Shares of Descartes Systems Group (NASDAQ: DSGX) plunged 8.30% in after-hours trading on Wednesday following the release of the company's fiscal 2026 first-quarter earnings report, which fell short of analyst expectations. The logistics software provider also announced significant cost-cutting measures, including a reduction in its global workforce.
For the quarter ended April 30, 2025, Descartes reported earnings per share of $0.41, missing the analyst consensus estimate of $0.44. Revenue came in at $168.7 million, also below the expected $170.08 million. While the company saw a 12% year-over-year increase in revenue, the results apparently disappointed investors who were anticipating stronger performance.
In response to what CEO Edward J. Ryan described as a "challenging and uncertain economic and trade environment," Descartes announced plans to reduce its global workforce by approximately 7% and eliminate various other operating expenses. The company expects to incur restructuring charges of about $4 million in the second quarter of fiscal 2026 but anticipates annualized cost savings of approximately $15 million once the measures are implemented. This move signals concerns about the near-term outlook and may have contributed to the sharp stock decline.
Despite the earnings miss and cost-cutting measures, Descartes highlighted some positive aspects of its performance, including record services revenues and a 12% increase in Adjusted EBITDA. However, the market reaction suggests investors are more focused on the challenges ahead and the potential impact of the workforce reduction on the company's growth prospects.
As global trade uncertainties persist, Descartes' performance in the coming quarters will be closely watched to see if these cost-cutting measures can improve profitability without significantly hampering growth. The after-hours stock plunge reflects investor concerns about the company's ability to navigate the current economic landscape and maintain its competitive edge in the logistics software market.