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Dye & Durham Ltd. (TSE:DND)
:DND
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Dye & Durham
(TSX:DND)
48Neutral
Positive Factors
Governance
Blacksheep has agreed to customary standstill and voting support terms, gaining the right to appoint a new board member, which is seen as positive governance development.
Revenue Growth
DND's banking technology business has been notably strong, with over 20% revenue growth in FY2024.
Negative Factors
Activist Pressure
Activist pressure from Engine Capital is pushing Dye & Durham to optimize return on invested capital and focus on organic growth and disciplined acquisitions.
Dye & Durham (DND) vs. S&P 500 (SPY)
Market Cap
C$856.80M
Dividend Yield0.59%
Average Volume (3M)276.25K
Price to Earnings (P/E)―
Beta (1Y)1.54
Revenue Growth2.97%
EPS Growth25.63%
CountryCA
Employees1,143
SectorTechnology
Sector Strength54
IndustrySoftware
Share Statistics
EPS (TTM)-2.33
Shares Outstanding67,200,000
10 Day Avg. Volume199,253
30 Day Avg. Volume276,248
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.82
Price to Cash Flow (P/CF)12.60
P/FCF Ratio5.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$21.33Price Target Upside67.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
Dye & Durham Business Overview & Revenue Model
Company DescriptionDye & Durham Corp is engaged in the business of providing business support services to organizations, government, and private firms through its cloud-based platform. The company offers legal services like due diligence, securities filings, litigation solutions, investigative services, court filing, KYC services, and financial risk management services.
How the Company Makes MoneyDye & Durham generates revenue through the sale of its cloud-based software solutions and services to legal, financial, and governmental organizations. The company employs a subscription-based model, where clients pay recurring fees for access to its software platforms. Additionally, Dye & Durham earns revenue through transaction-based fees for certain services, such as real estate conveyancing and court filing. The company may also benefit from strategic partnerships and acquisitions that expand its product offerings and market reach, further contributing to its income streams.
Dye & Durham Financial Statement Overview
Summary
Dye & Durham faces financial challenges with consistent net losses and high leverage. While operational efficiency is moderate and cash management is adept, the company's high debt levels and negative profitability metrics are concerning.Income Statement
Dye & Durham's income statement reflects a challenging environment with persistent net losses. The TTM (Trailing-Twelve-Months) shows a negative net income of -$154 million. The gross profit margin stands at 59.8%, indicating healthy cost management. Revenue growth appears stagnant with minimal increase from the previous year. EBIT and EBITDA margins are at 5.2% and 28.3%, respectively, showing moderate operational efficiency. However, the substantial net loss impacts the overall income statement score.45
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 5.06, indicating significant leverage. The company's equity ratio is 14.3%, reflecting a low proportion of equity financing. Return on equity is negative due to net losses, highlighting profitability challenges. While total assets increased, the high liabilities and low equity position pose financial risks. Overall, the balance sheet indicates financial leverage concerns and equity instability.50
Neutral
Cash Flow
Dye & Durham reports positive free cash flow of $92.6 million in the TTM, though lower than previous periods. Operating cash flow is strong at $125 million, showing good cash generation relative to net income. However, free cash flow growth has declined, and the free cash flow to net income ratio is negative due to net losses. The cash flow statement reflects solid cash management but is affected by the company's profitability issues.60
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 468.06M | 457.70M | 451.11M | 474.81M | 208.94M | 65.51M |
| Gross Profit | |||||
| 279.83M | 312.90M | 304.78M | 417.25M | 181.02M | 58.68M |
| EBIT | |||||
| 24.31M | 61.64M | 63.88M | 110.04M | 40.85M | 19.57M |
| EBITDA | |||||
| 132.29M | 114.48M | 79.04M | 232.35M | 46.06M | 21.53M |
| Net Income Common Stockholders | |||||
| -154.04M | -174.98M | -170.64M | 7.67M | -40.85M | -11.24M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 32.33M | 80.32M | 36.27M | 223.62M | 429.33M | 2.57M |
| Total Assets | |||||
| 2.27B | 2.24B | 2.12B | 2.25B | 1.56B | 166.96M |
| Total Debt | |||||
| 1.65B | 1.55B | 1.35B | 1.17B | 599.94M | 195.56M |
| Net Debt | |||||
| 1.62B | 1.47B | 1.31B | 943.67M | 170.60M | 192.99M |
| Total Liabilities | |||||
| 1.94B | 1.85B | 1.70B | 1.49B | 807.45M | 2.00M |
| Stockholders Equity | |||||
| 325.31M | 389.34M | 423.08M | 763.42M | 750.92M | -2.00M |
| Cash Flow | Free Cash Flow | ||||
| 92.59M | 141.92M | 108.30M | 161.63M | 69.83M | 30.14M |
| Operating Cash Flow | |||||
| 124.96M | 180.87M | 141.40M | 185.44M | 79.35M | 33.17M |
| Investing Cash Flow | |||||
| -269.74M | -40.28M | -158.27M | -923.58M | -790.67M | -11.17M |
| Financing Cash Flow | |||||
| 140.51M | 90.16M | -164.87M | 535.30M | 1.14B | -22.98M |
Dye & Durham Technical Analysis
Negative
12.75
Price Trends
14.67
Negative
16.78
Negative
15.14
Negative
Market Momentum
-0.49
Negative
43.09
Neutral
63.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DND, the sentiment is Negative. The current price of 12.75 is below the 20-day moving average (MA) of 12.97, below the 50-day MA of 14.67, and below the 200-day MA of 15.14, indicating a bearish trend. The MACD of -0.49 indicates Negative momentum. The RSI at 43.09 is Neutral, neither overbought nor oversold. The STOCH value of 63.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DND.
