Descartes Reports Record E-Commerce Revenues In The Fourth Quarter And In Fiscal 2000.

Business Editors

WATERLOO, Ontario--(BUSINESS WIRE)--March 7, 2000

37% Sequential License Revenue Growth to $6.6 Million in the

Fourth Quarter

243% Year Over Year Increase in E-Commerce License Revenues to

$12 Million

The Descartes Systems Group Inc. (Nasdaq:DSGX)(TSE:DSG), a leading supplier of business to business e-commerce solutions for e-fulfillment, today announced its fiscal 2000 fourth-quarter and year end results for the period ended January 31, 2000.

All dollar amounts are expressed in US currency and are reported in accordance with United States generally accepted accounting principles (US GAAP).

Revenues for the fourth quarter of fiscal 2000 (Q4 FY00) reached $12.2 Million up 16% from revenues of $10.5 Million in the third quarter of this fiscal year (Q3 FY00). License revenues increased to $6.6 Million in Q4 FY00 up 37% from $4.8 Million in Q3 FY00. In addition, license revenues from e-commerce, which represented approximately 80% of license revenues, increased sequentially by approximately $1.5 Million in Q4 FY00. Gross margins increased to 59% of revenues in Q4 FY00 up from 52% of revenues in Q3 FY00. Net loss for the quarter was $3.5 million or ($0.09) per share compared with a net loss of $4 Million or ($0.11) per share in Q3 FY00.

The company had net cash and short term investments at the end of the quarter of $57 Million.

"We are extremely pleased with our fourth quarter performance, both financially and in the marketplace." said Peter Schwartz, Descartes' Chairman and CEO. "We have firmly established our position as the B2B e-commerce logistics leader. Our innovative e-fulfillment solutions and our rapidly expanding Global Logistics Network are enabling customers to, radically improve customer service, reduce fulfillment costs, and create brand new businesses and revenue streams around e-fulfillment. We will continue to move aggressively to capitalise on our first mover advantage in this market."

Schwartz continued "We are focused on growing our Global Logistics Network, which serves as an ecosystem around which our customers build their own communities and participate as part of a broader federated network. We believe this differentiates Descartes from other vendors who are simply providing tools to connect trading partners together, and establish Descartes' position as a first mover in this new era of internet logistics."

The Company's successful shift to e-commerce in fiscal 2000 was reflected in the growth in e-commerce license revenues, which increased 243% to $12 Million in fiscal 2000 over the $3.5 Million recorded in fiscal 1999. Revenues in fiscal 2000 reached $43.7 Million, a decrease of 10% from revenues of $48.8 Million in fiscal 1999. License revenues were $18.8 Million in fiscal 2000 down from $23.1 Million in the prior year. Net loss for the year $21.8 Million or ($0.59) per share compared with a net loss of $25.9 Million or ($0.79) per share in fiscal 1999. "In fiscal 2000, we successfully transitioned to an e-commerce business model," continued Mr Schwartz. "More than 80% of our license revenues are now e-commerce revenues, where customers are using our software for B2B and B2C e-commerce. Going forward, we anticipate rapid growth in a subset of these e-commerce revenues comprised of recurring subscription and transaction based revenues, or, as we refer to them Network Revenues. Our expectation is that Network Revenues will emerge as a significant portion of our combined license and network revenues this year."

Fourth Quarter Highlights: A Growing Descartes Ecosystem

This quarter, Descartes strengthened its position as a B2B e-commerce ecosystem provider through key partnerships and through the expansion of its Global Logistics Network. Fourth quarter highlights include:

Growth of Global Logistics Network -- Descartes' Global Logistics

Network, the community of participants connected via Descartes'

common collaborative logistics infrastructure, continues to

expand rapidly. Webvan, Fosters, Medical Logistics, Inc. as well

as new transportation exchanges are among the customers that have

licensed the rights to Descartes' software, hosted services and

information infrastructure in Q4. The Descartes Global Logistics

Network provides Descartes' customers with automatic access to an

Internet trading community and is designed to create market

efficiencies and enable global economies of scale between

shippers, receivers, carriers, freight forwarders, third party

logistics providers, e-marketplaces, vertical portals, and

transportation exchanges. Descartes' customers can use the

network for private, semi-private and public business processes.

Partnerships -- In the fourth quarter Descartes formed a global

strategic alliance with Cap Gemini Group, a leading management in

IT consulting company. Cap Gemini is now providing business

process consulting and systems integration for Descartes'

DeliveryNet solutions. Descartes will also become a partner in

Cap Gemini's Solutions Center for Integrated Supply Chain

Management.

In Q4, Descartes also announced that GERS Retail Systems, the leading supplier of enterprise-wide solutions for the business to consumer marketplace, will offer Descartes' wireless routing and scheduling optimization solutions to enable both its traditional and e-business customers to achieve greater efficiencies in their fulfillment operations and reach higher levels of customer service. The Descartes solutions will be integrated into the GERS Point-of-Sale system.

Other Highlights

Financial Strength -- In January, the Company raised an additional $47

Million in a bought deal financing, strengthening the balance

sheet for growth.

Recognition -- On January 26, 2000, ARC Advisory Group - a leading

e-business analyst firm providing strategic planning and

technology assessment services to leading worldwide companies -

ranked Descartes as the number one e-fulfillment software and

services provider for the transportation market, commanding a

market share of almost 36% in this emerging, fast growing

segment.

Post Period notes

Expanding Footprint -- On February 24, 2000 Descartes announced the

acquisition of Pittsburgh based E-Transport, Incorporated a

leading provider of hosted software and logistics exchange

solutions for the multi-modal transportation market. This

acquisition closed on February 29. The acquisition enhances

Descartes' leadership position in e-fulfillment by providing new

hosted transportation software and enabling tools for exchanges.

