TSX: ENGH (Fair Value Update)

            Ahead of the September 11, 2026 earnings release, we expected continued headwinds in the Interactive Management Group (IMG), offset by sustained growth in the Asset Management Group (AMG). Top-line pressure eased in Q3 2026, as both segments grew quarter over quarter, though overall growth remained weak compared with Q3 2025.

            The latest results showed quarter-over-quarter revenue growth in both IMG and AMG. Compared with our reference year, IMG increased 4.98% and AMG increased 12.0%; however, after adjusting for inflation, IMG continues to face pressure since the start of our coverage. We believe much of this weakness reflects uncertainty in contact-center operations, particularly around the development of artificial intelligence and its potential impact on the broader industry. Reduced investment appetite has created uncertainty and limited growth, pushing industry participants to compete primarily on price—one of the least attractive forms of competition, as it compresses margins and reduces profitability across the sector.

            In this environment, the companies most likely to endure and strengthen their position are those with modest financial leverage, limited fixed financial obligations, and resilient cash flows. Enghouse is well positioned in this respect, supported by a substantial base of recurring revenue. Although the company has historically relied on acquisitions as a growth strategy, management has indicated that current share repurchases offer more attractive returns for shareholders and that it is prepared to wait for greater industry clarity before pursuing growth-oriented acquisitions.

            We view Enghouse’s current position favourably and maintain our price target at $ 40.50.