Q3 2026 The Descartes Systems Group Inc Earnings Call

We will conduct a question and answer session. If anyone has any difficulties hearing the conference?

Operator: We will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Scott Pagan. Please go ahead.

Please press star zero for operator assistance at any time.

J. Scott Pagan: Thanks. Good evening, everyone. Joining me in person on the call today are Edward Ryan, CEO, Allan Brett, CFO, and Ed Gardner, EVP Corporate Development. 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. These forward-looking statements include statements related to our assessment of the future and current impact of geopolitical trade, tariff, and economic uncertainty on our business and financial condition. Descartes' operating performance, financial results, and condition. 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 of revenues and incurrence of expenses. Potential acquisitions and acquisition strategy.

Thanks and good evening everyone. Joining me in person on the call today are Ed Ryan. CEO Alan Brett CFO and Ed Gardner EVP, corporate development.

I trust that everyone is received a copy of our financial results. Press release that was issued earlier today.

Portions of today's call other than historical performance includes statements of forward-looking information within the meaning of applicable. Securities laws.

These statements are made under the Safe Harbor, provisions of those laws.

These 4, we're looking statements include statements related to our assessment of the future, and current impact of geopolitical, trade tariff, and economic uncertainty, on our business and financial conditions.

Day cards. Operating performance, Financial results and conditions.

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 of revenues and in terms of expenses,

J. Scott Pagan: Cost reduction and integration initiatives. Timing of management changes. The approval and potential share purchase under a Normal Course Issuer Bid. 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. 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. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. You're cautioned that such information may not be appropriate for other purposes.

Potential Acquisitions and acquisition strategy cost reduction in the integration initiatives, timing of management changes the approval and potential share. Purchase under a normal course, issue or bid

Another matters that may constitute forward-looking statements.

These 4 were looking statements, involve known and unknown risks uncertainties assumptions and other factors that may cause the actual results performance, or achievements of Dart to different materials from the anticipated results performance for achievements. Implied by such forward-looking statements,

These factors are outlined in the press release and in the section entitled, certain factors that may affect future results in documents filed and furnished with the FCC. 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.

Your costumes that such information may not be appropriate for other purposes.

J. Scott Pagan: 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. With that, let me turn the call over to Ed Ryan.

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

And with that, let me turn the call over to Ed Ryan.

Thanks Scott and welcome everyone to the call.

Edward Ryan: Thanks, Scott, welcome everyone to the call. Today, we're reporting record strong quarterly revenues and adjusted EBITDA. We're now ahead of our year-to-date plans and focused on a strong end of the year. We're excited to go over these results with you and describe how we're well-positioned to help our customers in an environment where they're making many tariff and artificial intelligence investment decisions. First, let me give you a roadmap for this call. I'll start by hitting some highlights of last quarter, some aspects of how our business performed, and how we're positioned to help customers. I'll hand it over to Allan, who will go over the Q3 financial results in more detail. After that, I'll come back and provide an update on how we see the current business environment and how our business was calibrated for Q3.

Today, we're reporting record, strong, quarterly revenues and adjusted. Evita

We're now ahead of our year-to-date plans and focused on a strong end of the year.

We're excited to go over these results with you and describe how we're

Uh, well, positioned to help our customers in an environment where they're making many tariff and artificial intelligence investment decisions.

But first, let me give you a road map for this call. I'll start by hitting some highlights of last quarter some aspects of how our business performed and how we're positioned to help customers.

I'll then hand it over to Alan, who will go over the Q3 Financial results in more detail.

after that, I'll come back and provide an update on how we see the current business environment and how our business was calibrated for Q3,

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

Edward Ryan: We'll then open it up to the operator to coordinate the Q&A portion of the call. Let's start with the Q3 that ended 31 October. Key metrics we monitor include revenue, profits, cash flow from operations, operating margins, and returns on our investments. For this past quarter, we again had strong record performance in each of those areas. Total revenues were at a record high of $187.7 million, up 11% from a year ago. Record high services revenues were up 16% from a year ago with our continued focus on generating recurring revenues. Record net income was up 20% from a year ago. Record income from operations was up 24% from a year ago. Record adjusted EBITDA was up 19% from a year ago.

So, let's start with the third quarter that ended in October, 31st key metrics, uh, we monitor include Revenue, profits cash flow from operations operating margins and Returns on our investments.

For this past quarter, we again had strong record performance in each of those areas.

Total revenues were at a record, high of 187.7 million.

Up 11% from a year ago.

Record high Services revenues were up 16% from a year ago with our continued. Focus on generating recurring revenues

Record. Net income was up 20% from a year ago. Record income from operations was up 24% from a year ago.

Record adjusted.

Edward Ryan: Our adjusted EBITDA margin was up 3 points from a year ago to 46%. We generated a record high of $73 million in cash from our operations, up 22% from a year ago. Strong record results across all of these key metrics. At the end of the quarter, we had $279 million in cash, and we were debt-free with an undrawn $350 million line of credit. That included us using $37 million of our cash in Q3 to acquire Finale Inventory, an acquisition that we discussed on our September financial results call. We remain well-capitalized, cash generating, growing, and ready to continue to invest in our business. Our principal growth drivers in Q3 were largely the same as I've described in detail in past quarters. They are as follows. First, global trade data and intelligence.

Even though it was up 19% from a year ago or adjusted, even to margin was up 3 points from a year ago to 46% we generated a record high of 73 million in cash from our operations up 22% from a year ago.

So strong record results across all of these key metrics.

at the end of the quarter, we had 279 million in cash and we were debt-free with an undrawn 350 million line of credit

that included us using 37 million of our cash in Q3 to acquire finale finale, inventory and acquisition that we discussed on our September Financial results. Call

Growing and ready to continue to invest in our business.

Our principal growth drivers in Q3 were largely the same as I've described in detail. In past quarters, they are as follows.

Edward Ryan: It remains a chaotic tariff and trade environment for our customers. In the last 90 days, our customers have seen these significant changes. 1, a truce on tariffs between China and US, extending the tariff status quo while negotiations continue. 2, tariff expansions on metals, copper, timber, and furniture. 3, tariff relief for foodstuffs. 4, new reciprocal trade agreements between the US and countries like Argentina, Switzerland, and Malaysia. 5, the implementation and temporary pause and enforcement of BIS50, a regulation that expanded the number of denied parties that the US entities needed to screen against. We continue to be a provider of choice for our customers for tariff data, sanctioned party assistance, and research on trade flows. We help our customers keep their business flowing and help them plan for tomorrow. When things are changing rapidly, they rely on us for timely and accurate updates.

First global trade data and intelligence. It remains a chaotic chaotic, tariff and trade environment for our customers in the last 90 days. Our customers have seen these significant changes

want a truce on tariffs, between China and US extending the Care status quo while negotiations continue.

To tariff, expansions on Metals copper Timber and Furniture 3. Carefree relief for food, stuffs, for new reciprocal trade agreements between the US and countries like Argentina, Switzerland and Malaysia.

And 5 the implementation and temporary pause and enforcement of bis. 50 a regulation that expanded the number of denied parties that the US entities needed to screen against

We continue to be a provider of choice for our customers. For tariff data. Sanctioned party assistance, and research on trade flows, we help our customers, keep their business flowing and help them plan for tomorrow.

When things are changing rapidly, they rely on us for timely and accurate updates and Q3 the changing trade environment provided strong demand for our Solutions.

Edward Ryan: In Q3, the changing trade environment provided strong demand for our solutions. Second is Foreign-Trade Zones. The uncertain trade and tariff environment has many of our customers needing more of our help to find the most efficient way to import goods. One mechanism that's being investigated by more of our customers than ever before is Foreign-Trade Zones or FTZs. These are designated spaces for US companies to import goods on a tariff and duty deferred basis, only triggering payment when the goods are removed from the FTZ for shipment into free circulation. There's a detailed regulatory regime to manage these FTZs, including keeping track of everything flowing in and out of the FTZ and regular government reporting. However, with heightened and uncertain tariffs, it has become an effective way for our customers to manage their imports and cash flow.

Second is foreign trade zones.

The uncertain trade in tariff, environment has many of our customers needing, more of our help to find the most efficient way to import Goods, 1 mechanisms being investigated by more of our customers than ever before is foreign trade zones or ftzs.

These are designated spaces for us, companies to import Goods on a tariff and Duty deferred basis. Only triggering payment when the goods are removed from the ftz for shipment into free circulation.

There's a details regulatory regime to manage these ftzs, including keeping track of everything flowing in and out of the ftz and regular government reporting.

Edward Ryan: We've seen higher demand for our FTZ solutions than in previous years, and that was a good driver again this quarter. The third is e-commerce customs clearance. Earlier in the year, the US eliminated the de minimis exemption, which allowed foreign companies to ship goods duty-free to US customers where the value of the goods was less than $800. With that exemption gone, foreign e-commerce sellers needed to adapt to a new regulatory structure with new filings and submissions of tariffs. To do this, these sellers and their brokers need solutions that can handle large volumes and velocities of shipments that interact with US customs and get goods cleared quickly to prevent delivery delays. We have market-leading solutions to help these high-velocity importers, and it was a strong driver of growth in the quarter. The fourth is real-time shipment visibility.

However, with heightened and uncertain tariffs, that has become an effective way for our customers to manage their Imports and cash flow. We've seen higher demand for our ftz Solutions than in previous years and that was a good driver again. This quarter

The third is e-commerce Customs clearance earlier in the year, the US eliminated the dominance exemption, which allowed foreign companies to ship goods. Duty-free, to us customers where the value of the goods was less than $800.

With that exemption gone far and e-commerce sellers needed to adapt to a new regulatory structure with new filings and submissions of tariffs.

To do this, these sellers and their Brokers need solutions, that can handle large volumes and velocities of shipments that interact with US Customs and good get Goods, clear quickly to prevent delivery delays.

We have Market leading solutions to help these high velocity importers. And it was a strong driver of growth in the quarter.

The fourth is real-time shipment visibility.

Edward Ryan: Shipment, shippers and brokers want real-time visibility into the location of shipments in transit. Shipment tracking is an expected part of the consumer experience, so this is critical information for customers. In the business-to-business environment, shipment tracking allows for better planning on preparing delivery resources, whether they be loading dock doors or human resources unloading trucks. Getting accurate location information isn't always simple, particularly in the truck market, as many smaller independent truckers may not have the technology to provide automated location information. However, our MacroPoint solutions are the best at getting tracking information, leveraging carefully designed mobile applications and artificial intelligence agents. This market-leading tracking rate led to continued strong network performance by MacroPoint in the quarter. Similar revenue drivers to previous quarters have contributed to our record revenue performance this quarter.

Shipment, uh, shippers and Brokers. Want real-time visibility into the location of shipments. And Transit shipment tracking is an expected part of the consumer experience. So, this is critical information for customers in the business to business environment. Shipment tracking allows for better planning on preparing.

Delivery resources, whether they be loading, dock doors or human resources, unloading trucks getting accurate location. Information isn't always simple particular in the particularly in the truck Market. As many smaller independent, truckers may not have the technology to provide automated location information,

However, our macro Point Solutions are the best at getting tracking information leveraging, carefully designed mobile applications and artificial intelligence agents. This Market leading tracking rate led to continued strong Network performance by macro point in the quarter.

Edward Ryan: When combined with the cost rationalizations effort we undertook earlier this year, we also had record operating performance. Next, I wanna talk about artificial intelligence because it's becoming a bigger and bigger part of our business. I mentioned artificial intelligence helped our MacroPoint business, but I wanted to take a bit more or talk a bit more about how AI impacts Descartes overall. First, let me give some context for when you're thinking about Descartes and AI. Descartes is a network business with a huge network infrastructure. We run the Global Logistics Network. We're built by connecting huge numbers of shippers, carriers, governments, and logistics intermediaries together. We are not an enterprise software business. Logistics and supply chain problems are not enterprise problems. They are intra-enterprise problems and challenges. To solve them, you need data from multiple external sources, and that's what we do.

It's a similar Revenue drivers to previous quarters. Have contributed to our record Revenue performance, this quarter when combined with the cost rationalizations uh, effort we undertook earlier this year. We also had record operating performance.

The next I want to talk about artificial intelligence because it's becoming a bigger and bigger part of our business. I mentioned artificial intelligence helped, our macro Point business, but I wanted to take a bit more or talk a bit more about how AI impacts descarte overall.

First, let me give you some context for when you're thinking about the cart. Nia AI.

The cart is a network business with a huge Network infrastructure. We run the global logistics Network. We're built by connecting huge numbers of shippers, carriers governments and Logistics intermediaries together.

We are not an Enterprise software business.

To solve them, you need data from multiple external sources and that's what we do.

