fourth quarter of this.

After incurring approximately $4 8 million in capital additions for the first nine months of the year, we expect to incur approximately $1 million to $2 million in additional capital expenditures in the fourth quarter of this year.

Speaker 2: At this point, we currently expect that in the fourth quarter, we will use approximately 23.3 million of our cash to pay additional contingent consideration on two past acquisition.

At this point, we currently expect that in the fourth quarter, we will use approximately $23 $3 million of our cash to pay additional contingent consideration.

On to past acquisitions.

Speaker 2: While this entire 23.3 million estimated contingent consideration to be paid as a crude foreigner balance sheet, approximately 12.7 million of this balance relates to the portion of the urnode arrangements accrued for at the time of the acquisition and will be reflected in cash flow from financing activities.

While this entire $23 3 million estimated contingent consideration to be paid is accrued for in our balance sheet approximately $12 $7 million of this balance relates to the portion of the earn out arrangements accrued for at the time of the acquisition and will be reflected in cash flow from financing activities, while the remaining $10 6 million expected to be paid.

Speaker 2: While the remaining 10.6 million expected to be paid, will be reflected in cash flow from operating activities. As the financial results from these acquisitions have both been better than our initial expectations, and therefore the urnote payments are higher than our original estimates made at the time of the act.

We will be reflected in cash flow from operating activities as the financial results from these acquisitions of both being better than our initial expectations and therefore, the earn out payments are higher than our original estimates made at the time of the acquisitions.

Speaker 2: After incurring amortization costs of 45.4 million in the first nine months of the year, we expect amortization expense will be approximately 14.7 million in the fourth quarter with this figure being subject to adjustment for foreign exchange and see true acquisition.

After incurring amortization costs of $45 4 million in the first nine months of the year, we expect amortization expense will be approximately $14 7 million in the fourth quarter with this figure being subject to adjustment for foreign exchange and future acquisitions.

Speaker 2: Our income tax rate for the first nine months of the year came in at approximately 24.5% of pre-tax income.

Income tax rate for the first nine months of the year came in at approximately 24, 5% of pretax income.

Speaker 2: Looking ahead into the fourth quarter, we currently expect our overall tax rate will again come in below our blended statutory tax rate of 26.5%. And as a result, we'll experience a tax rate in the range of 23 to 25% of pre-tax income for the e.

Looking ahead into the fourth quarter. We currently expect our overall tax rate will again come in below our blended statutory tax rate of 26, 5% and as a result, we will experience a tax rate in the range of 23% to 25% of pre tax income for the year.

Speaker 2: After incurring stock-based compensation of expense of 12.4 million in the first nine months of the year, we currently expect stock compensation to be approximately 4.4 million in the fourth quarter, subject to any forfeitures of stock options or sharing.

After incurring stock based compensation.

<unk> expense of $12 4 million in the first nine months of the year. We currently expect stock compensation to be approximately $4 4 million in the fourth quarter subject to any forfeitures of stock options or share units and with that I'll turn it back over to Ed who will give you some closing comments as well as our baseline calibration for Q4.

Speaker 2: And with that, I'll turn it back over to Ed with who will give you some closing comments as well as our baseline calibration for Q4.

Okay.

Hey, great. Thanks, Al So where I am.

Speaker 3: The great thanks, Alan. So we're a month into Q4 and the end of our fiscal year. Generally areas are a business that benefit from end of your holiday sales, such as e-commerce and truck deliveries. We'll see you up, up, up, check and buying.

Month into Q4, and the end of our fiscal year.

General areas of our business the benefit from end of year holiday sales such as E Commerce and truck deliveries, we will see an uptick in volumes.

Speaker 3: Another area such as ocean transportation are at a seasonal low point and the inventory is already in store. Our forecasting and plans remain relatively cautious giving the general malaise and shipment violence being in the previous quarters this year. However, we're also mindful of the pressure ports with initial positive statistics on Black Friday sales violence.

In other areas, such as Ocean transportation or at a seasonal low point in inventories are already in store, our forecasting and plans remain relatively cautious given the general malaise in shipment volumes during the previous quarters. This year. However, we're also mindful of the press reports with initial positive statistics on Black Friday sales volumes.

