Descartes Systems, which provides software and services that aid in the shipment of goods worldwide, reported an upbeat third quarter earlier this week, as revenue grew 10% year over year and income jumped 35%.
Total sales grew to $17 million in the quarter ended Oct. 31, up from the prior year’s $15.5 million. Net income rose to $2.3 million from $1.4 million a year earlier.
Service revenue from its software-as-a-service offerings remains the bulwark of Descartes’ business, accounting for $15.7 million of the total in the quarter. Sales of software licenses accounted for the remaining $1.3 million.
In a Wednesday conference call ringing with optimism, Descartes CEO Arthur Mesher told analysts that the company expected to weather the “sea of uncertainty” in the global economy. In response to an analyst’s question, he noted that while global shipping may decline in the wake of the economic contraction, shipping volume affects about half of Descartes’ revenue, limiting some of the downside risk to the company of a foundering economy.
Mesher expressed gratitude to Descartes’ initial customers and investors who four years ago “put their shoulder” behind the company in the wake of its restructuring. In the time since then, he said, Descartes has faced leadership challenges, regulatory cost increases, finicky foreign exchange rates, and a deteriorating economy, but has managed to post 17 consecutive quarters of year-over-year EBITDA (earnings before interest, taxes, depreciation, and amortization) growth.
For the third quarter, America remained the biggest contributor to Descartes revenue, at 61%. Europe, the Middle East, and Asia represented 26%, while Canada pitched in 12% and the Asia Pacific region contributed 1%
Just this week, the Customs and Border Protection wing of the U.S. Department of Homeland Security issued a new ruling, dubbed the 10+2 rule, that will require maritime shipments to provide additional documentation in order to gain entry to U.S. ports.
In the wake of the announcement, Descartes christened its own 10+2 Workgroup as a forum for shippers and other cargo transporters to discuss associated best practices. Descartes recently announced a service targeted at those entities looking for help in complying with the new rule.