Edward Ryan: We transmit and house massive amounts of data. We help our customers source trusted, clean, formatted, and real-time data 'cause that's what's most valuable to them. The questions I've been getting from shareholders, analysts, and others is what's the impact of artificial intelligence on Descartes' business? The answer is that the impact is overwhelmingly positive. I'll talk about this in detail, but in summary, AI increases demand for our data and decision-making tools. Our customers want massive amounts of clean, formatted, real-time data to help them make decisions on our own network or to power their own AI investments. Data is the fuel for AI solutions. That data needs to be from a trusted source. Everyone knows poor data can lead to poor decision-making and execution.

Formatted and real-time data, because that's what's most valuable to them.

So the questions I've been getting from shareholders analysts and others is what's the impact of artificial intelligence on big heart's business?

The answer is that the impact is overwhelmingly positive. I'll talk about this in detail but in summary

AI increases demand for our data and decision-making tools. Our customers want massive amounts of clean formatted real-time data, to help them make decisions on our own network or to power their own AI Investments.

Data is the fuel for AI solutions. That data needs to be from a trusted Source. Everyone knows poor data. Can lead to poor decision-making and execution.

AI allows us to offer new Solutions and services leveraging, our Network infrastructure and data.

Edward Ryan: AI allows us to offer new solutions and services leveraging our network infrastructure and data. AI allows us to run our network and business more efficiently. Now let me go into a bit more detail. First, GLN data powers AI. AI tools massively speed up the pace of automation for our customers. With AI agents or agentic AI, we expect that most of our customers will eventually be running some form of AI tools to automate processes within their business. These AI tools are powered by data. Businesses that will be the most successful with AI are the ones that can train their tools with enormous amounts of current and clean data. In the supply chain and logistics world, that means that our customers' AI strategies and successes rely on getting more clean data from their trading partners.

And AI allows us to run our Network and business more efficiently.

Now let me go into a bit more detail.

The First glm Data Powers. Ai ai tools massively speed up. The pace of automation for our customers, with AI agents or agent Tech AI. We expect that most of our customers will eventually be running some form of AI tools to automate processes within their business.

These axles are powered by data businesses. That will be the most successful with AI are the ones that can train their tools with enormous amounts of current and clean data.

Edward Ryan: Our customers need information about things like the location, schedule, and amount of resources not in their control, including inventory, vehicles, vessels, and people. This is why AI makes Descartes' Global Logistics Network even more important for the customers. The Global Logistics Network helps our customers get massive amounts of real-time data from an enormous number of global trading partners. It's delivered in a clean manner that can power AI tools. The scale, reach, and global nature of Descartes' network has never been more important to our customers. Descartes is a network business. We get paid as we help customers get and process more data. We believe that AI is a huge potential tailwind in demand for our global logistics network. The second is that the GLN data includes the collective intelligence of the network.

In the supply chain and Logistics world, that means that our customers AI strategies and successes relying on getting more clean data from the trading partners. Our customers need information about things like the location schedule and amounts of resources, not in their control, including inventory Vehicles vessels, and people

This is why AI makes the carts Global Logistics Network. Even more important for the customers, the global logistics Network helps our customers get massive amounts of real-time data from an enormous number of global trading partners delivered in a clean manner, that can power AI tools.

Scale, reach and Global nature of big cart's network has never been more important to our customers.

The cart is a network business. We get paid as we help customers, get and process. More data, we believe that AI is a huge potential Tailwind in demand for our Global Logistics Network.

The second is that the gln data includes the collective intelligence of the network.

Edward Ryan: We expect that our customers will use AI to answer questions about how to best run their own businesses, and the power of AI may mean that they'll be able to answer questions that they haven't even thought of asking yet. Some of those questions will be best answered using the collective intelligence of data available on the Global Logistics Network. Think of it as the difference between predicting the traffic patterns on a particular road using only vehicles in your own fleet, compared to being able to get a better answer for traffic patterns using the vehicles of every participant on the Global Logistics Network. The difference between responding to a shipment delay by limiting yourself to one airline you've worked with versus every possible alternative with an air carrier available over the Global Logistics Network.

We expect that our customers will use AI to answer questions about how to best run their own businesses and the power of AI May mean that they'll be able to answer questions that they haven't even thought of asking yet.

But some of those questions will be best answered using the collective intelligence of data available on the global logistics Network. Think of it as the difference between predicting the traffic patterns on a particular Road using only vehicles in your own Fleet compared to being able to get a better answer for traffic patterns using the vehicles of every participant on the global logistics Network.

Or the difference between responding to a shipment delay. By limiting yourself to 1 Airline, you can work with versus every possible alternative with an aircraft carrier available over the global logistics Network.

Edward Ryan: Collective intelligence available over a massively scaled network matters when you're solving inter enterprise solutions, and that collective intelligence is another data source that powers AI for our customers. The third area is the GLN fuels AI with real-time information. Further, the most successful businesses will power their AI with current information so that the answers they get aren't stale. For that, our customers really need real-time and constantly updated information from a trusted source dedicated to data, and that's what the Global Logistics Network provides. We're processing shipment moves and getting location information in real time. We're quickly updating compliance rules, sanctioned parties, tariff rates, trade agreements and regulations, shipping rates and schedules. We live, eat, and breathe supply chain and logistics at scale, and we believe that's even more powerful business in the AI world.

Collective intelligence available over a massively scaled Network matters when you're solving inter-enterprise Solutions and that collective intelligence is another data source that powers AI for our customers.

The third area is the gln fuels AI with real-time information.

further, the most successful businesses will power their AI with current information, so that the answers they get aren't stale

For that our customers really need real time. And constantly updated information from a trusted source.

Dedicated to data and that's what the global logistics Network provides we're processing. Shipment moves and getting location information in real time. We're quickly. Updating compliance rules, sanctioned parties, tariff rates, trade, agreements, and regulations, shipping rates and schedules. We live. Eat and breathe supply chain and Logistics at scale, and we believe that's even more powerful business in the AI.

Edward Ryan: We believe that just the fact that our customers want to use AI increases demand for the Global Logistics Network. AI also allows us to make meaningful changes in the services and value we deliver to customers, and also in how we make our own operations more efficient and effective. Next area is AI enables new GLN services for our customers. We recently ran an internal employee AI Descartes hackathon with exactly that goal in mind. What our employees' ideas for using AI to deliver more value to customers or making our business more efficient. We had overwhelming employee interest and participation with more than 50 new suggestions for projects. This is in addition to the projects we've already completed or have underway. Generally, we leverage AI for customers in two ways.

So, we believe that just the fact that our customers want to use AI increases demand for the global logistics network. But AI also allows us to make meaningful changes in the services and value. We deliver to customers and also in how we make our own operations, more efficient and effective.

Next area is AI, enables new gln services for our customers.

We recently ran an internal employee AI Dart hackathon with exactly. That goal in mind.

What our employees ideas for using AI to deliver more value to customers or making our business more efficient?

We had overwhelming employee interest and participation with more than 50 new suggestions for projects. And this is in addition to the projects we've already completed or have underway.

Edward Ryan: One, by delivering new automated services that were too expensive or challenging when they were manual. Two, by allowing our customers to leverage the large amounts of data on the GLN to get better or faster answers that can help them manage their business. An example of new automated services include using agentic AI with our MacroPoint business. MacroPoint helps our broker and shipper customers get location information on in-transit shipments. Oftentimes, we can get this information from direct data feeds to vehicle telematics or trucking company transportation management systems. However, there is still a substantial number of small and/or independent truckers that do not have those technological capabilities. Having a staff of hundreds of people to call these trucks and ask them where they are just is not economically feasible for our customers.

Coverage AI for customers in 2 ways, 1 by delivering new automated services that were too expensive or challenging when they were manual and 2 by allowing our customers to leverage the large amounts of data on the gln to get better or faster answers, that can help them manage their business.

An example of new automated Services include using a Gentech AI with our macro Point business.

Macro Point helps our broker and shipper customers get location information on intransit shipments. Often times we can get this information from direct data feeds to vehicle telematics or Trucking Company transportation management systems. However, there's still a substantial number of small, Andor independent truckers that don't have those technological capabilities.

Edward Ryan: However, with agentic AI, we can work with them to download and use our mobile app or automate inquiries to truckers and get more tracking information for our customers much more efficiently. In just a few short months, we've had more than 300,000 outreaches using our AI agents, resulting in more than 180,000 drivers joining the MacroPoint network. The result is happy customers, more billable tracked loads for our customers. It's a great example of an enhanced service that just wasn't feasible before AI automation came to the table. Some other things that were already gone underway for our customers. Natural language searches of our GLN Datamyne US import information and faster results to get competitive intelligence. Automated logic into nine party screening to deal with challenging match scenarios on parties with ambiguous names and addresses.

Having a staff of hundreds of people to call these trucks and ask them where they are just isn't economically feasible for our customers. However, with the Genentech AI, we can work with them to download and use our mobile app or automate inquiries to truckers and get more tracking information. For our customers, much more efficiently.

In just a few short months, we've had more than 300,000 outreaches using our AI agents resulting in more than 180,000 drivers joining. The macro Point Network the result is Happy customers more billable tracked, loads for our customers. So it's a great example of an enhanced service that just wasn't feasible before AI automation came to the table,

Some other things that were already uh, Gone underway for our customers natural language searches of our gln data. Mine us import information and faster results to get competitor competitive intelligence.

automated logic and denied party screening to deal with challenging match, scenarios on parties with ambiguous names and addresses, this allows customers to process large, shipment volumes more quickly,

Edward Ryan: This allows customers to process large shipment volumes more quickly. Free trade eligibility assessments using AI recommendations based on past practices, helping our customers reduce their tariff bill. Automated tariff classification suggestions for goods. Using AI agents to interpret lengthy carrier rate agreements and present optimal selection recommendations. Finally, leveraging actual historical delivery service times for particular businesses to allow for better planning decisions. AI also allows us to run our own network more efficiently. AI allows us to make our own internal operations more efficient by automating tasks, minimizing human error, and enabling oversight and analysis that wasn't previously possible. For us, AI can help us with these areas such as enhanced network security as we deploy tools to monitor, target, and even counterattack malicious activity. More intense work, network performance monitoring to minimize service disruptions.

free trade eligibility assessments using AI recommendations based on past practices, helping our customers, reduce their tariff bill

Automated tariff. Classification, suggestions for goods.

Using AI agents to interpret lengthy carrier rate agreements and present. Optimal selection recommendations.

And finally leveraging actual historical delivery service times for particular businesses to allow for better planning decisions.

AI also allows us to run our own network more efficiently.

AI allows us to make our own internal operations more efficient by automating tasks. Minimizing human error and enabling oversight and Analysis. That wasn't previously possible for us. AI can help us with these areas, such as enhanced network security, as we deploy tools to monitor Target and even counter-attack malicious activity.

more intense work, uh, Network performance, monitoring to minimize service disruptions

Edward Ryan: Code development by providing engineers with a running start with suggested code and development or maintenance of services. This is something we're already seeing great benefit in. Finally, automated and self-serve customer service, leveraging the enormous amounts of product documentation that we produce. AI is a great opportunity for Descartes and for our Global Logistics Network. We believe it will spur further demand for our trusted real-time, clean, formatted GLN data and the collective intelligence of the network. It's already allowing us to deliver additional value to our customers with enhanced services. And it's helping make our business more efficient. We believe that the inter-enterprise scaled network infrastructure of our business puts us in a much better position to benefit from AI than legacy or emerging point or enterprise technology solutions.

Code development by providing Engineers with a running, start with suggested code and development or maintenance of services. This is something we're already seeing great benefit in

and finally automated and self.

Serve customer service. Leveraging, the enormous amounts of product documentation that we produce

so a has a great opportunity for de cartes and for our Global Logistics Network

we believe it will spur further demand for our trusted real-time clean formatted gln data and the collective intelligence of the network. It's already allowing us to deliver additional value to our customers with enhanced services and it's helping make our business more efficient. You believe that the inner Enterprise scaled Network infrastructure of our business puts us in a much better position to benefit from AI than Legacy or emerging point or Enterprise Technology Solutions.

Edward Ryan: To sum up before I hand it over to Allan, Q3 was a very strong quarter for us. Trade and tariff uncertainty fueled demand for many of our services. We saw AI have a meaningful impact on our service delivery to customers, and we completed an acquisition in our e-commerce pillar that's already contributing. An excellent job all around by our Descartes team. I'd like to touch on one other item outlined in our press release today, that is that we're planning on a CFO transition after the end of this fiscal year. Allan has decided that after more than 30 years as a public company CFO, including 12 at Descartes, he wants to take steps towards retirement. Allan will be handing things over to Ed Gardner in March 2026, consistent with our established CFO succession plan.

