The Descartes Systems Group Inc.

Good afternoon ladies and gentlemen and welcome to the Descartes Systems Group Quarterly Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If you wish to ask a question during this time, simply press star 1 on your telephone keypad. If at any time during this call, you require immediate assistance, please press star 0 for the operator. This call is being recorded on Wednesday, May 31, 2023. I would now like to turn the conference over to Scott Pagan. Please go ahead.

Thanks very much, and good afternoon, everyone. Joining me on the call today are Ed Ryan, CEO, and Alan Brett, CFO. 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 current and future impact of geopolitical and economic uncertainty on our business and financial condition, Descartes operating performance, financial results and condition, Descartes gross margins and any growth in those gross margins, cash flow and use of cash, business outlook, baseline revenues, baseline operating expenses and baseline calibration, anticipated and potential revenue losses and gains, anticipated recognition and expensing of specific revenues and expenses, potential acquisitions and acquisition strategy, cost reduction and integration initiatives, and other matters that may constitute forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, performance, or achievements of DCAR 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 Securities and Exchange Commission, 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 caution that such information may not be appropriate for other purposes. We don't undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions, or circumstances on which any such statement is based, except as required by law. And with that, let me turn the call over to Ed.

Thanks, Scott, and welcome everyone to the call. We had a very strong first quarter to start the year with record financial results. We're excited to go over those with you and give you some perspective about the business environment we see right now. But first, let me give you a roadmap for the call. I'll start with highlighting some aspects of how our business performed in the last quarter. I'll then hand it over to Alan, who will go over the Q1 financial results in more detail. I'll then come back and provide an update on how we see the current business environment and how our business is calibrated. And we'll then open it up to the operator to coordinate the Q&A portion of the call. So let's get started by looking at the quarter. Key metrics we monitor include revenues, profits, cash flow from operations, and return on our investments. For this past quarter, we had record performance in each of those areas. Total revenues were up 17% from a year ago, with services revenues up 21%. Net income and earnings per share were up 27% and 26% respectively. Income from operations was up 19%. while adjusted EBITDA was up 13% with a slight FX headwind. And we generated almost $49 million in cash from operations, representing 85% of adjusted EBITDA. At the end of the quarter, we had $182 million in cash and were debt-free with an undrawn $350 million line of credit. We remained well-capitalized, cash-generating, debt-free, and ready to continue to invest in our business. We believe a company like ours is well positioned to continue to thrive in market conditions like these. As I've said in the past, our investment strategy is heavily influenced by what our customers are looking for from us. An excellent example of that is our recently announced acquisition of Locals, where we continue to deploy capital for leading technology and services for our customers. Locals is headquartered in Australia, and specializes in helping customers with final mile deliveries. Specifically, they provide an Uber-like tracking experience to the end recipient of a delivery, allowing them to be able to see the real-time progress of the delivery over the final miles. Lookhouse also provides customer self-scheduling deliveries and a click-and-collect solution to help with fulfillment of online purchases. Lookhouse's customer base is mostly in Asia Pacific and Europe. Our focus is to integrate Locale's leading technology stack into our routing and scheduling solutions and make it available through our distribution channels on a worldwide basis. We've already been active in welcoming the Locale's team in and had them interacting with our Australian partners and customers, so we're off to a great start. Welcome to the entire Locale's team. Locale's complements our continued investment in final model deliveries this calendar year. Our February investment in GroundCloud had a partial quarter of contribution to our results and added a robust solution to help independent final mile delivery companies manage their operations, with particular specialization for service providers who are performing the bulk of their deliveries for large transportation brands such as FedEx and Amazon. What really distinguishes GroundCloud is its specialization and attention to driver safety by delivering easily digestible driver training video content to drivers' mobile devices. Our customers focus on ESG issues and risk minimization, which include workplace and driver safety are a good demand driver here. Our focus is on integration of the safety technology with our broader routing and scheduling solutions and anticipate that the go-forward revenue mix with growth will trend more towards Descartes' revenue mix over time, where nearly 90% of our business comes from higher margin recurring revenues. While our acquisition engine continues to deliver, Our organic operations were the principal contributor to a very successful quarter of growth. I just wanted to highlight a few areas that performed well. The first is real-time visibility. This is an area that we've talked about in the past quarters and continues to be strong. A large part of the logistics market is people moving shipments on other people's assets, whether they be planes, trucks, rails, or ships. There also may be many intermediaries involved, including freight brokers, third-party logistics providers, and customs brokers. With all those assets, modes of transportation, and parties involved, entering the question of where is my shipment is not an easy one. It's also an important question as people have realized over the past few years how vulnerable their businesses are to a dysfunctional supply chain. Our MacroPoint solutions have continued to be market leaders in this space and see strong growth, especially with their integration to our global logistics network. which enables us to easily cross-sell MacroPoint embedded directly into a number of Descartes solutions. The second is final mile delivery solutions. The same factors that have driven our recent acquisition investments in final mile delivery and the desire for shipment visibility have also driven growth in our organic route optimization operations. Regardless of whether you have your own fleet of delivery vehicles or are contracting out, the recipient's delivery experience is now part and parcel of the product sale. We continue to see strong demand from our customers for technology that enhances the customer's experience, whether it be in the scheduling or delivery process. Third area is e-commerce. We've certainly seen headlines about how e-commerce is not growing as fast as it did during the pandemic. However, those headlines often miss the key. It's still growing. E-commerce continues to be an increasingly more prevalent way of purchasing, and e-commerce deliveries flow as a consequence. We've made historic investments to help our customers with this trend, and we continue to see strong volumes in the quarter that contributed to our organic growth. And finally, we have global trade intelligence. This was another strong quarter for our global trade intelligence pillar with some key drivers. You may have seen an increased presence of our data being used by leading publications like the Wall Street Journal to do market analysis, showing the value that customers get from our data mine solutions. We're also continuing to see strong demand for sanction party screening as a consequence of continued geopolitical tensions, including from the war in Ukraine and U.S.-China tensions. So a good contributor to growth in the quarter as well. So let me just summarize as I hand it over to Alan to give the full financial details on the quarter. We had record financial results, the business performed well, and we believe that's a good reflection of the value that our customers continue to get from our solutions and the hard work that our team continues to put in for our customers. We ended the quarter with $182 million in cash, $350 million in available credit, and a market opportunity where we can continue to grow the business for our customers both organically and through acquisition. We remain focused on profitable growth so that we can continue to ensure that our customers have a secure, stable, and growing technology partner that can help them with their challenges well into the future. My thanks to all Descartes team members for everything they've done to contribute to a great quarter and continuing to have our business in an enviable position for future success. I'll now turn the call over to Alan to go through our Q1 financial results in more detail. Alan?