Speaker 3: We keep these things in mind as we set our calibration for the quarter. Our business is designed to be predictable and consistent. We believe that stability and reliability are valuable to our customers and employees and our broader stakeholders.

We keep these things in mind as you said our calibration for the quarter. Our business is designed to be predictable and consistent we believe that stability and reliability are valuable to our customers employees and our broader stakeholders.

Speaker 3: To deliver this consistency, we continue to operate from the following print.

We deliver this consistency we continue to operate from the following principles.

Speaker 3: Our long-term plan is for our business to grow adjusted, even to 10 to 15% annual.

Our long term plan is for our business to grow adjusted EBIT of 10% to 15% annually.

We grow through a combination of organic growth and acquisitions, we take a neutral party approach to building and operating solutions on our global Logistics network, we don't favor any particular party, we run our business for all supply chain participants connecting shippers carriers logistics service providers and customs authorities.

Speaker 3: When we over perform, we try to reinvest that over performance back into our business. We focus on recurring revenues and establish relationships with customers for life. We thrive on operating a predictable business that allows us to forward visibility to our revenues and investment payback.

When we over perform we try to reinvest that over performance back into our business, we focus on recurring revenues and establish relationships with customers for life.

And we thrive on operating a predictable business.

That allows us to for to forward visibility to our revenues and investment payback.

And our Q3 report we provided a comprehensive description of baseline revenues baseline calibration and their limitations.

Speaker 3: In our Q3 report, we provided a comprehensive description of baseline revenues, baseline calibration, and their limitations. As of November 1st,

As of November 1st 2023.

Speaker 3: Using foreign exchange rates of 72 cents to the Canadian dollar, the dollar six to the euro, and a dollar twenty one to the pound. We estimate that our baseline revenues for the fourth quarter of 2024 are approximately a hundred and twenty seven million dollars.

Using foreign exchange rates of <unk> 72 to the Canadian dollar $1 six to the euro and $1 21 to the pound we estimate that our baseline revenues for the fourth quarter of 2024 or approximately $127 million on our baseline operating expenses are approximately $79 million.

Speaker 3: and our baseline operating expenses are approximately $79 million. We consider this to be our baseline adjusted ebit to calibration of approximately $48 million for the fourth quarter of 2024, or approximately 38% of our baseline revenues as at November 1st, 2023.

Consider this to be our baseline adjusted EBIT calibration of approximately $48 million for the fourth quarter of 2024 were approximately 38% of our baseline revenues as at November one 2023.

Speaker 3: We continue to expect that we'll operate it in just the ebid to operate in margin range of 40 to 45%. Our margin can vary in that range given such things as far in exchange movements and the impact of acquisitions as we integrate them into our business.

We continue to expect that will operate at an adjusted EBIT to operating margin range of 40% to 45% our margin can vary in that range, given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business.

We've got lots of exciting things planned for our business. It remains an uncertain broader economic and supply chain environment, but we believe our proven track record of execution solid capital structure and customer focus will serve us well thanks to everyone for joining us on the call today as always we're available to talk to you about our business in whatever manner is most convenient.

Speaker 3: We've got lots of exciting things planned for our business. It remains an uncertain, broader economic and supply chain environment, but we believe our proven track record of execution, solid capital structure, and customer focus will serve us well. Thanks to everyone for joining us on the call today, as always, we're available to talk to you about our business and whatever manner is most convenient for you. And with that, operator, I'll now turn it over to you to manage the Q&A portion of the call.

For you and with that operator, I will now turn it over to you to manage the Q&A portion of the call. Thank you.

Thank you ladies and gentlemen, we'll now conduct the question and answer session. If you have a question. Please press star followed by the number one on your Touchtone phone you would hear at three bone broth acknowledging your request.

Speaker 1: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you have a question, please press par followed by the number one on your touchstone phone. You will hear a three-tone prompt acknowledging your request. If you would like to cancel your request,

I would like to cancel your request please press star two.

Speaker 1: Your first question comes from the line of mad pa from William Blair. Your line is not open.

Your first question comes from the line of Matt Pfau from William Blair. Your line is now open.