To sum up before I hand it over to Alan Q3 was a very strong quarter for us trade and tariff on certainty fuel demand. For many of our services, we saw AI have a meaningful impact on our service. Delivery to customers. And we completed an acquisition of our, in our e-commerce pillar. That's already contributing an excellent job. All Around by RJ cart team.

I'd like to touch on 1 other item outlined in our press release today and that is that we're planning on a CFO transition. After the end of this fiscal year,

Allen has decided that after more than 30 years as a public company CFO, including 12 at Dart, he wants to take steps towards retirement.

So Allan will be handing things over to Edgar in March 2026 consistent with our established CFO succession plan.

Edward Ryan: Allan is going to stick around in the business as an advisor to help us with the CFO transition and also more generally to keep helping our business grow. It continues to be a great privilege to work with Allan. He cares for the business a ton, which I think is reflected in his desire to stay involved with the business going forward. We're also thrilled to have Ed Gardner ready to assume the CFO role, someone that I've worked with for more than 20 years and Allan has worked with over his entire 12-year stint at Descartes. Ed has a ton of financial experience with our business and the many acquisitions that we brought on board, and will likely already be a familiar face to many shareholders and analysts. With Allan and Ed's long-working relationship together, we expect a seamless transition in March.

Now is going to stick around in the business as an adviser to help us with the CFO transition and also more generally to keep helping our business grow.

Someone that I've worked with for more than 20 years and Alan has worked with over his entire 12 year stint at the cart and has a ton of financial experience with our business and the many Acquisitions that we brought on board and will likely already be a familiar face to many shareholders and analysts with Alan and Ed's long working relationship. Together. We expect a seamless transition in March,

Edward Ryan: Those are our plans for the future, but we still have Allan Brett in the saddle until March. Now I'll turn the call over to him to go through our Q3 financial results and more to tell. Allan Brett?

So those are our plans for the future but we still have Allen and the saddle until March. So now I'll turn the call over to him to go through our Q3 Financial results in more detail. Alan

Allan Brett: Hey, thanks very much, Ed. Appreciate those words. As indicated, I'm gonna take you through our financial highlights for our Q3, which ended on 31 October. We're pleased to report record quarterly revenue of CAD 187.7 million this quarter, an increase of 11% from revenue of CAD 168.8 million in Q3 last year. While revenue from acquisitions completed in the past 12 months, including the acquisitions of 3GTMS and Finale Inventory completed earlier this year, contributed nicely to this growth. Our growth in services revenue from new and existing customers from our existing solutions was also a very significant driver of growth this quarter when compared to the same period last year.

Hey thanks very much, Ed appreciate those words. Uh so as indicated I'm going to take you through our financial highlights for our third quarter which ended on October 31st.

We are pleased to report record quarterly, revenue of 187.7 million this quarter, an increase of 11% from revenue of 168.8 million in Q3 last year.

While revenue from Acquisitions completed in the past 12 months, including the Acquisitions of 3gtms and finale inventory. Completed earlier this year contributed nicely to this growth. Our growth in Services, revenue from new and existing customers. From our existing Solutions, was also very significant driver of growth this quarter when compared to the same period last year.

Allan Brett: Looking at our revenue details further, our revenue mix in the quarter continued to be very strong, with services revenue increasing 16% to $173.7 million, compared to $149.7 million in the same period last year, representing approximately 93% of total revenues in Q3 this year. Based on these results, we estimate that organic services growth on an FX neutral basis came in right around 7% in Q3, after averaging closer to 4% in each of Q1 and Q2 this year.

Looking at our Revenue details further, our Revenue mix in the quarter continue to be very strong with Services. Revenue, increasing 16% to 173.7 million compared to 149.7 million in the same period last year.

Representing approximately 93% of total revenues in the third quarter of this year.

Based on these results we estimate that organic Services growth on an fx. Neutral basis came in right around 7% in Q3 after average and closer to to 4% in each of q1 and Q2 this year.

Allan Brett: While we saw some reasonable strength in our transaction volumes in Q3, the majority of the growth in services revenue this quarter continued to come from strong results in the global trade intelligence pillar, as well as in strength in our e-commerce filing, customs filing business and our transportation management solutions, including MacroPoint trade visibility solution, again this quarter. As expected, partially offsetting the strong growth in services revenue, license revenue came in at $1.7 million or 1% of revenue in the quarter, down from license revenue of $3.5 million recorded last year in Q3. While professional services and other revenue came in at $12.1 million or 6% of revenue, down from $15.6 million in Q3 last year.

While we saw some reasonable strength in our transaction volumes in Q3 the majority of the growth in Services Revenue. This quarter continue to come from strong results in the global trade intelligence pillar, as well, as in in strengthening our e-commerce, violent Customs filing business and our transportation Management Solutions, including macro points for visibility solution. Again, this quarter

Allan Brett: That's mainly a result of the inclusion of approximately $3.7 million of low-margin hardware sales from our GroundCloud business in our Q3 results in last year's comparable period. As indicated, these lower license and hardware sales were expected, and we continue to focus on driving growth in services revenue across our business. For the first nine months of this year, revenue came in at $536 million, an increase of 11% from revenue of $484 million the same period last year. With revenue from acquisitions completed this year, as well as organic growth in our existing solutions, both driving this revenue growth. Services revenue drove this growth year to date, growing approximately 15% over the same nine-month period year to date last year.

as expected partially ostrich to offsetting the the strong growth in Services Revenue licenses, licensed Revenue came in at 1.7 million or 1% of Revenue in the quarter down from licensed revenue of 3.5 million recorded last year, in Q3 while Professional Services and other Revenue came in at 12.1 million or 6% of Revenue down from 15.6 million in the third quarter last year. And that's mainly a result of the inclusion of approximately 3.7 million of low. Margin, Hardware Sales from our ground Cloud business, in our Q3 results in last year's,

Comparable period.

As indicated, these lower license and hardware sales were expected. And we continue to focus on driving growth and services Revenue across our business.

For the first 9 months of this year, Revenue came in, at 536 million an increase of 11% from revenue of 484. Million the same period last year. Again, with revenue from Acquisitions completed this year, as well as organic growth in our existing Solutions, both driving this Revenue growth

Again, Services Revenue drove drove the growth of your date growing approximately, 15% over the same. 9-month period year to date last year.

Allan Brett: Gross margin came in at 77% of revenue in Q3, up from gross margin of 74% of Q3 last year, again, driven by the low-margin hardware sales we recorded in last year's results. Excluding these hardware sales, gross margin would have improved slightly over the same quarter last year as a result of the continued leverage we experienced with revenue growth from new and existing customers. Operating expenses increased by approximately 11% in Q3 over the same period last year. This was heavily related to the cost coming from the acquisitions completed in the past 12 months, offset partially by the cost benefit of the restructuring plan that we put in place during Q2 of this year.

Gross margin came in at 77% of Revenue. In the third quarter up from gross margin of 74% to the third quarter last year. Again, driven by the low margin, Hardware Sales were recorded in last year's results.

Excluding these Hardware Sales, gross margin would have improved slightly over the same quarter last year as a result of the continued. Leverage, we experience with Revenue growth from new and existing customers.

Operating expenses increased by approximately 11% in the third quarter over the same period last year and this was heavily related to the cost coming from the Acquisitions completed in the past 12 months.

Offset partially by the cost benefit of the restructuring plan that we put in.

Place during Q Q2 of this year.

Allan Brett: As a result of continued cost control and the operating leverage we get from both acquisitive and organic revenue growth, we recorded adjusted EBITDA growth of 19% to a record CAD 85.5 million or 45.6% of revenue, up from CAD 72.1 million or 42.7% of revenue in Q3 last year. For the first 3 quarters of the year, adjusted EBITDA has increased by 15% to CAD 241 million from CAD 210 million in the same period last year, with adjusted EBITDA ratios increasing to 44.9% from 43.4%.

So as a result of continued cost control and the operating leverage, we get from both the acquisit acquisitive and organic Revenue growth. We recorded adjusted Eva dog, growth of 19% to a record 85.5 million or 45.6% of Revenue up from 72.1 million or 42.7% of Revenue in the third quarter last year.

For the first 3 quarters of the Year adjusted Evita has increased by 15%.

To 241 million from 210 million in the same period last year with adjusted Eva, ratios increasing to 44.9% from 43.4%.

Allan Brett: If we look at our GAAP financials, net income came in at $43.9 million, or $0.50 per diluted common share in Q3, up nicely from net income of $36.6 million, or $0.42 per diluted common share in Q3 last year. We should also note that the income tax expense for Q3 came in at $14.5 million, or 24.8% of pre-tax income, which is slightly lower than our blended statutory tax rate of 26.5%. Mainly as a result of recognizing some previously unrecorded R&D tax benefits from previous periods.

Third quarter.

Up nicely from net income of 36.6, million or 42 cents per day to common share in the third quarter last year.

We should also note that the income tax expense for the third quarter came in at 14.5 million or 24.8% of pre-tax income, which is slightly lower than our Blended. Statutory tax rate of

26.5% made mainly as a result of recognizing, some previously, unrecorded R&D tax benefits from previous periods,

Allan Brett: Net income for the nine-month year-to-date period was $118 million or $1.35 per diluted common share, compared to $106 million or $1.21 per diluted common share in the last year in the nine months, again, as a result of higher operating profits from our growing business. With these operating results and strong AR collection offset partially by higher cash tax payments in the quarter, cash flow generated from operations came in at $73.4 million or 86% of adjusted EBITDA in Q3, up from $60.1 million or 83% of adjusted EBITDA in Q3 last year.

Net income for the 9-month year-to-date period was 118 million or a135 per day per day. The common share compared to 106 million

Or a dollar 211 per diluted, common share in the last last year. The 9 months again, as a result of higher operating pro profits from our growing business. With these operating results and strong, our collection offset partially by higher cash, tax payments in the quarter, cash flow generated from operations came in at 73.486% of adjusted on the third quarter up from 60.1 million or 83% of adjusted. Evita in the third quarter last year.

Allan Brett: For the nine months year to date, our operating cash flow has increased 20% to approximately CAD 190 million or 79% of adjusted EBITDA, up from CAD 159 million of adjusted EBITDA in the same nine-month period last year. In these nine-month periods, cash flow from operating activities was impacted by the following. First, in this year, our cash flows have been negatively impacted by the payment of approximately CAD 6 million in personnel departure costs. In the comparable period last year, cash flow was negatively impacted by the payment of CAD 25 million in contingent acquisition consideration for previously completed deals, which that piece was not accrued for the time of the acquisitions. Those had some impact on the cash flow from operations for the nine months.

For the 9 months year to date, our operating cash flow has increased 20% to approximately 190 million or 79% of adjusted Ava.

Up from 159 million of adjusted e, but in the same 9-month period last year.

In in these 9-month periods cash flow from operating activities, was impacted by the following first. In this year, our cash flows have been negatively impacted by the payment of approximately 6 million in Personnel, departure costs. And in the comparable period last year, cash flow was negatively impacted by the payment of 25 million. In contingent acquisition consideration for previously completed deals, which these were that, that piece was not accurate for the time of the acquisitions.

Allan Brett: We should also mention that subject to these types of unusual events and quarterly fluctuations, we expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80% and 90% of our adjusted EBITDA in the quarters ahead. Overall, we are extremely pleased with our operating quarterly operating results as the addition of our recent acquisitions, combined with continued organic growth in services revenue, resulted in strong growth in both adjusted EBITDA and cash flow from operations in the quarter. If we turn our attention to the balance sheet, our cash balances totaled $279 million at the end of October, up approximately $38 million from the end of Q2 this year.

So those, those had some impact on the, on the cash flow from operations, for the 9 months, we should also mention that subject to these types of unusual events. And or quarterly fluctuations, we expect to continue to see strong cash flow conversion and generally expect cash flow from operations to be between 80 and 90% of our adjusted EV beta in the quarters ahead.

Overall, we are extremely pleased with our operating quarterly operating results.

as the addition of our recent acquisitions combined with continued, organic growth and services, Revenue resulted in

A strong growth in both adjusted Ava and cash flow from operations in the court.

Allan Brett: As indicated, we had strong cash flow from operations, and this was partially offset by the use of approximately $37 million in cash to complete the Finale Inventory acquisition at the beginning of this quarter. As a result, we currently have $279 million of cash as well as our unused $350 million credit facility available to deploy towards future acquisitions or opportunities consistent with our business plan. As we look to Q4 of our fiscal 2026 for the three months ended 31 January, we should note the following. After incurring approximately $4.3 million in capital additions in the first 9 months of the year, we expect to incur approximately $1 to 2 million of additional capital expenditures in Q4 of this year.

If we turn our attention to the balance sheet, our cash balance is totaled to 279 million at the end of October up approximately 38 million from the end of the second quarter. This year as indicated, we have strong cash flow from operations and this was partially offset by the use of approximately 37 million in cash to complete the finale, inventory, acquisition, at the beginning of this quarter.

