Enghouse Systems (TSX:ENGH) released third-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.
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Summary
Enghouse Systems reported Q3 revenue of $117.6 million, an increase from $114.3 million in Q2 but a decrease from $125.6 million in the prior-year period. Sequential improvement was driven by stronger software sales and favorable foreign exchange.
The company's primary focus has been on profitability and operational efficiency, resulting in operating expenses declining to $45.7 million and adjusted EBITDA increasing to $30.8 million, with an EBITDA margin of 26.2%.
The Asset Management Group saw revenue increase to $53 million, driven by stronger maintenance, SaaS, and professional services revenue, while the Interactive Management Group's revenue rose to $64.6 million with improved software sales.
Enghouse Systems maintained strong cash generation, with $28.4 million in operating cash flow and $267.8 million in cash reserves, continuing its strategy of share repurchases and dividend payouts.
Management emphasized ongoing challenges in monetizing AI investments and the competitive pressures from financially distressed competitors in the contact center market.
The company has been restructuring, with $4.6 million in charges, primarily targeting R&D expenses to align with revenue levels.
Despite a challenging market environment, Enghouse Systems remains financially strong and committed to disciplined execution, with a cautious approach to acquisitions due to high valuations and market risks.
Full Transcript
OPERATOR (Operator)
At this time, all lines are in 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 0 for the operator. This call is being recorded on Friday, September 11, 2026. I would now like to turn the conference over to Steven Sadler. Please go ahead.
Steve Sadler, Chairman and CEO
Good morning, everybody. I'm here today with Todd May, VP Legal Counsel, Vin Lin, VP Finance and Accounting, and Rob Medved, Chief Financial Officer, who is also on the call, but he is actually in Croatia. This will be Rob's last conference call for Enghouse Systems as he moves to a new adventure. Before we begin, I'll have Todd read our forward disclaimer.
Todd May, VP Legal Counsel
Certain statements made may be forward-looking by their nature. Such forward-looking statements are subject to various risks and uncertainties, including those in Enghouse Systems' continuous disclosure filings, such as its AIF, which could cause the Company's actual results and experience to differ materially from anticipated results or other expectations. Undue reliance should not be placed on forward-looking information, and the Company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Steve Sadler, Chairman and CEO
Thanks, Todd. Rob will now give an overview of the financial and business results.
Rob Medved, Chief Financial Officer
Thank you, Steve. Good morning, everyone, and thank you for joining us today. I'll begin with a review of our third quarter results and then provide some additional context around our operating performance. The third quarter reflected many of the trends we have discussed over the past several quarters. While the global business environment remains uncertain due to ongoing geopolitical tensions, evolving trade dynamics and broader economic caution, we continue to focus on the factors within our control: serving our customers, improving operational efficiency, managing costs prudently and generating strong cash flow.
Revenue for the quarter was $117.6 million, compared to $114.3 million in Q2 and $125.6 million in the prior-year period. While revenue remains below last year's level, we were encouraged by the sequential improvement from Q2, which was driven by stronger software sales, favorable foreign exchange and the timing of certain transactions. Recurring revenue remained stable at approximately 69.5% of total revenue, continuing to provide a strong foundation for the business.
One point I would emphasize this quarter is that while revenue growth remains important, our primary focus has been on profitability and operating discipline. Over the last several quarters, we have taken steps to better align our cost structure with current business activity, and we are beginning to see the benefits of those actions reflected in our financial results. Operating expenses, excluding special charges, declined to $45.7 million compared to $49.9 million in the prior year, while adjusted EBITDA increased to $30.8 million, up from the $26.5 million in Q2.
EBITDA margin improved to 26.2% compared to 23.2% in Q2 and 25.7% in the prior year. These results demonstrate that our profitability initiatives are having a favorable impact on the business despite continued revenue pressure in certain areas. Results from operating activities were $24.5 million compared to $23.6 million in Q2, despite recording $4.6 million in restructuring charges during the quarter. These restructuring activities were the most significant we have undertaken this fiscal year and were done late in the quarter, so there will be further phasing of benefits.
