Earnings call transcript: Evertz Technologies Q4 2025 revenue up, stock dips

Evertz Technologies Limited reported its fourth-quarter earnings, revealing a 4.1% year-over-year increase in revenue to $127.8 million. The company’s earnings per share (EPS) for the quarter stood at $0.17, aligning with market expectations. Despite this, the stock saw a slight decline of 1.88% to close at $12.24. According to InvestingPro data, the company maintains strong financial health with an overall score of 2.61 out of 5, labeled as "GOOD." The stock currently offers an attractive dividend yield of 7.41%, significantly above industry averages.

Key Takeaways

• Quarterly revenue increased by 4.1% year-over-year.
• Annual revenue decreased by 2.5% to $501.6 million.
• EPS for the quarter matched expectations at $0.17.
• Stock price fell by 1.88% in after-hours trading.

Company Performance

Evertz Technologies demonstrated resilience in the face of challenging market conditions, with quarterly revenue rising by 4.1% compared to the same period last year. However, annual revenue saw a decline of 2.5%, indicating some headwinds over the fiscal year. The company continues to focus on innovation and expansion, particularly in the U.S. market, which saw a 10.8% growth in revenue.

Financial Highlights

• Revenue: $127.8 million in Q4 2025, up 4.1% year-over-year
• Annual revenue: $501.6 million, down 2.5% year-over-year
• Quarterly EPS: $0.17, meeting forecasts
• Annual net earnings: $59.7 million
• Gross margin: 61.7% for Q4, 59.5% annually
• Cash position: $111.7 million, up from $86.3 million in April 2024

Earnings vs. Forecast

Evertz Technologies met market expectations with its EPS of $0.17 for the quarter. The revenue forecast was slightly below the actual revenue of $127.8 million, indicating a positive surprise. This alignment with forecasts suggests stable performance, though not enough to sway investor sentiment significantly.

Market Reaction

Following the earnings report, Evertz Technologies’ stock experienced a 1.88% decline to $12.24. This movement positions the stock closer to its 52-week low of $9.45, reflecting cautious investor sentiment despite the company’s solid quarterly performance. The stock’s reaction may be influenced by broader market trends and sector-specific challenges.

Outlook & Guidance

Looking ahead, Evertz Technologies is entering fiscal 2026 with a strong purchase order backlog of $285 million. The company remains focused on expanding its IP-based solutions and maintaining disciplined expense management. Future projections indicate potential growth, with EPS expected to reach $1.51 in FY2025 and $1.78 in FY2026.

Executive Commentary

"We are entering fiscal twenty twenty-six with significant momentum," stated Brian Campbell, Executive VP, highlighting the company’s strong backlog and demand environment. He noted, "We’re seeing a robust demand environment," which is reflected in the company’s strategic focus on IP and cloud-based architectures.

Risks and Challenges

• Regional unrest impacting international revenue, which declined by 28%.
• Potential supply chain disruptions affecting manufacturing expansion plans.
• Competitive pressures in the rapidly evolving technology sector.
• Economic uncertainties impacting customer spending patterns.
• Currency fluctuations affecting international sales.

Q&A

During the earnings call, analysts inquired about the company’s cash allocation strategy and its potential impact on future growth. Executives emphasized a flexible approach, allowing for strategic investments and potential expansions in manufacturing capabilities. The robust demand environment and strong quoting activity were also highlighted as positive indicators for future performance.

Full transcript - Evertz Technologies Limited (ET) Q4 2025:

Chloe, Conference Call Operator: Good afternoon, ladies and gentlemen, and welcome to the Fourth Quarter Evertz Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, June twenty five of twenty twenty five. I would now like to turn the conference over to Brian Kappo, Executive Vice President of Business Development.

Please go ahead.

Brian Campbell, Executive Vice President of Business Development, Evertz Technologies: Thank you, Chloe. Good afternoon, everyone, and welcome to Evertz Technologies conference call for our fiscal twenty twenty five fourth quarter ended 04/30/2025, with Doug Moore, Evertz’s Chief Financial Officer and myself, Brian Campbell. Please note that our financial press release and MD and A will be available on SEDAR and on the company’s investor website. Doug and I will comment on the financial results and then open the call to your questions. Turning now to Evertz results, I will begin by providing a few highlights and then Doug will provide additional details.

First off, for the second year in a row, annual revenues exceeded $500,000,000 coming in at $501,600,000 down 2.5 from the prior year. Revenues included $374,400,000 in The US Canada region, up 10.8% from the prior year. Recurring software services and other software revenues increased 17.8% year over year, totaling $222,600,000 in the year, which represents 44.4% of the total revenue. Gross margin was 298,500,000.0 with margin rates strengthening slightly to 59.5% on an annual basis. Net earnings were 59,700,000.0 resulting in fully diluted earnings per share of $0.77 Investment in research and development totaled $146,800,000 up from $134,800,000 in the prior year.

