Evertz Technologies Q3 2026 Earnings Report

Evertz Technologies EPS Results

• Actual EPS: C$0.24
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Evertz Technologies Revenue Results

• Actual Revenue: $139.33 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Evertz Technologies Announcement Details

• Quarter: Q3 2026
• Date: 3/4/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, March 4, 2026
• Conference Call Time: 5:00PM ET

Evertz Technologies (TSE:ET) Ltd is a Canadian provider of telecommunications equipment and technology solutions to the television broadcast and new-media industries. Evertz equipment is used in the production, post-production and transmission of television content. Its solutions are sold to content creators, broadcasters, and service providers looking to support multi-channel digital and high definition television, and next generation Internet Protocol environments. More than half of the firm's revenue is generated in the United States.

Evertz Technologies Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record quarterly sales of CAD 139.3 million (up 5% sequentially) with recurring software & services revenue of CAD 62.5 million (~45% of sales), continuing a multi-quarter growth trend.
• Positive Sentiment: Purchase order backlog exceeded CAD 246 million at end‑February and, together with CAD 32 million of February shipments, implies over CAD 278 million of near‑term revenue visibility.
• Negative Sentiment: Cash fell to CAD 24.8 million from CAD 111.7 million after CAD 91 million of dividends (including a CAD 75.5 million special dividend), materially reducing short‑term liquidity.
• Neutral Sentiment: Heavy R&D investment (CAD 36.7 million, 26.4% of revenue) and a stable gross margin of 58.3% (within the 56–60% target) support product and IP/cloud leadership but keep operating investment elevated.
• Negative Sentiment: Management noted a CAD 2.3 million foreign‑exchange loss, an inventory build to secure constrained components that used cash, and expects Q4 OpEx to rise ~CAD 1.5–2.0 million for the NAB trade show.

Presentation

[Operator]

Good afternoon, ladies and gentlemen, and welcome to the Evertz Q3 Investor Conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, March 4, 2026. I would now like to turn the conference over to Brian Campbell, Executive VP of Business Development. Please go ahead, sir.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Thank you, John. Good afternoon, everyone, and welcome to Evertz Technologies conference call for our fiscal 2026 third quarter ended January 31, 2026, with Doug Moore, Evertz Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A will be available on SEDAR and on the company investor website. Doug and I will comment on the financial results and then open the call to your questions.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Turning now to Evertz results, I will begin by providing a few highlights, and then Doug will provide additional detail. First off, sales for the third quarter totaled a record CAD 139.3 million, up 5% sequentially from the prior quarter. This includes revenue in the international region of CAD 43.7 million, up 27.7% sequentially.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Recurring software services and other software revenue increased 12.3% year-over-year, totaling CAD 62.5 million in the quarter. Our sales base is well diversified, with the top 10 customers accounting for approximately 44% of sales during the quarter, with no single customer accounting for more than 16% of sales. In fact, we had 107 customer orders of over CAD 200,000. Gross margin in the quarter was CAD 81.2 million or 58.3% compared to 57.8% in the third quarter of the prior year.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Net earnings were CAD 18.7 million, resulting in fully diluted earnings per share of CAD 0.24 for the quarter. Investment in research and development totaled CAD 36.7 million.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Evertz working capital was CAD 133.2 million, including cash of CAD 24.8 million as at January 31, 2026. At the end of February, Evertz purchase order backlog was more than CAD 246 million, and shipments during the month of February were CAD 32 million.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

We attribute this strong financial performance and solid 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, IT, and cloud-based architectures in the industry, and specifically the growing adoption of Evertz IP-based software-defined video networking solutions, Evertz IT cloud solutions, our immersive 4K, 8K Ultra-High Definition solutions, our state-of-the-art DreamCatcher IP replay and live production with BRAVO Studio featuring the iconic Studer audio.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Today, the board of directors declared a regular quarterly dividend of CAD 0.205 per share payable on or about March 20th. I will now hand over to Doug Moore, Evertz Chief Financial Officer, to cover our results in greater detail.

