Q4 2024 The Descartes Systems Group Inc Earnings Call

Operator: Good afternoon, ladies and gentlemen. I'm pleased to welcome you to the Descartes Systems Group quarterly results conference call. At this time, all lines are in a listen-only mode.

Good afternoon, ladies and gentlemen.

Speaker Change: Welcome to Descartes systems Group quarterly results conference call at.

Speaker Change: At this time.

Speaker Change: Answer in a listen only mode. Following the presentation, we will conduct a question and answer session.

Operator: 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. I would now like to turn the conference over to Scott Pagan. Please do so.

Speaker Change: Any time you win just call you require immediate assistance. Please press Star Zero Party, operator, I would now like to turn the conference all participant pagan. Please go ahead.

John Scott Pagan: Thank you, and good afternoon, everyone. Joining me remotely on the call today are Ed Ryan, CEO, and Allan Brett, CFO, and I trust that everyone has received a copy of our financial results press release that was issued earlier today. Portions of today's call, other than historical performance, include statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws.

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

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

John Scott Pagan: These forward-looking statements include statements related to our assessment of the current and future impact of geopolitical, trade, 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, anticipated and potential revenue losses and gains, anticipated recognition and expensing of Possible 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 Change: These forward looking statements include statements related to our assessment of the current and future impact of geopolitical trade and economic uncertainty on our business and financial condition.

Speaker Change: <unk> 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.

Speaker Change: Anticipated and potential revenue losses, and gains anticipated recognition and expensing of specific revenues and expenses.

Central acquisitions and acquisition strategy.

Cost reduction and integration initiatives and other matters that may constitute forward looking statements.

Speaker Change: 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.

John Scott Pagan: 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 FEC, the OSC, and other securities commissions across Canada, including our Management's Discussion and Analysis filed today. 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 Change: 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 SEC the OSC and other securities commissions across Canada, including our management's discussion and analysis filed today.

Speaker Change: 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.

John Scott Pagan: We do not 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, I will turn the call over to Ed. Hey, thanks, Scott, and welcome everyone to the call. Today we're reporting record fourth-quarter and annual financial results, even stronger organic growth, and further improvements to our operating margin. We're excited to go over these results with you and give you some perspective on the business environment we see right now. But first, let me give you a roadmap for the call.

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.

Edward J. Ryan: Hey, Thanks, Scott and welcome everyone to the call today, we're reporting record fourth quarter and annual financial results, even stronger organic growth and further improvements to our operating margins.

Edward J. Ryan: We're excited to go over these results 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.

Edward J. Ryan: I'll start by hitting some highlights from the last quarter and some aspects of how our business performed. Then I'll hand it over to Allan, who will go over the Q4 and annual financial results in more detail. I'll then come back and provide an update on how we see the current business environment and how our business was calibrated as we entered the new fiscal year. And 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 January 31st.

Edward J. Ryan: Start by hitting some highlights of last quarter and some aspects of how our business performed.

Edward J. Ryan: I'll hand, it over to Alan who will go over the Q4 and Haynesville financial results in more detail.

Alan: I'll then come back and provide an update on how we see the current business environment and how our business was calibrated as we entered the new fiscal year.

Alan: Finally, we will open it up to the operator to coordinate the Q&A portion of the call.

Alan: So let's start with the quarter that ended January 31 <unk>.

Edward J. Ryan: The metrics we monitor include revenues, profits, cash flow from operations, operating margins, and returns on our investment. For this past quarter, we again had outstanding performance in each of those areas. Total revenues were up 18 percent from a year ago, with services revenues up 20 percent. Adjusted EBITDA was up 19 percent from a year ago. The adjusted EBITDA margin was at 44 percent, and excluding the impact of earn-out payments we made on past acquisitions, which Allan will explain later, we generated $63.3 million in cash from operations, representing ninety six percent of adjusted EBITDA. At the end of the quarter, we had almost $320 million, $21 million in cash, and we were debt-free with an undrawn $350 million line of credit.

Alan: Key metrics. We monitor include revenues profits cash flow from operations operating margins and returns on our investments.

Alan: For this past quarter, we again had outstanding performance in each of those areas total revenues were up 18% from a year ago with services revenues up 20% adjusted EBITDA was up 19% from a year ago. Adjusted EBIT margin was at 44% and excluding the impact of earn out payments, we made on past acquisitions, which animal.

Alan: Explain later, we generated $63 $6 million in cash from operations, representing 96% of adjusted EBITDA.

Alan: At the end of the quarter, we had almost $320 million $21 million in cash and we were debt free with an undrawn $350 million line of credit.

Edward J. Ryan: We remain well capitalized, cash generating, have strong organic growth, and are ready to continue to invest in our business. We had a strong quarter of organic growth in our core services revenues from a year ago. Many of the key drivers are similar to past periods. The biggest growth areas were in real-time visibility, global trade intelligence, and routing and scheduling solutions. So let me touch on a few of those. First, real-time visibility.

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

Alan: We had a strong quarter of organic growth in our core services revenues from a year ago. Many of the key drivers are similar to past periods. The biggest growth areas were in real time visibility global trade intelligence and routing and scheduling solutions. So let me touch on a few of those.

First in real time visibility the core of our real term real time visibility solutions as macro point.

Edward J. Ryan: The core of our real-time visibility solutions is MacroPoint. In this market, there are three important types of logistics players. Carriers, these are companies who have vehicles, ships, planes, and trucks that move goods. Next, we have shippers. These are companies that have goods to be shipped, manufacturers, retailers, and distributors. These three intermediaries are companies who help manage parts of the movements of goods on behalf of shippers and carriers, including booking. These are sometimes called freight brokers, forwarders, or third-party logistics providers.

In this market there are three important types of logistics players.

Alan: Carriers and these are companies, who have vehicles shifts planes and trucks to move goods.

Alan: Two we have shippers as your companies and their goods to be shipped manufacturers retailers and distributors.

Alan: Three intermediaries. These are companies, who help manage parts of move ins up goods on behalf of shippers and carriers, including booking. These are sometimes called freight brokers borders where third party logistics providers.

Edward J. Ryan: When freight is booked, it's not always the shipper booking it with the carrier; it's often an intermediary booking for multiple shippers with multiple carriers. So if a shipper wants to know where a particular delivery is at any specific point in time, it can be challenging because the shipper didn't make the booking and doesn't know what vehicle the goods are on. Enter real-time visibility solutions.

Alan: When freight is booked it's not always the shipper booking it with your carrier, it's often an intermediary booking for multiple shippers with multiple carriers. So.

Alan: So if a shipper wants to know where a particular delivery is at any specific point in time, it can be challenging because the shipper make the bulking it doesn't know what vehicle because Iraq.

Alan: And your real time visibility solutions, we provide a network sources information from carriers shippers and intermediaries and present it in a way that makes business sense. The most common answer we're providing the shippers and intermediaries as to the question, whereas my stuff.

Edward J. Ryan: We provide a network of resources information from carriers, shippers, and intermediaries and present it in a way that makes business sense. The most common answer we're providing to shippers and intermediaries is the question, "where's my stuff?". Knowing the location of a shipment and when it's going to arrive is critical to serving your customers and running your business.

Alan: 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, but even more importantly, knowing where your stuff is versus where it's meant to be when things arent going to plan and getting updated ETA'S. It's critical if you want to set yourself apart from the competition and that's exactly what we help our customers do.

Edward J. Ryan: But even more importantly, knowing where your stuff is versus where it's meant to be when things aren't going to plan and getting updated ETAs is critical if you want to set yourself apart from the competition. And that's exactly what we help our customers do. To get our strong growth in Q4 comes from two things. One, we're winning more deals. And two, our existing customers are attracting more loads than they have in the past. I believe there are four key reasons for that.

Alan: To get our strong growth in Q4 comes from two things one we're winning more deals into our existing customers attracting more loads than they have in the past.

I believe there's four key reasons for this.

Edward J. Ryan: First, our solutions are better at tracking loads than our competitors. A key operational metric for this business is the percentage of loads submitted that are able to be successfully tracked. There can be challenges with tracking a load if you can't get tracking information from a driver.

Alan: First our solutions are better at tracking loads than our competitors our key operational metrics for this business as a percentage of load submitted that are able to successfully track there can be challenges with tracking and load. If you can't get tracking information from a driver there are challenges with the carriers data or systems, where if you are incorrect information about a look.

Edward J. Ryan: There are challenges with the carrier's data or systems, or if you have incorrect information about a load. We've invested in a team of dedicated professionals and systems focused on resolving any challenges with tracking the load to maximize our customers' ability to know where their goods are. We believe we have the largest network of connected carriers to get tracking information from. If carriers aren't already connected, we've got self-connect tools that help our customers get even more location coverage across their network of carriers.

Alan: We've invested a team.

Alan: Dedicated professionals and systems focused on resolving any challenges with trapping a load to maximize our customers' ability to know where their goods are.

Alan: We believe we have the largest network of connected carriers to get tracking information from carriers are already connected we've got self connect tools to help our customers even more location coverage across their network of carriers.

Edward J. Ryan: Ultimately, we're aligned with our customers' interests because our customers pay us by the number of successfully tracked loads. Our tracking percentage improved again this quarter, and we believe we have opportunities to improve it further going forward. Our improvement in tracking percentages has outpaced any recent decrease in industry shipping volume. The second reason is that visibility is embedded in many Descartes solutions.

Alan: Ultimately, we are aligned with our customers' interests because our customers pay us by the number of successfully track loads are tracking percentage approved again this quarter and we believe we have opportunities to improve it.

Alan: Further going forward or improvement and tracking percentages as outpaced any recent decrease in industry shipping bottles.

Alan: Second half visibility is embedded in many Descartes solutions are real time visibility solutions worked with a host of other Descartes solutions.

Edward J. Ryan: Our real-time visibility solutions work with a host of other Descartes solutions. Key integration areas are transportation management solutions, allowing shippers and intermediaries to manage their relationship with carriers from booking through invoicing, while getting visibility into shipments in motion. We believe we offer a more comprehensive suite of solutions than our competitors. Third, we're experienced in multiple transportation modes.

Alan: Integration areas, our transportation management solutions, allowing shippers and intermediaries to manage the relationship with carriers from booking through invoicing, while getting visibility to shipments in motion. We believe we offer a more comprehensive suite of solutions that are competitors.

Alan: Third we're experiencing multiple transportation modes, we have a long operating history with solutions and customers in all transportation modes truck rail Ocean and air We believe we have a more comprehensive global logistics network than any other provider in the industry.

Edward J. Ryan: We have a long operating history with solutions and customers in all transportation modes, truck, rail, ocean, and air. We believe we have a more comprehensive global logistics network than any other provider in the industry. And finally, we're a reliable, stable, and growing partner. Our customers take a lot of comfort from working with Descartes as a large public company with a long track record of financial stability. We have a long history of operating secure cloud services across the globe. This makes us the service provider of choice in the real-time visibility market. The second area is global trade intelligence solutions. These solutions fall into three main categories.