Speaker 4: Hey, great. I wanted to ask a question on competition and on the macro. So one of your public competitors had some notable struggles as past quarter. And there's another private competitor that went out of business, just wondering if you're seeing some of the same headwinds that they're seeing. And some of their struggles is having any impact on you competitively.

Hey, Greg I wanted to ask a question on competition and on the macro.

You know one of your public competitors had some notable struggles this past quarter and Theres. Another private competitor that went out of business. Just wondering if youre seeing some of the same headwinds that theyre seeing and some of their struggles is having any impact on you competitively.

Speaker 3: Thanks, Matt. I mean, I think we saw some other things at the impact of them. We obviously fought our way through and ended up with pretty good results. The two company you talked about made.

Thanks, Matt I mean.

I think we saw some of the things that impacted them. We obviously fought our way through it and ended up with pretty good results.

The two companies Youre talking about may have been in a different position on that.

Speaker 3: You know, things went bad maybe with transportation, transaction volumes and the customer suffers a result and they didn't have any other products and services to make up for it. We obviously were in a different situation and we were able to take advantage of that.

Things went bad maybe with transportation transaction volumes and customer suffer as a result, and they didn't have any other products and services to make up for it.

We obviously, we're we're in winter differences were in a different situation and we're able to take advantage of that.

Speaker 3: impension competitors struggling on that being good news for you because customers turn elsewhere and that also makes them potentially concerned about who they're doing business with and when you're a strong company like they carcad ends up planning.

Sometimes competitors struggling ends up being good news for you I guess customers turn elsewhere that also makes them potentially concerned about who they're doing business with them. When you are a strong company like Descartes that ends up playing interfere.

Speaker 4: Got it and then just on the services revenue that did take down sequentially was that driven by some of the you know headwinds on the transaction side that you cited

Got it and then just on the services revenue that did tick down sequentially was that driven by some of the headwinds on the transaction side that you cited.

Speaker 3: I think so, yeah, I mean, you know, we we we had a very strong quarter, but it probably would have been better if if some of our customers vines were doing even better. They wasn't a horrible quarter. I think people predicting it was going to be a lot worse than it was in terms of our customers transportation vines. And we have the benefit of continuing to sign up new customers in the face of that. We did all right, and that period probably would have been even better if.

I think so yes.

We had a very strong quarter, but.

It probably would've been better.

If.

Some of our customers' volumes are doing even better.

They are.

It wasn't a horrible quarter NTP wont predicting it was going to be a lot worse than it was in terms of our customers' transportation volumes.

And we have the benefit of continuing to sign up new customers in the space of that so.

We did all right in that.

<unk>, probably would have been even better.

Speaker 3: If that part had gone well and we had a bunch of other parts of our business So that I mentioned on the call that we're really doing well for that kind of more than made up for it So I'm wrapping with the results under the circumstances for sure

If that part has gone well and we had a bunch of other parts of our business what I mentioned on the call that we're really doing well for that kind of more than made up for it. So we're happy with the results.

Under the circumstances for sure.

Okay, great. Thank you appreciate it.

Hey, Thank you Matt.

Your next question comes from the line of Justin Long from Stephens. Your line is now open.

Speaker 1: Your next question comes from the line of Justin Long from Stephens. Your line is not open.

Speaker 5: Thanks and good afternoon. Ed, maybe building on that last question, could you share how your transportation volumes performed on a year-to-year basis in the quarter? And Alan, I heard your commentary around organic growth for the services revenue line, but do you have the estimate for all-in organic growth as well?

Thanks, and good afternoon, and maybe building on that last question could you share what your how your transportation volumes performed on a year over year basis in the quarter and Allen I heard your commentary around organic growth for the services revenue line, but do you have the estimate or all in.

Organic growth as well.

Speaker 3: I don't know that I have the exact numbers down year every year, but I do.

I don't know that I have the exact numbers down year over year.

Okay.

Speaker 2: Yeah, so if we want to talk about organic growth numbers, we're just over 9% on the services side and just very, very similar to that overall in the business. There was certainly some slight negative impacts on FX that would have affected the question matches had with respect to our services revenue being down slightly quarter on quarter. That was, they were up actually neutral with FX, but roughly 9% in both services revenue and total revenue for the...

