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Enghouse Systems (TSE:ENGH)
:ENGH
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Enghouse Systems (ENGH) AI Stock Analysis

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TSE:ENGH

Enghouse Systems

(OTC:ENGH)

Rating:74Outperform
Price Target:
C$27.00
▲(13.49%Upside)
Enghouse Systems' overall stock score reflects strong financial performance and attractive valuation, which are partly offset by neutral technical indicators and some challenges highlighted in the earnings call. The company's robust financial strategy and focus on recurring revenue provide a solid foundation for long-term growth despite current market challenges.

Enghouse Systems (ENGH) vs. iShares MSCI Canada ETF (EWC)

Enghouse Systems Business Overview & Revenue Model

Company DescriptionEnghouse Systems Limited is a Canadian-based software and services company that provides enterprise solutions to a variety of vertical markets. The company's portfolio includes customer engagement, contact center, video collaboration, and transportation solutions. Enghouse is known for its ability to enhance customer service, improve operational efficiency, and deliver a better end-user experience through its software offerings.
How the Company Makes MoneyEnghouse Systems makes money primarily through the sale of software licenses, maintenance and support services, and professional services. The company's revenue streams are diversified across its various business sectors, including customer interaction management, video collaboration, and transportation solutions. Enghouse also generates recurring revenue through subscription-based models for its cloud-based offerings. Significant partnerships with technology providers and resellers further contribute to its earnings by expanding its market reach and customer base.

Enghouse Systems Earnings Call Summary

Earnings Call Date:Jun 05, 2025
(Q2-2025)
|
% Change Since: -9.54%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
While Enghouse is expanding its recurring revenue and maintaining a strong cash position, declines in revenue, EBITDA, and net income, coupled with market volatility and operational challenges, paint a mixed picture.
Q2-2025 Updates
Positive Updates
Increase in Recurring Revenue
Recurring revenue increased to $86.2 million, representing 69.1% of total revenue, up from 67.5% last year, emphasizing the strategic focus on predictable long-term revenue streams.
Strong Cash Position and No Debt
Ended the quarter with $263.5 million in cash, cash equivalents, and short-term investments, with no external debt.
Successful Acquisitions and Integration
Completed the acquisition and integration of Margento and Trafi, enhancing the transportation portfolio and aligning with the broader mobility strategy.
Dividend Announcement
Board approved a quarterly dividend of $0.30 per common share, payable on August 29, 2025.
Negative Updates
Decline in Revenue and EBITDA
Revenue for the quarter was $124.8 million, a decline of 0.8% year-over-year. Adjusted EBITDA was $28.6 million with a margin of 22.9%, down from $35.7 million and a 28.4% margin in Q2 2024.
Decrease in Net Income
Net income for the quarter was $13.5 million or $0.24 per diluted share, compared to $20 million or $0.36 per diluted share last year.
Operational Challenges
Increased operating costs due to the shift towards SaaS revenue, overlap of costs related to recent acquisitions, and special charges of $1.4 million.
Demand Hesitancy and Market Volatility
Global economic volatility, demand-side hesitancy, and delays in capital investment decisions impacted performance.
Company Guidance
During Enghouse's Q2 2025 conference call, the company reported a revenue of $124.8 million, reflecting a year-over-year decline of 0.8%, and an adjusted EBITDA of $28.6 million with a margin of 22.9%, down from 28.4% in Q2 2024. Recurring revenue increased to $86.2 million, accounting for 69.1% of total revenue, up from 67.5% the previous year. Despite facing challenges such as foreign exchange volatility and increased operating costs, including special charges of $1.4 million, Enghouse maintained a strong cash position with $263.5 million in cash, cash equivalents, and short-term investments, and operated without external debt. The company invested $26.8 million in acquisitions and returned $14.3 million to shareholders through dividends. Moving forward, Enghouse aims to leverage its financial strength to continue strategic acquisitions and maintain a focus on operational efficiency and recurring revenue growth despite a difficult macroeconomic environment.