As a result we currently have 2779 million of cash as well as our unused. 350 million credit facility available to deploy towards future, Acquisitions or opportunities, consistent with our business plan.

as we look to the final,

Quarter of our.

Our physical 2026. For the 3 months, end of January 31st. We should note the following,

After incurring approximately 4.3 million in capital additions in the first 9 months of the year, we expect to incur approximately 1 to 2 million of additional Capital expenditures in the fourth quarter of this year.

Allan Brett: We expect we will use approximately $500,000 of our cash balances in Q4 to complete the earn-out obligation related to a past acquisition, and this amount is fully accrued for at the end of Q3. After incurring amortization costs of $60 million in the first nine months of the year, we expect the amortization expense will be approximately $21 million for Q4, with this figure being subject to adjustment for foreign exchange rates and future acquisitions. Our income tax rate for the first nine months of the year came in at approximately 24.1% of pre-tax income, which is just below our blended statutory tax rate of 26.5%.

We expect we will use approximately 500,000 of our cash balances in the fourth quarter to complete the earnout obligation related to a past acquisition. And this amount is fully accured for at the end of Q3

After incurring advertising costs of 60 million in the first 9 months of the year. We expect the amortization expense will be approximately 21 million for the fourth quarter. With this figure being subject to adjustment, for foreign exchange rates and future acquisitions.

Our income tax rate for the first 9 months of the year came in at approximately 24.1% of pre-tax income, which is just below our Blended statutory tax rate of 26.5%.

Allan Brett: For Q4, we currently expect our tax rate will come in fairly close to our blended statutory tax rate. As a result, we should experience a tax rate in the range of 24% to 28% of pre-tax income in Q4. However, as always, we should state that our tax rate may fluctuate quarter by quarter from one-time tax items that may arise as we operate internationally across multiple countries. Finally, after incurring stock-based compensation expense of $14.8 million in the first nine months of the year, we currently expect stock compensation to be approximately $6 million in Q4, subject to any forfeitures of stock options or share units. That's it for the financial update.

For the fourth quarter, we currently expect our tax rate will come in fairly close to our Blended statutory tax rate. And as a result, we should experience a tax rate in the range of 24 to 28% of free, tax income in Q4.

However, as always, we should state that our tax rate may fluctuate quarter by quarter from 1-time tax items, that may arise as we operate internationally across multiple countries.

And finally, after incurring, stock-based compensation expense of 14.8 million in the first 9 months of the year. We currently expect, stock compensation to be approximately 6 million in the fourth quarter.

Subject to any forfeitures of stock options or share units.

Allan Brett: As Ed mentioned, we have a well-planned CFO transition in the works, and I'm excited to be able to work with Ed Gardner on this seamless transition plan in the months ahead as we complete our fiscal 2026 and set the business up for continued growth. With that, I'll turn it back over to Ed Ryan to wrap up with some closing comments and our baseline calibration for Q4.

And I'm excited to be able to work with with Ed Gardner on this seamless transition plan and in the months ahead as we complete our physical 2026 and, and set the business up for continued growth.

So with that, I'll turn it back over to Ed, Ryan to wrap up with some closing comments and our Baseline calibration for Q4.

Hey thanks. Alan. Uh, please continue to be challenging business conditions for our customers.

Edward Ryan: Hey, thanks, Allan. These continue to be challenging business conditions for our customers. From a tariff and trade perspective, I outlined earlier some of the things that have happened over the past 90 days. Looking forward, the US Supreme Court is considering the legality of many tariffs with no identified timeline for resolution. Customers are also adjusting to new commodity-specific tariffs, and given the speed with which they were implemented, remain uncertain about additional tariff changes they may see in Q4. There remains ongoing geopolitical tensions impacting trade, whether it's tensions in the Middle East impacting trade lanes, the ongoing war in Ukraine impacting it and its resulting trade sanctions, or the potential new conflict in Venezuela impacting flight paths. Overlaying all that, our customers are trying to get a good handle on the economic environment.

From a tariff and trade perspective, I outlined earlier. Some of the things that have happened over the past 90 days. Looking forward to the US Supreme Court, is, considering the lengthy, uh, sorry, the legality of many tariffs with no identified timeline for resolution. Customers are also adjusting to new commodity specific tariffs, and given the speed with which they were implemented and remain uncertain about additional tariff changes, they may see in Q4

And the remains ongoing geopolitical tensions impacting trade, whether it's tensions in the Middle East impacting trade Lanes, uh the ongoing war in Ukraine, impacting it and its resulting trade sanctions or the potential new conflict in Venezuela, impacting flight paths.

Edward Ryan: I'm sure our customers have been monitoring the Black Friday, Cyber Monday buying period to get an understanding of how consumers will behave in this economic environment, and the early returns seem positive. This buying reaction will have a big impact on general economic activity and shipping related to inventory replenishment in 2026. For Descartes, we've grown during challenging business conditions in the past. Our plan is to continue to do so now. Some of the things that we believe continue to put us in a good position to do that include: We're particularly strong in global trade intelligence. We believe we can provide a ton of help to our customers in an environment where people are looking for information or help managing tariffs, continually updating sanction party lists, thirsting for competitive intelligence, dealing with increased export licensing complexity, and implementing new duty deferred Foreign-Trade Zones.

Overlaying all that. Our customers are trying to get a good handle on the economic environment. I'm sure our customers have been monitoring the Black Friday Cyber Monday. Buying period to get an understanding of how consumers will behave in this economic environment in the early returns seem positive.

Is buying reaction will have a big impact on General economic activity and shipping related to inventory replenishment in 2026.

For descarte we've grown during challenging business conditions. In the past, our plan is to continue to do so. Now some of the things that we believe continue to put us in a good position to do that include

Edward Ryan: We're diversified globally. We've got domestic transportation solutions that can be used around the world. Where there's shifting international trade relations, we have an established Global Logistics Network that can be leveraged by our customers. Our network model and processing of large amounts of clean, formatted real-time data put us in a great position to capitalize on AI opportunities. We have a total growth model. We have an extensive track record of acquisition activities to complement organic growth. Changing market conditions often provide us with even more opportunities to add solutions for our customers and grow by acquisition. Finally, we're a well-capitalized, cash-generating business. At Q3 quarter-end, we had $279 million in cash and $350 million in undrawn line of credit.

We're particularly strong in global trade intelligence. We believe we can provide a ton of help to our customers in an environment where people are looking for information or help managing tasks continually updating, sanctioned party. Lists thirsting for competitive intelligence dealing with increased export licensing complexity and implementing new duty to deferred foreign trade zones, we're Diversified globally, we've got domestic Transportation solutions, that can be used around the world and where there's shifting, international trade relations, we have an established Global Logistics Network that can be leveraged by our customers.

Our Network model and processing of large amounts of clean formatted real-time data, put us in a great position to capitalize on AI opportunities.

We have a total growth model. We have an extensive track record of acquisition activities to comp compliment organic growth changing market conditions. Often provide us with even more opportunities to add solutions for our customers and grow by acquisition.

Finally, we're well capitalized cash generating business at Q3 quarter end, we had 279 million in cash and 350 million in on Long. Uh excuse me, undrawn line of credit

Edward Ryan: In our quarterly report, we provided a comprehensive description of baseline revenues, baseline calibration, and their limitations. As of 1 November 2025, using foreign exchange rates of $0.71 to the Canadian dollar, 1.15 to the euro, and 1.32 to the Great Britain pound, and including the estimated contribution from the acquisition of Finale Inventory, we estimate that our baseline revenues for the Q4 of fiscal 2026 were approximately $161 million, and our baseline operating expenses were approximately $98.5 million. We consider this to be our baseline adjusted EBITDA calibration of approximately $62.5 million for the Q4 of fiscal 2026, or approximately 39% of our baseline revenues as at 1 November 2025. We are currently operating above our expected adjusted EBITDA operating margin range of 40% to 45%.

In our quarterly report, we provided a comprehensive description of Baseline revenues Baseline calibration and their limitations.

as of November 1st, 2025 using foreign exchange rates of 71 cents, the Canadian dollar

15 to the euro.

And 132 to the G uh, Great Britain pound and including the estimated contribution from the acquisition of finale.

Inventory, we estimate that our Baseline revenues for the fourth quarter of fiscal 2026, were approximately 161 million and our Baseline. Operating expenses were approximately 98.5 million,

we consider this to be our Baseline adjusted ebit to calibration of approximately 62.5 million for the fourth quarter of fiscal 2026 where approximately 39% of our Baseline revenues, as at November 1st 2025,

Edward Ryan: Our margins can vary in any period, given such things as revenue mix, foreign exchange movements, and the impact of acquisitions as we integrate them into our business. For now, we're keeping our target range at 40% to 45%. However, we'll monitor how we're performing over the coming quarters to consider whether any upward adjustment is appropriate. We've noticed that there's been uncertainty in public market conditions that have contributed to lower than historical valuation multiples for many logistics and supply chain technology companies, including Descartes. Considering how Descartes is currently performing, we remain optimistic about our ability to achieve our long-term financial plans. However, it's uncertain how public markets will trade for the foreseeable future, given everything going on in the world.

We're currently operating above our expected adjusted. Even to operating margin range of 40 to 45%. Our margin can vary in any period given such things as Revenue, mix foreign exchange movements and the impact of Acquisitions as we integrate them into our business. For now we're keeping our target range at 40 to 45%. However we'll monitor how we're performing over the coming.

Quarters to consider whether any upward adjustment is appropriate.

We've noticed that there's been uncertainty in public market conditions that have contributed to lower than historical valuation multiples for many Logistics and supply chain technology companies including descarte.

Edward Ryan: With that uncertainty, we believe it's prudent and in Descartes' interest to apply to start a Normal Course Issuer Bid to have the option to purchase Descartes shares in the open market over the next 12 months if and when we think it makes sense. Having the Normal Course Issuer Bid mechanism available to us will allow us to react quickly and appropriately to differing public market conditions. These remain uncertain times for our customers. It's a challenge for them to know what they can rely on in this global trade environment. Our goal is to continue to show our customers and other stakeholders that the one thing they can rely on is Descartes. Thank you 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.

Considering how the cart is currently performing. We remain optimistic about our ability to achieve our long-term Financial plans. However, it's uncertain. How public markets will trade for the foreseeable future? Giving everything going on in the world with that uncertainty. We believe it's prudent. And in deck, cart's interest to apply to start a normal course, issue or bid to have the option to purchase Dart shares in the open market over the next 12 months. If, and when we think it makes sense,

Course issue your bid mechanism available to us. Will allow us to react quickly and appropriately to differing public market conditions.

These remain uncertain times for our customers, it's a challenge for them to know what they can rely on. In this global trade environment. Our goal is to continue to show our customers and other stakeholders that the 1 thing they can rely on is Dick cart.

Thank you to everyone for joining us on the call today. As always, we're available to talk to you about our business in whatever manner is most convenient for you.

And with that operator, I'll now turn it over to you for the Q&A portion of the call.

Edward Ryan: With that, operator, I'll now turn it over to you for the Q&A portion of the call.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question is from Chris Quintero from Morgan Stanley. Your line is now open.

Thank you, ladies and gentlemen, we will now begin the question and answer session.

Should you have a question please? Press the star followed by the 1 and a touchdown Zone. Should you wish to cancel your request? Please press the star followed by the 2 if you're using a speaker-phone. Please listen to handset. Before pressing any Keys once again, that is star 1. Should you wish to ask a question?

Your first question is from Chris cantero from Morgan Stanley, your line is now open.

Hey, Ed. Hey.

Chris Quintero: Hey, Ed. Hey, Allan. Allan, congrats on that fantastic run here and best of luck in your next part here of your life journey. I want to double-click on the organic growth rate, specifically around the transaction volumes. Allan, you said reasonable strength. What did you exactly see there? Was there an improvement in the volumes, or was it kind of largely stabilization? How would you describe the volume component here?

Alan and congrats on that. Fantastic run here and and best of luck in your next part here of your, your life Journey. Um,

I wanted to double click on the organic growth rates specifically around the transaction volumes. Al, I think you said reasonable strength. So uh, what did you exactly see there? Was there an improvement in the volumes or was it kind of largely stabilization? How would you describe the the volume component here?

Well, a lot of the volume picked up was, uh,

Edward Ryan: Well, a lot of the volume we picked up was, you know, our competitors. We, you know, if you look at the trade stats, ocean and truck were fairly flat, but we were able to grow in those areas because we had solutions that were more attractive to customers than some of the one-hit wonder competitors that we've had in the past. You know, that enabled us to pick up in areas like the Type 86 filings.