Alan: And finally, we're reliable stable and growing partner our customers take a lot of comfort in working to take part of the larger public company with a long track record of financial stability, we have a long history of operating secure cloud services across the globe. This makes US a service provider of choice and the real time visibility market.

Alan: The second area is global trade intelligent solutions. These solutions fall into three main categories first.

Edward J. Ryan: First, competitive intelligence, which is understanding trade flows and goods classifications through research in our extensive database of manifest information. Second is Tariff and Duty Intelligence, which is researching and using our database of global tariffs and duties to help you manage your global trade and shipments. And the third is Sanctions Party Screen, which reviews customer shipments, employees, guests, and otherwise against our extensive list of domestic and international sanctioned parties to help ensure you're operating your business in accordance with the law.

Alan: Competitive intelligence, which is understanding trade flows and goods classifications through research and our extensive database of manifest information.

Alan: Secondly, as tariff and duty intelligence, which is researching and using our database of global tariffs and duties to help you manage your global trade and shipments and a third of sanctioned party screen, which is reviewing customer shipments employees guests and otherwise against our extensive list of domestic and international sanction parties to help ensure your.

Alan: Operating your business in according with the walk in accordance with the law.

Edward J. Ryan: To oversimplify, these solutions become more important to our customers when things change. When trade flows change, our customers need to adjust their relationships and systems. When tariffs and duties change, it may impact sourcing, manufacturing, and logistics decisions. And when sanctioned parties change, businesses need to reevaluate who they're doing business with for legal compliance purposes.

Alan: To oversimplify these solutions become more important to our customers and things are changing.

Alan: Trade flows change our customers need to adapt our relationships and systems.

Alan: Some duties change it may impact sourcing manufacturing and logistics decisions and when sanction parties change businesses need to reevaluate, who theyre doing business with legal compliance purposes.

Edward J. Ryan: There's been a lot of change in the world over the past years. It's been a big driver for our global trade intelligence business. And there are some areas of change that are happening right now that have helped drive demand for our solution. The first is the Red Sea disruption. Military conflict, terrorism, and piracy have made following traditional logistics routes through the Red Sea a very perilous thing for ocean carriers.

Alan: It's been a lot of change in the world over the past years, it's been a big driver for our global trade intelligence business and there are some areas of change that are happening right now, which have helped drive demand for our solutions.

Alan: The first is the Red sea disruption military conflict terrorism piracy have made following traditional logistics route through the Red Sea very powerless thing for Ocean carriers.

Edward J. Ryan: Many ocean carriers have rerouted their vessels to, instead, travel around the Cape of Africa. This adds time and cost to salons and reduces available capacity. Shippers scrambled to secure space on ocean vessels for their shipments and readjust their supply chain for delays. Carriers adjusted prices, added surcharges, and reallocated to vessels capable of making the Cape journey. This has created demand for many depart solutions, such as our ocean rate management, booking, and tracking solutions, but has also impacted demand for competitive intelligence and compliance screening for new trading relations. Second, additional sanctioned parties. This past quarter has once again seen additional international sanctions imposed primarily as a result of the war in Ukraine, activities in Israel and Gaza, and on the specific companies using forced labor.

Alan: The ocean carriers that we were out of their vessels to instead travel around the Cape of Africa.

This added time and cost of ceilings and reduce available capacity.

<unk> scrambled to secure space on ocean vessels for their shipments and readjust their supply chain for delays carriers' adjusted prices added surcharges and reallocated to vessel capable vessels capable of making the journey.

This has created demand for many of the card solutions, such as erosion rate management booking and tracking solutions, but has also impacted demand for competitive intelligence and compliance screening for new trading relationships.

Alan: Second additional sanction parties as part this past quarter has once again seen additional international sanctions imposed primarily as a result of the war in Ukraine activities, Israel in Gaza and on the specific comp.

Alan: Company is using forced labor.

Edward J. Ryan: Even after our fiscal year ended in February, the US announced 500 additional sanctions against Russia as a consequence of the ongoing war in Ukraine and the death of Alexei Navalny. An expanding world of sanctions presents difficult compliance challenges for our customers, so we've had to be on top of updating lists and able to meet the increased demand for sanctioned parties. And finally, the Panama Canal. The Panama Canal Authority has had to restrict ship transit due to low water flow levels in the canal.

Alan: Even after our fiscal year ended in February the U S announced 500 additional sanctions against Russia as a consequence of the ongoing war in Ukraine, and the depth of Alexia <unk>.

Alan: And expanding world of sanctions presents difficult compliance challenges for our customers. So we've had to be on top of updating less and able to meet the increased demand for sanction parties list.

Finally, the Panama Canal, the Panama Canal Authority has had to restrict to ship transit due to low water flow levels in the canal. This has reduced the available capacity of <unk> through this route and correspondingly increase the price. Many shippers have sought alternative trade routes or mechanisms, including shifting a portion of their journeys to being by rail or truck.

Edward J. Ryan: This has reduced the available capacity of sailings through this route and correspondingly increased the price. Many shippers have sought alternative trade routes or mechanisms, including shifting a portion of their journeys to being by rail or truck. These creative approaches have pushed demands for competitive intelligence and screening as many parties establish brand new trading and logistics relationships. And the last area is our routing and scheduling solutions. These solutions help you manage your own fleet of vehicles rather than hiring space on other people, who believe we have the premier routing and scheduling solutions in the market.

Alan: These creative approaches are pushed demand for competitive intelligence and screening as many parties established brand new trading and logistics relationships.

Alan: And the last areas in our routing and scheduling solutions.

Alan: 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 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. This is particularly so with the current focus on climate reporting and compliance.

Edward J. Ryan: Our customers have faced pressure to use their vehicles efficiently, whether it's due to cost pressures, limited labor, or environmental concerns. This is particularly so with the current focus on climate reporting and compliance, so we've seen continued good demand. We've also made recent investments to help our customers with delivery challenges and to deliver an enhanced delivery experience to consumers. Our customers recognize that the delivery experience is a key part of the customer's purchase experience. 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.

Alan: So we've seen continued good demand.

We've also made recent investments to help our customers with delivery challenges and to deliver an enhanced delivery experience to consumers our customers recognize that the delivery experience is a key part of the customers' purchase experience. So they are very interested in being able to provide delivery recipients with time definite delivery windows and an uber like delivery visibility.

And the final miles our innovations in this area continue to drive customers with complex delivery challenges to Descartes for solutions.

Edward J. Ryan: Our innovations in this area continue to drive customers with complex delivery challenges to Descartes for solutions. So those were some of the key areas of organic growth for us in the quarter. We also saw some growth in our customs and regulatory business, principally as a result of new customs standards in Europe gaining traction. However, overall, there have been challenges in the global freight market, challenges that were predicted earlier in the year and that we've been playing for.

Alan: So those were some of the key areas of organic growth for us in the quarter. We also saw some growth in our customs and regulatory business principally as a result of new customer standards in Europe, gaining traction. However, overall there have been challenges in the global freight market challenges that were predicted earlier in the year and that we've been planning for them, while aggregate transportation volumes in the <unk>.

Edward J. Ryan: While aggregate transportation volumes in the industry have been negatively impacted, we focused on delivering enhanced value to our customers for shipments that they're processing, and that's contributed to the results we've reported today. Additionally, our organic growth was complemented by the contribution of previously completed acquisitions. Several previous acquisitions performed better than we originally planned for, resulting in more earn-out being accrued and paid in the quarter. Allan will get into that in more detail in his section in a few minutes.

Alan: Street have been negatively impacted we focused on delivering enhanced value to our customers for shipments of processing and that's contributed to the results we reported today.

Alan: Our organic growth was complemented by the contribution previously completed acquisitions several previous acquisitions performed better than we originally planned for resulting in more earn out being accrued and paid in the quarter Alan will get into that in more detail in his section in a few minutes.

Edward J. Ryan: Separately from our announcement, let me touch briefly on the operational contribution of GroundCloud to our business. We've now got almost a full year of experience with GroundCloud safety and compliance solutions. GroundCloud helps identify safety incidents faced by drivers and provides responsive and targeted video training on the challenges that drivers face.

Alan: Separate from our announced let me touch briefly on the operational contribution of Grand class of our business. We've now got almost a full year of experience with Grand club safety and compliance solutions.

Alan: Around cloud helps identify safety incidents faced by drivers and provides responsive and targeted video training on the challenges the driver space. They also help companies manage delivery obligations as they are subcontractors to other delivery brands such as federal Express.

Edward J. Ryan: They also help companies manage delivery obligations as they have subcontractors to other delivery brands, such as Federal Express. When we first combined, we anticipated some impact on our overall adjusted EBITDA margin, which we saw in Q1 and Q2. We've made good progress on integration, and our aggregate adjusted EBITDA margin was back up to 44% for Q3 and slightly improved in Q4. The ground-floor business is now less dependent on professional services revenue and continues to deliver great value to its customers. We believe driver safety is an area of continued importance and interest for the global logistics community.

Alan: When we first combined we indicated we anticipated some impact our overall adjusted EBITDA margin, which we saw in Q1 and Q2, we've made good progress on integration and our aggregate adjusted EBIT margin was back up to 44% in Q3 and slightly improved in Q4.

Alan: <unk> business is now less dependent on professional services revenue continues to deliver great value to its customers. We believe driver safety in an area of continued importance and interest for the global logistics unit.

Alan: So let me just summarize as I hand, it over to Alan to give the full financial details of the quarter and year.

Alan: 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.

Edward J. Ryan: So let me just summarize as I hand it over to Allan for the full financial details of the quarter and year. 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 $321 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. 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. My thanks to the entire Descartes team for everything they've done to contribute to a great quarter and continue to put our business in an enviable position for future success. With that, I'll turn the call over to Allan to go through our Q4 and annual financial results in more detail. Okay, thanks, Ed.

Alan: This is the quarter with $321 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 acquisitions. 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.

Alan: Help them with their challenge is well into the future.

Alan: Thanks to the entire Descartes team for everything they've done to contribute to a great quarter continuing to have our business in an enviable position for future success with that I'll turn the call over to Alan to go through our Q4 and annual financial results in more detail.

Alan: Okay. Thanks, Ed that's indicated I'm going to walk you through our financial highlights for our fourth quarter and year ended January 31 2024.

Alan: We are pleased to report record quarterly revenues of $148 2 million. This quarter, an increase of just over 18% from revenues of $125 1 million in Q4 of last year.

Allan J. Brett: As indicated, I'm going to walk you through our financial highlights for our fourth quarter and year end of January 31st, 2024. We are pleased to report record quarterly revenues of $148.2 million this quarter, an increase of just over 18% from revenues of $125.1 million in Q4 of last year. Revenue mix in the quarter continued to be very strong, with services revenue increasing over 20% to $135.7 million from $113.4 million last year in the fourth quarter, with services revenue increasing to 92% of total revenue this quarter, up from 91% of total revenue in Q4 last year, removing the impact of both the recent acquisitions as well as a small impact from foreign exchange rates. We would estimate that our growth in services revenue from new and existing customers would have been approximately 10% this quarter when compared to the same quarter last year, which is up slightly from the increase of approximately 9% in the past few quarters of FY24.