Yes, so if you want to talk about organic growth numbers.

We're just over 9% on the services side and just very very similar to that overall in the business. There is there was certainly some slight negative impacts on FX that would've affected.

The question, Matt just had with respect to our services revenue being down slightly quarter on quarter. They were up actually neutral with FX, but roughly 9% in both services revenue and total revenue for the quarter.

Speaker 5: Okay, and any sense on transactional volumes on a year of a year basis, even if it's just kind of directionally, it sounds like maybe there was pressure year over year or any additional color you can share there.

Okay, and any sense on transactional volumes on that on a year over year basis, even if it's just kind of directionally. It sounds like maybe there was pressured year over year.

Any additional color you can share there.

Speaker 2: Yeah, there was definitely some pressure year on year. We certainly did better with our subscription services for software and databases. But as Ed said, a couple times in the prepared comments, we kind of expected that our businesses built to deal with those types of fluctuations. Those are not new for us. We'll see those types of things happen from time to time. Quite honestly, we've probably seen weaker transactions in the last 12 months.

Yes, there was definitely some pressure year on year, we certainly better and get better with our subscription services for software and databases, but as Ed said it a couple of times in the prepared comments, we kind of expected that our business is built to deal with those types of fluctuations those are not new for US we will see those types of things happen from time to time quite honestly, we probably.

Seen weaker transactions in the last 12 months.

Speaker 2: But, but overall, you know, what matters for us is the overall blood that growth rate and then businesses deal to us.

But but but overall what matters for us is the overall blended growth rate of that business is dealt to us.

Speaker 2: to grow in the 9% overall, is more of our...

To grow in the 9% overall as is or is it more of our focus.

Got it and I guess lastly, Ed could you just talk about the acquisition pipeline curious what youre seeing today versus a quarter ago and your level of confidence that we can peak capital deployment pick up the next couple of quarters or so.

Speaker 5: Got it. And I guess lastly, Ed, could you just talk about the acquisition pipeline curious what you're seeing today versus a quarter ago and your level of competence that we can see capital deployment pick up the next couple of quarters.

Speaker 3: Yeah, without getting into too much detail on it, we like the environment right now, a couple years ago that we're...

Yes, without getting into too much detail on it.

We like the environment. We're in right now a couple of years ago there were.

Speaker 3: Not many companies for sale and the ones that were in our estimation were oftentimes trying to church.

Not many companies for sale and the ones that were in our estimation, where oftentimes trying to charge too much.

Speaker 3: made a difficult acquisition environment for us. That things are certainly softening from that perspective and great opportunities for us to get more deals done at increased ranges that we think are good value.

Made a difficult acquisition environment for us that things are certainly softening from that perspective, we're not creating opportunities for us to get more deals done and price ranges that we think are good value.

Speaker 3: more companies are coming up for sale and as a result and maybe in addition to.

More companies are coming up for sale.

And as a result, and maybe in addition to.

Speaker 3: Companies are coming up for sale with a more reasonable expectation evaluation and that's creating an environment where we think we're in a very good position to get more guilds done in the future.

Companies are coming up for sale and with a more reasonable expectation on valuation and thats, creating an environment, where we think we're in a very good position to get more deals done in the future.

Okay I'll leave it there thanks for the time.

Hey, Thank you Justin.

Your next question comes from the line of Daniel Chan from DB Cowen. Your line is now open.

Speaker 1: Your next question comes from the line of Daniel Chan from TV Cowan. Their line is not open.

Speaker 2: You know how I get even, maybe to follow on that last question, the cash balance continues to grow at about $280 million and you do about $200 million of free cash flow year, which is more than you've typically spent on acquisitions in prior years. So any other considerations for that capital just given the strong cash balance and the strong cash flows, or do you think you'll be able to deploy that towards acquisitions over the next?

Hi, good evening, maybe to follow on that last question. The cash balance continues to grow at about $280 million you do about $200 million of free cash flow year, which is more than you've typically spent on acquisitions in prior years. So any other considerations for that capital just given the strong cash balance and strong cash flows or do you think youll be able to do.

