RE:RE:Sylogist Turnaround?You make a reasonable point. The dividend was sustainable based on the profitability at that time. Since then the balance sheet has changed dramatically (a reduction of $65M in working capital in less than 4 years).The new weaker balance sheet would be even more constrained if the dividend had not been effectively eliminated over a year ago. The bottomline is with debt costs and little cash flow the dividend was not sustainable. The Board had no choice but to cut the dividend.
I believe the MO in the past was to acquire older businesses at great prices, update the technology platform for longer life and harvest the cash flow for new acquisitions and pay dividends. The model worked well for 10 years until new management overpaid for the past few acquisitions in a hot market. Unfortunately these acquisitions were mostly service businesses with the need for high staffing levels resulting in llow margins.
As for new pricing metrics - Blackbaud, I believe, largely addresses the not-for-profit market. Wood has indicated his growth will come from education and municipal government where funding is sadly lacking. Price hikes in those markets seem challenged to me. One thing is for sure, sales cycles in those markets are extraordinarily long and upgrading current customers to a new platform is a serious drag on proftability. Let's not forget the new Microsoft platform will require a large royalty payment to Microsoft that wasn't there before resulting in much lower margins.