Yeah, a lot of volume we picked up was from uh uh you know, our competitors. We we, you know, if you look at the trade stats

Um, ocean and truck were fairly flat, but we were able to, to grow in those areas because we had Solutions uh, that were more attractive to customers than, than some of the 1 hit wonder competitors that we've had in the past. Uh, and you know that

Us to pick up in areas like the type 86 filings or pick up quite a bit of business.

Edward Ryan: We picked up quite a bit of business in the BIS 50, you know, area where new government regulation came in, and we were able to take our position in the market and go in and get, you know, a lot of new customers with bigger contracts that, you know, committed to us for a long period of time, like we have in past customs filing initiatives. Things like that added up to, you know, even in the face of, you know, transportation statistics that, you know, we probably would like them to be better, but we were able to grow substantially, I guess, our position in the market. A bunch of the AI things that I mentioned on the call are already helping.

Uh in the uh, bis 50. Uh, you know, area where new government regulation came in and we were able to

Take our position in the market and go in and and, and get, uh, you know, a lot of new customers with bigger contracts. That, uh,

Uh, that, you know, committed to us for, for a long period of time. Like we haven't passed Customs filing initiatives, uh, things like that added up to, uh, you know, even in the face of, you know, Transportation statistics that that, you know, we probably

would like them to be better, but we were able to to grow substantially uh because our position in the market uh and a bunch of the AI things that I mentioned on the call are already helping uh

Edward Ryan: I don't think I said it in the prepared comments, but you know, MacroPoint was at 87%, which is the highest track rate in the industry by 20 points. You know, but still the customers want to track all their shipments. We're now using AI to get that number up. It's now 90%. Just in a couple of months that shift occurred. That's not only more money for us, it's happier customers. They're paying us more money, but they want to track all their shipments. That put us in a situation where, you know, our customers are happy, we're making more money, and we're beating our competitors handily because they haven't moved to market with these kind of solutions as fast as we have.

I don't think I said it in the prepared comments, but, you know, macro Point uh was it 87%, which is the highest track rate in the industry by 20 points and you know, but still the the customers want to track all their shipments and

We're not using AI to to get that number up. It's now 90% and, uh, just in a couple months that, that, that shift occurred and uh, that's not only more money for us. It's happier customers and their pain is more money, but they want to track all their shipments.

and, uh, that put us in a situation where, you know,

Our customers are happy, we're making more money and we're beating our competitors, uh, handy because they haven't moved to Market with these kind of solutions as fast as we have.

Chris Quintero: Got it. Okay. stable-ish kind of industry volume trends, but you all just really took some market share here in the quarter. I would love to follow up on the AI commentary you gave, Ed. totally makes sense from the MacroPoint perspective, improving that tracking percentage rates. how do you think about the monetization angle of it? Are you know, charging higher prices? Is there a separate SKU to get some of this agent capability? How are you thinking about that more broadly?

Got it. Okay, so stable is kind of industry volume Trends, but you all just really took some some market share here in the quarter.

um,

I would love to follow up on the AI commentary you gave at, um, totally makes sense from the macro point perspective, improving that, that tracking percentage rates. Uh, how do you think about the monetization angle of it? Uh, are you, you know, charging higher prices, is there a separate skew to get some of this agentic capability? How are you thinking about that more, broadly?

Edward Ryan: No. There are probably a bunch of different ways, but, you know, some of the more pertinent ones, and we said we had that challenge with the employees that identified new things. It's doing more for our customers with the data that we already have. I'll give you an example. Take a shipment's delayed, and we know when it's supposed to be there, and we see something happen with a plane or a truck or a ship that goes, "Hey, there's gonna be a problem with this shipment." We could identify that that's gonna be a problem. We can figure out what to do about it and execute it for them.

Oh, so I I the probably a bunch of different ways but, you know, some of the the, uh, more pertinent ones. And we said, they had that challenge with the employees that uh I identified new things. It's it's

Doing more for our customers with the data that we already have. So I'll give you an example. Take a shipments delayed and we know when it's supposed to be there and we see something happen with a plane or a truck or a ship that goes. Hey, there's going to be a problem with this shipment.

Edward Ryan: I can imagine a world in a couple of years where, you know, I'm charging a customer to do all of that, but that work used to take them hours and hours internally, and they wouldn't even come up with a very good solution for it. You know, I could see a world in a couple of years where we may be telling a customer, Hey, that shipment you have, you know, it's gonna be, you know, 8 hours late. They go, Oh, why? You know, That's, that's, you know, why is it gonna be late? We go, Because it was gonna be late 5 days, and we figured out the problem, and rebooked you going somewhere else. As a result, you're only gonna be delayed a few hours. You know, to our customers, that's great news.

We could identify that that's going to be a problem. We can figure out what to do about it and do and execute it for them. And I can imagine a world in a couple years where you know I'm charging a customer to do all of that but that that work used to take them.

Edward Ryan: It could cost them hundreds of dollars to deal with that and have an angry customer. In the world I just described, we identified the problem faster than they ever would have done it themselves, came up with the best solution we could possibly come up with under the circumstances, and rebooked them, which they'll pay for, and got them in a situation where they got bad news, and it didn't work out that badly because we used AI tools and the data on our network to, you know, come up with a better solution for their customer.

Hey, that shipment, you have, uh, you know, it's going to be, you know, 8 hours late and they go. Oh, why? You know, that's that's uh, you know, why is it going to be late and we go? Because it was going to be late 5 days and we figured out the problem and we booked you going somewhere else. And as a result, you're only going to be delayed a few hours and you know, to our customers. That's great news. It it, it could cost them hundreds of dollars to deal with that and have an angry customer and in the world I just described we identified the problem faster than they ever would have done it themselves. Came up with the best solution, we could possibly come up with uh under the circumstances and rebook them, which they'll pay for and uh uh got them in a situation where they got bad news and it didn't work out that badly because we used AI tools and the data on our Network to, you know, come up with a better solution for their customer.

Awesome. Thanks so much guys.

Thank you, Chris.

Chris Quintero: Awesome. Thanks so much, guys.

Edward Ryan: Thank you, Chris.

Thank you. Your next question is from Dan Becker from William. Blair, your line is now open?

Operator: Thank you. Your next question is from Dylan Becker from William Blair. Your line is now open.

Dylan Becker: Hey, Ed. Hey, Alan. Thanks for the question here. Alan, congrats on the retirement. All the best. It's been a pleasure working together. Maybe sticking on the theme of AI with you, Ed, to start. Appreciate all the color on kind of the opportunity for value and monetization to come. Maybe if we think about the implications to kind of the moat and platform defensibility of the network here, maybe there's perception, or at least the thought of threat in competition entering the space. It feels like the scaled network that you guys have is a massive differentiator, but wondering maybe how you think about the network as a leg up, not only in compounding value, but also maybe the complexity of trying to replicate this or something like this from scratch.

Hey, hey, hey, Alan, thanks for the question here and Alan. Uh, congrats on the retirement, all the best. It's been a pleasure working together, um, maybe sticking on the theme of AI with you and to start our appreciate all the color on, kind of the, the opportunity, uh, for value and monetization to come. But maybe if we think about uh, the implications to kind of the moat and and platform to

Disability, or the network here, maybe there's perception. Uh, or at least the the thought of threat it in competition entering the space. It feels like the scale Network that you guys have is a massive differentiator, but wondering maybe how you think about the network as a leg up uh not only in compounding value but also maybe the complexity of trying to replicate this uh or something like this from scratch.

Edward Ryan: I mean, you know, I've been in the network business my entire life. I just give you two examples. You can't really compete with us as a network until you have all the connections. No one's gonna switch from my network to yours if you only have half of the connections that I have. They need the people that come in and solve the entire problem. That makes it very hard for someone new to come in and compete from scratch. Same with the data content business. You know, you have to have all the data. You can't just get some of it and then start competing with us. It's not attractive to customers. What that means is you have to spend a whole lot of time and effort upfront to recreate those businesses.

Um, I mean, you know, uh, I've been in the network business my entire life and I, I just give me 2 examples. You can't really compete with us as a network until you have all the connections, you know, 1's going to switch from my network to yours. If you only have half of the connections that I have, they need to people that come in and solve them the entire problem and it that makes it very hard for someone new to come in and and compete from scratch. Uh, same with the, the data content business, you know, you you have to have all the data, you can't just get some of it and then start competing with us. It's not

Edward Ryan: If you even could, and you can get any customers to do it's like by the time you start being able to monetize it, you could be 5, 10 years in. I can tell you just in the network side, the data all changes, and the connections all change over that period of time. You know, we had the advantage of starting from the beginning when all of this started and building all of this stuff. You know, there hasn't been a new network entrant in, you know, 20 years. Data content, same thing, right? As people got to collecting the data content. How do you get all of it? Because that's what you need to start.

Uh, attractive to customers. And what that means is, you have to spend a whole lot of time and effort upfront to to recreate those businesses. If you even could, and you can get any customers to do it, it's like, by the time you start being able to monetize it, you you could be 5 ten years in and uh, I could tell you just in the network side, the data, all changes, uh, and and the the connections all change over that period of time. Like, we're, we had the advantage of starting from from the beginning. When all of this started and building all this stuff.

and you know, there hasn't been a new network entrance in in

You know 20 years and uh data content, same thing, right? As people got to collecting the data content? Like how do you get all of it? Because that's what you need to start. And you know the reason our data content businesses are so profitable is

Edward Ryan: You know, the reason our data content businesses are so profitable is, we wouldn't charge any individual customer too much money. We have collected all the data over time, and now we just have to update it. That has a certain cost to it. Once you get over that cost, it is a very profitable business because all the new customers are pure profit. If you'd wanted to try and start that from scratch, you know, you're losing money for years and years and years till you get to the point where you're, you know, you have your head above water. It just made it unattractive for people to try and get back into it.

you want to charge any individual customer too much money. Uh we have collected all the data over time and now we just have to update it and uh that has a certain cost to it but once you get over that cost,

Uh, it is uh very profitable business because all the new customers are are pure profit. If you wanted to try and start that from scratch. You know, you're losing money for years and years and years to get to the point where you're, you know, you have your head above water and

it just made it unattractive for people to try and get back into it. So, you know, I I look and go, hey, uh,

Edward Ryan: You know, I look and go, hey, with all the stuff that we do for these people and the amounts that we charge them, it's, you know, it's not that attractive to get into it. You're gonna lose a lot of money for a long period of time until you get into it, and it's probably just not worth it to people. That's why we haven't seen anyone try to do it.

With all the stuff that we do for these people and the amounts that we charge them, uh, it's you know, it's it's not that attractive to get into it. You you're going to lose a lot of money for a long period of time until you you get into it and it's probably just not worth it to people.

And that's why we haven't seen anyone try to do it.

Dylan Becker: Right. No, that makes perfect sense. Thanks, Ed. Maybe switching over to Allan or Ed, if you have thoughts on this as well too, but on the services, the organic services step up, how should we think about kind of the sustainability of subscription demand, given we continue to highlight multiple moving parts and factors driving sustained complexity here? If you do think, or you segment it out on kind of the volume recovery side, more of a market share story at this point, how we should think about kind of the volume normalization continuing to play out over time, as maybe we get a sense of normalcy at some point here in the future.

No, it makes perfect sense. Thanks Ed. Um, and maybe switching over to Alan or or edit you have thoughts on this as well too, but on this Services, the organic Services, step up, what should we think about? Kind of the sustainability of subscription demand given? We continue to highlight multiple moving parts and factors driving sustained complexity here. Uh, and then if, if you you do think and you segment it out on.

Edward Ryan: Well, I mean, I'll take it. If Allan has anything else to add, he can jump in. You know, I think, our customers, you know, they don't know exactly what's gonna happen, and there's a lot of uncertainty out there. I called out a lot of it on the call. I think when that uncertainty goes away, you're gonna see increases in volumes and assuming the economy's in good shape when that happens. Frankly, you know, we don't know the answer to that question. What we do know is that we've got to run our business to keep making 10% to 15% and really trying to beat 15% growth in EBITDA no matter what happens. It's why you saw us make the moves we did earlier in the year to cut costs.

Kind of the volume recovery side, more of a market share, uh, story at this point, how we should think about. Kind of the volume normalization continuing to play out over time, as maybe we get a sense of normaly at some point here in the future. Well I mean I'll take it if I don't have anything else to add its jump in. Uh you know, I think

They they don't know exactly what's going to happen and there's a lot of uncertainty out there. I called out a lot of it on the call. Um, I think when that uncertainty goes away, uh, you're going to have you're going to see increases in volumes and assuming the economy is in good shape, when that happens. Uh, and frankly, you know, we don't know the answer to that question. What we do know is that

Edward Ryan: Not that we wanted to cut costs. It's that we thought, Hey, you know, we make one promise to our shareholders, and that's that we're gonna make 15% or attempt to be even better than that, every year, more than we did the last. You know, we are laser-focused on that. You know, there's some things we can't control in the business, some things we can. The things we can, we wanna try and control on the revenue side. Certainly on the cost side, though, we have a lot of control. You know, it's not that we like making the moves that we did. You know, no one likes firing people or cutting costs, you know, somewhat substantially.