All of that towards acquisitions over the next few years.

Speaker 3: Listen, we're making more money every year, that's great. We only buy companies when we think it's a good deal. And that means we have to get cash.

Well listen I mean, we're making more and more money every year and that's great.

We only buy companies when we think it's a good deal.

And that means we have extra cash.

Extra cash or not.

Speaker 3: I apologize for that. We absolutely think that the winner in our space is going to continue to be equipped with a positive and we absolutely believe that there are many more companies that are acquisition candidate for us. So while we talk about it at our board level, we'll discuss that recorder. You know, should we...

And I apologize for that.

We absolutely think that the winner in our space are going to continue to be equivalent acquisitive and we absolutely believe that there are many more companies that are.

Acquisition.

Candidates for us.

While we talk about at our board level will discuss every quarter I can or should we.

We havent dividend.

Speaker 3: Somebody give this money back to shareholders, to share by Valque, whatever.

Can we get money.

Money back to shareholders share buyback or whatever.

Speaker 3: But at the moment, and I think for the sustainable future, we believe that that money should go towards acquisitions. And it's not really gonna harm us, at the moment to have more cash sitting in the bank, it's actually a good thing. Our company continues to make more money. And as we look forward and say, hey, we think we're gonna like this future acquisition environment. And go, hey, I think we'd be smart to hang on to it and be ready to act if a bunch of stuff comes up for sale at the same time.

But at the moment and I think for sustainable future, we believe that that money should go towards acquisitions.

And it's not really going to harm us.

The moment to have.

More cash in the bank, it's actually a good thing our company continues to make more money.

And as as we.

Look forward and say Hey, we think we're going to like this future acquisition environment.

Hey, I think we would be smart to hang onto it and be ready to act if a bunch of stuff comes up for sale at the same time, we certainly think we have the team too.

Speaker 3: Certainly think we have the team to negotiate, purchase and integrate those types of companies when they come in. And we want to be ready when that happens.

Negotiate purchased and integrate those types of companies when they come in and we wanted to be ready when that happens.

That's why you see us holding onto our cash.

Speaker 3: Yeah, it makes a lot of sense. Thanks for that. I made another question on the macro environment. You talked about weaker volumes last quarter. Just wondering whether you saw that extend into the peak holiday shopping season over the last month. We've seen headlines that Black Friday, cyber Monday volumes. Well, you know, we're not reporting on this month, but I have seen some of the transportation statistics unrelated to our transaction volumes.

That makes a lot of sense thanks for that.

Maybe another question on the macro environment.

You talked about weaker volumes last quarter, just wondering whether you saw that extend into the peak holiday shopping season over the last month, we've seen headlines that black Friday, cyber Monday volumes well listen.

We're not reporting on this month, but I have seen some of the transportation statistics unrelated to our transaction volumes.

Speaker 3: I'd say they look good. And you can probably see some of that as you read the paper right now. Black Friday was a pretty good black Friday and the report's on reading right now. And when I look at, and again, independent of our transactions lines, when I look at the transportation statistics, but that we would normally look at over the last month.

I would say the I would say they look good.

And.

You can probably see some of that as you read the paper right now Black Black Friday was a pretty good black Friday, the reports I'm reading right now and when I look at and again independent of our transaction lines when I look at the transportation.

<unk> statistics, but that we would normally look at over the last month.

Speaker 3: They look good starting things, certainly we're starting to pick up an anticipation of black Friday. So that

They look good starting to things that certainly we're starting to pick up in anticipation of that Black Friday. So that's good news.

That's helpful. Thanks, Ed.

Thank you too.

Your next question comes from the line of Scott Group from Wolfe Research. Your line is now open.

Speaker 1: Your next question comes from the Linus Scott group from Wolf Research. Your line is now open.

Speaker 6: Hey, thanks, afternoon. And I just want to follow up on that last point, because I think we're seeing a little bit of better import activity, better air freight rates. You're saying you're not reporting on that, but is that sort of reflected to the extent that you are seeing that? Would that be reflected in your calibration?

