From Yahoo Finance · · 1m 20s
Descartes hits record Q2, but trade winds shift
Record revenue and a 47% EBITDA margin, with the catch buried in shipment volumes and a P/E of 35.
In brief
Record revenue and a 47% EBITDA margin, with the catch buried in shipment volumes and a P/E of 35. Descartes is compounding profit faster than revenue, but the stock's 35x trailing P/E prices in organic growth that depends on trade volumes it does not control. Originally reported by Yahoo Finance.
A record quarter
On September 10, Descartes reported fiscal Q2 2027 revenue of $201 million, up 12% year over year. Services revenue, the recurring core, rose 13% to $188.6 million.
“record revenue and income from operations despite an increasingly dynamic global trade environment”
Profit grew faster than sales
Income from operations jumped 36% to $65.5 million from $48.2 million. Adjusted EBITDA hit a record $94.4 million, and the margin reached 47%.
What actually drove it
Organic services revenue grew just over 9%. Demand came from Global Trade Intelligence, e-commerce, transportation management, and fleet performance tools.
Buying its way wider
Descartes picked up Extensiv, a warehouse and fulfillment platform for 3PLs, and Tai, a transportation management system for freight brokers. Absorbing both carries integration risk.
The shipping headwind
Tariff shifts, elevated fuel costs, and driver shortages are pressuring the market. Some revenue is tied to shipment volumes, though management argues rising trade complexity keeps demand up.
“increased trade complexity continues to support demand even when shipment volumes are under pressure”
Priced for no mistakes
The stock trades at 35 times trailing earnings, 25.84 forward, and sits below its $107.52 52-week high. Hedge fund holders slipped from 33 to 32 in Q2.
What matters most
Descartes is compounding profit faster than revenue, but the stock's 35x trailing P/E prices in organic growth that depends on trade volumes it does not control.