Enghouse Systems Financial Statement Overview

Summary
Enghouse Systems demonstrates robust financial health with strong profitability margins and solid cash flow management. The low debt-to-equity ratio and high equity ratio highlight financial stability, though slight pressure on profitability is noted.
Income Statement
75
Positive
Enghouse Systems shows a stable financial performance with a gross profit margin of 64.1% and a net profit margin of 15.6% for the TTM. The revenue growth rate is modest at 0.5% compared to the previous year, indicating a steady market position. EBIT and EBITDA margins are strong at 22.8% and 28.0%, respectively, reflecting efficient operational management. However, the decline in EBIT and EBITDA from the previous period suggests some pressure on profitability.
Balance Sheet
80
Positive
The balance sheet reveals a robust financial position with a low debt-to-equity ratio of 0.02, showcasing minimal reliance on debt financing. The return on equity is healthy at 13.1%, indicating effective use of shareholder funds. The equity ratio stands at 69.2%, highlighting strong equity financing and asset stability. Continuous improvement in stockholders' equity suggests prudent financial management.
Cash Flow
78
Positive
Enghouse Systems demonstrates solid cash flow management with an operating cash flow to net income ratio of 1.65 and a free cash flow to net income ratio of 1.63 for the TTM. Although the free cash flow growth shows a slight decline of 1.7%, the company maintains a strong cash-generating ability, supporting operational and strategic initiatives.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue505.02M502.50M454.02M427.58M467.18M503.78M
Gross Profit323.77M326.92M304.02M297.49M337.55M358.60M
EBITDA141.42M150.66M136.90M143.79M163.33M180.67M
Net Income78.59M81.33M72.25M94.50M92.79M98.59M
Balance Sheet
Total Assets868.67M833.49M783.67M705.00M674.62M763.65M
Cash, Cash Equivalents and Short-Term Investments263.52M274.73M240.36M228.05M198.83M251.79M
Total Debt10.83M11.09M12.40M19.88M25.60M42.16M
Total Liabilities267.42M237.69M228.34M196.83M220.31M267.32M
Stockholders Equity601.26M595.81M555.33M508.17M454.31M496.32M
Cash Flow
Free Cash Flow127.83M130.09M114.24M102.26M115.13M165.60M
Operating Cash Flow129.84M132.07M115.30M103.18M118.46M168.15M
Investing Cash Flow-66.26M-45.25M-57.23M-21.09M-37.62M-45.07M
Financing Cash Flow-70.77M-57.08M-51.78M-54.87M-119.51M-22.32M

Enghouse Systems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price23.79
Price Trends
50DMA
24.35
Negative
100DMA
24.74
Negative
200DMA
26.43
Negative
Market Momentum
MACD
-0.08
Negative
RSI
52.54
Neutral
STOCH
66.38
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ENGH, the sentiment is Positive. The current price of 23.79 is above the 20-day moving average (MA) of 23.44, below the 50-day MA of 24.35, and below the 200-day MA of 26.43, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 52.54 is Neutral, neither overbought nor oversold. The STOCH value of 66.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ENGH.

Enghouse Systems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$10.64B12.0915.87%0.09%-8.74%307.82%
77
Outperform
$1.28B40.7341.12%20.52%246.69%
74
Outperform
C$5.63B404.692.32%15.14%-31.45%
74
Outperform
C$1.31B16.7513.26%5.77%5.12%-2.77%
71
Outperform
C$552.13M123.296.39%0.90%1.75%139.02%
62
Neutral
C$2.46B-33.64%22.09%-334.14%
50
Neutral
C$3.03B2.29-63.12%2.26%4.49%-6.07%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:ENGH
Enghouse Systems
23.79
-5.27
-18.14%
TSE:OTEX
Open Text
41.06
-0.46
-1.11%
TSE:DCBO
Docebo
43.04
-9.29
-17.75%
TSE:KXS
Kinaxis Inc
203.19
35.73
21.34%
TSE:LSPD
Lightspeed POS Inc
17.91
-0.14
-0.78%
TSE:TCS
TECSYS Inc. J
37.21
-2.53
-6.37%

Enghouse Systems Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Enghouse Networks Powers JCI’s Neo-Carrier Strategy with Core Messaging Solutions
Positive
Jun 24, 2025

Enghouse Networks has been selected by Japan Communications Inc. (JCI) to provide its core messaging and security solutions as part of JCI’s Neo-Carrier Strategy. This initiative aims to launch a new mobile service that operates independently from traditional mobile network constraints by integrating voice, SMS, and data connectivity directly with MNO infrastructure. The deployment of Enghouse Networks’ SMS Core System, which includes SMSC, SMS Firewall, and Voicemail, marks a significant milestone for JCI. This system offers high performance, scalability, and compliance with open standards, positioning JCI for future advancements in mobile messaging services.

The most recent analyst rating on (TSE:ENGH) stock is a Buy with a C$43.00 price target. To see the full list of analyst forecasts on Enghouse Systems stock, see the TSE:ENGH Stock Forecast page.

M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Enghouse Systems Reports Q2 2025 Results Amid Strategic Acquisitions
Neutral
Jun 6, 2025

Enghouse Systems Limited reported a slight decrease in revenue for the second quarter of 2025, with a 0.8% drop compared to the same period last year. Despite the decline, the company continues to prioritize recurring revenue and maintain a strong cash position, which supports its acquisition strategy. The recent acquisitions of Margento and Trafi are expected to bolster Enghouse’s transportation offerings and align with its long-term growth vision. The company remains financially resilient with no external debt and continues to pay dividends, reflecting its commitment to shareholder returns.

The most recent analyst rating on (TSE:ENGH) stock is a Buy with a C$43.00 price target. To see the full list of analyst forecasts on Enghouse Systems stock, see the TSE:ENGH Stock Forecast page.

Product-Related AnnouncementsBusiness Operations and Strategy
Enghouse and NKS110 IKS Enhance Norway’s Emergency Response System
Positive
May 6, 2025

Enghouse Transportation & Public Safety, in collaboration with NKS110 IKS, has successfully implemented the Enghouse LocusEmergency OHV (LEO) system across all 110 emergency dispatch centers in Norway. This deployment enhances public safety by providing advanced resource management tools that improve situational awareness and response times. The initiative strengthens Norway’s emergency infrastructure, ensuring readiness for current and future challenges, and reflects Enghouse’s commitment to delivering cutting-edge technology for public safety organizations.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 23, 2025