Hey, Thanks afternoon, So Ed I just wanted to follow up on that last point, because I think we're seeing a.

A little bit of better import activity better airfreight rates, youre, saying youre not reporting on that but is that sort of reflect to the extent that you are seeing that is that would that be reflected in your <unk>.

Calibration.

Our calibration was done at the first day of the.

Speaker 3: The calibration was done at the first day of the quarter. So technically now.

Quarter, so technically now.

Speaker 3: I might kind of about not reporting on it is just saying, hey, I'm reporting on, yeah, through the end of the quarter, not the first month of the first quarter. And specifically to your question, our calibration this quarter was done as of the first day of the quarter.

And my comment about not reporting on it is just saying hey.

I am reporting on through the end of the quarter not yet not the first month of the first quarter and specifically to your question. Our calibration. This quarter was done as of the first day of the quarter.

Speaker 6: Okay, that makes sense. Okay. I wanted to get your perspective, you know, a year ago we were talking about

Okay that makes sense, okay I wanted to get your perspective.

A year ago, we were talking about.

Speaker 6: Justin Time is becoming just in case. I'm wondering is with much higher rates, are we just, is that sort of done, or are we back to Justin Time and how does that?

Just in time is becoming just in case I'm wondering is.

With much higher rates or are we just is that sort of done or are we back to just in time and how does that.

Is that a good thing or a bad we're probably I mean, it's a bit of a guess on my part we're just getting.

Speaker 3: Is that a good thing or a bad thing? We're probably signing this a bit of a guess on my part. You know, we're just getting uh...

Sure.

Speaker 3: Some comments from customer about this, but, but, you know, I don't know this perfectly, but we always believe that just in time.

Some comments from customers about this but I.

I don't know this this perfectly but we always believe that just in time.

Speaker 3: Now just in case we always believed it would end up gravitating towards back just in time You know people forget about how bad it was three years ago when the ports were all backed up And then they start going boy I'm losing a lot of money an inventory carrot cost I've had all this extra stuff and now interest rates just went up significantly and so now that's a lot of money and I should be more careful

Now just in case, we always believed it would end up gravitating towards back just in time people forget about how bad it was three years ago and the ports were all backed up and then they start going boy Im losing a lot of money in inventory carry costs that have all this extra stuff and now interest rates just went up significantly and so now that's a lot of money and I should.

Be more careful and we always believed that was going to drift towards back debt and I'd say.

Speaker 3: And we always believed that it was gonna drift towards back that and I say

Speaker 3: If I had to venture to guess that we're probably somewhere approaching back to just in time on a lot of cases.

But if I had to venture to guess that we're probably somewhere approaching back to just in time and a lot of cases.

Speaker 3: because high interest rates and the warehouses are so big and you can only hold so much inventory. You've got to make good approximations about what customers are going to buy in stores and companies are always going to try and do.

Because of higher interest rates.

And.

The warehouses are only so big and you can only hold so much inventory and you got to make.

Good.

<unk> about what customers are going to buy in stores in Qatar and companies are always going to try and do that.

Speaker 3: And I think we're drifting back towards just the time.

And I think you were drifting back towards just in time for sure in most cases.

Speaker 3: Makes sense. And then just lastly, you know, nice step up in the EBITDA margin. Did we see the full impact of some of the cost actions this quarter? Or do we see more of that? Show up in Q4? And so maybe we see another further step up in the margin. Yeah, I'll flip that. Let me let down. I have to let more space.

It makes sense and then just lastly, and a nice step up in the EBITDA margin did we see the full impact of some of the cost actions this quarter or do we see more of that show up in Q4, and so maybe we see another further step up in the Marcellus.

Let me, let Allen answer that more specifically.

Speaker 9: Yes, sure. So we did initiate our, our, our, our recession plan earlier in the quarter. So for the most part, we've completed it and, and the results are in the quarter. There will be a little bit of an impact coming through Q, Q4 given that there'll be a full quarter impact for, for all the changes, but, but for the most part, Q3 had, had most of it baked in. If that helped. All right. Thank you.