Our revenue in the mix.

Revenue mix in the quarter continued to be very strong with services revenue increasing over 20% to $135 7 million from $113 4 million last year in the fourth quarter with services revenue increasing to 92% of total revenue this quarter up from 91% of total revenue in Q4 last year.

Alan: Removing the impact of both the recent acquisitions as well as a small impact from foreign exchange rates.

Alan: We estimate that our growth in services revenue from new and existing customers would have been approximately 10% this quarter when compared to the same quarter last year, which is up slightly from the increase of approximately 9% in the past few quarters of FY 'twenty four.

Alan: Professional services and other revenue, including hardware revenue came in at $11 1 million or just over 7% of revenue up from 10.0 million or 8% of revenue.

Alan: In the same quarter last year, mainly as a result of the ground cloud acquisition early in FY 'twenty four.

Alan: In addition license revenue came in at one 4 million compared to $1 7 million last year in the fourth quarter pretty.

Allan J. Brett: Professional services and other revenue, including hardware revenue, came in at $11.1 million, or just over 7% of revenue, up from $10.0 million, or 8% of revenue, in the same quarter last year, mainly as a result of the ground cloud acquisition early in FY24. In addition, license revenue came in at $1.4 million compared to $1.7 million last year in the fourth quarter, pretty consistent at roughly 1% of revenue.

Pretty consistent at roughly 1% of revenue.

Alan: For the year, our revenue was a record $572 9 million up 18% from revenue of $486 million in the previous year.

Alan: For the year services revenue came in at 50.

Alan: $529 million up almost 20% from $435 7 million last year with just more than half of this growth coming from growth in revenues from new and existing customers. While the remainder of the growth can be attributed to growth from acquisitions.

Alan: Gross.

Alan: <unk> came in at 76% of revenue for the fourth quarter of the year down.

Allan J. Brett: For the year, our revenue was a record $572.9 million, up 18% from revenue of $486 million in the previous year. Services revenue came in at 520.9 million, up almost 20% from 435.7 million last year, with just more than half of this growth coming from growth in revenues from new and existing customers, while the remainder of the growth can be attributed to growth from acquisitions. Gross margins came in at 76% of revenue for the fourth quarter of the year, down slightly from a gross margin of 77% for the fourth quarter of the month and for the entire period last year.

Alan: Down slightly from gross margin of 77% for the fourth quarter.

Alan: For the fourth quarter last year and for the entire period last year.

Alan: The slight decrease in gross margin was mainly result of the impact of lower gross margins experienced as experienced in the businesses that we acquired during the year, including ground glass.

Alan: Operating expenses for the fourth quarter and for the year increased primarily related to the impact of recent acquisitions, including ground cloud, but also increased slightly as a result of additional investments that we made in our business over the past year, primarily in the area of sales marketing product development and network security.

Alan: As a result of the above adjusted EBITDA came in at a record $65 7 million in the fourth quarter or <unk> 44, 3% of revenue up a solid 19% from adjusted EBITDA of $55 4 million.

Allan J. Brett: This slight decrease in gross margin was mainly a result of the impact of lower gross margins experienced in the businesses that we acquired during the year, including ground class. Operating expenses in the fourth quarter and for the year increased primarily due to the impact of recent acquisitions, including GroundCloud, but also increased slightly as a result of additional investments that we made in our business over the past year, primarily in the areas of sales, marketing, product development, and network security. As a result of the above, Adjusted EBITDA came in at a record $65.7 million in the fourth quarter, for 44.3% of revenue, up a solid 19% from Adjusted EBITDA of $55.4 million, also at 44.3% of revenue in the fourth quarter last year.

Alan: Also at 44, 3% of revenue in the fourth quarter of last year.

Alan: After having our adjusted EBITDA as a percentage of revenue weakened early in the year with the lower margins from the ground cloud business strong operating leverage from organic growth.

As well as improvements from the ground cloud margins during the year resulted in this recovery of our adjusted EBITDA margin by the fourth quarter back to last year's Q4 ratio.

Alan: Looking at the annual results again as a result of strong revenue growth. We continue to see strong adjusted EBITDA growth to a record of two.

Alan: $247 5 million or 43, 2% of revenue for.

Alan: For FY 'twenty, four up 15% from $215 2 million or 44, 3% of revenue last year.

Allan J. Brett: After having our adjusted EBITDA as a percentage of revenue weakened early in the year with lower margins from the ground cloud business, strong operating leverage from organic growth, as well as improvements in the ground cloud margins during the year, resulted in this recovery of our adjusted EBITDA margin by the fourth quarter back to last year's Q4 ratio. Looking at the annual results, again, as a result of strong revenue growth, we continue to see strong adjusted EBITDA growth to a record of 247.5 million, or 43.2% of revenue for FY24, up 15% from 215.2 million or 44.3% of revenue last year. With these solid operating results, cash flow generated from operations came in at $50.8 million, or 77% of adjusted EBITDA, in the fourth quarter.

With these solid operating results cash flow generated from operations came in at $58 million or 77% of adjusted EBITDA in the fourth quarter.

Alan: However, we should note that this cash flow figure was negatively impacted by the payment of $12 6 million in earn out payments on past acquisitions that were larger than the original estimates that we made on those acquisitions.

Alan: As we've mentioned in the past when an earn out payment is greater than the earn out amount originally estimate at the time of acquisition.

Alan: Counting rules require us to separate that earn out payment in two parts on the statement of cash flows first portion of the earn out payment that was estimate at the time of the acquisition is charged against cash flow from financing activities.

Alan: Second the excess amount of the earn out payment arising from better than expected performance of that acquisition. Those acquisitions is charged against cash flow from operations.

Allan J. Brett: However, we should note that this cash flow figure was negatively impacted by the payment of $12.6 million in earn-out payments on past acquisitions that were larger than the original estimates that we made on those acquisitions. As we've mentioned in the past, when an ERNOTE payment is greater than the ERNOTE amount originally estimated at the time of acquisition, the accounting rules require us to separate that ERNOTE payment into two parts on the Statement of Cash. First, the portion of the year-on-out payment that was estimated at the time of the acquisition is charged against cash flow from financing activities.

Alan: So if we were to exclude this unusual accounting treatment of higher earn out payments and our operating cash flow in the fourth quarter would have been $63 4 million or <unk>, 96% of adjusted EBITDA in Q4 up 25% from operating cash flow of $50 6 million or <unk>, 91% of adjusted EBITDA in the fourth quarter last year.

Alan: For the year cash flow from operations, excluding the impact of these higher earn out payments in those periods.

Alan: $223 million or 89% with adjusted EBITDA up 11% from $198 million or <unk>, 92% of adjusted EBITDA last year.

Allan J. Brett: Second, the excess amount of the year-on-year payment arising from the better-than-expected performance of those acquisitions is charged against cash flow from operations. So, if we were to exclude this unusual accounting treatment of higher earner payments, then our operating cash flow in the fourth quarter would have been $63.4 million, or 96% of adjusted EBITDA in Q4, up 25% from operating cash flow of $50.6 million, or 91% of adjusted EBITDA in the fourth quarter last year. For the year, cash flow from operations, excluding the impact of these higher earner payments in both periods, was 220.3 million, or 89% of adjusted EBITDA, up 11% from 198 million, or 92% of adjusted EBITDA last year. Going forward, we expect to continue to see strong operating cash flow conversion in the range of 80 to 90% of our adjusted EBITDA in the years ahead, of course, subject to unusual events and quarterly fluctuations, including adjustments related to future earner payments that exceed our estimates made at the time of acquisition. From a gap earnings perspective, net income for the fourth quarter came in at $31.8 million, up 7% from net income of $29.8 million in the fourth quarter last year.

Going forward, we expect to continue to see strong operating cash flow conversion in the range of 80% to 90% of our adjusted EBITDA in the years ahead of course subject to unusual events and quarterly fluctuations, including adjustments related to future earn out payments that exceed our estimates made at the time of acquisitions.

Alan: From a GAAP earnings perspective, net income for the fourth quarter came in at $31 8 billion up 7% with net income of $29 8 million in the fourth quarter last year.

Alan: But.

Alan: For the year net income was $115 9 million or 134 cents per diluted common shares up 13% from 142 from $102 2 million or $1 18 per diluted common share.

Alan: Overall as Ed mentioned earlier were certainly pleased with the operating results for fiscal 2024 and <unk>.

Alan: As our continued revenue growth has allowed us to invest in several areas of the business, while still allowing us to achieve 15% growth in adjusted EBITDA maintain a strong adjusted EBITDA margin and achieved solid growth in our cash flow from operations.

Alan: If we turn our attention to the balance sheet our.

Alan: Our cash balances totaled $321 million at the end of January.

Alan: However for the year, our cash balances increased by approximately.

Alan: $45 million as we generated pro forma operating cash flow of just over $220 million as I just mentioned.

Allan J. Brett: For the year, net income was $115.9 million, or $0.134 per diluted common share, up 13% from $102.2 million, or $1.18 per diluted common share. Overall, as Ed mentioned earlier, we're certainly pleased with the operating results for fiscal 2024, and as our continued revenue growth has allowed us to invest in several areas of the business while still allowing us to achieve 15% growth in adjusted EBITDA, maintain a strong adjusted EBITDA margin, and achieve solid growth in our cash flow from operations. If we turn our attention to the balance sheet, our cash balances totaled $321 million at the end of January.

Alan: While offsetting that we've deployed $143 million in capital towards new acquisitions, and also paid an additional $31 7 million in earn out payments.

Alan: On past acquisitions in FY 'twenty four.

Alan: Yeah.

After that any year with just over $320 million of cash and Undrawn credit facility of $350 million, we are clearly well capitalized and positioned to consider all acquisition opportunities in our market consistent with our business plan.

Alan: Okay.

Alan: As we look to the current year, wherein our physical 2025, we should note the following.

Alan: After incurring approximately $5 6 million in capital additions. This past year, we expect to occur approximately five five to $6 5 million in additional capital expenditures this coming year.

Allan J. Brett: However, for the year, our cash balance has increased by approximately $45 million as we generated pro forma operating cash flow of just over $220 million, as I just mentioned. While offsetting that, we've deployed $143 million in capital towards new acquisitions and also paid an additional $31.7 million in earnest on past acquisitions in FY24. So after ending the year with just over $320 million of cash and then drawing a credit facility of $350 million, we are clearly well capitalized and positioned to consider all acquisition opportunities in our market, consistent with our business plan. As we look to the current year we are in, our physical 2025, we should note the following. After incurring approximately $5.6 million in capital additions this past year, we expect to incur approximately $5.5 to $6.5 million in additional capital expenditures this coming year. We expect that amortization expense will be approximately.

Alan: We expect that amortization expense will be approximately 50.

Alan: <unk> $57 5 million for fiscal 2025, with this figure being subject to adjustment for foreign exchange rates and any future acquisitions.

