SaaS Revenue soars 48% in the third quarter, SaaS RPO reaches $157 million

MONTREAL, Feb. 29, 2024 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the third quarter fiscal year 2024, ended January 31, 2024. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

TECSYS (PRNewsfoto/TECSYS)

"Our third quarter represents another record quarter led by SaaS revenue and included the addition of five new logos, three new hospital networks, ongoing customer SaaS migrations, and the biggest bookings quarter of the fiscal year so far," said Peter Brereton, president and CEO of Tecsys. "Our SaaS margins continue to expand and the resulting impact on our overall margin profile is becoming evident. We are seeing activity across all key verticals and through all commercial channels, with rising demand and pipeline expansion. This solid financial performance is bolstered by a market that is showing no signs of slowing down."

Mark Bentler, chief financial officer of Tecsys, added, "After our third quarter we embarked on a strategic restructuring designed to improve profitability over the long term. As part of this effort, we reduced our workforce by about 4% across a range of departments. This restructuring is expected to result in one-time costs of around $2.3 million, which will be recorded in our Q4 fiscal 2024 financial statements and result in anticipated annual operating cost savings of around $4.6 million heading into fiscal 2025."

Third Quarter Highlights:

  • SaaS revenue increased by 48% to $14.2 million, up from $9.5 million in Q3 2023.
  • SaaS subscription bookingsi (measured on an ARRi basis) decreased by 17% to $4.9 million, compared to $5.8 million in the third quarter of fiscal 2023.
  • SaaS Remaining Performance Obligation (RPOi) increased by 23% to $157.2 million at January 31, 2024, up from $128.3 million at the same time last year.
  • Annual Recurring Revenue (ARRi) at January 31, 2024, was up 16% to $87.2 million compared to $75.4 million at January 31, 2023.
  • Professional services revenue was down by 4% to $13.0 million compared to $13.6 million in Q3 fiscal 2023.
  • Total revenue excluding hardware revenue was $36.2 million, 11% higher than $32.5 million reported for Q3 last year, while total revenue rose 13% to reach a record $43.8 million.
  • Gross margin was 45%, compared to 44% for the same period of fiscal 2023.
  • Total gross profit increased to $19.9 million, up 17% from $17.0 million in Q3 fiscal 2023.
  • Operating expenses increased to $18.7 million, higher by $2.7 million or 17% compared to $16.0 million in Q3 last year.
  • Profit from operations was $1.2 million, up from $1.0 million in the same period of fiscal 2023.
  • Net profit was $0.8 million or $0.05 per share on a fully diluted basis in Q3 fiscal 2024, compared to net profit of $0.9 million or $0.06 per share for the same period in fiscal 2023.
  • Adjusted EBITDAii was $2.6 million compared to $2.8 million reported in Q3 last year.
  • In the third quarter of fiscal 2024, Tecsys acquired 50,400 of its outstanding common shares for $1.5 million as part of its ongoing normal course issuer bid. 

Year-to-date performance for first nine months of Fiscal 2024:

  • SaaS revenue increased by 43% to $37.7 million, up from $26.3 million in the same period of fiscal 2023.
  • SaaS subscription bookingsi (measured on an ARRi basis) decreased by 16% to $10.5 million, compared to $12.5 million in the same period of fiscal 2023.
  • Professional services revenue was $40.8 million compared to $40.7 million in the same period of fiscal 2023.
  • Total revenue excluding hardware revenue was $105.4 million, 12% higher than $94.4 million reported for the same period of fiscal 2023, while total revenue rose 14% to reach $127.3 million.
  • Gross margin was 45% for the first nine months of fiscal 2024 compared to 44% for the same period in fiscal 2023.
  • Total gross profit increased to $57.8 million, up 19% from $48.4 million in the same period of fiscal 2023.
  • Operating expenses increased to $55.2 million, higher by $8.9 million or 19% compared to $46.3 million in the same period of fiscal 2023.
  • Profit from operations was $2.6 million, up from $2.2 million in the same period of fiscal 2023.
  • Net profit was $1.6 million or $0.11 per fully diluted share, flat compared to the same period in fiscal 2023.
  • Adjusted EBITDAii was $6.8 million compared to $7.0 million reported in the same period of fiscal 2023.