E-Transport's hosted pricing database solutions are currently

used by over 80% of the global ocean cargo carriers. The

acquisition further expands the reach of Descartes' Global

Logistics Network, creating what the company believes is the

largest Internet logistics network in the world and providing

Descartes customers with automatic access to an Internet trading

community.

About Descartes

Descartes is a leading provider of end-to-end logistics solutions for B2B e-commerce. Descartes' e-fulfillment software and exchange solutions enable companies to create high-performance customer fulfillment networks - aka DeliveryNets(tm). DeliveryNet solutions empower organizations to deliver reliable, responsive customer service in a profitable manner and to create innovative new products and services. DeliveryNet solutions leverage Descartes' Internet-based Global Logistics Network to integrate the internal and external logistics and fulfillment processes of shippers, receivers, carriers, logistics service providers, e-marketplaces, vertical portals and transportation exchanges. The result is a global e-fulfillment information infrastructure that provides cost saving and revenue opportunities for businesses that need to manage physical product movement. Descartes products are licensed today by more than 850 companies in 35 vertical industries and 50 countries worldwide. For more information about Descartes, visit http://www.descartes.com.

All registered and unregistered trademarks mentioned in this release are the property of their respective owners.

This release contains statements relating to market and customer dynamics, future operating strategy, revenue and expense growth, revenue composition and other matters that constitute forward-looking statements that involve risks and uncertainties. The Company's actual results may differ from the results discussed in the forward-looking statements. Factors that may cause such a difference include, but are not limited to: risks associated with uncertainty and unanticipated delays in closing customer orders; uncertainty associated with the shift from enterprise applications to e-business markets; dependence on and increasing use of the Internet and the growth of electronic commerce, risks associated with acceptance of licensing models for electronic commerce market, competition or consolidation within the industry; management of growth; the Company's dependence on certain industries, markets and clients; the Company's dependence on key personnel, proprietary technology and a limited number of products; acquisitions; software defects; the ability to enhance current products and to introduce new products in a timely fashion at competitive prices; third party claims of infringement; reliance on third party licenses; limited profitability; lengthy sales and implementation cycles and increasing size of orders; and the potential volatility of share prices; potential fluctuations in quarterly results; the need to enhance management systems; currency risk; and international sales; and other factors discussed in the section entitled, "Risk Factors" in documents filed with the Securities and Exchange Commission, the Ontario Securities Commission and other securities commissions across Canada.

THE DESCARTES SYSTEMS GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS                             US GAAP
(in thousands)                                          (IN US$)

                                    January 31,    January 31,
                                          2000           1999

                ASSETS

CURRENT ASSETS
   Cash and cash equivalents       $    31,149    $    17,556
   Short-term investments               25,835         11,290
   Accounts receivable - trade          18,906         19,238
   Accounts receivable - other             918            424
   Prepaid expenses and
    deferred charges                     3,707          5,807
                                        80,515         54,315

CAPITAL ASSETS, net                      4,921          4,739

INTANGIBLE ASSETS, net                   4,923          6,199
                                   $    90,359    $    65,253

                LIABILITIES

CURRENT LIABILITIES
   Bank indebtedness               $         -    $     3,134
   Accounts payable                      3,886          4,101
   Accrued liabilities                   6,020          6,546
   Income taxes payable                     41             39
   Deferred revenue                      4,751          4,262
                                        14,698         18,082

                STOCKHOLDERS' EQUITY

   Common shares                       159,831        110,393
   Additional paid-in capital            3,126          3,126
   Unearned deferred compensation         (390)          (627)
   Accumulated other comprehensive loss   (563)        (1,147)
   Deficit                             (86,343)       (64,574)
                                        75,661         47,171
                                   $    90,359    $    65,253


THE DESCARTES SYSTEMS GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS                   US GAAP
(in thousands, except share and per share data)         (IN US$)

                      Three Months Ended          Year Ended
                           January 31              January 31
                        2000        1999        2000        1999

REVENUE
  Software licenses $  6,577    $  7,533   $  18,792   $  23,086
  Services             5,461       5,447      22,047      17,366
  Hardware               147       1,782       2,826       8,306
    Total revenue     12,185      14,762      43,665      48,758

COSTS AND EXPENSES
  Cost of software
   and hardware          659       1,514       3,978       7,460
  Cost of services     4,295       4,545      19,701      15,291
  Sales and marketing  4,086       4,745      19,255      13,747
  Research and
   development         3,942       3,907      15,028      11,318
  General and
   administration      2,592       1,254       6,792       5,008
  Amortization of
   intangibles           352         967       1,407       3,509
  Write-off of intangibles -           -           -      16,458
  Purchased in-process
   research and
   development             -         498           -       2,765
    Total costs
     and expenses     15,926      17,430      66,161      75,556

LOSS FROM OPERATIONS  (3,741)     (2,668)    (22,496)    (26,798)

OTHER INCOME (EXPENSE)
Interest expense         (85)        (98)       (411)       (268)
Interest revenue         325         345       1,138       1,131
                         240         247         727         863

LOSS BEFORE
 INCOME TAXES         (3,501)     (2,421)    (21,769)    (25,935)

INCOME TAXES
       Current             -           -           -           -
       Deferred            -           -           -           -
                           -           -           -           -

NET LOSS           $  (3,501)  $  (2,421)   $(21,769)   $(25,935)

NET LOSS PER SHARE
  BASIC AND DILUTED $  (0.09)   $  (0.07)   $  (0.59)   $  (0.79)

WEIGHTED AVERAGE
 SHARES
 OUTSTANDING BASIC
 AND DILUTED      37,556,387  33,314,937  36,711,861  32,932,209