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what it is
Descartes sells software that helps shippers book freight, clear customs, track deliveries, and keep supply chains from turning into group projects.
how it gets paid
Last year Descartes Systems made $729M in revenue. recurring services was the main engine at $675M, or 93% of sales.
why it's growing
Revenue grew 12.0% last year. The advances are primarily attributed to growth in global trade-intelligence demand.
what just happened
Latest quarter revenue hit $349M and EPS reached $0.85, both up about 94%-98% vs. prior year.
At a glance
B+ balance sheet — decent shape, but not bulletproof
85/100 earnings predictability — you can trust these numbers
45.1x trailing p/e — you're paying up for this one
9.5% return on capital — nothing to write home about
xvary composite: 60/100 — average
What they do
Descartes sells software that helps shippers book freight, clear customs, track deliveries, and keep supply chains from turning into group projects.
The grip is in the workflow. Once your shipments, customs filings, and carrier links run through Descartes, ripping it out means retraining staff and risking delays across a business that already runs on thin margins. You can see it in the numbers: services were $174 million of $188 million in the fiscal third quarter, or 92.6% of sales, which tells you customers keep paying to stay plugged in.
How they make money
$729M
annual revenue · their business grew +12.0% last year
recurring services
$675M
+16.0%
professional services
$22M
+12.0%
license and implementation
$18M
+12.0%
transactional messaging and data
$14M
+12.0%
The products that matter
global logistics network software
Logistics & Trade Platform
$729M total revenue
it is the entire $729M business, connecting shippers, carriers, brokers, and customs systems through one operating layer.
core engine
recurring services and support
Services Revenue
$174M last quarter · +16% from a year ago
this line reached $174M in the latest quarter and grew 16% from a year ago. that matters because recurring revenue is the part of the model investors trust first and punish first if it slips.
recurring
cross-border compliance intelligence
Global Trade Intelligence
helped lift recent quarterly sales to $188M
management tied recent demand to trade-intelligence and customs filing tools as quarterly revenue reached $188M and adjusted operating income rose to $78.6M.
growth lever
Key numbers
45.1x
trailing p/e
P/E → price-to-earnings → what you pay for each dollar of profit. You are paying up for reliability here.
28.8%
operating margin
Operating margin → profit after running the business → this is high for software tied to freight, which gives Descartes room when customers get cautious.
35.0%
net margin
Net margin → profit after all costs → every $1 of revenue turns into $0.35 of profit, which is the part investors actually get paid on.
$1B
fy2028 sales
Management's long-range revenue path points to a billion-dollar business, up from $729 million now. That is the scale story you are buying.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 75 / 100
- net profit margin 35.0% — keeps 35 cents of every dollar in revenue
- return on equity 10% — $0.10 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in DSGX 3 years ago → it's now worth $12,340.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Latest quarter revenue hit $349M and EPS reached $0.85, both up about 94%-98% vs. prior year.
Gross margin stayed high at 76.7%. Earlier company commentary also showed fiscal third-quarter sales of $188 million, with services revenue up 16% to $174 million.
$349M
revenue
$0.85
eps
76.7%
gross margin
the number that mattered
76.7% gross margin is the tell. Gross margin → money left after delivering the product → this business still prints software economics inside a messy freight market.
-
we welcome descartes systems group to the institutional data in this issue.the company provides a logistics and trade-compliance software platform through a large network that connects shippers, carriers, brokers, and government systems. it has expanded over the past few years primarily through acquisitions and with its growing focus on sales of recurring services.
-
the latest quarter showed strong reported results despite a mixed freight backdrop.
-
fiscal third-quarter sales reached $188 million, up 11% vs. prior year, as services revenue rose 16% to $174 million. (year ends january 31st.) adjusted operating income rose to $78.6 million, up roughly 20%.the advances are primarily attributed to growth in global trade-intelligence demand, increased ecommerce customs filing activity, and transportation management and visibility offerings. broader transportation volumes were relatively flat, thus, gains were primarily had from increased market share and competitive offerings.
-
descartes should continue to build on recent performance.rules and enforcement around cross-border trade have been changing quickly, spurring customer to invest in tools that reduce the potential for delays and fines. at the same time, tariff uncertainty and shifting trade agreements have companies looking for reliable, realtime trade intelligence. these factors should help to sustain growth in descartes’ top line, while margins continue to improve on better service margins.
-
the business could see a few long-term tailwinds.the platform has the potential to realize practical benefits from automation and artificial intelligence.
source: company earnings report, 2026
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What could go wrong
the #1 risk is recurring services growth slowing while the stock still carries premium software valuation.
med
renewal and module churn
$174M of the latest quarter's $180M revenue came from services. that is great when customers renew and painful if they start trimming seats, transactions, or modules.
even small cracks here would hit the most trusted part of the model — the exact revenue stream investors are paying 45.1x earnings for.
med
flat freight activity
management described broader transportation volumes as relatively flat. if freight demand stays soft, growth has to keep coming from share gains, pricing, and compliance complexity.
that makes the path from $729M to the $800M revenue estimate narrower than the headline suggests.
med
acquisition execution
the company has expanded through acquisitions over the last few years. roll-ups look clean until integration slows, cross-sell falls short, or purchased growth stops compounding.
if deal execution slips, you are left valuing a 45.1x stock on a slower organic base.
med
multiple compression
28.6% net margins and 85/100 predictability are good. a trailing p/e of 45.1x assumes the market keeps paying up for that quality.
if growth drifts toward single digits, the stock can fall a lot faster than the business deteriorates.
with $174M of the latest $180M quarter coming from services and the stock at 45.1x earnings, the combined risk is simple: any slowdown in recurring growth gets magnified by the valuation.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
services staying close to the whole quarter
$174M of $180M revenue came from services. if that mix slips, the market will ask harder questions about revenue quality.
trend
share gains versus the freight backdrop
recent growth happened while transportation volumes were relatively flat. once is impressive. twice starts to look structural.
calendar
next check on the $800M path
the market already expects about $800M this year. each quarter now has to prove that number is earned, not assumed.
risk
how long investors stay patient with 45.1x earnings
premium multiples survive a lot. they do not survive revenue disappointment for long.
Analyst rankings
short-term outlook
average
momentum score 3. in human-speak, analysts expect a normal next 6–12 months, not a setup you need to chase.
risk profile
average
stability score 3 — neither unusually defensive nor unusually fragile.
chart momentum
bottom 5%
technical score 5 is the weakest reading. in human-speak, the chart looks worse than the income statement.
earnings predictability
85 / 100
management has a consistent reporting profile. you usually get fewer surprises here than in a typical mid-cap software name.
source: institutional data
Institutional activity
187 buyers vs. 171 sellers in 3q2025. total institutional holdings: 65.5M shares.
source: institutional data
Price targets
3-5 year target range
$75
$156
$88
current price
$116
target midpoint · +32% from current · 3-5yr high: $170 (+95% · 18% ann'l return)
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