Within the Asset Management Group, revenue was $53 million compared to $51.4 million in Q2 and $55.9 million in the prior year. Sequential improvement was driven by stronger maintenance, SaaS and professional services revenue along with contributions from the Six Bell acquisition. Professional services activity improved as several delayed projects moved forward during the quarter. Segment profit increased to approximately $18.5 million from $15.3 million in Q2, reflecting both improved revenue and continued cost discipline.
Within the Interactive Management Group, revenue was $64.6 million compared to $62.8 million in Q2. Software sales improved from the prior quarter and recurring revenue was stable. Maintenance revenue remained below prior-year levels; however, churn moderated during the quarter and renewal performance improved. Lifesize and Qumu continued to experience declines, but the magnitude of these declines has reduced compared to prior periods. Segment profit increased to approximately $21.5 million compared to $18.5 million in Q2.
Cost reductions, particularly within R&D, helped offset ongoing pressure from recurring revenue attrition. Cash generation remains a key strength of Enghouse Systems. We generated $28.4 million of operating cash flow before changes in working capital and income taxes paid, and ended the quarter with $267.8 million in cash, cash equivalents and short-term investments, while continuing to carry no external debt. During the quarter, we returned shareholders through $16.9 million of dividends and $7.5 million of share repurchases, reflecting our confidence in the long-term value of the company and the strength of our balance sheet.
Subsequent to quarter end, our board declared a quarterly dividend of $0.31 per common share, payable on November 27, 2026 to shareholders of record at the close of business on November 13, 2026. This continues our long-standing commitment to returning capital to shareholders while maintaining the financial flexibility to invest in the business and pursue acquisition opportunities. Before concluding, I'll briefly touch on AI across both IMG and AMG.
Our approach remains practical and customer-focused. We continue to see customer interest in AI-enabled solutions and recorded growth in AI-related activity during the quarter. Internally, we are also leveraging AI to improve productivity, accelerate development efforts and support operational efficiency. As always, our focus is on solutions that provide measurable value to customers rather than pursuing technology for its own sake. In summary, revenue improved sequentially during the quarter and, importantly, our focus on cost management and operational efficiency is beginning to translate into stronger profitability.
While the external environment remains uncertain and customers continue to make purchasing decisions cautiously, Enghouse Systems remains financially strong, highly cash generative and disciplined in its execution. We believe these characteristics continue to position the company well regardless of broader market conditions. Before I hand the call back, before I hand the call back, I want to thank Steve, the board, and the entire Enghouse team for the many opportunities I've been given during my time here.
It has been a privilege to be part of the company and I wish everyone at Enghouse continued success in the future. With that, I'll turn the call over to Steve.
OPERATOR (Operator)
Folks, you're back.
Steve Sadler, Chairman and CEO
Are we back?
OPERATOR (Operator)
Yes, you are, Steve. Looks like we had a bit of technical difficulties.
Steve Sadler, Chairman and CEO
Okay. I think Rob was just going to hand it over to me.
Rob Medved, Chief Financial Officer
Correct, Steve. I did.
Steve Sadler, Chairman and CEO
Okay. Well, thanks, Rob. At least we know there was not anything from Russia or something over there in Croatia doing damage to us, because we still hear you. That's good. As noted in our last conference call, the markets which we operate in continue to be challenging with respect to AI, which Rob mentioned. Although there's a lot of interest and promotion by major AI players, it continues to be difficult to monetize AI investment in our markets.
We continue to explore and use AI leading models for internal productivity and building practical solutions which provide a return on our investments. Monetizing AI with customers, like the many solutions noted in our last quarterly call, continues to improve to benefit both ourselves and our customers. With respect to capital deployment, there's not been much change since the last quarter. We continue to investigate a lot of opportunities in the private and public markets in our business sectors and continue to find that private market valuations are smaller but also are at a premium to public market valuations.
Although we investigated a number of opportunities, no new acquisitions were completed in the quarter. We continued to purchase our own Enghouse Systems shares using our internally generated funds under the TSX-defined normal course issuer bid. We believe the purchase of our own shares is a good use of our funds and better value in many cases than the acquisition opportunities that we are seeing, especially in the private markets. I would now like to open the call to questions.