[Doug Moore, CFO at Evertz Technologies]

All right. Thanks, Brian, and good afternoon, everyone. For the sales were CAD 139.3 million in the third quarter of fiscal 2026. That's a 2% increase compared to CAD 136.9 million in the third quarter of fiscal 2025. For the nine months ending January 31, 2026, sales were CAD 384.2 million, up CAD 10.4 million or 3% for the nine-month period ending January 31, 2025. Quarterly hardware revenue was CAD 76.8 million, a decrease from CAD 81.2 million the prior year.

[Doug Moore, CFO at Evertz Technologies]

While software and services revenue increased to CAD 62.5 million from CAD 55.7 million in the prior year. Revenues from software and services represented approximately 45% of the total revenue in the quarter.

[Doug Moore, CFO at Evertz Technologies]

Year-to-date, hardware revenue is up 1% year-over-year to CAD 209.3 million for the nine months ending January 31, 2026. While revenues from software and services is up 5% to CAD 174.9 million, from CAD 166.4 million in the prior year. Year-to-date, software and service revenue represented approximately 46% of total revenue over the period. Looking at regional revenue, quarterly revenues in the US. Canadian region declined 3% to CAD 95.6 million compared to CAD 99.1 million the prior year.

[Doug Moore, CFO at Evertz Technologies]

This was more than offset by a 15% increase in quarterly revenues in the international region, which were CAD 43.7 million compared to CAD 37.8 million the prior year.

[Doug Moore, CFO at Evertz Technologies]

The international segment represented 31% of total sales in the quarter compared to 28% in the same period last year. For the nine months ending January 31st, revenues in the Canadian US region were up 2% to CAD 273.6 million, while international revenue increased 3% to CAD 110.6 million compared to CAD 105.9 million the same period last year.

[Doug Moore, CFO at Evertz Technologies]

For the nine months period ending January 31st, international sales represented 29% of total sales compared to 28% the same period last year. Gross margin for the quarter was 58.3% as compared to 57.8% in the prior year. For the nine months ending January 31st, the gross margin was 59.3%.

[Doug Moore, CFO at Evertz Technologies]

Both the quarter end and year-end, gross margin percentages were within the company's 56%-60% target range. Looking at S&A expenses. S&A was CAD 18.6 million in the third quarter, a decline of CAD 0.6 million or 3% for the same period last year. Selling and admin expenses as a percentage of revenue were approximately 13.3% compared to 14% for the same period last year. Sequentially, selling and admin is down approximately CAD 0.5 million from Q2.

[Doug Moore, CFO at Evertz Technologies]

That decline is primarily driven by the timing of trade show and promotions costs, which decreased about CAD 900,000 as in Q2 we attended our IBC trade show last quarter. For the nine months ending January 31st, selling and admin expenses were CAD 56.3 million or 14.7% of sales.

[Doug Moore, CFO at Evertz Technologies]

That's compared to CAD 55.2 million or 14.7% of sales for the same period last year. Research and development expenses were CAD 36.7 million for the third quarter. That represents a CAD 0.1 million increase over the same period last year. As a percentage of revenue, R&D expenses were 26.4% compared to 26.7% in the prior year.

[Doug Moore, CFO at Evertz Technologies]

For the nine months ending January 31st, R&D expenses were CAD 110.4 million or 28.7% of sales. That's compared to CAD 110.2 million for the same period last year. ITCs for the quarter were CAD 4.8 million. That's compared to ITCs of CAD 3.6 million the prior year third quarter.

[Doug Moore, CFO at Evertz Technologies]

Foreign exchange for the third quarter resulted in a loss of CAD 2.3 million, as compared to a gain for the third quarter ended January 31st, 2025 of CAD 3.9 million. The largest driver behind the current period loss was a translation of US dollar assets into Canadian dollars, given a decline of the US dollar versus the Canadian dollar over the quarterly period. We had closed October 31st at approximately 1.42:1 US to Canadian, and that dropped to approximately 1.3612 as at January 31st.

