Descartes Systems Group Inc (NASDAQ:DSGX) stock fell 8.50% (As on June 5, 11:17:31 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the first quarter of FY25. At April 30, 2025, Descartes had $176.4 million in cash. Cash decreased by $59.7 million in Q1FY26. Cash provided by operating activities of $53.6 million, down from $63.7 million in Q1FY25 and down from $60.7 million in Q4FY25. Income from operations of $46.2 million, up 9% from $42.4 million in Q1FY25 and down from $47.1 million in Q4FY25. Net income of $36.2 million, up 4% from $34.7 million in Q1FY25 and down from $37.4 million in Q4FY25. Net income as a percentage of revenues was 21%, compared to 23% in Q1FY25 and 22% in Q4FY25.

Moreover, revenues were comprised of services revenues of $156.6 million (93% of total revenues), professional services and other revenues of $11.8 million (7% of total revenues) and license revenues of $0.3 million (less than 1% of total revenues). Services revenues were up 14% from $137.8 million in Q1FY25 and consistent with $156.5 million in Q4FY25. Adjusted EBITDA of $75.1 million, up 12% from $67.0 million in Q1FY25 and consistent with $75.0 million in Q4FY25. Adjusted EBITDA as a percentage of revenues was 45%, compared to 44% in Q1FY25 and 45% in Q4FY25.

Meanwhile, Descartes has undertaken cost reduction initiatives designed to reduce its cost base. The plan is designed to reduce Descartes’ global workforce by approximately 7% and eliminate various other operating expenses. As a result, Descartes expects to incur restructuring charges of approximately $4 million in the second quarter of fiscal 2026 (Q2FY26), which will also impact cash generated from operations in Q2FY26. Once completed, Descartes anticipates annualized cost savings of approximately $15 million.

In addition, on March 24, 2025, Descartes acquired all of the shares of 3GTMS, a leading provider of transportation management solutions. The purchase price for the acquisition was approximately $112.7 million, net of cash acquired, which was funded from cash on hand.

DSGX in the first quarter of FY25 has reported the adjusted earnings per share of 41 cents, missing the analysts’ estimates for the adjusted earnings per share of 46 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 12 percent to $168.74 million in the first quarter of FY25, missing the analysts’ estimates for revenue by 0.51%.