OPERATOR (Operator)
Ladies and gentlemen, we will now begin a question-and-answer session. If you would like to ask phone questions, you will need to press star-1 on your telephone keypad. Again, that will be star, then the number 1 on your telephone keypad. And if you would like to withdraw your question, just press star then the number 2. Your first question comes from Erin Ka from CIBC. Please go ahead.
Erin Ka, Analyst at CIBC
Hi, good morning. Thanks for taking the questions. Maybe just to start with the demand environment, SaaS and maintenance revenue increased sequentially this quarter, which was good to see. And we've talked about cautious customer spending for a few cycles now. Just wondering if you're starting to see any signs there of normalization or stabilization. I believe Rob mentioned some churn moderated in the quarter and some renewals improved. So maybe if you can just expand on what you've been seeing there.
Steve Sadler, Chairman and CEO
Yeah, I would say, Erin, it's about the same as it has been in the past. You know, our quarters can vary a little bit up or down, so I don't really see any big improvement at this stage in the marketplace. It is like it has been for the last few quarters.
Erin Ka, Analyst at CIBC
Okay, thanks, Steve. And then maybe just on the profitability side, you know, good to see the EBITDA margin in the quarter as well. You've been taking cost actions for several quarters now. So just on that, do you think there's still meaningful efficiency opportunities remaining, or are we starting to approach a point where future margin gains will require revenue growth to achieve them?
Steve Sadler, Chairman and CEO
Yeah, I'm not sure the revenue growth is the answer for margin gains because it's a tough market and, as you probably know, some of our major competitors are in a difficult financial situation. So they're keeping margins down, trying to get some revenue basically to survive. And these are pretty large competitors with a billion, like a billion plus in revenue. So I don't see the cost reductions in improving margins that way. Internally, as Rob mentioned, we did some of the restructuring that you see in the quarter right at the end of the quarter.
So that will benefit future quarters. It didn't really benefit this quarter, and it takes time because you give notice periods and then you talk to people. It's unfortunate that we have to do that. But that's just the way the market is today, and we match cost to revenue, so we continue to do so.
Erin Ka, Analyst at CIBC
Thank you, that's helpful. Maybe just one last one on the leadership changes then, and congratulations to Rob and Vin on the promotion here. Just on authority and any changes regarding acquisition evaluation, financial oversight—how are you thinking about Vin's promotion here to VP Finance and the M&A evaluation team?
Steve Sadler, Chairman and CEO
Yeah, the acquisition teams are both the same. They're working hard on many opportunities, but the environment's quite a difficult one because there's a lot of risk. So you’ve got to be careful what you buy so you don't buy something that's not going to produce the return that we've committed for shareholders. On our website and elsewhere, we have a high return on investment, generally at 20% or higher. We're continuing to do that. We're not trying to rush to make the revenue look better by buying things that won't give us the return that we need.
But there are a lot of opportunities out there. It is probably a more difficult environment than people understand, especially for the medium and smaller-sized companies, and larger companies are having difficulties as well, and it's showing up somewhat in their marketplace. But they're very large, which increases the risk. You don't want to do a large error. You like to do at least a medium or a smaller error. So we're very conscious of that. We try to avoid mistakes, shall we say?
OPERATOR (Operator)
Your next question comes from Kevin McFay from UBS. Please go ahead.
Kevin McFay, Analyst at UBS
Great. Thanks so much, and good morning. Hey, good to see, you know, some of the cost adjustments. Good morning. Hey, good to see the cost adjustments. I wonder, can you help us understand where are you in that journey, and is there any way to think about what the business is sized for from a revenue perspective in terms of, you know, is the adjustment factor the new normal or just, I guess, how are you thinking about those cost adjustments, and should we see some more?
Steve Sadler, Chairman and CEO
You know, we really always have taken the approach we match cost to revenue. Unfortunately, as you noted, our revenue over several quarters—though it happens to be up this quarter over last quarter. But we had projected before that we still—our margin dropped last quarter, and we had to get it back to what we see as more normal, which is at like 25% EBITDA level. So, yeah, to answer your question, it depends what happens in the marketplace. We do match cost to revenue and, you know, hopefully the revenue has stabilized and can grow, but it may not have.