After paying contingent consideration on earth or earn out payments of 31 7 million on past acquisitions. This past year. We currently anticipate that we will make an additional earn out payments of $34 million in FY 'twenty five.

Alan: Of this $34 million estimate to be the estimate estimated amount to be paid $7 7 million relates to the portion of the earn out arrangements accrued for at the time of the acquisitions and will be reflected in cash flow from financing activities.

Alan: With the remaining balance estimated at $26 $3 million will be reflected as a reduction in cash flow from operating activities. The majority of light, which is likely to be paid in Q1.

Allan J. Brett: $57.5 million for fiscal 2025, with this figure being subject to adjustment for foreign exchange rates and any future acquisitions. After paying contingent consideration on earn-out or earn-out payments of $31.7 million on past acquisitions this past year, we currently anticipate that we will make an additional earn-out payment of $34 million in FY25. Of this $34 million estimated amount to be paid, $7.7 million relates to the portion of the earn-out arrangements accrued for at the time of the acquisitions and will be reflected in cash flow from financing activities, with the remaining balance estimated at $26.3 million will be reflected as a reduction in cash flow from operating activities, the majority of which is likely to be paid in Q1. Our income tax rate in the fourth quarter came in at approximately 20.6% of pre-tax income, resulting in a tax rate for the year of 23.3% in FY24, which is lower than our statutory tax rate, mainly as a result of the reversal of certain uncertain tax positions during FY24.

Our income tax rate in the fourth quarter came in at approximately 26% of pretax income, resulting in a tax rate for the year.

Alan: 23, 3% in FY, 'twenty, four which is lower than our statutory tax rate, mainly a result of the reversal of certain uncertain tax positions.

Physical 24.

Alan: Looking forward to FY 'twenty five we're expecting the tax rate will be in the range of 23% to 28% of our pre tax income.

Alan: Which means it will be something on either side of our blended statutory tax rate of approximately 26, 5%.

Alan: So as always we should add that our tax rate may fluctuate from quarter to quarter from onetime items that may arise as we operate internationally across multiple countries.

And finally.

Alan: We currently expect stock compensation stock compensation expense will be approximately $13 4 million for fiscal 'twenty five subject to any future equity grants as well as any future forfeitures of stock options or share units.

Alan: I will now turn it back over to Ed.

Edward J. Ryan: Great. Thanks Alan.

Edward J. Ryan: We're a month into Q1 and the end of our fiscal year.

Allan J. Brett: Looking forward to FY25, we're expecting the tax rate to be in the range of 23 to 28% of our pre-tax income, which means it will be something on either side of our blended statutory tax rate of approximately 26.5%. Though, as always, we should add that our tax rate may fluctuate from quarter to quarter from one-time items that may arise as we operate internationally across multiple countries. And finally, we currently expect stock compensation expense to be approximately $13.4 million for fiscal 25, subject to any future equity grants, as well as any future forfeitures of stock auctions or share units.

Edward J. Ryan: Q1 is generally one of the more challenging quarters as the market.

Edward J. Ryan: Recover from the holiday rush and the shipping deals with great disruption caused by the Chinese new year.

Volumes have been stronger than other non pandemic years. However, we're monitoring to see the impact of the Red Sea in Panama <unk> mailed the versions on our volumes.

Edward J. Ryan: Keep these things is mined 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 employees and our broader stakeholders to deliver this consistency we continue to operate from the following principles.

Edward J. Ryan: I will now turn it back over to Ed. Great. Thanks, Allan. We're a month into Q1 and the end of our fiscal year. Q1 is generally one of the more challenging quarters as the market recovers from the holiday rush, and the shipping deals with freight disruption caused by the Chinese New Year. However, recent ocean volumes have been stronger than in other non-pandemic years.

Edward J. Ryan: Our long term plan is for our business to grow adjusted EBITDA, 10% to 15% per year.

Edward J. Ryan: We grow through a combination of organic and.

And.

Edward J. Ryan: Inorganic or acquisition, we take a neutral party approach to building and operating solutions on our global Logistics network. We don't favor any particular party you want our business for all supply chain participants connecting shippers carriers logistics service providers and customs authorities.

Edward J. Ryan: However, we're monitoring to see the impact of the Red Sea and Panama Canal diversions on our bodies. 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, employees, and our broader stakeholders. To deliver this consistency, we continue to operate from the following principles.

Edward J. Ryan: When we over performed we try to reinvest that over performance back into our business.

Edward J. Ryan: We focus on recurring revenues and establishing relationships with customers for life and <unk>.

Edward J. Ryan: We thrive on operating a predictable business that allows us forward visibility to our revenues and investment paybacks.

Edward J. Ryan: Our long-term plan is for our business to grow adjusted EBITDA 10 to 15% per year. We grow through a combination of organic and inorganic acquisitions. We take a neutral party approach to building and operating solutions on our global logistics network. We don't favor any particular party.

Edward J. Ryan: In our annual report, we provided a comprehensive description of baseline revenues baseline calibration and their limitations.

Edward J. Ryan: As of February one 2024, using foreign exchange rates of <unk> 75.

Edward J. Ryan: Canadian dollar.

Edward J. Ryan: We run our business for all supply chain participants, connecting shippers, carriers, logistics service providers, and customs authorities. When we overperform, we try to reinvest that overperformance back into our business. We focus on recurring revenues and establishing relationships with customers for life. And we thrive on operating a predictable business that allows us forward visibility into our revenues and investment payback. In our annual report, we've provided a comprehensive description of baseline revenues, baseline calibration, and their limitations, as of February 1st, 2024. Using foreign exchange rates of 75 cents to the Canadian dollar, $1.08 to the Euro, and $1.27 to the Great Britain Pound, we estimate that our baseline revenues for the first quarter of fiscal 25 are approximately $130.5 million, and our baseline operating expenses are approximately $81 million.

Edward J. Ryan: The dollar to the euro at $1 27 to the Great Britain pound, we estimate that our baseline revenues for the first quarter of fiscal 'twenty, five or approximately $135 million and our baseline operating expenses are approximately $81 million. We consider this to be our baseline adjusted EBIT calibration.

Edward J. Ryan: Approximately $49 5 million for the first quarter of fiscal 2025 were approximately 38% of our baseline revenues as at February one 2024.

Edward J. Ryan: We continue to expect that we'll operate any adjusted EBIT operating margin range of 40% to 45%.

And bearing in that range, given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business like we saw with brand club.

Edward J. Ryan: Got lots of exciting things planned for our business. It remains a challenging economic supply chain and compliance environment for our customers, but we believe our proven track record of execution solid capital structure customer focus will help us serve them well.

Edward J. Ryan: We consider this to be our baseline adjusted EBITDA calibration of approximately $49.5 million for the first quarter of fiscal 2025, or approximately 38% of our baseline revenues as at February 1st, 2024. We continue to expect that we'll operate in an adjusted EBITDA operating margin range of 40 to 45 percent. Our margins can vary in that range given such things as foreign exchange movements and the impact of acquisitions as we integrate them into our business, like we saw with BrownCloud.

Speaker Change: 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 for you and with that operator, I'll turn it over to you for the Q&A portion of the call.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session did you have a question. Please press the star followed by the one that you touched on.

Edward J. Ryan: We've got lots of exciting things planned for our business. It remains a challenging economic supply chain and compliance environment for our customers, but we believe our proven track record of execution, solid capital structure, and customer focus will help us serve them well. Thanks to everyone for joining us on the call today.

You will hear today, John from technology, and Youll requests questions will be taken in the order received should you wish to cancel your request. Please press the star followed by the tail. If you are using a speaker phone. Please lift the handset before pressing Eddie.

Edward J. Ryan: 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 turn it over to you for the Q&A portion of the call. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press the star followed by the 1 on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Questions will be taken in the order received. Should you wish to cancel your request, please press the star followed by the. If you are using a speakerphone, please lift the handset before pressing any button.

Speaker Change: Your first question is from Stephen Lang from Stephens. Please ask your question.

Speaker Change: Yeah.

Stephen Lang: Hi, Good afternoon. This is Justin long from Stephens, how are you doing.

Justin Trennon Long: Hey, Jeff how are you.

Stephen Lang: Good so maybe to start I think you gave the organic growth in services revenue for the quarter, but could you also talk about all in organic growth and then looking forward. If we do see signs of a better freight cycle. This year is it reasonable to expect that organic growth too.

Operator: Your first question is from Steven Long from Stevens. Please ask your question. Thank you. Thank you. Hi, good afternoon. This is Justin Long from Stevens.

Stephen Lang: Accelerate or is there anything that you see on the horizon that could prevent that from happening.

Stephen Lang: Maybe Alan can comment at the end on the overall number but no I think youre your presumption is correct.

Justin Trennon Long: How are you doing? Hey Justin, how are you? So maybe to start, I think you gave the organic growth and services revenue for the quarter, but could you also talk about all-in organic growth? And then looking forward, if we do see signs of a better freight cycle this year, is it reasonable to expect that organic growth to accelerate, or is there anything that you see on the horizon that could prevent that from happening? Maybe Allan can comment at the end on the overall number, but no, I think your presumption is correct. We're expecting... Maybe kind of what we've seen so far in the market, and if it improved from there, it would certainly help our business and probably our growth rates as well. I don't know the overall number off the top of my head.

Stephen Lang: We're expecting.

Stephen Lang: Maybe kind of what we've seen so far in the market and if it did improve from there would certainly help our business in probably our growth rates as well I don't know.

Alan: Overall number off top my head.

Alan: Yeah, Justin we're just just around 10% on services and as you know thats the bulk of our revenue.

Alan: Professional services outside of the acquisitions, where we're relatively flat licenses were down ever so slightly so somewhere.

Alan: Down to 10% a little bit maybe by.

Alan: By half a point to a point.

Alan: But thats the number we focus on is that 10% growth on the services.

Got it understood and I guess secondly, I wanted to ask about acquisitions at Ed could you just comment on the pipeline that youre seeing today versus a quarter ago and it's been a few quarters. Since we saw an acquisition materialize I guess, hence ground cloud so what's your confidence that.

Allan J. Brett: Yeah, Justin, we're just around 10% on services. And as you know, that's the bulk of our revenue. However, professional services, outside of acquisitions, were relatively flat.

Allan J. Brett: Licenses were down ever so slightly. So somewhere, water's down to 10% a little bit, maybe by a half a point to a point. But that's the number we focus on is that 10% growth in services. Got it understood. And I guess, secondly, I wanted to ask about acquisitions. Ed, could you just comment on the pipeline that you're seeing today versus a quarter ago? And you know, it's been a few quarters since we saw an acquisition materialize, I guess, since ground cloud. So what's your confidence that we can see that change in the quarters ahead? Yeah, there's a lot going on right now. And first and foremost, kind of a little bit of struggle over price with the number of people that are out in the market. We expect, just based on what we're seeing ahead of us and the number of companies that are saying they're going to go out that we would see it start to pick up in the near future. Okay, great. Congratulations on the quarter. Hey, thank you very much, Justin.