We continue to strengthen our cash position, closing the year with $111,700,000 in cash and cash equivalents, up from $86,300,000 in April 2024. Turning to the fourth quarter results, quarterly revenue was $127,800,000 up 4.1% from the prior year. Gross margin in the quarter was $78,900,000 with margin rates strengthening to 61.7%, up three ninety five basis points sequentially from the third quarter of the current year and up two fifty four basis points from the fourth quarter of the prior year. Investments in research and development during the quarter totaled $36,500,000 and net earnings for the fourth quarter were $13,000,000 while fully diluted earnings per share were $0.17 Evertz working capital was $206,900,000 up $5,500,000 from April 2024. Operational highlights for the quarter included Evertz stellar presence at the National Association of Broadcasters NAB show in Las Vegas, where Evertz next seamless multi frame hybrid SDI IP routing platform with our FX link expansion architecture was recognized with a TV Tech Best of Show award, and we are honored to have received the TVB Europe Best of Show award for Stewter Exista and View.

At the May 2025, Evertz purchase order backlog was in excess of $259,000,000 and shipments during the month were $26,000,000 We attribute the strong financial performance and robust combined shipments and purchase order backlog to channel and video services proliferation, increasing global demand for high quality video anywhere anytime, the ongoing technical transition to IP, IP and cloud based architectures in the industry, and specifically to the growing adoption of Evertz IP based software defined video networking solutions, Evertz, IT and cloud solutions, our immersive four ks, eight ks ultra high definition solutions, our state of the art DreamCatcher IP replay and live production with Bravo Studio featuring the iconic Stewter Audio. Our sales are well diversified with the top 10 customers during the year accounting for approximately 44.7% of sales with one customer of 11.8%. In the fourth quarter, the top 10 customers accounted for approximately 55.2% of sales with two customers of 14.410.5% respectively with 120 customer orders over 200,000 in the quarter. Today EREF’s Board of Directors declared a quarterly dividend of $0.20 per share payable on or above July 11. I’ll now hand it over to Doug Moore, EREF’s Chief Financial Officer to cover our results in greater detail.

Thanks, Brian. Good afternoon, everyone. Before I get into financial results, I’ll provide a quick update on the tariff situation as it relates to our operations. As we noted during our last quarterly call, while it was and is a fluid situation, back at that time, there was a relatively flat U. S.

Tariff on Canadian manufactured goods. As you likely know, on March 7, an exemption was implemented for compliant goods. The vast majority of goods we sell to The U. S. Are indeed USMCA compliant and thus exempt from additional tariffs.

Further, Canada doesn’t currently have tariffs on our significant raw materials that we purchased. Therefore, and while I repeat, it remains a fluid situation. We are not incurring significant tariff costs today nor did we in the past quarter. But before I move on, I will also note that the majority of our US down shipments did come from Canada this quarter, so we’ll highlight that we continue to increase our flexibility by further building out our manufacturing capabilities in The U. S, in particular in Pennsylvania.

And this is irrespective of tariffs as we look to increase flexibility and better address U. S. Government opportunities. Now looking at the financial results, sales in particular, revenue was $127,800,000 in the fourth quarter of fiscal twenty twenty five as compared to $122,800,000 in the fourth quarter of fiscal twenty twenty four, an increase of $5,000,000 or just over 4% quarter over quarter. For the twelve months ended April ’30, sorry, 2025, revenue was $501,600,000 as compared to $514,600,000 in the same period last year, and this represents a decline of $13,000,000 or approximately 2.5%.

As it relates to revenues in specific regions, U. S. And Canadian region had revenue for the quarter of $106,200,000 as compared to $96,500,000 last year and represents an increase of $9,700,000 or 10% quarter over quarter. Revenues in The U. S./Canada region were $374,400,000 for the twelve months for the year ended 04/30/2025, compared to 338,000,000 in the period last April.

That’s an increase of 36,400,000.0 or 10.8%. The international region had revenues for the quarter of $21,400,000 compared to $26,300,000 last year, a decrease of $4,900,000 in the quarter over quarter or eighteen point six percent and represented 16.8% of total sales this quarter. For the twelve months ended 04/30/2025, international revenue was $127,200,000 compared to $176,600,000 in the year last year, a decline of $49,400,000 or 28%. The decrease is driven by a couple of different factors. First, last year, we recognized $21,000,000 in revenue from a large order that we had previously press released that did not reoccur this year.

And second, some of the decrease is attributable to regional unrest, other multiple locations, but including The Middle East and Central Africa. Within revenue, hardware revenue during the year was $279,100,000 in the year compared to $325,700,000 last year, while software and services revenue totaled $202,600,000 this year compared to $188,900,000 in the prior year. In the quarter, hardware revenue was $71,700,000 as compared to 75,100,000.0 in the same period last year, while software and service revenue was $56,100,000 this quarter compared to $47,700,000 in the same period of last year. Gross margin for the fourth quarter was approximately 61.7% compared with 59.2% in the prior year quarter. That gross margin was above our target range.

The increase is driven by a product mix change and partially due to the greater proportion of software and service revenue in the quarter. For the twelve months ended April 30, gross margin was approximately 59.5%. Year to date margins were within our target range. Turning to S and A expenses. S and A was $20,700,000 in the fourth quarter, an increase of 600,000 for the same period last year.

Selling and admin expenses as a percentage of revenue were approximately 16.2% compared to 16.4% for the same period last year. Sequentially, had we had NAV, we had it in the fourth quarter, which increased cost between 1 and a half to 2,000,000 in trade show comp. For the twelve months ended 04/30/2025, selling and admin expenses were $75,900,000, an increase of $3,600,000 from the same period last year. Selling and admin expenses as a percentage of revenue were approximately 15.1% over the period compared to 14% for the same period last year. R and D expenses were $36,500,000 for the fourth quarter.

That represents a $200,000 decrease from $36,700,000 in the fourth quarter last year. And as a percentage of revenue, R and D expenses were 28.6% compared to 29.9% in the prior year. And for the twelve months, research and development expenses were 106,800,000. That represents an increase of 11,900,000.0 over the same period last year. And that increase includes an increase of 7,700,000.0 as you’re billed with salaries, largely relating to increases in headcount and salaries themselves over the past eighteen to twenty four months.

Research and development expenses as a percentage of revenue were 29.3% Foreign exchange for the fourth quarter was a loss of $4,400,000 compared to a gain of $2,100,000 in the same period last year. The loss in the quarter was driven by a weakening U. S. Dollar compared to the Canadian dollar.

2025 was a gain of $200,000 consistent with last year. Turning to a discussion of liquidity of the company. Net cash as of 04/30/2025 was a $111,700,000 compared to net cash of 86,300,000.0 as at 04/30/2024, while working capital was $206,206,900,000.0 as of 04/30/2025 compared to $201,400,000 as at 04/30/2024. Now for cash flow, the company generated cash from operations of $99,600,000 That includes a $19,300,000 change in noncash working capital and current taxes, including a decrease of inventory of approximately $25,000,000 driven by a decline of raw materials on hand. The effects of the change in noncash working capital and current taxes are excluded from the calculation.

The company generated $79,600,000 in cash from operations during the year. The company used cash of $6,700,000 for investing activities. That’s principally driven by the acquisition of capital assets. And the company used cash and financing activities of $71,400,000 but this is principally driven by dividends paid at $60,100,000 purchase of capital stock under our NCIB for $4,900,000 and principal payments on leases liabilities of 4,800,000.0 Finally, our share capital position at 04/30/2025. Shares outstanding were approximately 75,800,000.0 and options and equity based restricted units outstanding were approximately 4,900,000.0.

The weighted average shares outstanding were 76,000,000, and average fully weighted average fully diluted shares were $77,000,000 for the year ended 04/30/2025. That brings me to conclusion a review of our financial results and position for the second quarter. Finally, I would like to remind you that some of the statements presented today are forward looking, subject to a number of risks and uncertainties, and we refer you to the risk factors described in the annual information form and official reports filed with the Canadian Securities Commission. Brian, back to you. Thank you, Doug.

Chloe, we’re now ready to open the call to questions.

Chloe, Conference Call Operator: Thank you. Your first question comes from the line of Max Ingham from Canaccord Genuity. Your line is open.

Brian Campbell, Executive Vice President of Business Development, Evertz Technologies: Hey, good afternoon. Thanks for taking my questions. My first question is on the demand environment. Can you just give us an overview of the demand you’re seeing both in North America and then internationally? And any changes you might be seeing in sales cycles or drawn out decision making?

So with respect to the demand environment, are seeing a robust demand environment. The strong backlog does reflect that. In addition, we’re seeing very good solid quoting activity, probably you know, up over the last few months. Okay. Thanks.

Thanks for the color. And then on my second question is on the cash. Cash is now above a 100,000,000. Can you just go over how you’re thinking about that use that capital allocation, any priorities you have for that? So we currently have an an active NCIB.

I mean, it’s relatively limited number of shares we can buy. It’s around 8,500 shares a day. And we declared a a regular quarterly dividend, say, of 20¢. Beyond that, I think it’s a gives us a lot of flexibility. And and and we do continue to review the landscape for shareholder accretive acquisitions and And we do have that flexibility provided by the cash and the balance sheet and our pristine balance sheet.

Right. Okay. And then just a quick last one. What are your So we expect the the back of more than a year out is approximately 40%. I think something worth noting too on the backlog just for understanding.

So there’s a a significant portion that’s US dollar base. So having lower conversion rate of around 1.38 versus 1.44 has an impact on our overall backlog. I think that, you know, it’s it’s worth noting. Okay. For Thanks for taking my yep.

Thanks for taking my questions. Thanks, Max.

Chloe, Conference Call Operator: Our next question comes from the line of Thanos Moschopoulos from BMO Capital Markets. Your line is open.

Brian Campbell, Executive Vice President of Business Development, Evertz Technologies: Good afternoon. Brian, maybe expanding on your commentary regarding an uptick in quoting activity. And any additional color you can provide in terms of from your perspective, what might be driving that? Very good strong demand for Evertz products and solutions, and it does reflect as well too. We’ve had, you know, very good solid results in The US Canada region, which was a significant win this year.

Yeah. I’ll I’ll highlight it. We did a light start. So maybe the light start for us for sure. I mean, some of that might be attributable to some macroeconomic uncertainty related to the whole tariff, what would happen, what would not, but we are definitely seeing improvements over the past couple of months.

Yeah. Maybe just to clarify, because that’s gonna be my next question on the the the main shipments. I mean, recognizing that, you know, one month is a data point and picking some up as volatility. And and maybe the macro’s gotten a little bit a little, you know, less murky in in recent weeks. But I guess takeaways from your customer discussions, you’re not seeing any specific pauses or influences.

I mean, you had a brief period of macro concern that from your perspective, you’re largely seeing this as usual, at least in North America? So, Dallas, you were breaking up. Sorry. Yeah. No.

I I I was just saying, notwithstanding me having been lights, I I think what you’re trying to convey is, you know, good demand environments overall, notwithstanding me being later start and and, you know, customer discussions seem positive, and you’re not really seeing a lot of macro hesitation per se on the back of the tariffs. Would that be fair? Not specifically related to tariffs, but Okay. Fairly the global macro environment has not changed significantly with respect to, you know, uncertainties in The Middle East and Europe, right, that we’ve been Mhmm. Going.

Okay. Okay. That clarifies it. On the gross margins, sorry, I understand, you know, mix drove part of it, but given that I presume the mix will continue to skew more towards software over the coming quarters, would it be unreasonable to think that you might be able to sustain gross margin up to 60%? We have some validity to it.

Right? So even last quarter, we were below 58%. I mean, there’s a long term trend. I mean, that’s certainly the goal. And we have seen an uptick, you know, if you compare year over year.

But there is fluidity to it, there is a a mix change each quarter apparently. But so we haven’t changed our target, but it has been skewing higher over the past few quarters, like, you know, long term, eight to twelve quarters. Okay. From an OpEx perspective, obviously, there was NAV. Are there any other nuances you’d call out as you think about the upcoming quarter?

No. I mean, s so s and a and maybe just ratio cost in general, you know, it’s over 1,500,000.0 in the quarter for traces as a whole. It’s it’s it’s the only other thing which is not hugely material, but there is less business days, frankly, in q four. So even having three less business days can have a about a half a million dollar impact on on r and d, which would bring it down slightly. That would yeah.

Q one would be more similar to q three. K. And and finally, you made the comment that you’re continuing to expand your US production. Is the is your plans regarding CapEx sort of unchanged from what you were thinking back in May yeah. As of today.

Not not at the in the quarter, there was less than a million dollars of of capital asset spend, but today, we’ve committed to over over $2,000,000 US actually in in spending. That is from a from a build out perspective that hasn’t changed. If if we do, I don’t expect it to increase significantly beyond that as unless we acquire a building as opposed to lease it. But that is something we’re exploring. But other than that, my expectation hasn’t changed.

K. Great. I’ll pass the line. Thank you.

Chloe, Conference Call Operator: There are no further questions at this time, mister Capital. Please continue.

Brian Campbell, Executive Vice President of Business Development, Evertz Technologies: Thank you, Chloe. I’d like to thank the participants for their questions and add that we are very pleased with the company’s performance during fiscal twenty twenty five, which saw continued strong sales exceeding $05,000,000,000 solid gross margins of 59.5% for the year, which together with Evertz disciplined expense management yielded basic earnings of $0.78 per share. We’re entering fiscal twenty twenty six with significant momentum fueled by a combined purchase order backlog plus many shipments totaling in excess of $285,000,000. By the growing adoption and successful large scale deployments of Eurest’s IP based software defined video networking and cloud based solutions by some of the largest broadcast, new media and service provider enterprises in the industry and by the continuing success of Dreamcatcher Bravo, our state of the art IP based replay and production suite. With Evertz significant investments in software defined IP, technologies, the over 600 industry leading IP SDN deployments and the capabilities of our staff, Evertz is poised to build upon our leadership position in the innovative to provide innovative solutions to customers and deliver to shareholders.

Thank you, everyone, and good night.

Chloe, Conference Call Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.