It's a difficult market for us right now in all the markets. The contact center market is generally difficult and again some think it's AI. It's really not AI causing a lot of it. What's causing it is major—I mean billion-dollar—contact center solution providers hit receivership or being taken over by creditors. So they're pretty desperate, and that makes it tough in a market to compete against because they have to get the revenue to keep going, and they probably are doing it still at a loss.
We are profitable. We tend not to jump into that game just to get the revenue higher and lose or have less profitability. So we manage to profitability, not to revenue.
Kevin McFay, Analyst at UBS
That's helpful. And Steve, I wonder, could you give us a sense—AI as a percentage of revenue—and one of the things we're kind of focused on is we're more than one year into this AI journey and the clients haven't changed the behavior and, in all likelihood, probably aren't going to change nearly as much as what the sector's discounting. But if you think about that thought process, is there anything from a client perspective that gives you more confidence?
Because I happen to agree with you that I don't think it's going to be nearly as meaningful as what the stocks are discounting. But any thoughts as to goal posts you can point to, whether it's renewals or just, again, as these competitors go through the adjustment process on the receivership—any sense of when we start to come out of this malaise, I guess, for lack of a better word?
Steve Sadler, Chairman and CEO
You know, I think there's lots of different views on that. I might have a—contribute to some of the others because there's a lot of promotion of AI but not a lot of results, except for the platforms where everyone's experimenting, doing proof of concepts. Studies that I've seen show these proof of concepts rarely provide a return on investment. The number I saw from an MIT study was 95% do not add any value at this point in time. But we're new in the game, so you've got to be in the game, you’ve got to play, you’ve got to keep trying things because you never know when you've hit a very good one.
But right now AI is just like all technology in the past—used to be the cloud was a technology. Technology has a history of coming out with new things, and it takes some time for them to produce results. And you’ve got to keep experimenting a little bit until you find the right path forward. So right now internally we're using it; it's providing some help in getting our costs down for sure. I'm sure that's the same with customers, but putting in a product that a customer buys, not so much.
We don't see that yet. We still experiment with it. But customers generally will do their own or try their own. And again, most of them aren't producing results in enterprises. It's quite different in different markets. If you're in the film industry and you can use AI to automate images, et cetera, that's probably quite good. If you're in retail, it's probably quite good. But in the areas that we're in, it's still challenging, but there's potential there and therefore we've got to keep up with it.
Kevin McFay, Analyst at UBS
That makes a lot of sense. One more for me if I could. It was great to see that the previously delayed professional services reengage. As we think about that as a proxy for future revenue, where does that surface on the income statement in terms of lines of revenues that professional services starts to—obviously it sounds like that occurred in the quarter—where will we see the transition to other parts of the revenue stream?
Steve Sadler, Chairman and CEO
You know, it's interesting, the professional services can be seasonal. We have a fair bit of our business in Europe. They take a lot of time off in the summer—a lot more than the Americans do—so professional services drop sometimes down a little bit then. But on the other hand, as you go to SaaS and you go to in the cloud, it's more of a standard system. You're not customizing as much as when it was on-prem for a particular customer. So professional services generally, in a cloud environment, will decline.
So we've gone through a lot of that already because we have about 70% of our—just under 70% of our revenue. Hello. Are we back? Okay. Well, technology is interesting. Let's go back to the questions. I guess that's why you've got to be careful on all automated technology taking over everything, because sometimes it doesn't work very well. Question.
OPERATOR (Operator)
Your next question comes from Steven Lin. Please go ahead.
Steven Lin, Analyst
Hi, good morning. Could you hear me okay?
Steve Sadler, Chairman and CEO
Yep. You're good. I hope we stay good.
Steven Lin, Analyst
Okay, perfect. Thank you very much. Thanks for taking the questions. Maybe start off with, can you help us unpack the churn picture a bit—like how much of churn is still coming from acquired business like Lifesize versus your existing customer base? And then are you seeing any signs of stabilization in either bucket? And then a quick one on the AI front—you guys set up dedicated AI groups in both IMG and AMG earlier this year. Just wondering how are the conversations going, how customer engagement is tracking, and then whether some AI offering is in the pipeline coming up.
