Topicus.Com Inc V.TOI

Alternate Symbol(s): TOITF

Technology Software - Application

Topicus.com Inc. is a Canada-based provider of vertical market software and vertical market platforms to clients in a select group of public and private sector markets. The Company is engaged principally in the development, installation and customization of software and the provision of related professional services and support for customers across several diverse markets primarily in Europe. Its companies include Total Specific Solutions (TSS) Public and Topicus. Its Topics are engaged in acquiring, developing and managing businesses. Topicus is a provider of consumer centric platforms and common workspaces in the realms of finance, education, healthcare and social services by connecting organizations, professionals and end users. Its TSS software solutions offers its customers financial security, strategic guidance, and share their best practices so that they can be leaders in their respective domains. Its software solutions provide customers with real business value.

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Topicus.Com Inc

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Post by retiredcfon Feb 08, 2023 2:07pm

534 Views

Post# 35275047

RBC

At this point, they don't actually cover TOI (hence the not-rated). GLTA

February 7, 2023

Constellation Software Inc.
Read-through from Topicus’s Q4 results

TSX: CSU | CAD 2,370.01 | Outperform | Price Target CAD 2,600.00

Sentiment: Neutral

Topicus (TSX-V: TOI, not rated) reported Q4 revenue above our estimates on stronger organic growth. Constellation consolidates 100% of Topicus’s financials into its results. Consensus estimates are not available for Topicus, so we compare Topicus’s actual results against the estimates for Topicus in our Constellation model. Topicus’s Q4 revenue was €264MM (27% Y/Y), above our estimate of €247MM. The upside reflects organic growth at 6% Y/Y Q4, up from +3% Q3 and above the 3% in our model. On higher revenue, Topicus’s Q4 adj. EBITDA of €71MM (7% Y/Y, 15% Q/Q) was above our estimate of €67MM. Adj. EBITDA margins were flat Q/Q at 27.0% and in line with our estimate for 27.0%, though declined 500 bps Y/Y on higher staffing, travel, advertising, and contingent consideration.

Q4 M&A better than our M&A tracker, Q1 off to a strong start. Topicus deployed €12.7MM capital on acquisitions in Q4 (€10.5MM cash, €2.9MM deferred payments, net of €0.6MM acquired cash). Q4 M&A was above the €4MM in our M&A tracker, though below the €45MM in our model. Following Q4, Topicus has deployed €26MM on acquisitions in Q1 to date, which compares against €40MM in our Topicus model for all of Q1.

Neutral read-through to Constellation. The 300bps Q/Q improvement in Topicus’s organic growth is incrementally positive for Constellation; however, Topicus only equates to 14% of our Q4 revenue estimate for Constellation and Constellation’s organic growth tends to be more stable quarter to quarter than Topicus. Additionally, Topicus’s margins were flat Q/Q, which is consistent with our estimate for Constellation’s margins to be flat Q/Q at 26.9% after adjusting for Allscripts and a $30MM increase in contingent consideration in Q3.