[Doug Moore, CFO at Evertz Technologies]

For the nine months ending January 31st, foreign exchange resulted in a loss of CAD 0.8 million compared to a gain of CAD 4.7 million the same period last year. Turning to the discussion of liquidity of the company.

[Doug Moore, CFO at Evertz Technologies]

Cash as at January 31, 2026 was CAD 24.8 million, a decline compared to cash of CAD 111.7 million as at April 30, 2025. The decline was primarily due to CAD 91 million in dividends distributed in the quarter, including CAD 75.5 million in special dividends paid during Q3. Working capital was CAD 133.2 million as at January 31, compared to CAD 206.9 million at the end of April 30, 2025. Looking at cash flows for the quarter. The company generated cash from operations of CAD 29.3 million, which is net of a CAD 4.4 million change in non-cash working capital and current taxes.

[Doug Moore, CFO at Evertz Technologies]

If the effects of change in non-cash working capital and current taxes were excluded from the calculation, the company generated CAD 24.9 million in cash from operations during the quarter. It's worth noting we did use about CAD 10 million in cash and inventory in the quarter as we purchased some last-time byproducts and also securing parts for plant production. We increased raw materials.

[Doug Moore, CFO at Evertz Technologies]

The company used cash of CAD 7 million for investing activities, which was principally driven by the acquisition of capital assets in the quarter, including the acquisition of an airplane for CAD 4.4 million, replacing aircraft previously sold during the year. The company used cash in financing activities of CAD 92.4 million, which, as noted, was principally driven by dividends paid of CAD 91 million, including the special dividend of CAD 75.5 million.

[Doug Moore, CFO at Evertz Technologies]

Finally, looking at our share capital position at January 31, 2026. Shares outstanding were approximately CAD 75.5 million, and options and share-based RSUs outstanding were approximately CAD 4.5 million. Weighted average shares outstanding were CAD 75.5 million, and weighted average fully diluted shares were CAD 76.7 million as at January 31. That concludes the review of our financial results and position for the third quarter.

[Doug Moore, CFO at Evertz Technologies]

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, we refer you to the risk factors described in the annual information form and the official reports filed with the Canadian Securities Administrators. Brian, back to yourself.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Thank you, Doug. John, we're now ready to open the call to questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Once again, it is star one if you wish to ask a question. Your first question comes from the line of Thanos Moschiopoulos from BMO Capital Markets. Your line is now open.

[Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets]

Hi, good afternoon. North American growth was clearly a little bit slower, recognizing you had strong growth internationally. Just with respect to North America, anything you'd call out as far as what you're seeing in the environment? Is that just reflective of project timing, which, as we know, can be sometimes lumpy?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Good. Thanos, it's Brian. I'm actually on a remote cell phone here in Ottawa at a defense conference event. You were breaking up a little bit there. Could you repeat the question for us?

[Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets]

Sure. I was just asking about the slower growth in North America during the quarter, whether you've seen any change in the end markets or whether that's just reflective of project timing and lumpiness?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

I would advise that it's more reflective of timing and lumpiness. We haven't seen a significant change, and we are heading into the NAB event on the tail end of April, where we're going to be, you know, connecting again directly with, you know, many customers on-site. It's. We're quite excited by that.

[Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets]

Okay. Clearly, defense is topical. Maybe on each side of the border, we've seen Canada focusing on ramping up domestic procurement, in the US, you're obviously, you've been investing in building out your operations. Can you update us in terms of, what you're seeing with respect to defense opportunities?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

We're definitely encouraged by the steps that are being taken on multiple fronts, whether that's government initiatives that mandate the defense, you know, Canadian defense sector, and the internal people as well too. It, you know, that is tends to be a longer-term sales cycle, but it's all, you know, quite encouraging and we're very intent on devoting sufficient, you know, resources to help the Canadian government as they're moving forward. As you know, we have had successes over the years in the US and with NATO partners.

[Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets]

Great. Maybe one last one for me. OpEx has been relatively stable in recent quarters, which is good to see that expense discipline. Any puts and takes as we think about the near-term OpEx trajectory, or should this be representative of the run rate near term?