Steve Sadler, Chairman and CEO
I think you've asked too many questions for me to remember them all. But churn is still an issue. Again, some of it comes from acquisitions, some of it's just general in the marketplace. Remember what I said is major competitors—like billion-dollar revenue, especially in the IMG market, which is our contact center market—are in difficulty. And it's—think of a retail store that gets in difficulty. They start lowering all prices, and that attracts some customers.
But there's also risk involved in going with a company like that. But it gets them to think about what they're doing. So churn is continuing. It's still there. It's a little lower—when you say from the acquisitions, we're mostly built by acquisitions, so everything sort of was an acquisition at one time for the last 10 years. But again, some of it—especially Voice, not Voice—Video is still part of our IMG group, and it's a tough market right now.
So it continues like it was. It's a little bit better. But I wouldn't say it's improved drastically.
Steven Lin, Analyst
All right, appreciate the color on that. And then just the second part to the question will be on the AI front—just how conversations are happening with customers and how customer engagement is tracking.
Steve Sadler, Chairman and CEO
So we have two groups, one in AMG and one in IMG, that do AI. We've got some projects. We had an interesting one that we got in the quarter, but it's all small. It's nowhere near the promotion that you see in the marketplace—like they aren't all rushing to it. It's hard to get a return, and the token costs have gone up, or the usage of it has gone up, and they're eating through their budgets pretty quick doing some of these proofs of concepts. So we find it interesting.
We find it helps internally for us because we try and do practical solutions, but we don't see a huge uptake in our customer base. That could be the areas we're in. Doesn't mean it doesn't happen in films or in other places. But in our products we don't see a huge uptake. That could change in the future, so you have to be in the game and you have to understand how to do it so you can react to things as they change, like every day. I heard somewhere today that everyone's going to be eliminated totally in two years.
Like, I just don't see it. Maybe I'm missing something, but I heard that about driverless cars 10 years ago, and looking out the window right now, I don't see any on the road. There are some somewhere, but they're not on the road here in Toronto where I am. Maybe they're on the road in Croatia where Rob is, I have no idea. But it's something you're going to be in. Everyone's talking about it, but monetizing it—unless you're a platform or a chip maker—is still difficult, as far as we can tell, in the areas that we're in.
Steven Lin, Analyst
Appreciate the color, and I guess switching gears a little bit—besides the private market valuations at a premium to public factor that you mentioned earlier—wondering any other constraint on the pace of deals? And then how would you characterize the current kind of M&A pipeline?
Steve Sadler, Chairman and CEO
You know, the M&A pipeline is quite large. We have a lot of activity going on. We do take risks into consideration. And just think of all what you said on AI—are they going to be disruptive in some of the areas that we're looking at? So it takes a little more thinking and a little more due diligence to make sure we don't do a bad deal. We've always taken pride in the fact we've generally done good deals and since got a return for our investors. So there's actually more opportunities than usual, but there's more risk for all the reasons that we've talked about on the call today than usual as well. So we're trying to avoid a mistake, but there's lots of opportunities. We should be doing more. The private companies are smaller, which is less risk. When you're smaller you can make a mistake; it isn't a huge one. The public companies are huge and bigger, but they're having trouble mainly because of the public markets.
And no one is willing to put new money in if you're not making money and you have debt—to get new money in the markets we're in is very difficult. So we're in quite a good position because of our financial resources. But it makes the market tough to get new business because others who are more desperate will lower prices because they have to get some revenue in to support the cost that they have. We tend to take the other approach of, rather than rushing to take revenue that'll hurt us, maybe in the long run we've taken our costs down to match to the revenue that we have and are going to have.
Steven Lin, Analyst
Thank you. And then just a final one from me on the restructuring charges. Enghouse Systems took a fairly sizable 4.6 million this quarter. It seems like toward the end of the quarter maybe you could give us some color, more detail on where the cost cuts are being made, and then whether, from a margin perspective, there's room to further improve and right-size and improve the margins.
Steve Sadler, Chairman and CEO
Okay. They’re made in various areas, of course. As our customer support and our revenue drops, we match to it. So we generally have not taken out much costs in sales because we’re trying to improve that area. Where we’ve taken out more costs in that number is in R&D. We have some older products where, you know, we’re trying to concentrate more on our go-forward products versus our regional products that we’ve had for quite a time. And they’re good products, they still work, but we don’t have to develop a lot of things new there because the customers are happy with what they have.