Yes, sure. So we did initiate our restructuring plan earlier in the quarter. So for the most part we've completed it and the results are in the quarter, there will be a little bit of an impact coming through Q Q4, given that there'll be a full quarter impact for all of the changes, but but for the most part.

Q3 had.

<unk> had most of it baked in if that helps.

Alright. Thank you guys appreciate the time.

Okay. Thank you Scott.

Speaker 1: Asadam Aindaur, if you have a question, please press star, follow by the number one in your touchstone phone.

As a reminder, if you have a question. Please press star followed by the number one and your Touchtone phone.

Speaker 1: Your next question comes from the line of Robert Young from Canacard Genuity. Your line is now open.

Your next question comes from the line of Robert Young from Canaccord Genuity. Your line is now open.

Speaker 10: Hi, good evening. The first question is asking about the shutdown of a private competitor. Maybe just another question there. They, a lot of reports in the news suggested that they really struggled to find a strategic buyer that there was not a lot of activity out there. And so, like, is there a big sea change or is there a bigger change in the number of buyers or the interest in the space?

Hi, good evening.

First question is asking about the shutdown of a private competitor maybe just another question there.

A lot of reports in the in the.

And you suggested that they really struggled to find a strategic buyer that there is.

Not a lot of activity out there and so like is there a big sea change or is there a bigger change in the number of buyers or the interest in the space that puts you in a better position competitively.

Speaker 3: that puts you to better, better, better, to be better. All right. I, I, I, I, I, I, I, I, I, I, while I knew who they were talking about, when they asked the question a couple questions ago, I, I, I,

Hi.

While I knew who they were talking about let me ask the question a couple of questions ago.

Speaker 3: and I did bother disagreeing with the question. I don't know that we're technically really a competitor of the guy that he was talking about going out of the business. They're more of a freight broker. They had a business that was an electronic freight brokerage, and that's not something we would buy. That's a customer of ours. They were a small customer of ours. You know, and.

I didn't bother disagreeing with your question.

I don't know that were detected with a competitor of.

The guy that he was talking about going out of business. They are more of a freight broker. They had a business that was an electronic freight brokerage and thats not something we would buy that as a customer of ours. They were a small customer of ours.

And.

Speaker 3: You know, furthermore, when I, this has happened, like, I've watched this movie like 30 times in my life, where a company comes in that does the same thing as everybody else in an industry and says, I'm gonna be the automated guy that does that. And every time I hear that, I go, that's a misnomer. You're trying to pretend like your technology company went in this case, you're a freight broker. And you're saying that the reason that we should invest in your freight brokerage is,

Furthermore, when.

This has happened like I've watched this movie like 30 times in my life, where a company comes in that does the same thing as everybody else in an industry and says I'm going to be the automated guy who does that and every time I hear that I go that's a misnomer youre trying to pretend like you are a technology company. When in this case, you're a freight broker and youre, saying that the reason that we should invest in your freight.

Brokerage is.

Speaker 3: It's because you're going to be more automated than everyone else. And I always think to myself.

Is because youre going to be more automated than everyone else and I always thinking to myself.

Speaker 3: Even if that creates an advantage for you for some period of time, it's not going to last long because your competitors are going to buy automations from people like us that provide awesome automation in this industry. And that advantage will evaporate in short order, and you'll be back to being a freight broker with no significant advantage ever anyone else. I think that's what happens here. I think, you know, in addition to that, because they raised a lot of money, they dumped a lot of money into becoming an automated freight broker and as a result,

Even if that creates an advantage for you for some period of time, it's not going to last long.

Your competitors are goodbye automation from people like us that provide automation in this industry and an advantaged rollback rate in short order and you'll be back to being a freight broker with no significant advantage over anyone else.

That's what happened here.

In addition to that because they raised a lot of money they dumped a lot of money into becoming automated great broker and as a result.

Speaker 3: They had a big burn that was hard to overcome when things went back to normal. And as a result,

Yeah.

They had a big burn that was hard to overcome when things went back to normal and as a result.

Okay.

Speaker 3: you know, they went out of business and you know, we didn't even look, you know, that's not something we would buy. And that's something maybe one of our competitors, or sorry, one of our customers would buy. And...

They went out of business.