Dye & Durham Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Performance Comparison
TSE:DND
Dye & Durham
12.42
-1.73
-12.23%
OTEX
Open Text
25.11
-12.29
-32.86%
SHOP
Shopify
90.59
12.17
15.52%
TSE:CSU
Constellation Software
4,628.59
882.96
23.57%
TSE:KXS
Kinaxis Inc
155.66
4.00
2.64%
EGHSF
Enghouse Systems
17.87
-5.47
-23.44%
Dye & Durham Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -7.14% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balanced view with positive aspects such as revenue and ARR growth, strong EBITDA margins, and a commitment to debt reduction. However, negative factors included significant one-time expenses impacting cash flow, increased net finance costs, and challenges related to real estate market exposure.Highlights
Top Line Growth
Dye & Durham reported revenue of $120.7 million, up 10% compared to the corresponding period in fiscal 2024. Organic revenue increased by 6.3%, driven primarily by Canadian practice management software in the Financial Services division.
Increased Annual Recurring Revenue (ARR)
ARR increased to 35% of total revenue, compared to 27% in prior periods. ARR was $152 million, up 36% or $40.3 million year-over-year.
Adjusted EBITDA Growth
Reported adjusted EBITDA of $66.5 million, up 11% from the same period in fiscal 2024, maintaining strong EBITDA margins at 55%.
Debt Reduction Commitment
Net debt reduced by approximately $30 million since December 31, 2023. The company is focused on debt reduction by suspending M&A activities and concentrating on organic growth.
Lowlights
One-Time Expenses Impacting Cash Flow
Leverage free cash flow was negative $39 million for the second quarter, primarily due to payments related to the CEO separation agreement and shareholder engagement costs.
Net Finance Costs Increased
Net finance costs were $66 million in the second quarter, an increase of $17 million compared to the corresponding period in fiscal 2024, driven by factors including unfavorable net unrealized foreign exchange impacts.
Challenges in Real Estate Exposure
Revenue exposed to real estate transactions globally was 41% in Q2, compared to 44% in fiscal 2024, with potential headwinds from contract renewals influencing ARR performance.
Company Guidance
During the Dye & Durham second quarter fiscal 2025 earnings call, several key metrics and guidance points were discussed. The company reported a 10% year-over-year revenue growth to $120.7 million, with organic revenue increasing by 6.3%. Annual recurring revenue (ARR) grew 36% to $152 million, now representing 35% of total revenue, up from 27% the previous year. The company maintained a strong EBITDA margin of 55%, with adjusted EBITDA reaching $66.5 million, an 11% increase. Contracted revenue accounted for 57% of the total, with real estate transaction exposure at 41%. Despite a negative free cash flow of $39 million this quarter, primarily due to one-time costs, the company remains focused on debt reduction, having reduced net debt by approximately $30 million to $1.38 billion by the end of December 2024. Looking ahead, Dye & Durham is aiming for positive organic growth, supported by improving real estate markets and a strategic shift towards developing workflow software solutions, signaling a move away from growth through mergers and acquisitions.Dye & Durham Corporate Events
M&A Transactions
Dye & Durham Responds to Unsolicited Purchase Proposal
Neutral
Feb 25, 2025
Dye & Durham Limited has confirmed receiving an unsolicited, non-binding proposal to purchase the company at $20 per share, though it lacks material financing details. The company is not engaged in any discussions or negotiations regarding this proposal and does not plan to comment further unless legally required.
Executive/Board ChangesBusiness Operations and Strategy
Dye & Durham Announces New Interim CEO and Board Chair
Positive
Feb 21, 2025
Dye & Durham announced the appointment of Sid Singh as Interim CEO and Arnaud Ajdler as Chair of the Board. Singh, who has extensive experience in technology and corporate turnarounds, aims to strengthen the company’s market position and enhance stakeholder value through strategic initiatives. The leadership changes are expected to drive sustainable growth and improve customer satisfaction.
DividendsBusiness Operations and StrategyFinancial Disclosures
Dye & Durham Achieves 10% Revenue Growth in Q2 FY2025
Neutral
Feb 13, 2025
Dye & Durham reported a 10% increase in revenue to $121 million for Q2 FY2025, aligning with its guidance. The company observed a 36% rise in Annual Recurring Revenue, now constituting 34% of total revenue. With a strategic focus on organic growth and market-leading innovation, Dye & Durham aims to improve customer satisfaction and financial performance. Despite a net loss of $17.6 million, the company remains optimistic about achieving sustainable growth. The board declared a dividend of $0.01875 per share, payable on February 27, 2025.
Dye & Durham Reveals Annual Meeting Results
Dec 18, 2024
Dye & Durham Limited announced the voting results from its annual general meeting, revealing the election of several directors and the approval of Ernst & Young LLP as auditors. While the resolution on executive compensation was not passed, a resolution related to the issuance of certain options received majority support.
Dye & Durham Board Resigns Amid Shareholder Pressure
Dec 17, 2024
Dye & Durham has announced a major shakeup in its board of directors, with the entire board resigning and new nominees from Engine Capital and OneMove Capital taking their place. This move comes after shareholders made their preferences clear, prompting the outgoing board to facilitate a swift transition. The annual general meeting will proceed as planned, but most of the company’s nominees will not stand for election.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.