So in the last reduction, which was done towards the end of July, you’ll find our R&D, which is, you know, nearly 20% of our revenue — that’s quite high for the industry. So we did some reductions in that area. That was the majority of where the cost reduction came from. I could say, like many others, "AI — hey, we’re using it, it’s safe." It’s not true though, so I don’t do that. It’s generally we had to fine-tune that, looking at putting more emphasis on our go-forward products and the more regional products that we’ve had for some time.
We still want to make sure we give good service to the customers, but we’re not doing a lot of new things in them except for new products that we’re tying to the platforms that we have.
Steven Lin, Analyst
Thank you very much. I’ll pass it.
OPERATOR (Operator)
Again, if you would like to ask a question, please press Star then number one on your telephone keypad. For your next question, from David Kwan from TD Cowen, please go ahead.
David Kwan, Analyst at TD Cowen
Thanks. So, Steve, you mentioned that the restructuring happened late in the quarter, so there was modest benefit to margins in Q3. Should we expect margins to improve from these levels in Q4 and into 2027?
Steve Sadler, Chairman and CEO
When you talk about margins, I think about it differently. There’s a cost of revenue. We are working to improve that, to make that better. A lot of people who’ve gone into the cloud use a lot of third-party products and have a high cost of revenue, much higher than when it was on-prem. So we’ve worked on that side — that’s what we see as margin. And then below, to get to EBITDA, you have all your costs of professional services, you’ve got your costs of sales, you’ve got financial costs, et cetera.
We trim those back, again, to match to the revenue that we have. We constantly look at doing this. Although you say there’s costs at the end of the quarter, we still have people who, especially in Europe, have to work out their notice period. So again, it takes a little bit of time. So you’ll see some of the savings this quarter and next quarter because some notice periods are quite long. So we don’t just take all that cost and do it right away. We finish off projects we’re working on, especially in R&D. So again, we hope to see some savings, and hopefully our revenue doesn’t go down to cause more issues in that area. But it is a tough environment. And again, if you look at, let’s say, the IMG side — contact center side — big billion-dollar companies are in financial difficulty, and so they’re hustling to do something. And again, it’s hard to get money because investors are not investing in that because of the promotion and image that AI may take it all over.
We don’t see that, but one never knows. You’ve got to make sure you’re prepared for anything that can come up when a technology’s at stake, because it changes quickly and you’ve got to be ready for it.
David Kwan, Analyst at TD Cowen
Do you think that getting margins back into the high 20s is realistic, or are you kind of targeting something around the current levels in the mid-20s?
Steve Sadler, Chairman and CEO
I would say mid-20s is more realistic now, again for the very comments I just made. The competition are being active because they need — they have issues. And their issue is they can’t really get more financial resources easily. The marketplace is not rewarding the area. So if you have debt and you’re not making money, you’ve got a problem. Fortunately, we have cash and we make money, so we don’t have that problem. But I don’t want to have that problem.
In other words, we’ve got to keep watching and matching our costs to revenue. But it’s still a tough market, there’s no doubt about it.
David Kwan, Analyst at TD Cowen
Tough one. Do you expect any more material restructuring in Q4, or is what happened at the end of July kind of the big restructuring work for now?
Steve Sadler, Chairman and CEO
We’re hoping the July one has helped us going forward and has done what we need to do. But again, it depends on the market, the revenue, and all the things that are happening out there these days. We match cost to revenue. I’m hoping that’s done, but if it isn’t done, we may have to look at some more. But we don’t try and keep doing it. In other words, we try to do it once. And again, a lot of it was on the R&D side, which we hadn’t done for quite a while.
If you look at the competition, you’ll see they can run around 12–13% of revenue for their R&D expense. We’re closer to 20, 19, so we’re a little high. Some of that we should be a little higher because we have a different model or different solutions in different geographical regions, but we’re a little bit too high. And so we’ve started to say, okay, it’s time to fix some of that. And again, obviously spending that extra money wasn’t getting us the extra revenue.
