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Tecsys Reports Financial Results for the Second Quarter of Fiscal 2024

T.TCS

SaaS Revenue Rises 37% in the Second Quarter, SaaS RPO reaches $147 million

MONTREAL, Nov. 30, 2023 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the second quarter fiscal year 2024, ended October 31, 2023. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

TECSYS (PRNewsfoto/TECSYS)

"We have made notable progress this quarter, with a 37% increase in SaaS revenue," said Peter Brereton, president and CEO of Tecsys. "Our activities in the quarter have strengthened our market position, bolstered our customer and partner communities, and reaffirmed our commitment to innovation. We are seeing strong pipeline expansion and activity across verticals. Notably, there is accelerated demand for our pharmacy supply chain solutions, where we have multiple new customer proof points in the face of Drug Supply Chain Security Act regulation enforcement. On top of that, our user conference in Scottsdale in the month of September was excellent, with attendance up 40% and a massive increase in average customer size."

Mark Bentler, chief financial officer of Tecsys adds, "We continue to see positive momentum with SaaS RPO up 34%, our SaaS margins continuing to expand and our partner driven pipeline up 98% from the same time last year."

Second Quarter Highlights:

  • SaaS revenue increased by 37% to $12.1 million, up from $8.8 million in Q2 2023.
  • SaaS subscription bookingsi (measured on an ARRi basis) increased by 34% to $3.7 million, compared to $2.8 million in the second quarter of fiscal 2023.
  • SaaS Remaining Performance Obligation (RPOi) increased by 34% to $146.7 million at October 31, 2023, up from $109.5 million at the same time last year.
  • Annual Recurring Revenue (ARRi) at October 31, 2023 was up 19% to $84.9 million compared to $71.2 million at October 31, 2022.
  • Professional services revenue was down by 5% to $12.9 million compared to $13.5 million in Q2 fiscal 2023.
  • Total revenue excluding hardware revenue was $34.1 million, 8% higher than $31.5 million reported for Q2 last year, while total revenue rose 9% to reach $41.5 million.
  • Gross margin was 44%, flat compared to the same period of fiscal 2023.
  • Total gross profit increased to $18.3 million, up 10% from $16.7 million in Q2 fiscal 2023.
  • Operating expenses increased to $18.7 million, higher by $3.1 million or 20% compared to $15.6 million in Q2 last year.
  • Loss from operations was $0.4 million compared to Profit from operations of $1.0 million in Q2 last year.
  • Net loss was $340 thousand or $0.02 per share on a fully diluted basis in Q2 fiscal 2024, compared to net profit of $0.7 million or $0.05 per share for the same period in fiscal 2023.
  • Adjusted EBITDAii was $1.0 million compared to $2.8 million reported in Q2 last year.

Year-to-date performance for first half of Fiscal 2024:

  • SaaS revenue increased by 40% to $23.6 million, up from $16.8 million in the same period of fiscal 2023.
  • SaaS subscription bookingsi (measured on an ARRi basis) decreased by 15% to $5.7 million, compared to $6.7 million in the same period of fiscal 2023.
  • Professional services revenue was up 2% to $27.8 million compared to $27.2 million in the same period of fiscal 2023.
  • Total revenue excluding hardware revenue was $69.2 million, 12% higher than $61.8 million reported for the same period of fiscal 2023, while total revenue rose 15% to reach $83.5 million.
  • Gross margin was 45% for the first half of fiscal 2024 compared to 43% for the same period in fiscal 2023.
  • Total gross profit increased to $37.8 million, up 20% from $31.4 million in the same period of fiscal 2023.
  • Operating expenses increased to $36.5 million, higher by $6.2 million or 20% compared to $30.3 million in the same period of fiscal 2023.
  • Profit from operations was $1.4 million, up from $1.1 million in the same period of fiscal 2023.
  • Net profit was $0.8 million or $0.06 per fully diluted share compared to $0.8 million or $0.05 per share on a fully diluted basis for the same period in fiscal 2023.
  • Adjusted EBITDAii was $4.2 million compared to $4.3 million reported in the same period of fiscal 2023.

"Despite a temporary dip in professional services revenue this quarter due to project scheduling and the swift growth of our partner ecosystem, we maintain a strong backlog" added Mark Bentler "We anticipate continued growth in professional services revenue and are adequately staffed to meet these demands. As a result of that temporary slow down in professional services revenue, we are adjusting our short-term Adjusted EBITDA outlook to provide a range, while affirming our Adjusted EBITDA guidance for Fiscal 2025 and our SaaS and total revenue growth guidance for Fiscal 2024."

Financial Guidance:

Tecsys is updating financial guidance as follows:


Current

Previous

Reiterate


FY24 Guidance

FY24 Guidance

FY25 Guidance

Total Revenue Growth

10-15%

10-15%

n.a.

SaaS Revenue Growth

35-37%

35-37%

n.a.

