Evertz Technologies ((TSE:ET)) has held its Q3 earnings call. Read on for the main highlights of the call.
Evertz Technologies’ recent earnings call conveyed a generally positive sentiment, underscored by strong sales growth in the U.S. and Canada and an uptick in software services revenue. Despite facing challenges such as a decline in international revenue and potential impacts from U.S. tariffs, the company remains optimistic due to record sales figures and a robust order backlog.
Record Quarterly Sales
Evertz Technologies reported record-high quarterly sales of $136.9 million, reflecting a 9% sequential increase and a 1% year-over-year rise. This achievement underscores the company’s strong market position and its ability to drive sales growth despite challenging economic conditions.
Strong U.S. and Canada Revenue Growth
The company experienced significant revenue growth in the U.S. and Canada, with a 23% increase quarter-over-quarter, totaling $99.1 million. This growth also represented an 11% year-over-year increase for the nine months ending January 31, 2025, highlighting the strength of Evertz’s operations in these key markets.
Growth in Software Services
Evertz saw a 6.3% year-over-year increase in recurring software services and other software revenues, totaling $55 million for the quarter. This growth is indicative of the company’s successful expansion into software services, which is becoming an increasingly important revenue stream.
Robust Order Backlog
The company’s purchase order backlog exceeded $269 million as of February 2025, with shipments during the month totaling $39 million. This robust backlog suggests strong future sales potential and provides a buffer against market volatility.
Dividend Declaration
Evertz’s board declared a regular quarterly dividend of $0.20 per share, payable around March 20. This decision reflects the company’s commitment to returning value to shareholders and its confidence in its financial health.
Decline in International Revenue
International revenue saw a significant decline, decreasing by 31% quarter-over-quarter and 29.5% year-over-year for the nine months ending January 31, 2025. This downturn highlights the challenges Evertz faces in international markets, which could impact future growth.
Impact of U.S. Tariffs
Evertz anticipates some negative impact on margins due to U.S. tariffs. To mitigate this risk, the company is working on expanding its manufacturing capabilities within the U.S., which could help stabilize margins in the long term.
Decrease in Gross Margin
The gross margin for the quarter decreased slightly to 57.8% from 58.9% in the same quarter last year. This decrease was primarily driven by changes in product mix, which the company will need to manage carefully moving forward.
Increased R&D and S&A Expenses
Research and development expenses increased to $36.6 million, up $2.6 million from last year, while selling and administrative expenses rose by $900,000, representing 14% of revenue. These increases reflect Evertz’s ongoing investment in innovation and market expansion.
Forward-Looking Guidance
In the Q3 2025 conference call, Evertz Technologies highlighted key metrics, including a 9% sequential sales increase and a 1% year-over-year rise. The company maintained a strong working capital of $207.9 million and cash reserves of $96.3 million as of January 31, 2025. With a backlog exceeding $269 million, Evertz is well-positioned for future growth, although it remains vigilant about potential challenges such as tariffs and international market fluctuations.
In summary, Evertz Technologies’ earnings call painted a picture of a company experiencing robust growth in North America and expanding its software services, despite facing some international revenue challenges and tariff-related pressures. The overall sentiment remains positive, buoyed by record sales and a strong order backlog, positioning the company well for future success.