Enghouse Systems Q4 Earnings Call Highlights

23 Dec 2025, 03:24 by Kim Johansen · The Markets Daily

Enghouse Systems (TSE:ENGH) reported fourth-quarter and full-year fiscal 2025 results marked by stable revenue, a high proportion of recurring revenue, and margin support from cost initiatives, while management emphasized disciplined capital allocation and a cautious view of near-term organic growth amid customer uncertainty around AI and broader macro factors.

Financial results and balance sheet

Chief Financial Officer Rob Medved said fourth-quarter revenue was CAD 124.5 million, down slightly from CAD 125.7 million in the prior-year period. For the fiscal year ended Oct. 31, 2025, revenue totaled CAD 498.9 million, compared with CAD 502.5 million in fiscal 2024.

Adjusted EBITDA in Q4 was CAD 33.7 million, representing a 27% margin. For the full year, adjusted EBITDA was CAD 127.6 million, for a 25.6% margin. Net income was CAD 21.1 million in the quarter and CAD 73.7 million for the year, or CAD 1.34 per diluted share.

Medved also highlighted Enghouse’s liquidity, stating the company ended the year with CAD 269.1 million in cash and no external debt.

Recurring revenue—defined on the call as SaaS and maintenance—represented over 69% of total revenue in both Q4 and the full fiscal year, which management said provided predictability and helped buffer market volatility.

Segment performance: AMG growth and IMG transition

Enghouse’s Asset Management Group (AMG), which includes the transportation business, was described as a standout in fiscal 2025. AMG revenue rose to CAD 55.7 million in Q4, up 9.3% from CAD 51.0 million a year earlier, and was nearly in line with Q3’s CAD 56.0 million. For the year, AMG revenue increased more than 10% to CAD 213.1 million.

Management attributed AMG growth largely to the 2025 acquisitions of Margento and Trafi, which Medved said expanded Enghouse’s offerings with mobility-as-a-service platforms, transit fare collection, and account-based ticketing. He said the transportation portfolio now covers e-ticketing and automated fare collection, fleet routing, and MaaS platforms.

In the Interactive Management Group (IMG), Q4 revenue was CAD 68.8 million, compared with CAD 74.7 million in the prior-year quarter and CAD 69.6 million in Q3. For the full year, IMG revenue totaled CAD 285.8 million. Medved said the year-over-year decline reflected expected churn in maintenance and SaaS streams as Enghouse continues transitioning toward SaaS-based licensing models.

Management pointed to the acquisition of Aculab as a positive for IMG, citing additions including communications and “AI-driven technologies” such as voice and face biometrics and media processing.

Cost actions and margin outlook

Medved said a “proactive approach to cost management” helped support performance, particularly in Q4. He noted restructuring and cost-cutting initiatives in the second half of the year, including streamlining operations, aligning costs with revenue, and reducing operating expenses, especially in areas affected by acquisition integration and market shifts. He said the benefit began to show in Q4 through improvements in adjusted EBITDA and net income, and he expects efficiency gains to continue into fiscal 2026.

In Q&A, management was asked whether margins could rise above the 27% delivered in Q4 without additional M&A. Management responded “Yes.” When asked whether a previously referenced CAD 2.0 million to CAD 2.5 million restructuring benefit was fully reflected in Q4, management said “No.” Management added that some restructuring effects were reflected in Q4, but that in certain countries notice periods and procedures delay actions, and some expenses were not even in Q4. They also said the company continues to reassess areas for potential further reductions, particularly in IMG, to match costs to revenue.

Capital deployment: acquisitions, buybacks, and dividend

Shortly after year-end, Enghouse acquired the telecommunications division of Sixbell, which Medved said expands its presence in Latin America. On the call, CEO Steve Sadler described Sixbell as a “small acquisition” in an area where Enghouse already operates in South America. He said integration began in early November and is ongoing, and management expects it to add “a little bit” to revenue and contribute to EBITDA consistent with return expectations.

Medved said Enghouse returned CAD 61.8 million through dividends in 2025, a 16% increase over the prior year, and repurchased CAD 14.7 million of shares. The board approved an eligible quarterly dividend of CAD 0.30 per share, payable Feb. 27, 2026, to shareholders of record as of Feb. 13, 2026.

Sadler also emphasized continued share repurchases under the normal course issuer bid and said the company intends to continue its acquisition strategy. He said Enghouse is seeing “substantial acquisition opportunities” and indicated plans to increase the acquisition team to expand its focus on capital deployment.

When asked about dividend growth expectations for 2026, Sadler said decisions are made by the board and are typically considered around the AGM in March. He added that his view would be to increase the dividend “very slightly” and allocate more capital to buybacks and acquisitions, describing the current stock price as a “reasonable investment” and noting an uncertain environment that could worsen in general even if not necessarily for Enghouse.

AI strategy and the Lifesize go-to-market reset

A recurring theme in management’s commentary was customer uncertainty around AI and difficulty monetizing it. Sadler said many customers are “struggling to implement AI effectively to improve their return on investment,” and that Enghouse is setting up dedicated AI professional services groups across IMG and AMG, focused on practical implementation using a small language model (SLM) concept. He described it as a new area Enghouse is entering, building on internal work that has improved efficiency over time.

In response to questions about AI-related acquisitions, Sadler said AI acquisitions could be considered, but added that Enghouse has struggled to find targets that “make money,” arguing that many companies cannot monetize AI investments. He said Enghouse believes it can monetize its own expertise through professional services, starting in January, and highlighted that the Aculab leader teaches AI at a university in the U.K.

Sadler also addressed the Lifesize solution, saying it had just been revamped and that the company plans to begin taking it to market around Jan. 1. He said Enghouse had to eliminate some third-party products that made costs too high, referencing the expense of major cloud and AI infrastructure providers, and said the changes were made to avoid selling into the market at unprofitable cost levels.

Looking ahead, Sadler characterized fiscal 2026 as likely “a good stable year,” with limited emphasis on internal growth in “tough markets,” paired with a greater focus on acquisition-driven growth and continued disciplined cost management.

About Enghouse Systems (TSE:ENGH)

Enghouse Systems Ltd is a Canada-based provider of software and services to a variety of end markets. The firm’s operations are organized in two segments namely, the Interactive Management Group and the Asset Management Group. The firm has operations in Canada, the United States, the United Kingdom, France, Germany, Sweden, Israel, Croatia, Denmark, Norway, India, Japan, Hong Kong, Singapore, and Australia etc.