Descartes Systems DSGX recently expanded its portfolio with the acquisition of 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.

Descartes’ acquisition of MCP involves an up-front consideration of $24 million in cash, with the potential for an additional $6 million in performance-based consideration. This earn-out depends on the joined forces achieving specific revenue-growth targets over the next two years, with payouts expected in fiscal 2026 and fiscal 2027.

Over the past years, the trucking industry has witnessed a surge in carrier fraud and cargo theft. Due to this, there has been a heightened demand for robust solutions that help brokers and shippers navigate these logistics challenges. MCP’s platform streamlines the complex task of onboarding carriers, gathering and screening their information to ensure compliance with industry regulations. By scrutinizing truck carriers for legitimacy, insurance coverage and safety records, MCP helps freight brokers mitigate risks in transporting goods.

Merging DSGX MacroPoint FraudGuard Tool With MCP Solution

The cutting-edge solution, when paired with MCP’s onboarding and risk-monitoring solution, creates a swift process where carriers are examined, monitored and tracked in real-time. In addition, any fraudulent activities observed during the onboarding or monitoring phases are immediately addressed, allowing brokers and shippers to take quick action and minimize potential risks.

Descartes MacroPoint, a solution that provides real-time visibility and tracking of shipments, has been a powerful tool for brokers and shippers. With the addition of the FraudGuard feature in April 2024, it enables customers to detect and prevent fraudulent carrier activities more effectively. Carriers can seamlessly integrate with the solution via GPS-based electronic logging devices, transportation management systems, or mobile app-based tracking methods.

The transportation industry is currently dealing with two of the most pressing issues – carrier fraud and cargo theft. DSGX’s latest deal not only addresses critical challenges in the logistics industry but also improves overall supply chain performance by empowering freight brokers and shippers seeking robust Know-Your-Carrier capabilities. MCP’s platform complements Descartes’ existing investments in logistics technology, enabling customers to manage the entire lifecycle of shipments in a secure, efficient manner.

DSGX’s Strategic Buyouts Buoying Revenues

Acquisition and innovation remain at the forefront of 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 with GroundCloud and Localz acquisition in 2024, drove the top-line performance.

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.

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

Based in Canada, Descartes provides software-as-a-service logistics solutions to businesses, including transportation and logistics, manufacturing, retail and healthcare.

DSGX’S Zacks Rank & Stock Price Performance

At present, DSGX has a Zacks Rank #4 (Sell). Its shares have gained 36.8% compared with the sub-industry’s growth of 29.4% in the past year.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Harmonic Inc. HLIT, Arista Networks, Inc. and Ubiquiti Inc. HLIT and UI sport a Zacks Rank #1 (Strong Buy), whereas ANET carries a Zacks Rank #2 (Buy) each at present.

Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. HLIT delivered a trailing four-quarter average earnings surprise of 32.5%.

Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.

Arista Networks supplies products to a prestigious set of customers, including Fortune 500 global companies in markets like cloud titans, enterprises, financials and specialty cloud service providers. It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, ANET delivered an earnings surprise of 8.25%.

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