The Descartes Systems Group Inc. DSGX announced that it has expanded its e-commerce portfolio by acquiring Sellercloud for about $110 million, funded by cash in hand. Moreover, there is potential for an extra $20 million payable as performance consideration if the combined business meets certain revenue goals in the first two years after the acquisition. This additional payment is anticipated in fiscal 2026 and fiscal 2027.

New Jersey-based Sellercloud is a leading provider of omnichannel e-commerce solutions that supports small and mid-sized retailers, distributors, wholesalers and manufacturers manage their operations across multiple channels. Its inventory and order management solutions allow users to effectively synchronize and oversee their inventory across several sales channels. Sellercloud also streamlines the fulfillment process by directing orders to the correct warehouse and assisting staff with picking, packing, shipping and returns.

Descartes enhances its product suite by incorporating Sellercloud, which introduces advanced inventory and order management features that have been highly sought after by customers. This acquisition aligns perfectly with Descartes' previous investments in e-commerce solutions like XPS, ShipRush, Pixi and Peoplevox, all aimed at consolidating its offerings. 

By integrating Sellercloud’s capabilities with its existing shipping, fulfillment and warehouse management solutions, Descartes now provides a unique and comprehensive solution that enables businesses to manage the entire lifecycle of domestic and cross-border e-commerce shipments, distinguishing itself in the marketplace.

Strategic Acquisitions Boost Descartes’ Top Line

Acquisitions remain crucial for Descartes to foster top-line growth. In the last reported quarter, DSGX revenues soared 14% year over year to $163.4 million, beating the Zacks Consensus Estimate by 2.8%. Synergies stemming from the acquisition of BoxTop Technologies during the quarter, along with OCR and Thyme ASD buyouts settled in the fiscal first quarter, drove the top-line performance.

In September 2024, Descartes expanded its portfolio by acquiring Assure Assist, Inc., operating as MyCarrierPortal (“MCP”). MCP is renowned for its carrier onboarding and risk monitoring solutions for the trucking industry, enabling freight brokers and shippers to manage their carrier networks efficiently. The initiative is aimed at bolstering DSGX’s capabilities in fraud prevention and compliance within the trucking industry.

In June 2024, it acquired England-based BoxTop Technologies Limited for $13 million (or £10.25 million) in an all-cash transaction. The acquisition will integrate BoxTop solutions with its Global Logistics Network platform. The initiative is likely to broaden the network’s reach and capabilities, providing customers with even greater efficiency and visibility across their supply chains.

The Descartes Systems Group Inc. Price and Consensus

The Descartes Systems Group Inc. price-consensus-chart | The Descartes Systems Group Inc. Quote

Descartes has strategically acquired companies to enhance its product offerings and secure innovative technologies and talent. This approach strengthens its overall portfolio, enabling the company to capitalize on growth opportunities across various sectors, driving revenues and boosting DSGX stock performance.

However, uncertainty prevailing over global macroeconomic conditions, geopolitical instability and volatile supply-chain issues remain headwinds.

DSGX’s Zacks Rank & Stock Price Performance

DSGX currently carries a Zacks Rank #5 (Strong Sell). Shares of the company have gained 41% in the past year compared with the sub-industry's growth of 28.5%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Itron, Inc. ITRI, Cirrus Logic, Inc. CRUS and SS&C Technologies Holdings, Inc. SSNC.  ITRI presently sports a Zacks Rank #1 (Strong Buy), whereas SSNC & CRUS carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Itron is a technology and services company and one of the leading global suppliers of a wide range of standard, advanced, and smart meters and meter communication systems. It delivered an earnings surprise of 57%, on average, in the trailing four quarters. In the last reported quarter, ITRI pulled off an earnings surprise of 26%. 

Cirrus Logic’s performance is driven by increasing shipments in the smartphone market. Steady momentum in the laptop market and standout next-generation flagship smartphone design cushion the top line. CRUS delivered an earnings surprise of 56.6%, on average, in the trailing four quarters.

SS&C Technologies Holdings delivers investment and financial management software and related services focused exclusively on the financial services industry. It delivered an earnings surprise of 3.1%, on average, in the trailing four quarters. In the last reported quarter, SSNC pulled off an earnings surprise of 4.9%.

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