Alan: We can see that change in the quarters ahead.

Speaker Change: Yes, Theres a lot going on right now.

Speaker Change: And first and foremost, it's kind of a little bit of a struggle over price with.

Speaker Change: With the number of people that are out in the market.

Speaker Change: Expect just based on what we're seeing ahead of us and number of companies that are saying theyre going to go out.

Speaker Change: We would see it start to pick up in the near future.

Speaker Change: Okay, great congrats on the quarter.

Speaker Change: Great. Thank you very much just I appreciate it.

Speaker Change: Thank you.

Your next question is from will Milner from Golden Bear. Please ask your question.

William Milner: Hi, I am William Miller on for Mark.

Will Milner: Thanks for taking my question.

Will Milner: In your prepared remarks, I believe you commented aggregates volume was down.

Will Milner: Strong demand in their subscription products are the changes in the operating environment, such as the ongoing conflicts in the middle East.

Will Milner: Increasing more and enough adoption of subscription products.

Will Milner: Any decline.

Will Milner: Transaction volume and revenue.

Speaker Change: Yes, that's certainly part of it and I mentioned, a couple of other things in the beginning of the call or maybe even more prominent.

Edward J. Ryan: I appreciate it. Thank you. Your next question is from Willow Miller from Wilden Bear. Please ask your question. Hi, I'm Willow Miller. I'm from Matt Pfau.

Speaker Change: We're picking up a bunch of business from our competitors.

During tough times, I think people tend to flock to safe and reliable source, that's been a big help for us.

Operator: Thank you for taking our question. In your prepared remarks, I believe you commented that aggregate rate volume is down, but you're seeing strong demand for your subscription products. Are the changes in the operating environment, such as the ongoing conflict in the Middle East, increasing more and enough adoption of subscription products to offset any decline in transaction volume and revenue? Yeah, that's certainly part of it. And I mentioned a couple other things in the beginning of the call that are maybe even more important.

Speaker Change: Our macro point business in our global trade intelligence business.

Speaker Change: That's been the case, which is great.

Speaker Change: And as you mentioned.

Speaker Change: The conflicts around the world put more people on the sanction parties list tariffs and duties changes or things like that.

Speaker Change: As I've said, all along complexity and change is a big growth driver for us in our business and I think Thats why you see us outperform.

Edward J. Ryan: You know, we're picking up a bunch of business from our competitors. As you know, during tough times, I think people tend to flock to a safe and reliable source. That's been a big help for us. Certainly, in our macro point business and our global trade intelligence business, that's been the case, which is great. And yeah, as you mentioned, conflicts around the world have put more people on the sanctioned parties list.

Speaker Change: Logistics transportation market over the last year.

Speaker Change: That's great. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is from Paul Treiber from RBC capital markets. Please ask your question.

Paul Michael Treiber: Thanks, very much and good afternoon just.

Paul Michael Treiber: The commentary in the prepared remarks on the drivers of organic growth are really helpful.

Paul Michael Treiber: When you look back over the years do you see the changes that youre benefiting from or do you feel like these these drivers are structural and likely to persist for.

Edward J. Ryan: Tariffs and duties change as a result of things like that. And, you know, as we've said all along, complexity and change are a big growth driver for us in our business. And I think that's why you've kind of seen us outperform the logistics transportation market over the last decade. That was great, thank you.

Paul Michael Treiber: For a while or does it seem like it's more short term in nature and may sub side at some point in the future.

Speaker Change: Certainly the latter I mean, we see a bunch of things going on and you've probably heard me mentioned before the biggest one which is just that the whole world is realized supply chain and logistics is more important and that the first place they tend to put.

Operator: Thank you. Thank you. Your next question is from Paul Treiber from RBC Capital Markets. Please ask your question. Oh, thanks very much. And good afternoon. Just the comments and the prepared remarks on the drivers of organic growth are really helpful.

Speaker Change: They tend to cause them to tend to make extra investments in the first place to put those investments.

Paul Michael Treiber: Do you know, when you look back over the years, do you see the changes that you're benefiting from? Like, do you feel like these drivers are structural and likely to persist for a while? Or does it seem like it's more short-term in nature and, you know, may, you know, subside at some point in the future? No, certainly the latter.

Speaker Change: So the technology because it gives them the fastest return on investment is the most visible for their customers I think that's been helping us.

Speaker Change: Since the pandemic started.

Speaker Change: Yes.

Speaker Change: I see no end in sight to that.

Edward J. Ryan: I mean, we see a bunch of things going on. You probably heard me mention the biggest one before, which is that the whole world has realized that supply chain and logistics are more important. And that the first place they tend to put the money they make extra investments. And the first place to put those investments is into technology because it gives them the fastest return on investment. And it's the most visible for their customers.

Speaker Change: There is.

Speaker Change: Other areas, where we're <unk>.

Speaker Change: As drivers in our business.

Speaker Change: People are putting more money into technology and as a result.

They are going with the kind of the.

Speaker Change: The IBM as the industry now someone is seen as a trusted and reliable provider. So we tend to move the small guys. The larger guys. During times like this and then just some of the products that we have are our fast growing and.

Edward J. Ryan: I think that's been helping us since the pandemic started, and I see no end in sight to that. You know, there's other areas where there are drivers in our business. People are putting more money into technology, and as a result, you know, they're going with the kind of the "IBM of the industry," you know, someone who's seen as a trusted and reliable provider. So we tend to move from small guys to larger guys during times like this. And then just some of the products that we have are fast-growing, like e-commerce and global trade intelligence, which are fast-growing things that we kind of see that going on for a long time to come. I don't know when it ends, but I don't see any in the chat show up.

Speaker Change: Like E Commerce and global trade intelligence that are that are fast growing things that we kind of see that going on for a long time to come.

Speaker Change: One of them, but I don't see any end in sight.

Speaker Change: So.

Speaker Change: Certainly the latter.

Speaker Change: That's good.

Speaker Change: And then how do you see that stronger.

Speaker Change: Fundamentally stronger organic growth.

Ranging your business model.

Speaker Change: Or would you consider changing your business model around it.

Speaker Change: What I mean by that is.

Speaker Change: Would you consider a higher.

Higher levels of sales and marketing investments are there different types of acquisition targets that you consider in light of seeing stronger organic growth than historically.

Speaker Change: Yes, I mean, I think you've seen us describing that in the past couple of years, putting more money into sales and marketing.

Edward J. Ryan: Certainly the latter. That's good to hear. And then how does that stronger, fundamentally stronger organic growth, changing your business model? Or would you consider changing your business model around it? And what I mean by that is, would you consider a higher level of sales and marketing investments? Are there different types of acquisition targets that you consider in light of seeing stronger organic growth than you have historically?

Pretty prudent investors.

Speaker Change: Cautious guys.

Speaker Change: We're running this business for a long term, we try to treat the money like it's our own and Thats.

Speaker Change: Certainly one of the things that we do is continue to make investments as we've done better than.

Speaker Change: In our business and I think youre going to see us continue to do that but it's probably not going to be.

Edward J. Ryan: Yeah, I mean, I think you've seen us describe in the past couple of years putting more money into sales and marketing. You know, we're still pretty prudent investors and we're cautious guys that, you know, we're running this business for the long term. We try to treat the money like it's our own. And that's certainly one of the things that we do, continue to make investments as we get better in our business. And I think you're going to see us continue to do that. But it's probably not going to be fundamentally changing the business, maybe just incremental changes to try to make improvements as things get better. You mentioned acquisitions. You know, probably over the last 10 years, we've gravitated towards faster-growing businesses that are profitable and mostly have recurring revenue.

Speaker Change: Fundamentally changing.

Speaker Change: The business, maybe just incremental changes to try to make improvements as things get better you mentioned.

Speaker Change: Acquisitions are probably over the last 10 years, we've gravitated towards faster growth businesses that are profitable and mostly recurring revenue I think.

Speaker Change: We've gotten quite comfortable doing that and certainly look for those types of businesses and the acquisition environment.

Speaker Change: We will consider anything but certainly we gravitate towards some of those faster growing things that we think are going to be the stuff that our customers want next and I hope will continue.

Speaker Change: Continue to see us do that.

Speaker Change: Moving into the future.

Speaker Change: And then just lastly for me on the acquisition side.

Speaker Change: Do you have a.

Edward J. Ryan: I think, you know, we've gotten quite comfortable doing that and certainly look for those types of businesses in the acquisition environment. We'll consider anything, but certainly we gravitate towards some of those faster growing things that we think are going to be the stuff that our customers want next. And I think they'll continue to see us do that. And then, just lastly, for me on the acquisition side, do you have a, you mentioned faster growing businesses. I mean, there's been a lot of money that the VCs have put into the space of the last couple years, maybe some of them are struggling now. Do you lean more towards, you know, buying healthier businesses, you know, the cash flow positive, or would you consider some that are, you know, fixer uppers that may have seen stronger growth but are, you know, unprofitable or burning cash?

Speaker Change: You mentioned profit growing businesses I mean, there's been a lot of money that the bdcs or put it into the space of last couple of years, maybe some of them are struggling now do you lean more towards <unk>.

Speaker Change: Buying a healthier businesses.

Speaker Change: The cash flow positive or would you consider something that Arab pick.

Speaker Change: Fixer upper is that they may have seen stronger growth flat or are unprofitable are burning cash.

Speaker Change: The three things we look for companies that are growing companies that are profitable and companies that are all or most of the recurring revenue and we kind of stick to our guns and that we will consider something else, but it's it's rare that you find us looking at something Thats.

Speaker Change: Doesn't have all three of those things so.

Speaker Change: We would like to see a business be profitable before we buy it we would say we don't want to shoot a hole on our own book right. So.

Speaker Change: When we're looking at a business, we'd like to see them demonstrated an ability to make it a profitable business before we get involved.

Edward J. Ryan: And we, you know, the three things we look for are companies that are growing, companies that are profitable, and companies that are all or mostly recurring revenue. And we kind of stick to our guns on that. We'll consider something else, but it's rare that you find us looking at something that doesn't have all three of those things. We would like to see a business be profitable before we buy it. As we would say, you know, we don't want to shoot a hole in our own boat. And when we're looking at a business, we'd like to see them demonstrate an ability to make it a profitable business before we get involved. And you know, just so it fits in culturally with us, right?

Speaker Change: Just so it fits culturally with us right.

Speaker Change: Companies that are losing a lot of money trying to operate in a different way in different mindset and when they get to be profitable. They tend to operate a lot more like we do and we don't want to be the ones trying to change the culture.

Speaker Change: These.

Speaker Change: Thanks for taking the questions.

Speaker Change: Yes, Thank you Paul.

Speaker Change: Thank you. Your next question is from Daniel Chan from TD Cowen. Please ask your question.

Daniel Chan: Hi, Good evening I know I asked this question last quarter, but your cash balance is now over $320 million. So any update on your thoughts on the use of cash you've got more cash on the balance sheet than you've ever spent in any year for acquisitions and it looks like you're likely to generate more than $200 million of free cash flow next year or so will you be able to use all of that for M&A or you could.