"Based on our Q3 results and our Q4 outlook, we are revising our full year fiscal 2024 guidance to tighten the range on total revenue growth, tighten the range and increase the high end on SaaS revenue growth and tighten the range on short-term Adjusted EBITDA margin guidance," continued Bentler. "We expect to provide updated guidance for fiscal 2025 as part of our Q4 and full year fiscal 2024 earnings release."

Financial Guidance:

Tecsys is revising financial guidance as follows:






Current FY24
Guidance

Previous FY24
Guidance

Reiterate FY25
Guidance

Total Revenue Growth

11-14%

10-15%

n.a.

SaaS Revenue Growth

37-38%

35-37%

n.a.

Adjusted EBITDA ii Margin

5-6%

4-6%

8-9%

On February 29, 2024, the Company declared a quarterly dividend of $0.08 per share to be paid on April 11, 2024, to shareholders of record on March 21, 2024.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.

i See Key Performance Indicators in Management's Discussion and Analysis of the Q3 2024 Financial Statements.

ii See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q3 2024 Financial Statements.

Third Quarter Fiscal 2024 Results Conference Call
Date: March 1, 2024
Time: 8:30am EST
Phone number: 800-935-9319 or 416-981-9016
The call can be replayed until March 8, 2024, by calling:
800-558-5253 or 416-626-4100 (access code: 22029167)

About Tecsys

Since our founding 40 years ago, much has changed in the realm of supply chain technology. But one thing has remained constant; by developing dynamic and innovative supply chain solutions, Tecsys has been equipping organizations for growth and competitive advantage. Serving healthcare, distribution and converging commerce industries, and spanning multiple complex, regulated and high-volume markets, Tecsys delivers warehouse management, distribution and transportation management, supply management at point of use, and retail order management, as well as complete financial management and analytics solutions.

Tecsys' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS. For more information on Tecsys, visit www.tecsys.com.

Forward-Looking Statements

The statements in this news release relating to matters that are not historical fact are forward-looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of Tecsys Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with Tecsys Inc.'s business can be found in the MD&A section of the Company's annual report and the most recently filed annual information form. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR+ (www.sedarplus.ca).

Copyright © Tecsys Inc. 2024. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

Non-IFRS Measures

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods. The exclusion of interest expense, interest income and income taxes eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, share-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods eliminates the non-cash impact of these items.

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-GAAP financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.

The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.

 


Three months

ended January 31,

Nine months

ended January 31,

Trailing 12 months

ended January 31,

(in thousands of CAD)


2024


2023


2024


2023


2024


2023














Net profit for the period

$

759

$

888

$

1,590

$

1,643

$

2,036

$

4,229

Adjustments for:













Depreciation of property and equipment and right-of-use assets


355


476


1,116


1,335


1,556


1,850

Amortization of deferred development costs


147


135


436


351


581


438

Amortization of other intangible assets


356


411


1,146


1,201


1,548


1,583

Interest expense


45


92


136


389


153


567

Interest income


(260)


(221)


(782)


(475)


(993)


(532)

Income taxes


644


455


1,422


869


2,177


(242)

EBITDA

$

2,046

$

2,236

$

5,064

$

5,313

$

7,058

$

7,893

Adjustments for:













Stock based compensation


594


538


1,770


1,722


2,225


2,062

Gain on remeasurement of lease liability


-


-


-


-


-


(573)

Recognition of tax credits generated in prior periods


-


-


-


-


-


(617)

Adjusted EBITDAii

$

2,640

$

2,774

$

6,834

$

7,035

$

9,283

$

8,765

 

Condensed Interim Consolidated Statements of Financial Position
As at January 31, 2024 and April 30, 2023 (Unaudited)
(In thousands of Canadian dollars)