[Doug Moore, CFO at Evertz Technologies]

No, I mean, the big thing to call out there is, like, while Q2 had IBC, Q4 has NAB there, NAB. That is a pretty significant show for us. Just from a Q3 to Q4 perspective, you can, you know, I would expect an increase of, you know, a million and a half to 2 million dollars. The same with on the, on the Q4 front as we ramp up for that show.

[Doug Moore, CFO at Evertz Technologies]

We, we, a little bit harder to forecast, but we do often have, some increases in R&D materials and prototypes, which is, you know, historically, last couple of years anyway, been about an extra half million in Q4. Then beyond Q4, it's, you know, there's nothing specific to call out other than inflationary matters.

[Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets]

Great. I'll pass along. Thank you.

[Operator]

Your next question comes from the line of Robert Young from Canaccord Genuity. Your line is now open.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

Hi, Brian. I think you noted you're attending the Ottawa Conference on Security and Defence earlier in the call. I think I heard that.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Correct, yeah.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

Could you talk about what you're showing at the conference? What are the products that you're displaying to a defense customer? What are the areas where you think Evertz can be meaningful in supplying, you know, the Canadian defense establishment?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

It isn't as much a trade show as you're familiar with the NAB and IBC. It's more attended in conference, but we're definitely continuing to reinforce and make strong relationships on multiple fronts. It is the, you know, monitoring command and control solutions or transport. As you know, core elements of our key technologies are Common Criteria and NIAP certified, and that plays very well to, you know, the direction that's being taken by, you know, much of the new spending initiatives.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

No specific product areas that you're in a sales motion at this conference. Is there anything worth highlighting? I understand you're highlighting products that you have certifications related to, but what product areas would you highlight as particularly relevant to a defense customer?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Rob, other than the ones I articulated previously, which is the, you know, command and control relevant ones, which are, you know, multi-viewers, signal processing, the DreamCatcher live production solutions, that whole family of technical operations center, live production, replay, storage solutions, all, and transport, all fall into, you know, categories that would be of demand and of course, the RF solutions of which we have many and we're at the forefront of the DIFI push, which is the digitization of IF RF solutions.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

Okay. Great. That's great color. Noted you added SOC 2 to the evertz.io product, which, maybe we could just give us a sense of what that opens up for Evertz. Is that a meaningful, addressable market change?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Yeah, it's very early days. I don't have anything to add there.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

Okay. I know the backlog ticked up for the first time in quarter-over-quarter. Sequentially, it ticked up for the first time in a, in a while. Maybe is that driven by like, maybe a weaker level of February shipments, or is there another factor to call out there?

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

Doug, do you wanna handle that?

[Doug Moore, CFO at Evertz Technologies]

Yeah, sure. It's just, again, there's some lumpiness in projects, whether we deliver or they come in, some significant orders come in at a time. It's just a reflection of strong demand. You are correct. The February shipments are a bit light, that's fair. Yeah, the growth in backlog up, I think CAD 6 million quarter-over-quarter is very positive. I think it's, you know, not directly attributable to one item. I would say it's just, you know, strength across strong demand.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

Okay. Maybe last question? You noted the inventory build in the quarter. Is that driven by anything in the pipeline or any maybe unannounced programs that you've won, something that's not? Yeah, go ahead. Sorry.

[Doug Moore, CFO at Evertz Technologies]

No, it's actually, it's more driven by, market, I guess procurement realities, with, you know, there's some memory, certain components like memory on allocation where, basically have to secure parts to guarantee our ability to ship. It's more driven by, the procurement side and seeing there's certain products on allocation or, you know, potential coming shortages, that we're, you know, using some of the cash to stockpile.

[Robert Young, Managing Director and Head of Research at Canaccord Genuity]

I think that's it for me. I'll pass the line.

[Operator]

As a reminder, if you have a question or any follow-up, please press star one. Your next question comes from the line of Paul Treiber from RBC Capital Markets. Your line is now open.

[Paul Treiber, Director and Research Analyst at RBC Capital Markets]

Thanks very much. Good afternoon. Just a question on recurring software and services revenue. It was strong again this quarter. Is there anything to call out in terms of either unusuals or project completion, or do you see it as, you know, continue to grow in these sort of low double digits here?

[Doug Moore, CFO at Evertz Technologies]

I think you have to track it for the last, you know, eight quarters. Like, there's been a strong trend in growth. There's not, you know, a milestone of, you know, achieved a CAD 10 million or something like that. There's always some volatility based on project completion and milestone completion. It's not a specific, you know, one contract to point to. There'll be continued some peaks, you know, going forward. You'll see over the past eight-plus quarters or more, really 12 quarters, it's been growing, like, as a trend.

[Paul Treiber, Director and Research Analyst at RBC Capital Markets]

Okay, that's helpful. In international, the strength in international, I mean, it's the highest quarterly level in a number of years. Has anything changed in terms of your momentum there and the drivers of that growth and what's driving that?

[Doug Moore, CFO at Evertz Technologies]

A lot of the growth in the current quarter, at least compared to the prior years, it was a couple of projects in Europe that we completed. I don't know if that's really a macro thing to call out necessarily than the, you know, the lumpiness or volatility in this case, you know, helping us in the quarter.

[Paul Treiber, Director and Research Analyst at RBC Capital Markets]

just lastly, just on gross margins, it ticked down a little bit sequentially. Does that relate to international, or some of these larger projects? You know, maybe the mix may have a lower gross margin than the past.

[Doug Moore, CFO at Evertz Technologies]

Yeah. I mean, the main driver, of course, is the product mix, but in this case, there is some drag due to international margins being a bit tighter than elsewhere. You know, it's still well within the range. It's still, you know, a strong margin, but there'll be volatility even going forward. Yeah, there's a bit of a drag in the quarter with the international sales.

[Paul Treiber, Director and Research Analyst at RBC Capital Markets]

Just lastly, just on the topic of gross margins. With memory costs going up, how will that impact gross margins? Is it a relatively small portion of your BOM that it's basically immaterial from a consolidated point of view?

[Doug Moore, CFO at Evertz Technologies]

Yeah. I mean, what we do is we analyze BOMs on an individual level. If there's marketable cost increases, we may have to, you know, address that through pricing. It's not, you know, in the current quarter, it hadn't affected margins necessarily. It's really just, you know, having to acquire, use cash to basically acquire inventory, so we have it there to ship basically when we need it. It hasn't really been a drain on margins, but it is causing us to react and with procurement.

[Paul Treiber, Director and Research Analyst at RBC Capital Markets]

Okay. Thanks for taking the questions.

[Operator]

There are no further questions at this time. I will now turn the call over to Brian Campbell. Please continue, sir.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

I'd like to thank the participants for their questions and to add that we are pleased with the company's performance during Q3 of fiscal 2026, which saw record sales of CAD 139.3 million, including CAD 62.5 million in software and services revenue, solid gross margins at 58.3% in the quarter, which together with Evertz' disciplined expense management, yielded quarterly earnings of CAD 0.24 per share, despite a foreign exchange loss of CAD 2.3 million in the quarter.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

We're entering into the last quarter of fiscal 2026 with significant momentum, fueled by over CAD 32 million of shipments in the month of February, with a combined purchase order backlog plus February shipments totaling in excess of CAD 278 million, and by the continuing adoption and successful large-scale deployments of Evertz' IP-based software-defined video networking and cloud solutions by the largest broadcast new media service provider and enterprises in the industry, and by the continuing success of DreamCatcher BRAVO, our state-of-the-art IP replay production suite.

[Brian Campbell, Executive VP of Business Development at Evertz Technologies]

With Evertz' significant investments in software-defined IP, IT, and cloud 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 broadcast and media technology sector while further penetrating government and defense. Thank you and good night.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Brian Campbell, Executive VP of Business Development
• Doug Moore, CFO

Analysts

• Paul Treiber, Director and Research Analyst at RBC Capital Markets
• Robert Young, Managing Director and Head of Research at Canaccord Genuity
• Thanos Moschopoulos, Managing Director of Equity Research at BMO Capital Markets