Edward J. Ryan: The companies that are losing a lot of money tend to operate in a different way and have a different mindset, and when they get to be profitable, they tend to operate a lot more like we do, and we don't want to be the ones trying to change the culture. Thanks for taking the questions. Yes, thank you.

Daniel Chan: <unk> returning some of it to shareholders.

Speaker Change: No we see a.

Speaker Change: A strong environment for M&A in the next couple of years.

Operator: Thank you. Your next question is from Daniel Chan from C.D. Kellins.

Speaker Change: And a couple of years now we're not much is sold and there's been a little bit of a site about what the what the prices should be.

Daniel Chan: That's your question. Hi, good evening. I know I asked this question last quarter, but your cash balance is now over $320 million. So, any update on your thoughts on the use of cash? You've got more cash on the balance sheet than you've ever spent on acquisitions, and it looks like you're likely to generate more than $200 million of free cash for next year. So will you be able to use all of that for M&A, or are you considering returning some of it to shareholders?

Speaker Change: Companies that are not growing out because I don't think it's a good environment to sell the company and I think that's starting to change I'm seeing that change going on in the market right now.

Speaker Change: Sure.

Speaker Change: Now, we're holding on to that cash so if theres a need to deploy a larger amount we're ready to do that.

Speaker Change: We think our company has the wherewithal to do a lot of acquisitions in a year and we're still very prudent about how we do it and we're careful about the investments we make but with more of them came addison in a given year.

Speaker Change: We suspect that could happen one of these days.

Edward J. Ryan: No, we see a strong environment for M&A in the next couple of years. It's been a couple of years now where not much is sold, and there's been a little bit of a fight about what the prices should be. Companies that are not going out because they don't think it's a good environment to sell a company in, and I think that's starting to change. We're seeing that change in the market right now. And, you know, we're holding on to that cash. So if there's a need to deploy a larger amount, we're ready to do that. We think our company has the wherewithal to do a lot of acquisitions in a year, but we're still very prudent about how we do it and very careful about the investments we make.

Speaker Change: We wanted to be prepared with cash on hand and pull it off.

Okay that makes sense and then earlier you commented that it's a pretty competitive market out there.

Speaker Change: Any changes to acquisition thresholds or Kpis that you use when you're considering these targets.

Speaker Change: Especially with like higher rates and like you said more competition space.

Speaker Change: We try to stick to our guns.

Speaker Change: Yeah.

Speaker Change: Looked at each and each acquisition individually Reits I mean somehow.

Speaker Change: They are all different and they all have reasons that we might pay more or less for them, but.

Speaker Change: Back at home, we're sitting there thinking about.

Edward J. Ryan: But if more of them come at us in a given year, and we suspect that could happen one of these days, we want to be prepared with cash on hand to pull it off. Okay, that makes sense. And then earlier, you commented that it's a pretty competitive market out there. Any changes to acquisition thresholds or KPIs that you use when you're considering these targets? especially with higher rates and, like you said, more competition in the space. Yeah, we try to stick to our guns. You know, we look at each end of each acquisition individually, right? I mean, some have, they're all different.

Speaker Change: This is the way we buy companies and this is how we evaluate what's a good price for them and we do our damage to stickiness to this.

Speaker Change: Priorities.

Speaker Change: And then maybe on the on the EBITDA margin I mean continues to take higher and nice to see that the acquisitions being layered in nicely.

Speaker Change: Can you.

Speaker Change: If we were to just kind of ignore acquisitions for a second organically do you think what do you think the upper level as you can get above that 45% range.

Speaker Change: We think that there is a natural push in our business the natural tailwind for it to keep going higher we have a bunch of businesses as you've probably heard me describe in the past that global trade intelligence, our network cost and selling businesses.

Edward J. Ryan: They all have reasons that we might pay more or less for them. But, you know, back at home, we're sitting there thinking about, you know, this is the way we buy companies. And this is, you know, how we evaluate what's a good price for them. And we do our damage to stick to this, to this, prior to that.

That have a very high incremental.

Edward J. Ryan: And then maybe on the EBITDA margin, I mean, it continues to tick higher, nice to see that the acquisition is being layered in nicely. Can you, if we were to just kind of ignore acquisitions for a second, organically, what do you think the upper level is? Do you think you can get above that 45% rate?

Speaker Change: Margin.

So when we sign a new customer.

Speaker Change: Most of that money flows right to the bottom line and Thats it.

Speaker Change: In total.

Speaker Change: Across some of our fastest growing businesses.

Speaker Change: That creates a natural tailwind where that number keeps getting pushed up over time.

Edward J. Ryan: We think that there is a natural push in our business, a natural tailwind for it to keep going higher. We have a bunch of businesses, as you've probably heard me describe in the past, such as Global Trade Intelligence, our network and customs filing business, that have a very high incremental margin. So when we sign a new customer, most of that money flows right to the bottom line, you know, in total and across some of our fastest growing businesses. That creates a natural tailwind where that number keeps getting pushed up over time. Those businesses all operate above the line that we're at right now, 44%, and all things being equal, I think it would get pushed over time as those businesses grow. Now, that having been said, you know, we go out and box five companies; they all make less than us. That's going to drag them down at the same time.

Speaker Change: Those businesses all operate above the line that we're at right now 44%.

And all things being equal I think it would get pushed over time as those businesses grow.

Speaker Change: Now that having been said.

Speaker Change: Go out in Blackstock companies. They all make left announced that's going to drag it down at the same time.

Speaker Change: I don't view that as bad news I think thats, an opportunity for us to get those businesses to perform like the rest of our business and make our whole company.

Speaker Change: More profitable and stronger over time.

Speaker Change: But.

Speaker Change: All things being equal and if there were no acquisitions you can see some of the strongest areas in our business with some of the strongest growth in some of the highest incremental margins will continue to push that number up.

Speaker Change: Thanks, Ed.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is from Ann Duignan from Raymond James Please ask your question.

Edward J. Ryan: I don't view that as bad news; I think that's an opportunity for us to get those businesses to perform like the rest of our business and make our whole company more profitable and stronger over time. But all things being equal, and if there were no acquisitions, I think you'd see some of the strongest areas in our business with some of the strongest growth and some of the highest incremental margins; we'd continue to push that number. Thanks, Ed.

Ann Duignan: Thank you for taking my questions.

Ann Duignan: A question for Alan could you give us some more color on the FX impact on the Rev.

Ann Duignan: Our revenue as well as the EBITDA.

Yeah. So so we're fairly naturally hedged it from a from a profitability perspective from from FX, we are a little bit more expensive than Canada.

Operator: Thank you. Thank you. Your next question is from Andy Nguyen from Raymond James. Please ask your question. Thank you for taking my questions. Maybe I have a question for Allan.

Ann Duignan: Little bit more.

Ann Duignan: More revenue than profitability profits coming out of the U K oar.

Allan J. Brett: Could you give us some more color on the FX impact on revenue as well as EBITDA? Yeah, so we're fairly naturally hedged from a profitability perspective by FX. We're a little bit more expensive in Canada, a little bit more revenue and profitability, and profits coming out of the UK or continental Europe.

Alan: No in Europe. So we're very naturally hedged there so very very minor impact this quarter as well as most quarters on the EBITDA side from a revenue perspective, we do have some level of exposure with 30% or so of our revenue coming from from those currencies and so and a strong U S. Dollar environment, we see a bit of a weakness in.

Allan J. Brett: So we're very naturally hedged there. So, very, very minor impact this quarter, as well as most quarters on the EBITDA side. From a revenue perspective, we do have some level of exposure with 30% or so of our revenue coming from those currencies. And so in a strong US dollar environment, we see a bit of a weakness in our revenues. But it was actually a very, very minor quarter.

Alan: In our in our revenues it was actually a very very minor quarter. It was a very small less than half a million dollar impact on revenues.

Alan: In Q4, and really a small impact for most of FY 'twenty four on revenues that Hasnt always been the case, but it is it was also a low impact on EBITDA and that is pretty much always the case does that help.

Allan J. Brett: It was a very small, less than half a million dollar impact on revenues in Q4, and really a small impact for most of FY24 on revenues. That hasn't always been the case, but it was also a low impact on EBITDA, and that is pretty much always the case. Does that help?

Speaker Change: Yes no.

Speaker Change: That's very helpful and maybe a question on the backhaul pictures there had been report a softening retail spending in the U S.

Edward J. Ryan: Yeah, no, gotcha. That's, that's very helpful. And maybe a question on the Morocco pictures. There has been a report of softening retail spending in the US, maybe across Europe as well. Could you give us some more color on what you see on the ground in terms of the volume of retailers? Yeah, I mean, retailers, from what we see, are all focused on improving their supply chain operations so they can operate more efficiently, and, you know, we're benefiting from that right now. The minor ups and downs in that industry show up in some of our transportation statistics that we've been seeing for a while, but the bigger growth driver from retailers and manufacturers that we do business with directly is them implementing more transportation management solutions, supply chain visibility solutions It's something that customers are focused on right now, and making sure they know where everything is is not only important to them, it's important to their customers, and that's been a big benefit for us, and I suspect it will be for a long time to come. Thank you. I'll pass the line.

Across Europe as well.

Speaker Change: Could you give us some more color on what you're seeing on the ground in terms of evolving with the retailer.

Speaker Change: Yes.

Speaker Change: The retailers from what we see are all focused on improving our supply chain operations. So they can operate more efficiently and.

Speaker Change: Uh huh.

Speaker Change: We're benefiting from that right now the miner.

Speaker Change: Ups and downs in that industry show up in some of our transportation statistics that we've been seeing for a while.

Speaker Change: But the bigger growth driver from retailers and manufacturers that were doing business with directly with them implementing more transportation management solutions quite some visibility solutions.

Speaker Change: And these some of these short term things that you just mentioned while they may.

Speaker Change: Provide.

Speaker Change: Minor ups and downs in our in our global Logistics network.

Speaker Change: Moreover from these types of companies, we're getting increased investment because they see a need to improve their supply chains.

Speaker Change: It's something that customers are focused on right now and making sure. They know where everything is there is not only important to them. It's important to their customers and that's been a big benefit for us and I suspect it will for a long time to come.

Speaker Change: Thank you I'll pass it on.

Operator: Thank you. Thank you. Your next question is from Robert Young from Canaccord. Please ask your question. Hi, good evening.

Speaker Change: Hi.

Thanks, Jamie.

Speaker Change: Thank you.

Next question is from Robert Young from Canaccord. Please ask your question.

Robert Young: Hi, Good evening, I think there's a little bit of a continuation of Paul's earlier question is it seems trade intelligence been very successful high margin and maybe the world, there's always going to be this volatile, but it feels as though you're benefiting from a lot of.