January 31, 2024

April 30, 2023

Assets






Current assets






Cash and cash equivalents


$

16,724

$

21,235

Short-term investments



16,486


15,835

Accounts receivable



24,772


22,900

Work in progress



3,389


1,734

Other receivables



530


523

Tax credits



5,330


5,338

Inventory



1,903


1,034

Prepaid expenses



9,270


8,193

Total current assets



78,404


76,792

Non-current assets






Other long-term receivables



901


363

Tax credits



5,900


5,368

Property and equipment



1,483


1,802

Right-of-use assets



1,352


1,708

Contract acquisition costs



3,864


3,738

Deferred development costs



2,627


2,254

Other intangible assets



7,996


9,287

Goodwill



17,294


17,467

Deferred tax assets



8,134


8,137

Total non-current assets



49,551


50,124

Total assets


$

127,955

$

126,916

Liabilities






Current liabilities






Accounts payable and accrued liabilities


$

21,772

$

21,669

Deferred revenue



30,697


30,388

Lease obligations



798


793

Total current liabilities



53,267


52,850

Non-current liabilities






Other long-term accrued liabilities



8


253

Deferred tax liabilities



1,222


1,255

Lease obligations



1,506


2,120

Total non-current liabilities



2,736


3,628

Total liabilities


$

56,003

$

56,478

Equity






Share capital


$

48,026

$

44,338

Contributed surplus



14,229


15,285

Retained earnings



9,037


10,832

Accumulated other comprehensive income (loss)



660


(17)

Total equity attributable to the owners of the Company



71,952


70,438

Total liabilities and equity


$

127,955

$

126,916

 

Condensed Interim Consolidated Statements of Income and Comprehensive Income
For the three and nine-month periods ended January 31, 2024 and 2023 (Unaudited)
(In thousands of Canadian dollars, except per share data)




Three Months Ended

January 31,

Nine Months Ended

January 31,




2024


2023


2024


2023

Revenue:










SaaS


$

14,160

$

9,544

$

37,727

$

26,343

Maintenance and Support



8,620


8,356


25,817


24,722

Professional Services



13,021


13,569


40,798


40,739

License



396


1,073


1,104


2,587

Hardware



7,626


6,375


21,841


16,841

Total revenue



43,823


38,917


127,287


111,232

Cost of revenue



23,893


21,909


69,512


62,787

Gross profit



19,930


17,008


57,775


48,445

Operating expenses:










Sales and marketing



8,223


7,349


24,539


20,302

General and administration



2,650


2,813


8,580


8,619

Research and development, net of tax credits



7,834


5,806


22,079


17,346

Total operating expenses



18,707


15,968


55,198


46,267

Profit from operations



1,223


1,040


2,577


2,178

Other income



(180)


(303)


(435)


(334)

Profit before income taxes



1,403


1,343


3,012


2,512

Income tax expense



644


455


1,422


869

Net profit


$

759

$

888

$

1,590

$

1,643

Other comprehensive income (loss):










Effective portion of changes in fair value on designated revenue hedges



4,101


2,368


1,101


515

Exchange differences on translation of foreign operations



(90)


742


(424)


934

Comprehensive Income


$

4,770

$

3,998

$

2,267

$

3,092

Basic and diluted earnings per common share


$

0.05

$

0.06

$

0.11

$

0.11

 

Condensed Interim Consolidated Statements of Cash Flows
For the three and nine-month periods ended January 31, 2024 and 2023 (Unaudited)
(In thousands of Canadian dollars)




Three Months Ended

January 31,

Nine Months Ended

January 31,




2024


2023


2024


2023

Cash flows from operating activities:










Net profit


$

759

$

888

$

1,590

$

1,643

Adjustments for:










Depreciation of property and equipment and right-of-use-assets



355


476


1,116


1,335

Amortization of deferred development costs



147


135


436


351

Amortization of other intangible assets



356


411


1,146


1,201

Interest expense (income) and foreign exchange (gain) loss



(180)


(303)


(435)


(334)

Unrealized foreign exchange and other



(452)


(273)


(1,050)


418

Non-refundable tax credits



(151)


(806)


(1,365)


(1,666)

Stock-based compensation



594


538


1,770


1,722

Income taxes



78


100


454


430

Net cash from operating activities excluding changes in non-cash working capital items related to operations



1,506


1,166


3,662


5,100

Accounts receivable



(4,175)


(2,480)


(1,950)


(6,870)