So it’s a matching of costs and revenue, and no one likes to do it, but that’s what we have to do. And we don’t want to be in the position of some of our major suppliers. You know, you can talk Avaya, you can Mitel — they all have some difficulties, and, you know, we’ve seen quite a few more, even 200–300 million dollar companies, especially in the contact center market. For whatever reason, it’s a more mature market. But also, if you look at the telcos — that’s our IMG or networks area — think of Bell, think of Telus, look how they’re doing.
That’s pretty standard we’re seeing in that market as well. So we’ve got a bit of a perfect storm against us. We have to manage for that, and we expect we’ll come out ahead of the game, but it’ll take a little bit of time.
David Kwan, Analyst at TD Cowen
That’s helpful. Just two more questions. One, I think last quarter you alluded to some deals that might have been delayed there. So did this quarter benefit from some of those slipped deals and maybe help lead to that sequential improvement in revenue?
Steve Sadler, Chairman and CEO
I usually don’t talk about slipped deals because then I find they slip forever. Okay? In other words, they slip, but then they come in and new ones slip. So I really think we’ve done pretty well in the revenue growing over last quarter. I’m not sure where that goes forward because, again, the competition have difficulties and they’re making — how much margin decline do you want to take to get revenue versus make money on the bottom line? That’s something we have to deal with every day.
David Kwan, Analyst at TD Cowen
Thanks. And then one last question just on capital allocation and the balance sheet. So I was wondering, how much cash do you think is enough to fund the business and provide enough flexibility to fund acquisitions should things kind of turn around? I’m just trying to get a better sense of when you might look to redeploy your cash in a more significant way, like a special dividend or an SAP, given the tougher M&A environment. And just looking back, I think it was roughly five years ago when you paid the special dividend, you had less cash than you have right now.
So why not maybe pay a special dividend, or maybe do an SAB, especially given where the valuation is right now — multi-year lows?
Steve Sadler, Chairman and CEO
Our dividend is actually quite high right now — not because of the absolute dollar of the dividend, but because our stock price went down. Okay, so we’re at 7%. What other tech companies out there are paying 7–8% dividends? So I’m hoping that we can improve the stock price. I don’t think we have to improve, really, the dividend. We actually put a smaller dividend increase in this year to do buybacks instead of, because quite frankly, our stock price, in our opinion, is a good investment right now — probably better, and it hasn’t been like this for 10 years plus — probably better than some of, because we’re in the public markets, but it’s probably better than some of the acquisitions we’re looking at currently. But these things change pretty quickly. If there’s any — there’s lots of criticisms you can do about my career — it’s that we aren’t doing enough deals. I think there are deals out there that are good value, and it comes down to, if they’re larger ones, do I want to accept that risk? It’s tough in this market. Everyone thinks contact centers are going to be eliminated.
I’ve heard in one year — well, that didn’t happen because they said that a year ago. Then I’ve heard, well, three years, five years. I think AI in particular helps make the contact centers more productive and more responsive. But you’re going to need both. You’re going to need humans and you’re going to need better technology to help do contact centers. Remember, contact center is not inbound; it’s also outbound. We do both. We actually call it internally "communication centers" because we do both in- and outbound.
But there are challenges there for sure. Some of it is theoretical challenges and some of it are real. And sometimes you can’t tell the difference — what’s theoretical and could become real, or is it really real? Is it really happening? I think more and more people see AI — and always — as being technologies to help do better things and give better service. That’s how we see it. We see AI with humans, I guess you’ll say, working together to provide better service to customers.
And that’s how we’re approaching it right now.
David Kwan, Analyst at TD Cowen
That’s right. Thanks, and good luck, Rob.
Rob Medved, Chief Financial Officer
Thank you.
OPERATOR (Operator)
There are no further questions. I’ll turn the call back over to Stephen.
Steve Sadler, Chairman and CEO
Well, thank you, everybody. I know these are interesting times, to say the least. Sorry for the interruption — again, with technology, sometimes you get them with calls. But thank you for attending the call and your continued support. We understand a little bit of patience is hard to do sometimes, but we’re hopefully will prove to be the right thing for you to do, and shows a good positive cash flow and, overall, a strong debt-free financial position.
This is very good in this marketplace. We just need a little more visibility and certainty of where it’s all going. We look forward to our year-end conference call in December. Thank you for attending.
OPERATOR (Operator)
Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
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