Robert Young: I think this is a little bit of a continuation of Paul's earlier question, which is, it seems trade intelligence has been very successful; it's high margin. And I mean, maybe the world is always going to be this volatile, but it feels as though you're, you know, benefiting from a lot of, you know, volatility and changes. And, you know, if we're looking at a couple years, and things calm down, does the interest in your customers to maintain subscriptions there maintain activities? Like, how does the business do? How does the revenue change if things get calmer? Yeah, that's a good question.

Robert Young: Volatility and changes in.

Robert Young: If we're looking at a couple of years and things calmed down it does the interest in your customers to maintain subscription there can maintain activities like how does the business.

Robert Young: As the revenue change if things get calmer.

Speaker Change: Yeah, that's a good question.

Edward J. Ryan: So what we've seen is that once you start using these things, you don't stop. And there are always changes. I mean, even in times of slower change, and we're in the middle of, you need to keep having that solution. So once you switch to it, it's hard to get off. It's almost impossible to stop, actually. You need to have it.

So what we've seen is that once you start using these things you don't stop.

Speaker Change: And there's always changes I mean, even in times of slower change and we're in the middle.

Speaker Change: Time of high change right now, but even when that slows down and see it.

Speaker Change: Even within a year, we see pickup in slow down.

Speaker Change: The customers that are already doing.

Speaker Change: Most always stay honest the service they need to know what's happening we need to know what the sanctions parties or if youre, if youre shipping stuff and you've been find once or twice already on when you sign up for our solutions in this constantly people getting added to the sanction Party list.

Speaker Change: Even in a slow time, there's lots of people getting added everyday and lots of countries and products et cetera.

Edward J. Ryan: The only thing that would make you stop is the country. If your company got smaller, or you stopped shipping as many products to as many different countries, you might not buy as much stuff from us. But as long as your company continues to do well, you're probably going to be buying this solution once you start. And then my second question would be, in the past, you've highlighted some of the labor negotiations in U.S. ports as maybe a headwind. And I think that this year there will be some expected negotiations in the Atlantic and golf course ports. And just curious, does that impact you, or does the shim just move?

You need to you need to keep having that solution. So once you switch to it.

Speaker Change: It's hard to get off once it is almost impossible stop actually you need to add the only thing that would make two stops with country at your company got smaller.

Speaker Change: Or you stopped shipping as many products to as many different countries you might not buy as much stuff from us, but as long as your company continues to do well youre, probably going to be buying those solutions from us.

Speaker Change: Once you've got a couple.

Speaker Change: And then my second question would be around in the past you've highlighted some of the labor negotiations in U S ports as maybe a headwind and I think that this year there is some expected.

Speaker Change: [noise] negotiation in the Atlantic and Gulf Coast ports, and just curious does that impact you or just the assumed just move.

Edward J. Ryan: Does it have any impact on you if that's extended? Yeah, when I've talked about it, when I've talked about it as a headwind, it's really a headwind for our customers, great challenges for them. It actually tends to help us because they have to move stuff around and change things very rapidly to do that, and that tends to drive more transaction volume for us. I don't know whether there's going to actually be a strike there. Most of the time, these things are threatened, but they don't actually go through. Golf Lane ports is not as big as, say, the west coast courts, which just got resolved a year ago.

Speaker Change: Does it have any impact on you if that if there's an extended yes, when I've talked about it when I talked about it as a headwind its really a headwind for our customers great challenges for them and actually tends to help us because they have to move stuff around.

Speaker Change: <unk> very rapidly to do that and that tends to drive more transaction volume for us.

Speaker Change: I don't know, whether there is going to actually be a strike that most of the time. These things just threaten they don't actually go through.

Gulf linked towards it's not as big as like say, the West Coast ports, which has got resolved year ago.

Speaker Change: Six eight months ago, but nonetheless, youre doing business out of those areas would impact you.

Edward J. Ryan: And, you know, if it did, our customers would have to make arrangements to get around it. And that usually benefits them. Makes sense. Thanks. I'll pass the line.

Speaker Change: If it did our customers have to make arrangements to get around it not usually.

Speaker Change: Benefits us.

Makes sense, Thanks, I'll pass the line.

Operator: Thanks, Rob. Thank you. Your next question is from Scott Group from Wolf Research. Please ask your question. Hey, thanks.

Speaker Change: Thanks, Rob.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Our next question is from Scott Group from Wolfe Research. Please ask your question.

Scott H. Group: Hey, Thanks afternoon.

Scott H. Group: So I just want to go back to organic growth for a second. The bit of a pickup from last quarter wasn't clear. Is that more you are seeing transactional start getting a little bit better, or is it the other parts of the business that got better? And then maybe just, as you talked about the Panama Canal and the Red Sea, your data clearly shows a big shift to the West Coast ports. Just wondering, do you think that continues or maybe starts to fade? So on the latter, I mean, it's going to continue for a while. You can watch the war and, you know, what's going on in Israel is probably causing that. I don't know what's going to happen there, but it will go on until it stops, and our customers would be thrilled if it did stop, but there's not much we can do about it. The Panama Canal is more a function of water levels than the Panama Canal, I've heard. I'm not a meteorologist, but I've heard that this is in part due to El Nino, which I guess ends at some point later this year.

Scott H. Group: I just wanted to go back to the organic growth for a second.

Scott H. Group: The bit of a pick up from last quarter.

Scott H. Group: It wasn't clear is that more are you seeing the transactional.

Scott H. Group: Start getting a little bit better or is it the other parts of the business that got better and then maybe just you talked about Panama Canal and Red Sea.

Your data clearly showing a big shift to the West Coast ports. Just wondering do you think that continues or maybe starts to fade.

So on the latter.

Speaker Change: I mean, it's going to continue for a while I mean I need.

Speaker Change: To watch those.

Speaker Change: More than.

Speaker Change: What's going on in Israel, probably causing that.

Speaker Change: That.

Speaker Change: I don't know whats going to happen there but.

Speaker Change: It will go on until that stops and.

Speaker Change: Our customers will be thrilled if it did stop but not much we can do about it.

Speaker Change: Panama Canal is more a function of water levels and the Panama Canal I've heard him out I'm not a meteorologist, but have heard that.

Speaker Change: In part due to El Nino, which I guess.

Speaker Change: And at some point.

Speaker Change: Later this year so.

Speaker Change: We will see what did that actually helps things but.

Edward J. Ryan: So we'll see if that actually helps things, but my understanding is that it should, and maybe Panama would be a little better without knowing what the weather is going to be like next year, obviously. And sorry, what was the first part of the question? Just like how organic growth picked up a little bit. Is that more transactional getting better? Or is it the other parts getting better?

Speaker Change: My understanding is that it should be the Panama would be a little better next year.

Without knowing what the weather's going to be next year, obviously I'm sorry, what was the first part of the question.

Speaker Change: Just like what what the organic growth picked up a little bit is that more transactional getting better or is it. The other part is getting better.

Edward J. Ryan: It's our services overall are getting better. And a little of it was from transaction volume, and probably a little more of it was from subscription volume. I mean, subscriptions and transactions are going up and down, you know, through the pandemic, they went way up and then way down and back up to normal and, you know, probably, muddling around over the past year, maybe tipping up a little bit towards the end. You're seeing our move from 9% to 10%. The subscriptions have been steadily moving up over the past four or five years, a great source of strength for our business and something that's helped us keep the growth rates up even with the network a year or two ago that was having lackluster performance was kind of more than making up for it. The subscription part of our business. We'll see what happens in the future. I mean, you know, I don't know what's gonna happen with the economy.

Speaker Change: It's our services overall getting better and a little of it was from transaction volume and probably a little more of it was from subscription volume.

<unk>.

Speaker Change: The transactions are going up and down through the pandemic. They went way up and then lay down and back up to normal and I would probably.

Speaker Change: Muddling around over the past year, maybe ticking up a little bit towards the end.

Speaker Change: R R.

Speaker Change: Sure.

Speaker Change: From 9% to 10% the subscriptions have been steady.

Speaker Change: Steadily moving up over the past four or five years, it's been.

Speaker Change: A great source of strength for our business and supplements helps us keep the growth rates up even with.

Speaker Change: The network or a year or two ago that was having lack luster performance kind of more than making up for it.

Speaker Change: Subscription part of our business, we will see what happens in the future.

Speaker Change: Don't know what's going to happen in economy, they will probably have some impact on the transactional business.

Edward J. Ryan: That'll probably have some impact on the transactional business. The subscription business, over the last several years, has seemed to be somewhat, you know, not really impacted by that. The overriding issue here is that more companies are saying, hey, we've got to do something about this supply chain to manage it better. Our customers are expecting us to do that, and we're going to pump more money into that investment. And that money is predominantly going to go into purchase technology because that's where we get the biggest bang for the buck and the highest visibility by the customer. And I see no end in sight as we continue to see manufacturers and retailers make investments in those areas, and, you know, when they do, they often choose to take part. So maybe just to follow up there, like, I feel like you talked more today about Share Games for your services. Am I right that you're talking more about that? Is this a new trend, or has this been going on for a while?

Speaker Change: Subscription business over the last several years are seem to be somewhat.

Speaker Change: <unk>.

Speaker Change: Not really impacted by that.

Speaker Change: The overriding issue there is that more companies are saying, Hey, we got to do something about this.

Speaker Change: Hi chain to manage it better our customers are expecting us to do that and we're going to pump more money into that investment and that money is predominantly going to go into the purchase of technology, because that's where we get the biggest bang for the Buck and the highest visibility by the customers.

Speaker Change: And.

Speaker Change: I see no end in sight to that.

Speaker Change: So what happens but.

I continue to see manufacturers and retailers make investments in those areas.

Speaker Change: When they do they they oftentimes you're choosing to take part in which is great.

So maybe just to follow up there like I feel like you talked more today.

Speaker Change: Today about <unk>.

Share gains for your services.

Speaker Change: Right that you are talking more about that is this a new trend.

Speaker Change: Or has this been going on for some don't offer.

Edward J. Ryan: It's been going on for a while. I probably explained it better or more thoroughly today than I have in the past. You know, people would ask over the last year, "hey, black box transportation environment, how do you continue to put up good numbers?" And I think that's your answer. You know, even in a flat environment where you've been taking gains from our competitors and taking gains from ourselves in the sense that, you know, we get a customer hands us a whole bunch of shipments and says, please track. Two years ago, we were able to track 70% of them. Today, I'm able to track 87% of them.

Speaker Change: It's been going on for a while or you probably explained it better or worse thoroughly today than I have in the past.

Speaker Change: No.

Speaker Change: People would ask over the last year, he Blackhawks transportation environment, how do you continue to put up good numbers and I.

Speaker Change: I think that's your answer.

Speaker Change: Even in a flat environment, where you're taking gains from our competitors.

And taking gains from ourselves in a sense in that.

Speaker Change: We get a customer hands off a whole bunch of shipments that says please tracks.

Speaker Change: Well two years ago, we were able to track 70.

Speaker Change: Let's just 70% up today I'm able to track, 87% I get paid by the shipments to track and as we got better attract not only did that help us be that are competitive with your customer you want to go with the company the contracted most shipments.