We've got to run our business to keep making 10 to 15% and and really trying to beat 15% growth in Evita, no matter what happens. It's why you saw us make the moves we did earlier in the year to cut costs. Not that we wanted to cut costs that we thought, hey, you know, we make 1 promise to our shareholders. And that's that we're going to make 15% or or or attempt to be even better than that. Uh, every year, uh, more than we did the last and, you know, we are a laser focused on that. And, you know, there's some things we can't control in the business, some things we can, the things we can. We want to try and control on the revenue side and uh certainly on the cost side though, we have a lot of control and

um, you know, it's not that we like making the moves that we didn't, you know, no 1 likes firing, people are cutting costs, you know, somewhat substantially.

Edward Ryan: We thought that's what we have to do to run our business properly and to keep people wanting to invest in our business so that we have the money to go out and buy more companies when other companies get themselves in a whole lot more trouble than we do because they're not willing to make those tough decisions, and we are. I think that's what separates us from a lot of the other smaller players in this industry that, you know, it's easy to be a high flyer. It's like what happens when, you know, when one of the engine blows and you gotta, you know, you gotta, you know, kind of keep running the business until you can get more power.

But we thought that's what we have to do to run our business properly, and to keep, uh, people wanting to invest in our business. So that we have the money to go out and buy more companies when other companies get themselves in a whole lot more trouble than we do because they're not willing to make this tough decisions. And we are, and, uh,

I think that's what uh, separates us from from a lot of the other smaller players in this industry that uh, you know, it's easy to be high flyer. It's like what happens when, uh, you know, when 1 of the engine blows and you got to, you know, you got to uh you know, kind of keep running the business uh until you can get more power.

Very helpful. Thanks Adam. Now, congrats again Alan.

Dylan Becker: Very helpful. Thanks, Ed. Congrats again, Allan.

Edward Ryan: Thank you.

The next question is from Paul treiber from RBC Capital markets. Your line is open.

Operator: The next question is from Paul Treiber from RBC Capital Markets. Your line is now open.

Paul Treiber: Thanks for taking the question. Congrats, Allan, on the retirement. Just, first question, the US Department of Transportation announced a number of changes to US trucking regulations. How do you see those, you know, impacting your domestic trucking business, you know, either, you know, positively or negatively?

Oh, thanks for taking the question. Uh, in, congrats all in, on the, on the retirement. Just the first question that that the US Department of Transportation announced a number of changes to us Trucking regulations. How do you see those? Um, you know, impacting your your domestic trucking business, you know, they're, you know, positively or negatively.

Edward Ryan: I don't know that they're gonna have a big impact on us. You know, most of the time governments come in and put rules in place and we help customers comply with those rules. I'm not sure if that's gonna happen with these particular rules, you know, when you have to track your trucks more accurately, when you have to make sure your drivers are legal, when you have to make sure your drivers are not driving overtime and things like that, you know, you need software solutions to track it if you have a big fleet. You know, guys like us come in and help people deal with that. Oftentimes help them, you know, act more efficiently in the process.

I don't know that they're going to have a, a, a, a, a big impact on us, uh, you know, most of the most of the time governments come in and put rules in place and, and we help customers comply with those rules. And I'm not sure if that's going to happen with these particular rules. But uh,

Uh, you know, when you have to track your trucks more accurately, when you have to make sure your drivers are illegal. When you have to make sure your drivers are, are are uh, not driving overtime and things like that. Uh, you you know, you you need software solutions to track it. If you have a big Fleet and you know, Guys Like Us come in and and help people deal with that and and and often times help them.

Edward Ryan: Buy our software, comply with some government regulations, but we'll also help you run your fleet more efficiently, so we can save you money at the same time, so that you have the money to kind of pay for this new rule the government put in. You know, I see it coming. They'll always be coming.

You know uh uh act more efficiently in the process. So buy our software comply with some government regulations but we'll also help you run your Fleet in more efficiently so we can save you money at the same time so that you have the money to kind of pay for this new rule, the government put in. So you know I I

I see it coming. There's going to be the the they'll always be coming, they're always going to have more rules for truckers and and uh,

Edward Ryan: They're always gonna have more rules for truckers and, you know, we just wanna be there and prepared to help them with the ones that we think we can solve for them and have software that we give them that saves them money in five other places too, so that they can continue to afford to pay for some of these things and operate more efficiently, even though the government just told them they had to do something.

Uh, you know, we just want to be there and prepared to help them with the ones that we think we can solve for them and uh, and have software that we give them that saves them money in 5 other places too so that they can continue to uh, forward to uh, to pay for some of these things and, and operate more efficiently. Even though the government just told them they had to do something.

and then just a, a second question just on,

Paul Treiber: Just a second question. Just on capital allocation, you did mention, you know, valuations are down. You're putting in place the NCIB because it sounds like you see opportunistic opportunities. How do you look at the balance between, you know, repurchasing shares and, you know, capital deployment on acquisitions? Like, is there a priority for one versus the other? Does it depend on, you know, relative valuations of each?

Capital allocation you did mention, you know, valuations are down. Um, you're putting in place the ncib. Um, because it sounds like you're you, you see opportunistic opportunities, how do you look at the balance between, you know, repurchasing shares and it it capital deployment on on Acquisitions, like, is there, is there a priority for 1 versus the other?

Does it depend on you know, relative valuations of each?

Edward Ryan: Well, you know, we see a lot of stuff for sale right now, and we think, you know, the winner in this space is gonna continue to bring businesses in and make them part of their own business. We think with our network, we're in a very good position to do that. There's lots of businesses that would be better if they operated on top of our network. I see AI driving a whole lot more business in that way as well. You know, almost every AI tool I've seen in the logistics and supply chain space looks like a feature to me. I'm sure there was some guy years ago, you know, working at WordPerfect, and thinking, Oh, well, I've got the best word processor in the market.

Well, uh, you know, we see a lot of stuff for sale right now and we think, you know, the winner in this space is going to continue to, uh, bring businesses in and make them part of their own business. Uh, we think with our Network we're in a very good position to do that. Uh, there's lots of businesses that would be better if they operated on top of our Network. And uh I I see AI drive a whole lot more business. Uh, in in that way as well, you know, almost every AI tool I've seen in the logistics and supply chain space looks like a feature to me.

Edward Ryan: I've got the legal market all tied up." All of a sudden, Microsoft comes in and goes, "I have Excel, and I have PowerPoint, and I have your email and all this stuff," and you go, they can't compete anymore. I think we're in that kind of situation, in, with the network that we have. A lot of these businesses, you know, are in desperate search of customers, and they will one day be a feature, just like Word or WordPerfect is a feature as part of the, you know, Microsoft suite of tools. I could see these things, you know, getting layered under our network and being a lot more valuable as a result. I think you're always gonna see us gravitate in that direction.

Cost of stuff comes in and goes and I have Excel and I have PowerPoint and I have your email and all the stuff and and you go they can't compete anymore.

And I think we're in that kind of situation uh, in in with the network that we have.

A lot of these businesses, uh, you know, are in Desperate search of customers and they will, 1 day be a feature, just like word or Word. Perfect is a feature as part of it, you know, uh, Microsoft Suite of, uh, uh, tools. I could see these things, you know, getting layered under our Network and being a lot more valuable as a result. And so, I think you're always going to see our our, you know, us gravitate in that direction at the same time. You know, we recognize that

Edward Ryan: At the same time, you know, we recognize that probably because of AI and maybe a couple other things that are going on in the market, not much to do with us, and other than maybe a misunderstanding, a little bit of our business. If there's someone out there saying, Hey, Descartes is an enterprise software company, you know, I'm going like, Not really. We're a network, and, we're different than those other guys. If you're thinking you're gonna take all the enterprise software guys down a little bit because AI might harm them, I go, You shouldn't be putting us in that same category, because we have a lot of things that are probably gonna take advantage of us of AI. You know, we still have to deliver, we still have to make those things happen, as you always do.

Because probably because the AI and maybe a couple other things were going on in the market, not much to do with us and other than maybe a misunderstanding.

Uh, a little bit of our business. If if there's someone out there saying, hey dick, carts and enterprise software company.

You know, I'm going like, not really, we're a network and uh, we're different than those other guys. And if you're thinking, you're going to take all the enterprise software guys, down a little bit because AI might harm them. I go, you're, you shouldn't be putting us in that same category.

uh,

Edward Ryan: I like our chances on it. I like the cards that we have in our hands right now a lot better than I do many other people. I think that's going to continue to result in more and more acquisitions for us. You know, as long as we see that, we're going to be trying to buy businesses up. That having been said, when our multiple drops to a level that, you know, that we think is way lower than it should be, and we have some cash on hand, we might see us picking up some stock. Right now it's out there as a placeholder to make it quicker to do if we wanted to do it. You know, otherwise we're going to keep going about our business.

because we have a lot of things that are probably going to take advantage of us of of AI. And, you know, we still have to deliver. We still have to make those things happen and as you always do. But I like our chances and I like the cards that we have in our hands right now and a lot better than I than I do many other people and I think that's going to continue to result in more and more Acquisitions for us.

and you know as long as we see that we're going to be trying to buy businesses up, you know that haven't been said when when our multiple drops to a level that uh

You know that we think is way lower than than it should be, um and we have some cash on hand. We might we might see us picking up some stock.

uh, right now it's it's out there as a, uh,

Placeholder to make it quicker to do, if we wanted to do it.

Edward Ryan: If, we believe the market values us properly at some later point, we, you know, we might not be as focused on it. Right now, you know, we go, Hey, it's, you know, it's gotten beat up a lot and maybe in our mind unfairly.

and uh, you know, otherwise we're going to keep going about our business and uh, if uh, we believe the market values that's properly at some later point, we, you know, we might not be as focused on it but right now, you know, we go, hey it's uh,

you know, it's gotten beat up a lot and and maybe in our mind, unfairly

All right, thanks for taking the questions and congrats again. Alan

Thanks Paul.

Paul Treiber: All right. Thanks for taking the questions and congrats again, Allan.

Edward Ryan: Thanks, Paul.

Thank you. Your next question is from Kevin. Christina Rodney from skillshare Bank, your line is now open

Operator: Thank you. Your next question is from Kevin Krishnaratne from Scotiabank.

Kevin Krishnaratne: Hey there. Good evening. Thanks for taking my questions. I've just got one. Allan, also congrats, and thanks. It was quite a pleasure working with you. Hope to continue to do so going forward in your roles. E-commerce, you talked about that being a beneficiary to your organic growth. I know you touched on sort of the transactional piece with the filings and, you know, seeing a benefit there. Can you maybe talk about what you're seeing? You've been beefing up that business, Finale Inventory, Sellercloud. You mentioned the holiday season, you know, things are looking good to start off.

Kevin Krishnaratne: Any kind of color there, maybe the size of this business, the growth and sort of what you're seeing there, with the growing piece of your e-commerce business.

Hey there. Uh, good evening. Thanks for taking my questions. I've just got got 1 in Allen also, congrats, and thanks, it was a pleasure working with you hope to continue to, to do so going forward. New roles. Um, e-commerce. You, you, you talked about that, uh, being a beneficiary to your organic growth. I know you touched on sort of the transactional piece with the filings and, you know, seeing a benefit there, can you maybe talk about? You know what you're seeing. Um, you've been beeping up that business finale inventory, uh, seller Cloud, um, you mentioned the holiday season. You know, things are looking good to start off. So any any kind of color there, maybe the size of this business, uh, the growth and sort of what you're seeing there, um, with the, with the growing piece of this, uh, of your of your e-commerce business.

Edward Ryan: I think it's like 12% now, Allan, tell me, correct me if I'm wrong, but it continues to grow, and we continue to pick up good assets there that we think provide solutions to the customers that will benefit them and our network in the long run. Finale is a great add-on to Sellercloud. Finale, if they had a customer that got too big at some point, they used to kind of, you know, that customer would graduate from there and leave and go to somebody else. Now all of a sudden, we have the ability to have them graduate and go to our next solution of Sellercloud. That's attractive for us and maybe shows you how a lot of acquisitions, you know, go on the Global Logistics Network.

I think it's like 12% now, I don't have to correct me if I'm wrong but it's just continues to grow and we continue to pick up uh good assets there. That we think uh,

Provide solutions to the customers that uh, uh, that will benefit them. And and our Network in the long run finale is a great add-on, uh, it's a seller Cloud. Uh,

Finale. If they had a customer that got you big, at some point, they they used to kind of

Edward Ryan: A lot of times, 20 years ago, we were buying stuff and thinking, I hope it grows, but I'm not gonna count on that. I'm gonna count on being able to cut, you know, costs and manage the business more efficiently than the people we bought it from. You know, now with 26,000 customers and growing, you know, we start to look at these things and go, We can't help but grow these businesses. You know, there's just too many people on our network that would like them. The example I always use, you know, when I'm out talking to shareholders is, I buy some company with 500 freight forwarders and they love it.

You know that customer would graduate from there and leave and go to somebody else. Now, all of a sudden we have the ability to have them graduate and go to who are our next solution up. Solid Cloud. So that's uh attractive for us. Uh, and maybe shows you how a lot of Acquisitions, you know, go on the global logistics Network. Um, a lot of times, you know, 20 years ago, we were buying stuff and thinking, I hope it grows, but I'm not going to count on that. I'm going to count on being able to cut, you know, cost and manage the business more efficiently than the people. We bought it from, you know, now with 26,000 customers and growing. Uh, you know, we start to look at these things and go, we can't help but grow these businesses and, you know, there's just too many people on our Network that would like them.

And the example I always use, you know when I'm out talking to shareholders is I buy some company with 500 for a quarters and they love it.

Edward Ryan: I look and go, "Wow, we have 5,000 freight forwarders." If I buy this company, the first thing I'm gonna do is walk it around to the other 4,500 and say, "Hey, what do you think of this?" They're not all gonna buy it initially, but they're all gonna take a look if we ask them to. I mean, we've got big relationships with all these people, and you know, when we walk around a new solution to everyone, it's, you know, they have to look at it. You know, a lot of times with these smaller companies that we're buying, they didn't feel like they have to look at it previously. You know, they looked and went, "Oh, you know, I don't have to meet them," or whatever.

And I look and go. Wow, we have 5,000 for 8/4. So if I buy this company, the first thing I'm going to do is walk it around to the other 4500 and say, hey what do you think of this now? They're not all going to buy it, uh, initially, but they're all going to take a look if we ask them to, I mean, we've got big relationships with all these people. And, you know, when we walk around a new solution to everyone that's um,

Like they have to look at it previously, you know, they they look and went. Um,

Oh I, you know, I don't have to meet them at whatever. So all of a sudden de cartes buys the company and they they kind of have to to, to take a look at it and sometimes they take a look at it and buy it. And then,

Edward Ryan: All of a sudden Descartes buys the company, and they kinda have to take a look at it. Sometimes they take a look at it and buy it. You know, that's good news for us. That e-commerce space has been going great. We keep picking up more assets there and those assets, we've been able to grow them all. That's exciting for us. You know, I think it's gonna continue to be a good space for us that you'll see us continue to expand in over the years.

You know that that's good news for us. Uh that e-commerce space has been going great. We keep picking up more assets there and those assets uh we've been able to grow them all. Uh so that's exciting for us and uh you know, I think it's going to continue to be a good space for us that you'll see us continue to expand in over the years.

Good to hear. Uh, thanks a lot, I'll pass the line. Thank you.

Thanks again.

Kevin Krishnaratne: Good to hear. Thanks a lot. I'll pass you on. Thank you.

Edward Ryan: Thanks, Kevin.

Thank you. Your next question is from Stephanie Price from C open.

Operator: Thank you. Your next question is from Stephanie Price from the CIBC.

Sam Schmidt: Hi there. It's Sam Schmidt on for Stephanie Price. I have a question around the year-to-date adjusted EBITDA growth that's tracking towards the higher end of that 10% to 15% target growth range. How should we think about growth there going forward?

Hi there, it's Sam Schmidt on for Stephanie Price. Um, I had a question around the year to date adjusted Eva growth. It's tracking towards the higher end of that. 10 to 15%, Target growth range. How should we think about growth there going forward?

Edward Ryan: I think you're gonna continue to hear us say 10 to 15. We've beaten 15 many times over the last 20 years, unapologetically. You know, I think we were up almost 30% for one quarter, if I remember correctly, 7 or 8 years ago. You know, as our network gets more and more profitable, as our revenue picks up at a higher growth rate, you know, when Scott and I started running the business directly 15 years ago, we were growing like 1%, 2%, 3%. All of a sudden, you know, now we're growing at 4%, 5%, 6%, 7%, 8%, 9%, 10%, depending on, you know, what's going on.

I think you're going to continue to hear us. Say, 10 to 15 we we've we've beaten 15 many times over the last 20 years. Uh unapologetically uh you know um I think we were up almost 30% from 1 quarter if I remember correctly 7 or 8 years ago, you know as our Network gets uh more and more profitable as our Revenue. Uh

picks up at a at a higher growth rate, you know, I, when when, uh,

When Scott and I started running the business directly uh 15 years ago. Um, we were

growing like 1 2, 3 percent, and

Now, all of a sudden, you know, now we're growing it.

Edward Ryan: I go, "It's a heck of a lot easier to get to 15% EBITDA growth, with, you know, 7% organic services growth, because I can leverage that and get that up, you know, get the EBITDA up to 10% or 11% or 12%." Then I add on a couple acquisitions, and all of a sudden I'm well over 15. I don't think you're gonna hear us say a different number. We think that's a number that we, you know, will always be in a good position to hit. We think that if we can keep growing that EBIT every year, our stock price has to kind of follow along.

46789 10%, depending on, you know, what's going on? And I go, it's a heck of a lot easier to get to 15%. You get the growth, uh, with the, you know, 7% uh, organic Services growth, uh, because I can leverage that and get that up, you know, get to you. But to up to 10 or 11 or 12%.

And uh, and then I add on a couple Acquisitions and all of a sudden I'm well over 15. I don't think you're going to hear us say a different number. We think that's a a number that we

you know, we'll always uh be in a good position to hit and we think that if we can keep growing at it, even every year our stock price has to kind of follow along, I was explaining that to 1 of my kids the days that

Edward Ryan: I was explaining that to one of my kids the other day that, well, he was an investment banker, now he's a private equity guy, and I was going, Look, I don't know what's gonna happen to the stock price over time. You know, the companies like ours are valued at different multiples, and we don't have a ton of control of that month to month. We do make more money every year, and that has to end up showing up in the stock price. We're pretty confident we can continue to do that. If we do, it's tough for the stock to not keep going up.

While he's Investment Bank right now, he's a private Equity guy and and I was going look, I don't know what's going to happen to the stock price over time, you know, the the the companies like ours are valued at different multiples and we don't have a ton of control of that uh, month to month, but we do make more money every year and that has to end up showing up in the stock price.

We're pretty confident we can continue to do that, and if we do, uh, it's tough for the stock to not keep going up.

That's helpful. Thank you. I'll pass the line.

Sam Schmidt: That's helpful. Thank you. I'll pass the line.

Edward Ryan: Thanks, Sam.

Thank you. Your next question is from John Sheriff, from TD, Cowen, your line is are open.

Operator: Thank you. Your next question is from John Shao from TD Cowen. Your line is now open.

John Shao: Thanks for taking my question. Ed, congratulations on your retirement. Good luck with the next chapter. I just want to ask your customer mentality at this point. I understand they're still waiting for some more clarity, but do you think at a certain point, you know, they're gonna develop some kind of fatigue, and as a result, they're more willing to spend regardless of the environment?

Yeah, thanks for taking my question to Alan. Congratulations on your retirement. Good luck with the next chapter. I, I just want to ask, uh, your, your customer mentality at this point on our stand, they're still waiting for some more clarity. But do you think a certain point, uh, you know, they're going to develop some kind of fatigue and as a result, they're more willing to spend regardless of the environment.

Edward Ryan: You know, we'll see. I hope that's the case. I think as they get more certainty, they will be willing to spend. You know, we're seeing, you know, the 60% of our business that's, you know, subscription sales. We really haven't seen any slowdown. It just, it popped up significantly in the pandemic, and it's never really stopped. You know, transaction volumes are ebb and flow. They zoomed up in the middle of the pandemic and zoomed back down again and then got back to a kind of a steady pace. You know, they've been up and down for the last 2 years. You know, I'd call it like lackluster, you know, transaction performance. Our subscription sales have continued.

You know, we'll see. I hope that's the case. Uh, uh, I think as they get more certainty, they will be willing to spend. Uh, and and, you know, we're seeing, you know, the on, in the 60% of our business. That's, uh,

You know, subscription sales we really haven't seen any slowdown. It's just it it it popped up significantly in the pandemic and it's never really stopped. Uh you know, the transaction volumes are EB and Flow.

Uh, they zoomed up in the middle of the pandemic and zoom back down again and got back to us, kind of a steady pace, and then, you know, they've been up and down, uh, for the last 2 years. Uh, but you know, I'd call it like lackluster, you know, transaction performance.

Edward Ryan: You know, the I think most of the world realized that logistics and supply chain was a lot more important than they thought it was, in the middle of that pandemic, because the customers were telling them that. The first place you put your money is into technology, because that's where you get the biggest bang for your buck, and that's where the customer notices the most. So, you know, I think that's been great for us. It continues to this day. You know, we hope when transaction volumes pick up, that we're gonna benefit from that. I'm pretty sure we will.

But our subscription sales have continued uh you know that I think most of the world realized that Logistics and supply chain was a lot more important than they thought it was uh in the middle of that pandemic because the customers were telling them that and the first place you put your money is in to technology because that's where you get the biggest bang for your buck. And that's where the customer notices the most

and so, uh,

you know, I think that's been great for us, it continues to this day and, uh,

Edward Ryan: In the meantime, you know, we're running our business as best we can to try and, you know, keep hitting 15% EBITDA growth every year and keeping a great solution for our customers so that they always wanna use us and they wanna sign more contracts with us. You know, we spend a lot of time doing that and I think it's gonna pay off.

You know, we hope when transaction volumes pick up uh uh that we're going to benefit from that. I'm pretty sure we will. And in the meantime, you know, we're running our business uh, as as best we can to try and, you know, keep it in 15% you the growth every year.

And uh keeping you in a great solution for our customers so that so that they always want to use this. And they they want to sign more contracts with us. And you know we spend a lot of time uh

and uh, uh,

I'm just going to pay off.

John Shao: Got it. I also wanted to go back to the restructuring you did earlier in the year. Can I assume this quarter's OpEx and EBITDA include the full run rate of your cost savings?

No. I I also wanted to go back to the restructuring. You did earlier in the year. Can I assume this quarter is all packed in EA? Include a full round rate of your cost savings.

Allan Brett: Yeah, that's correct, John. Absolutely. The full impact. We had partial impact in Q2, and now the full impact is in Q3.

Yeah that that's correct. Sean. Absolutely the full full impact, we had partial impact in Q2 and now the full impact using Q3

sounds good. Thank you.

Thanks.

John Shao: Sounds good. Thank you.

Edward Ryan: Thanks, John.

Thank you. Your next question is from aeon Brown from W, strong and Co

Operator: Thank you. Your next question is from Lachlan Brown from Rothschild & Co. Your line is now open.

Your line is that open?

Lachlan Brown: Hi, Ed. Alan, congrats on an excellent tenure as, on our CFO. Thanks for squeezing me in. I'll keep it to the singular question. In terms of the strong organic delivery in the quarter, you mentioned you're taking share on market volumes. How should we think about the contribution from other growth drivers like cross-selling, pricing, and new logos? Was there an acceleration on any of those drivers quarter on quarter? Thanks.

Hi Ed, uh, Alan congrats on an excellent tenor as on at CFO. Uh, thanks for squeezing me. And I'll keep it to the, uh, singular question in terms of the strong organic delivery in the quarter. Uh, you mentioned, you're taking share on Market volumes, but how should we think about the contribution from other growth growth drivers, like cross-selling pricing and new logos? What's an acceleration of any of those drivers uh quarter on quarter? Thanks.

Edward Ryan: Yeah, I mean, you know, the I mentioned earlier, we're being very successful at taking stuff away from our competitors. Cross-selling, you know, inches up every year. You know, 15 years ago, it was minimal, you know, 20% or something. You know, now you look at it, and it's 65% to 70%. We continue to get better at that. I probably about 5 questions ago, I explained why. You know, as we get a bigger and broader solution set, it's tough for the customers to not consider and take it seriously. The thing I mentioned at the end of the last question is important, right? We spend a lot of time making sure that our customers get what they were promised.

Uh, this song. Yeah, I mean, you know, this, I mentioned earlier, we're being very successful taking stuff away from our competitors.

Uh, cross-selling, you know, inches up every year. Um,

15 years ago, it was

Minimal, you know 20% or something. You know, now you look at it and it's

60 to 70, 65 to 70%, uh, and we, can we continue to get better that I I, I probably about 5 questions ago, I explained to you. Why, you know, as we get a bigger and broader solution set, it's tough for the customers to not consider it and and take it seriously. And then the thing I mentioned that at the end of the last question is, is, is important, right? We, we spend a lot of time, making sure.