Adjusted EBITDA1 Margin

4-6%

6 %

8-9%





On November 30, 2023, the Company declared a quarterly dividend of $0.08 per share to be paid on January 5, 2024 to shareholders of record on December 14, 2023.

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 Q2 2024 Financial Statements.

ii

See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q2 2024 Financial Statements.

Second Quarter Fiscal 2024 Results Conference Call
Date: December 1, 2023
Time: 8:30am EST
Phone number: 877-224-7327 or 416-641-6705
The call can be replayed until December 8, 2023 by calling:
800-558-5253 or 416-626-4144 (access code: 22028536)

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. 2023. 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 October 31,

Six months

ended October 31,

Trailing 12 months

ended October 31,

(in thousands of CAD)


2023


2022


2023


2022


2023


2022














Net profit for the period

$

(340)

$

715

$

831

$

755

$

2,165

$

4,281

Adjustments for:













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


377


429


761


859


1,677


1,925

Amortization of deferred development costs


147


114


289


216


569


383

Amortization of other intangible assets


394


394


790


790


1,603


1,580

Interest expense


53


178


91


297


200


613

Interest income


(253)


(150)


(522)


(254)


(954)


(648)

Income taxes


(81)


389


778


414


1,988


(160)

EBITDA

$

297

$

2,069

$

3,018

$

3,077

$

7,248

$

7,974

Adjustments for:













Stock based compensation


724


708


1,176


1,184


2,169


1,945

Gain on remeasurement of lease liability


-


-


-


-


-


(573)

Recognition of tax credits generated in prior periods


-


-


-


-


-


(617)

Adjusted EBITDAii

$

1,021

$

2,777

$

4,194

$

4,261

$

9,417

$

8,729

Consolidated Statements of Financial Position
As at October 31, 2023 and April 30, 2023
(In thousands of Canadian dollars)




October 31, 2023

April 30, 2023

Assets






Current assets






Cash and cash equivalents


$

17,374

$

21,235

Short-term investments



16,266


15,835

Accounts receivable



20,625


22,900

Work in progress



3,949


1,734

Other receivables



412


523

Taxcredits



8,516


5,338

Inventory



2,117


1,034

Prepaid expenses



8,833


8,193

Total current assets



78,092


76,792

Non-current assets






Other long-term receivables



119


363

Taxcredits



5,723


5,368

Property and equipment



1,540


1,802

Right-of-use assets



1,463


1,708

Contract acquisition costs



3,598


3,738

Deferred development costs



2,465


2,254

Other intangible assets



8,393


9,287

Goodwill



17,347


17,467

Deferred tax assets



8,137


8,137

Total non-current assets



48,785


50,124

Total assets


$

126,877

$

126,916

Liabilities






Current liabilities






Accounts payable and accrued liabilities


$

19,445

$

21,669

Deferred revenue



32,999


30,388

Lease obligations



789


793

Total current liabilities



53,233


52,850

Non-current liabilities






Other long-term accrued liabilities



1,825


253

Deferred tax liabilities



1,232


1,255

Lease obligations



1,713


2,120

Total non-current liabilities



4,770


3,628

Total liabilities


$

58,003

$

56,478

Equity






Share capital


$

47,642

$

44,338

Contributed surplus



15,128


15,285

Retained earnings



9,455


10,832

Accumulated other comprehensive income (loss)



(3,351)


(17)

Total equity attributable to the owners of the Company



68,874


70,438

Total liabilities and equity


$

126,877

$

126,916

Consolidated Statements of Income and Comprehensive Income
For the three and six-month periods ended October 31, 2023 and 2022
(In thousands of Canadian dollars, except per share data)




Three Months Ended

October 31,

Six Months Ended

October 31,




2023


2022


2023


2022

Revenue:










SaaS


$

12,072

$

8,798

$

23,567

$

16,799

Maintenance and Support



8,899


8,098


17,197


16,366

Professional Services



12,869


13,539


27,777


27,170

License



252


1,055


708


1,514

Hardware



7,397


6,621


14,215


10,466

Total revenue



41,489


38,111


83,464


72,315

Cost of revenue



23,144


21,432


45,619


40,878

Gross profit



18,345


16,679


37,845


31,437

Operating expenses:










Sales and marketing



8,645


6,703


16,316


12,953

General and administration



2,971


3,072


5,930


5,806

Research and development, net of tax credits



7,133


5,856


14,245


11,540

Total operating expenses



18,749


15,631


36,491


30,299

(Loss) profit from operations



(404)


1,048


1,354


1,138

Other costs (income)



17


(56)


(255)


(31)

(Loss) profit before income taxes



(421)


1,104


1,609


1,169

Income tax (benefit) expense



(81)


389


778


414

Net (loss) profit


$

(340)

$

715

$

831

$

755 $

Other comprehensive income (loss):










Effective portion of changes in fair value on designated revenue hedges



(5,573)


(2,007)


(3,000)


(1,853)

Exchange differences on translation of foreign operations



92


496


(334)


192

Comprehensive loss


$

(5,821)

$

(796)

$

(2,503)

$

(906)

Basic and diluted (loss) earnings per common share


$

(0.02)

$

0.05

$

0.06

$

0.05


See accompanying notes to the consolidated financial statements.