Edward J. Ryan: I get paid by the shipment to track. And as we got better at tracking, not only did that help us beat out our competitors, but if you're a customer, you want to go with the company that can track them on a ship. But it also helped us, you know, increase our transaction volume because I was using the math I was using before. We were leaving 30% of them on the ground a couple years ago, and now we're leaving 13% of them, and we continue to try and bump that number up.

Speaker Change: But it also helped us.

Speaker Change: Increase our transaction volumes because that was.

Speaker Change: Just to stay with the math was even before we were leaving 30% of them on the ground couple of years ago, and now, we're leaving 13% of them on the ground.

Speaker Change: And continuing to try and bumped that number up so so that's been a big help for us and we continue to focus aggressively on that area. I think we've spent a lot more time than our competitors doing stuff like that and it's paying off.

Edward J. Ryan: So that's been a big help for us, and we continue to focus aggressively on that area. I think we spend a lot more time than our competitors doing stuff like that, and it's paying off. And then, just last one, if I can, so you guys, you know, continue to come in at the high end of that. 10-15% annual EBITDA target. I know it's early.

Speaker Change: And then just last one if I can so you guys continue to come in at the high end of that.

Speaker Change: 10% to 15% annual EBITDA target I know, it's early but how you're feeling about.

Edward J. Ryan: How are you feeling about... Fiscal 25? I mean, we're always trying to beat that 15% number, Scott. We say 10% to 15%. We all get our bonuses based on beating that 15%.

Speaker Change: Fiscal 'twenty five.

Speaker Change: I mean, we're always trying to beat that 15% number Scott.

Speaker Change: Say, 10% to 15%.

Speaker Change: We all get our bonuses based on treating with <unk> et cetera.

Edward J. Ryan: So yeah, we're confident we will, as we always are, and we're going to do our damndest to make sure that we get there.

Speaker Change: We were confident we will as we always are and we're going to damage to make sure.

Speaker Change: If we get there.

Speaker Change: Makes sense. Thank you guys appreciate it.

Scott H. Group: Thank you guys, I appreciate it. Hey, thank you, Scott. Have a great day.

Speaker Change: Thank you Scott have a great day.

Speaker Change: Thank you. Your next question is from Kevin Cristian <unk> from Scotia Bank. Please ask your question.

Operator: Thank you. Your next question is from Kevin Krishnaratne from Scotiabank. Please ask your question. Hey there, good evening. I've got one.

Kevin Krishnaratne: Hey, there good evening.

Kevin Krishnaratne: How do we think about the opportunity for cross-selling upside? I know it might be tough to say, but you've got so many products and services, but how early are you? And how do you measure where you are versus where you can go?

One.

Kevin Krishnaratne: How do we think about the opportunity for cross selling upside I know it might be tough at the state, but you've got so many products and services like how early are you and how do you measure where you are versus where you can go.

Edward J. Ryan: You know, many, many SaaS firms do give metrics like net retention ratio to measure how much more revenue they're generating from a given client over time. I know, you know, I'm going to give that, but just how do we think about that? Any thoughts there and how you're looking at the revenue generation on a given client over time from cross selling? We do. Yeah, sure, sure.

Kevin Krishnaratne: Many fast firms do you give metrics like net retention ratio to measure how much more revenue, they're generating from that given client over time.

Kevin Krishnaratne: Can you give that but just how do we how do we think about that any thoughts there and how you're how you're looking at the.

Kevin Krishnaratne: Revenue generation.

Kevin Krishnaratne: Generation.

Kevin Krishnaratne: Client over time from the cross selling we do.

Speaker Change: Yeah sure sure we do business with just about every transportation company of any size in the world and just about every intermediary in the rolling stock.

Edward J. Ryan: We do business with just about every transportation company of any size in the world and just about every intermediary in the world of any size, so we have a lot of cross-selling opportunities. If you look at the reports every Thursday night, what we sold that week, it's usually in the two-thirds of the sales or new sales to existing customers, which is a cross sell. And I would expect it to continue that way for a while.

Speaker Change: So we have a lot of.

Speaker Change: Cross sell opportunity.

Speaker Change: If you look at any difference.

Speaker Change: Torts every Thursday night, what we sold that weekend or easily in that two thirds of the sales of new sales to existing customers, which is a cross sell.

Speaker Change: And I would expect it to continue that way for a while.

Edward J. Ryan: There is no end in sight to cross-selling being a very large part of what we do. Remember, we continue to buy new companies too. So as soon as we buy a company, you know, so we'll give you an example, we buy a company with, say, 500 freight forwarders, and the customers love that product. And we buy the company, and I say, hey, we've got 5000. So the first thing we're going to do is go to the other 4500 and say, hey, have you seen this big product? And because we're already in there, you know, the company we bought might have had to fight its way into each account.

Speaker Change: I see no end in sight to cross sell being a very large part of what we do remember we continue to buy new companies to so as soon as we buy a company. So we could give you. An example, we buy a company with say 500 freight forwarders and the customers love that product.

Speaker Change: We buy the company and I say, Hey, we've got 5000.

Speaker Change: So the first thing we're going to do is get them together 4500, and say Hey, This thing is the product and because we're already in there.

Speaker Change: The company, we bought might've had a spike there way into each account and were walking writing because we've been I'm at all.

Edward J. Ryan: We're walking right in because we've been, I might already sell 20, 30 products. So, my ability to walk in the door and show the product is immediate.

Speaker Change: Some 23 products and so my ability to walk in the door and show the product is immediate.

Edward J. Ryan: And I'm not saying they're all going to buy it right away, but if we can bring it to a much wider customer base, I like our chances of selling a lot more of it than the company we just bought does. And I think that's why you see cross-sell continue to be a big part of our business and will be for a long time to come. Great. I appreciate it. Thank you. I thank you, Kevin. Thank you. Your next question is from Raimo Lenschow from Barclays. Please ask your question.

Speaker Change: And I'm, not saying, they're all going to buy it right away, but if we can bring it out to a much wider customer base I like our chances of selling a lot more of it than the company. We just bought US and I think that's why you see our cross sell continue to be a big part of our business and will be for.

Speaker Change: A long time to come.

Speaker Change: Great appreciate it thank you.

Hey, Thank you Kevin.

Speaker Change: Thank you.

Speaker Change: Our next question is from vinyl Lin Chen from Barclays. Please ask your question.

Operator: Thank you. Quick question on ESG, carbon footprint, et cetera, like how is that starting to come through for your clients? Because in our checks, we're hearing quite a bit of extra interest there to optimize things there. And what are you doing on the product side there? Thank you. Hey, thanks, Raimo. So, you know, ESG for a long time, for 20 years, even before it was a household name.

Lin Chen: Thank you.

Speaker Change: And a quick question on if you think about.

Lin Chen: ESG carbon footprint et cetera.

Lin Chen: How is that starting to come through for your clients.

Speaker Change: Our checks, we're hearing quite a bit of extra interest to optimize things Darren.

Speaker Change: What are you doing on the product side, Dan. Thank you.

Speaker Change: Hey, thanks very much.

Speaker Change: So.

Speaker Change: Yes.

Dan: For a long time for 20 years before that was a household name.

Raimo Lenschow: You know, we had a lot of retail customers starting in the grocery industry that had customers, they're consumer customers that were environmentally conscious and started positioning our product as a way to help the environment. They would have, you know, green deliveries, they would say, as they were offering these deliveries up to the consumer. Here we are 20 years later, and this is, you know, a household name.

Dan: We had a lot of retail customers starting into the grocery industry that had customers their consumer customers that we're environmentally conscious.

Dan: And started positioning our product as a way to help the environment. They would they would have green deliveries. They would say they were offering these deliveries up to the consumer.

Dan: 20 years later and this is a household name.

Edward J. Ryan: And while it's getting beat up a little bit, you know, in the last six months to a year, I think the environmental part of it is less beat up because of that. I think there are a lot more companies going, hey, you know, we need to do our part to help the environment. We need to answer these questions for regulators who are asking a lot of questions and specifically about the environment.

Dan: While it is getting beat up a little bit in the last six.

Six months to a year.

Dan: Higher metal part of it.

Dan: As less beat up on top of that I think there was a lot more companies going hey.

We need to we need to do our part to healthy environment, we need to answer these questions for regulators, who were asking a lot of questions and specifically about the environment.

Edward J. Ryan: And our products, and there are several products that help them solve that problem. Make no mistake, our customers are buying our products because they save money, but it's really nice for them when not only does it save them money, but it also helps reduce their carbon footprint. And, you know, we have several products out there that do provide a significant impact on reducing your carbon footprint. So, you know. Not only with the amount of money we save for a big retailer or manufacturer that, say, routes trucks with us, we get into the C-suite because of that, but once we do get into the C-suite, they're also going, hey, I'm being asked about all these other things.

And our products and there are several products that.

Dan: That help them solve that problem.

Dan: Make no mistake, our customers are buying our products because they save money, but its really nice for them win not only does it save you money, but it also helps reduce your carbon footprint and we have several products out there that does.

Dan: Provide a significant impact on reducing your carbon footprint.

Dan: Yeah.

Dan: Not only with the amount of money, we save for a big retailer or manufacturer, let's say routing trucks with us we get into the C suite because of that but once we do get into the C. Suite. There also going Hey, I'm being asked about all these other things.

Edward J. Ryan: You know, how is this going to impact the environment? And, you know, our answers to that are very good. We have a number of products that reduce the miles driven, reduce the amount of trucks driven, and the amount of gasoline used to deliver goods. And it's a significant reduction, tens of millions of miles a year that we're taking off the road across our customers. And, you know, as regulatory bodies start to put more and more pressure on our customers to answer things like that. And, you know, that drives demand for our products, which has been great.

Dan: How does this is going to impact the environment and.

Dan: Our answers and that are very good.

Dan: We have a number of products that reduce the miles driven versus the amount of trucks, driven and the amount of gasoline used.

Dan: To deliver goods and its significant reductions.

Dan: Tens of millions of miles a year that were taken off the road across our customer base and.

As regulatory bodies start to put more and more pressured shareholders talk about more and more pressure on our customers to answer things about that and that drives demand for our products, which has been great.

Speaker Change: Yeah, Okay. Thank you.

Raimo Lenschow: Okay, perfect. Thank you. Hey, thank you, Raimo. Thank you. There are no further questions at this time. I will now hand the call back to Ed Ryan for his closing remarks. Great. Thanks, everyone. Appreciate your time this afternoon, and we look forward to reporting back to you on the next quarter in early June. Thanks for your time tonight, and have a great day. Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining me. You may now disconnect.

Speaker Change: Hey, Thank you very much.

Speaker Change: Thank you there are no further questions at this time I will now hand, the call back to Ed Williams for any closing remarks.

Edward J. Ryan: Great. Thanks, everyone. I. Appreciate your time this afternoon, and we look forward to reporting back to you on next quarter in early June.

Speaker Change: Thanks for your time Tonight and have a great day.

Speaker Change: Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect.