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The Descartes Systems Group Inc DSGX

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Morningstar’s Analysis

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Descartes Benefits From Well-Publicized Supply Chain Contortions; FVE Up to $67

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Narrow-moat Descartes delivered strong results, with revenue and adjusted EBITDA nicely ahead of our expectations. We view Descartes as being increasingly well-positioned to address the heightening complexity of global transportation networks, with the acquisition of GreenMile during the quarter nicely complementing existing routing solutions and cementing a leadership position for the company in global routing and scheduling for private fleets. As Descartes’ increasingly comprehensive portfolio grows, both organically and through bolt-on acquisition activity, we expect the company’s investment goals around distribution capabilities and customer implementation resources to create a virtuous circle for revenue growth. Based on results, recent acquisitions, and strengthening industry tailwinds, we are raising our fair value estimate to $67 (CAD 84) from $56 (CAD 70) per share and see shares as fairly valued at current levels.

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Company Profile

Business Description

The Descartes Systems Group provides a software solution that allows users in the shipping industry to communicate with one another. The core product is the Global Logistics Network, which is best understood as transaction driven. Descartes charges clients to send/receive messages, data, and documents on the GLN (the transactions). Customers typically contract for a monthly minimum over a multiyear period. The GLN platform allows for Descartes to upsell additional software modules as well, typically provided via a software-as-a-service model.

120 Randall Drive
Waterloo, ON, N2V 1C6, Canada
T +1 519 746-8110
Sector Technology
Industry Software - Application
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 31, 2022
Stock Type
Employees 1,610