That our customers get what they were promised. I mean, I I, we joke with people, we, but it's true. We will lose money to make sure that you got what you wanted and

Edward Ryan: I mean, I would joke with people, but it's true. We will lose money to make sure that you got what you wanted. You know, you know how serious we are about making money, but it's really important to us that our customers get what they were promised. There's only one FedEx in the world, and I could say it about any of our big customers. I don't want them hating us. I want them to think Descartes would do anything I needed to do to make sure that I was successful in doing it. You know, you could look and say, Hey, that's 'cause you charge, you know, recurring revenue fees, right? You wanna get your money. There's some truth to that.

you know, you know how serious we are about making money but it's really important to us that our customers get what they were promised. There's only 1 FedEx in the world,

I could say, at about any of our big customers, but I don't want them hating us. I want them to think.

The cart would do anything, I needed to do to make sure that I was successful in doing it. And you know, you could look and say, hey, that's cuz you

Charge you know recurring Revenue fees, right? You want to get your money and there's some truth to that but

Edward Ryan: Maybe more broadly, we want them to think we're a good company to do business with. That we're fair and that we try our hardest, and that we try to make sure that the customer gets what they want. You know, you've heard us say customers for life a lot of times on these calls. That's what we're talking about. Because I want them, when they have their 32nd contract with us, I want them to be quite happy to sign the 33rd and 34th and 35th contract with us. That's really important to us. You know, from 20 years ago, where, you know, maybe the company wasn't so focused on that kind of stuff and now it is. I think we know that's the right way to behave.

maybe more broadly, we want them to think we're a good company to do business with. They were fair and that we we try our hardest and then we try to make sure that the customer gets what they want. You. You've heard us say customers for life, a lot of times on these calls.

That's what we're talking about because I want them when they have their 30 second contract with us. I want them to be quite happy to sign the 3030 and 34 and 35th contract with us. That's, that's really important to us. And, uh,

Edward Ryan: If I'm buying something from someone, if they stick with me and make sure that it, you know, they're trying their hardest to make sure they get what they want, I'll deal with some problems. I mean, you know, some of these things are complicated. I'll deal with problems as long as I know that they're gonna keep trying to make sure that I'm successful. We've gone to great lengths to do that and I think that's, you know, a big part of the reason that you see our cross-selling continue to tick up every year, because, you know, the customers know we care about them.

You know, from 20 years ago where you know maybe the company wasn't so focused on that kind of stuff and and and now it is and I think we, we know that's the right way to behave. It's if I'm buying something from someone. I I if they stick with me and make sure that it, you know, they're trying their hardest to make sure they get what they want. I, I'll be with some problems. I mean, you know, some of these things are complicated. I I'll I'll deal with problems as long as I know that they're going to keep trying to make sure that I'm successful and, uh, we've gone to Great Lengths to do that. And, and I think that's, you know, a, a big part of the reason that you see our cross-selling, uh, continue to tick up every year, uh, because uh, you know, the customers know we care about them.

Yeah, very helpful. I would just yeah, I would just add a lot from that. Um,

Lachlan Brown: Yeah.

Lachlan Brown: That's very helpful.

Allan Brett: Yeah, I would just add, Lachlan, that price remains similar to other quarters. Price is a very small part of that growth in Q3 and similar to past quarters as well. No big change there. We're using price increases responsibly to offset inflationary costs for us, but it's not the main driver of our growth.

Price remains similar to other quarters prices, a very small part of that that growth uh in Q3 as similar to pass quarters as well. So no no big change there. We're using price increases responsibly to offset the inflationary costs for us but uh it's not the main driver of our growth.

I've got.

Uh, congrats on the strong result. Thanks.

Thank you.

Lachlan Brown: Of course. Congrats on the strong result. Thanks.

Edward Ryan: Thank you.

Operator: Thank you. Your next question is from Mark Schappel from Loop Capital. Your line is now open.

Thank you. Your next question is from Mark Chappelle from loop capital. Your line is at open.

Timothy Greaves: Hi, this is Timothy Greaves on for Mark. Thank you for taking my question. I guess my one will be on the TMS replacement cycle. Are you seeing evidence of that accelerating? Where is Descartes winning versus the legacy TMS competitors?

Hi. This is uh, Tim Graves on for Mark. Uh, thank you for taking my question, I guess my my, my 1 will be on, uh, the TMS replacement cycle. Uh, are you seeing evidence of that accelerating and, and where is the car? Went in versus the Legacy uh TMS competitors.

Edward Ryan: I don't know that I see it accelerating, but it's a decent market for us right now. We continue to pick up more transportation management solutions. We have 6 or 7 of them right now, depending on what kind of customer you are, you know, a forwarder, broker, 3PL, a big retailer, manufacturer, you know, these types of things. We have a lot of good solutions to solve those problems. We continue to look at other TMSs when they come up or AI features that we think would be a good part of a TMS.

Edward Ryan: You know, I think we're gonna continue to remain in a leadership position there, especially some of the companies that just, you know, the midsize companies, that they used to do it, get bought up, and they lose their focus, and they lose their people. You know, we just keep sticking in there and buying more companies that can solve more types of problems for customers. Over time, I think, you know, that has helped us win the day. We have a lot of different solutions that solve a lot of different problems, and people look at us and go, Those guys are gonna be around. They're not gonna get bought up by a private equity firm, and everything's gonna go to hell in a handbasket. They're a public company that's neutral in the industry.

Um, we continue to look at other tms's when they, when they come up or AI features that we think would be a good part of a TMS. Uh, and uh, you know, I think we're we're going to continue to remain in a leadership position there, especially some of the companies that, you know, the mid-size companies uh that they used to do. It get bought up and they lose their focus and they lose their people. And, you know, we just keep sticking in there and buying more companies that can solve more types of problems for customers. And, and over time, I think, you know that has helped us win the day. We have a lot of different solutions that sell a lot of different problems and people, look at us and go. Those guys are going to be around. They're not going to get bought up by a private Equity Firm. And and everything's going to go to hell in a hand basket. They're a public company that's neutral in the industry, they're a size and scale that

Edward Ryan: They're a size and scale that. Thank you.

Thank.

Allan Brett: I think we just lost Ed's or voice there, but he was just emphasizing that we, you know, that we're well diversified and with the size and scale to manage properly. Ed, are you back yet?

you, I think we just lost Ed's uh video or voice there, but he was just just emphasizing that we uh, you know, that we're we're well Diversified and, uh, with the size and scale to uh,

To to manage, uh, to to manage properly. So,

Edward Ryan: No, no.

Sorry, we're just having a little audio problems for Ed, but, uh, hopefully that answers it for you.

Yeah, thank you.

Allan Brett: Sorry, we're just having a little audio problems for Ed, but hopefully that answers it for you.

Timothy Greaves: Yeah. Thank you.

Operator: Thank you. Once again, that is star one should you wish to ask a question. Your next question is from Scott Group from Wolfe Research. Your line is now open.

Thank you. Once again that is star 1. Should you wish to ask a question? And your next question is, from Scott group from Wolfe research. Your line is now open.

Hey guys, this is, uh, call on for Scott.

Cole: Hey, guys. This is.

Uh, sorry Ryan. I just got thrown off a call, but I I'm back now.

Edward Ryan: Hey.

Cole: Cole on for Scott.

Edward Ryan: Hey, sorry, guys. This is Edward Ryan. I just got thrown off the call, but I'm back now.

Cole: All good, Ed. This is Cole on for Scott. We recently saw a competitor announce a change in their pricing philosophy to get away from per user fees. Maybe what percent of your revenue is based on per user pricing versus volume-based or fixed pricing? How do you think about this evolving in a world where some of the brokers and forwarders are talking about structurally reducing headcount?

Oh good. Uh, this is colon for Scott. Uh, we recently saw a competitor announced a change in their pricing philosophy to get away from per user fees.

um, maybe what percent of your revenue is based on per user pricing versus volume based, or fixed pricing, and how do you think about this evolving in a world where some of the Brokers and forwarders are talking about structurally reducing how to count

Edward Ryan: You know, I've heard this argument a bunch of times. There's a bunch of different ways we price. It's not just per user. It's, you know, we have all types of transaction processing charges, even in some of our subscription services, per truck, per mobile handheld device, and yeah, sometimes per user. I don't think that's gonna be a big challenge for us. If they start to have less people using the system because they become more efficient, we're gonna come up with a different way to extract value. I know the guy you're talking about, and I think they probably shot too high, and they have a lot of problems with customers right now because of that. You know, I think if you see us start to do that, it's gonna be a more reasonable approach to it.

I, you know, I've heard this argument with a bunch of times. There's, there's a bunch of different ways to be priced. It's not just per User. It's, you know, we have all types of transaction processing, uh charges uh even in some of our subscription Services per truck per mobile handheld device and yeah, sometimes per user uh

I don't think that's going to be a big challenge for us if they start to have less less people using the system because they become more efficient, we're going to come up with a different way to, to extract value. I, I know the guy you're talking about and I think they probably shot too high and there's a lot of problems with customers right now because of that,

and you know, I think if you see us start to do that, it's going to be a more reasonable approach to

Cole: Okay. Helpful. We're seeing some of the forwarders seeing pretty big increases in customs revenue as a result of de minimis going away. Are you guys also seeing that benefit? How does a big increase in customs filings and customs complexity impact you guys going forward?

Helpful. And we're seeing some of the forhers seeing pretty big increases in customs Revenue, as a result of the Minimus going away. Are you guys also seeing that benefit, uh, and how does a big increase in customs filings and Customs complexity impact? You guys going forward.

Edward Ryan: I mean, you know, you'll hear us say all the time on this call, the complexity helps us, and I think that's correct. You know, look at the situation we're talking about here with the Type 86 filing. We've almost doubled our revenue in that space in just a couple of months. Honestly, you know, a year and a half ago, we were very concerned they were going to cancel de minimis and all of that business could go away. What ended up happening was, you know, our sales team came up with the approach of we'll just keep charging you for all the shipments that you make per shipment, same way we were doing it before. Instead of making a Type 86 filing, which is going away, we'll make a Type 01 filing.

I mean, you know, you'll hear us say all the time when it's called the complexity helps us and I think that's that's correct uh you know look at the situation we're talking about here at the type 86 file. We've almost doubled our Revenue in that, in that space uh, in uh, in in just a couple months and and honestly, you know, a year and a half ago, we were very concerned that they were going to cancel the minimums and and all that business could go away. And what ended up happening was

You know, our sales team came up with the approach of, we'll just keep charging you for all the shipments that you make per shipment. Same way. We were doing it before.

And instead of making a type 86 file, which is going away, we'll make a type 1 file.

and so, we were able to switch our customers over to that uh, that solution and um,

Edward Ryan: We were able to switch our customers over to that solution. We were, you know, thinking we were doing pretty well. Our competitors started really struggling to handle Type 01 filings with the massive amount of volume that some of the bigger players were producing at millions and millions of transactions a day. Our network had the ability to deal with that because we've been doing, you know, customs filings for FedEx and DHL and UPS and a lot of other big players for years and had already dealt with millions of transactions a day. We had a, you know, as a network operator versus a software company, which I think a lot of the other guys were just software companies.

We were, you know, thinking we were doing pretty well and then our competitors started really struggling to handle type 1 files with the massive amount of volume that uh some of the bigger players were were producing and millions and millions of transactions a day and our Network had the ability to deal with that. Because we've been doing, you know, Customs filings for FedEx and DHL

On ups and a lot of other big players for years and had already dealt with millions of transactions a day. And so we had a, you know, as a as a network operator versus a software company which I think a lot of the other guys were just software companies. You know we had a network that was robust and able to process the transactions quickly and

Edward Ryan: You know, we had a network that was robust and able to process the transactions quickly. You know, we saw almost all of them switch over to us, and it really, you know, ended up being a gigantic benefit for us in the last several months. You know, happy about that.

You know, we saw almost all of them switch over to us and it it really, you know, ended up being a a gigantic benefit for us in the last several months.

so, you know, um,

happy about that.

Okay. Thanks that. I'll turn it back.

Thank you.

Cole: Okay. Thanks, Ed. I'll turn it back.

Edward Ryan: Thank you.

Operator: Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Edward Ryan: Hey, thanks everyone. We look forward to reporting back to you on Q4 in March. Otherwise, if you're looking for one-on-one discussions with us, please reach out to us and we'll find a way to talk to you. Have a great day, guys.

Hey, uh, thanks everyone. We look forward to reporting back to you on Q4 in March. And otherwise, if you're looking for, uh, 1-on-1 discussions with us, please, uh, reach out to us and we'll find a way to, uh,

To talk to. You have a great day, guys.

Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.