We didn't even look we know that's not something we would buy desktop may be one of our competitors are one of our customers with Bob.

Uh huh.

Speaker 3: They did it. I think the competitors probably thought, I'll just steal those customers from them, and that'll be the end of it. I'd do my guesses to what happened there.

They did it.

The competitors, probably fall, obviously build those customer from them and that will be the end of it.

I guess as to what happened there but.

Speaker 3: That you know for us that that business we were just looking at from afar. They were minor customer bars We were aware what's going on, but not not particularly interested in

For us that that business, where we're just looking at from afar. They were minor customer of ours, we were aware of what's going on but not not particularly interested in the asset.

Speaker 10: Second question for me would be about, I think on the call you've been talking about maybe offsetting weaker transaction volumes than you expected with maybe better subscription side. And so as curious as that consolidation, is there any other, you know, what is there any other factor there, maybe to call out?

Okay.

Second question for me would be about I think on that call you been talking about maybe offsetting weaker transaction volumes than you expected, but maybe better subscription side and so I was curious is that consolidation is there any other.

Is there any other factor there maybe to call out.

Speaker 3: No, I mean, no, I will listen. We have a bunch of areas are business that are booming. We have transaction volumes that are you know, stuff in like 30 a little over 30% of our business that

Our customers know.

No listen we have a bunch of areas our business that are booming we have.

Transaction volumes that are.

Stuffed unlike 30 little over 30% of our business.

Speaker 3: have always and will always fluctuate up and down a little bit. Everyone's in the wild, you seem fluctuate down a lot, like in a way. But even that a lot is 8%. That was, they were down all the way 8%. And I think, geez, you know, why is that? Because most of the stuff that we use still has to ship. And, you know, maybe in the good times, we're all buying lobster. And at bad times, we're all buying chicken. But it's...

Have always and will always fluctuate up and down a little bit every once in a while you seem fluctuate down a lot like in a way, but even that a lot of 8% that was they were they were down in all the way to 8% I think geez.

Why is that because most of the stuff that we use still has to ship and maybe in good times, we're all buying lobster and in bad times, we're all buying chicken.

Speaker 3: It's the same shipping volume. Okay, there's one cost a lot more than the other. Maybe we don't buy boats and jet skis for a couple of years, but most of the stuff that we need to live and run our households.

It's the same shipping volume.

One cost a lot more than the other.

Maybe we don't buy both and Jeff you talked a couple of years, but.

But most of the stuff that we need to live and run our households.

Speaker 3: still gets shipped and we get that shipping bond. So even in the worst of times, we may be percent down for the work that's ever gonna get is not that much. And I go, these variations in our business happened from time to time, guys, like us need to be prepared for it. And for us, we have a broad enough business where we have a bunch of other things that are really going great, so that when the transportation bonds are a little weak, like they were in the last six, eight months, while they were recovering, but not as strong as we'd like to see them.

Still get shipped and we get that ship in volume so even in the worst of times and 8% down for the work that's ever going to get is not that much.

Yeah.

These variations in our in our business happened from time to time, guys like us need to be prepared for it.

So for US we have a broad enough business, where we have a bunch of other things that are really going great. So that when they traded transportation volumes are a little weak like they were in the last six to eight months, while they were recovering button, but not as strong as we'd like to see them.

Speaker 3: You know, our business continues to perform well through that. And I think that's a great sign of a resilient business that, you know,

Our business continues to perform well through that and I think that's a great sign of a resilient business that you know.

Uh huh.

Speaker 7: Something like volumes go down and we are answered to that. It's nothing to see here. We continue to do well. All right. Thanks for taking the question. Hey, thank you, Ralph.

Nothing like volumes go down and our answer to that is nothing to see here, we continue to do well.

Alright, thanks for taking the question.

Great. Thank you Ralph.

There are no further questions at this time please continue.

Speaker 3: All right, great. Thanks everyone for your time. We look forward to seeing you in the coming weeks and months and now reporting back to you next quarter with BQ4 results. Have a great...

Alright, great. Thanks, everyone for your time, we look forward to seeing you in the coming weeks and months and reporting back to you next quarter with the Q4 results have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker 1: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.