Work in progress



557


(288)


(1,662)


(359)

Other receivables



184


9


136


(221)

Tax credits



3,160


(1,224)


841


(3,353)

Inventory



213


(351)


(871)


(494)

Prepaid expenses



(304)


(1,291)


(945)


(1,473)

Contract acquisition costs



(401)


(388)


(261)


(718)

Accounts payable and accrued liabilities



3,890


1,478


597


1,614

Deferred revenue



(2,295)


(1,198)


327


4,455

Changes in non-cash working capital items related to operations



829


(5,733)


(3,788)


(7,419)

Net cash provided by (used in) operating activities



2,335


(4,567)


(126)


(2,319)

Cash flows from financing activities:










Repayment of long-term debt



-


(7,800)


-


(8,400)

Transfers from short-term investments



-


5,000


-


5,000

Payment of lease obligations



(195)


(148)


(593)


(570)

Payment of dividends



(1,177)


(1,093)


(3,385)


(3,131)

Interest paid



(45)


(92)


(136)


(389)

Issuance of common shares on exercise of stock options



423


15


3,067


112

Shares repurchased and cancelled



(1,532)


-


(2,205)


-

Net cash used in financing activities



(2,526)


(4,118)


(3,252)


(7,378)

Cash flows from investing activities:










Interest received



22


26


91


63

Transfers from short-term investments



18


-


40


-

Acquisitions of property and equipment



(190)


(279)


(455)


(510)

Acquisitions of other intangible assets



-


(62)


-


(62)

Deferred development costs



(309)


(130)


(809)


(597)

Net cash used in investing activities



(459)


(445)


(1,133)


(1,106)

Net decrease in cash and cash equivalents during the period



(650)


(9,130)


(4,511)


(10,803)

Cash and cash equivalents - beginning of period



17,374


21,331


21,235


23,004

Cash and cash equivalents - end of period


$

16,724

$

12,201

$

16,724

$

12,201

 

Condensed Interim Consolidated Statements of Changes in Equity
For the three and nine-month periods ended January 31, 2024 and 2023 (Unaudited)
(In thousands of Canadian dollars, except number of shares)

 



Share capital

Contributed

surplus

Accumulated
other
comprehensive
income (loss)

Retained
earnings

Total



Number


Amount

Balance, May 1, 2023


14,582,837

$

44,338

$

15,285

$

(17)

$

10,832

$

70,438

Net profit


-


-


-


-


1,590


1,590

Other comprehensive income:













Effective portion of changes in fair value on designated revenue hedges


-


-


-


1,101


-


1,101

Exchange difference on translation of foreign operations


-


-


-


(424)


-


(424)

Total comprehensive income


-


-


-


677


1,590


2,267

Shares repurchased and cancelled


(76,200)


(248)


(1,957)


-


-


(2,205)

Stock-based Compensation


-


-


1,770


-


-


1,770

Dividends to equity owners


-


-


-


-


(3,385)


(3,385)

Share options exercised


192,302


3,936


(869)


-


-


3,067

Total transactions with owners of the Company


116,102


3,688


(1,056)


-


(3,385)


(753)

Balance, January 31, 2024


14,698,939

$

48,026

$

14,229

$

660

$

9,037

$

71,952














Balance, May 1, 2022


14,562,895

$

43,973

$

13,176

$

(1,434)

$

12,968

$

68,683

Net profit


-


-


-


-


1,643


1,643

Other comprehensive income:













Effective portion of changes in fair value on designated revenue hedges


-


-


-


515


-


515

Exchange difference on translation of foreign operations


-


-


-


934


-


934

Total comprehensive income


-


-


-


1,449


1,643


3,092

 

Stock-based Compensation


-


-


1,722


-


-


1,722

Dividends to equity owners


-


-


-


-


(3,131)


(3,131)

Share options exercised


7,054


139


(27)


-


-


112

Total transactions with owners of the Company


7,054


139


1,695


-


(3,131)


(1,297)

Balance, January 31, 2023


14,569,949

$

44,112

$

14,871

$

15

$

11,480

$

70,478

 

SOURCE Tecsys Inc.

Copyright 2024 Canada NewsWire

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