Consolidated Statements of Cash Flows
For the three and six-month periods ended October 31, 2023 and 2022
(In thousands of Canadian dollars)




Three Months Ended

October 31,

Six Months Ended

October 31,




2023


2022


2023


2022

Cash flows from operating activities:










Net profit


$

(340)

$

715

$

831

$

755

Adjustments for:










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



377


429


761


859

Amortization of deferred development costs



147


114


289


216

Amortization of other intangible assets



394


394


790


790

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



17


(56)


(255)


(31)

Unrealized foreign exchange and other



600


1,063


(598)


691

Non-refundable tax credits



(774)


(439)


(1,214)


(860)

Stock-based compensation



724


708


1,176


1,184

Income taxes



362


305


376


330

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



1,507


3,233


2,156


3,934

Accounts receivable



4,045


(3,847)


2,225


(4,390)

Work in progress



(1,390)


883


(2,219)


(71)

Other receivables



214


105


(48)


(230)

Tax credits



(1,248)


(1,081)


(2,319)


(2,129)

Inventory



(242)


112


(1,084)


(143)

Prepaid expenses



(358)


380


(641)


(182)

Contract acquisition costs



137


(77)


140


(330)

Accounts payable and accrued liabilities



273


3,056


(3,293)


136

Deferred revenue



1,246


4,415


2,622


5,653

Changes in non-cash working capital items related to operations



2,677


3,946


(4,617)


(1,686)

Net cash provided by (used in) operating activities



4,184


7,179


(2,461)


2,248

Cash flows from financing activities:










Repayment of long-term debt



-


(300)


-


(600)

Payment of lease obligations



(199)


(178)


(398)


(422)

Payment of dividends



(2,208)


(2,038)


(2,208)


(2,038)

Interest paid



(53)


(178)


(91)


(297)

Issuance of common shares on exercise of stock options



881


35


2,644


97

Shares repurchased and cancelled



(673)


-


(673)


-

Net cash used in financing activities



(2,252)


(2,659)


(726)


(3,260)

Cash flows from investing activities:










Interest received



33


25


69


37

Transfer from short-term investments



-


-


22


-

Acquisitions of property and equipment



(163)


(171)


(265)


(231)

Deferred development costs



(253)


(258)


(500)


(467)

Net cash used in investing activities



(383)


(404)


(674)


(661)

Net increase (decrease) in cash and cash equivalents during the period



1,549


4,116


(3,861)


(1,673)

Cash and cash equivalents - beginning of period



15,825


17,215


21,235


23,004

Cash and cash equivalents - end of period


$

17,374

$

21,331

$

17,374

$

21,331


See accompanying notes to the consolidated financial statements.

Consolidated Statements of Changes in Equity
For the three and six -month periods ended October 31, 2023 and 2022
(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


-


-


-


-


831


831

Other comprehensive income:













Effective portion of changes in fair value on designated revenue hedges


-


-


-


(3,000)


-


(3,000)

Exchange difference on translation of foreign operations








(334)




(334)

Total comprehensive (loss) income


-


-


-


(3,334)


831


(2,503)














Shares repurchased and cancelled


(25,800)


(84)


(589)


-


-


(673)

Stock-based Compensation


-


-


1,176


-


-


1,176

Dividends to equity owners


-


-


-


-


(2,208)


(2,208)

Share options exercised


161,249


3,388


(744)


-


-


2,644

Total transactions with owners of the Company


135,449

$

3,304

$

(157)

$

-

$

(2,208)

$

939

Balance, October 31, 2023


14,718,286

$

47,642

$

15,128

$

(3,351)

$

9,455

$

68,874














Balance, May 1, 2022


14,562,895

$

43,973

$

13,176

$

(1,434)

$

12,968

$

68,683

Net profit


-


-


-


-


755


755

Other comprehensive income:













Effective portion of changes in fair value on designated revenue hedges


-


-


-


(1,853)


-


(1,853)

Exchange difference on translation of foreign operations


-


-


-


192


-


192

Total comprehensive (loss) income


-


-


-


(1,661)


755


(906)

Stock-based Compensation


-


-


1,184


-


-


1,184

Dividends to equity owners


-


-


-


-


(2,038)


(2,038)

Share options exercised


5,999


121


(24)


-


-


97

Total transactions with owners of the Company


5,999

$

121

$

1,160

$

-

$

(2,038)

$

(757)

Balance, October 31, 2022


14,568,894

$

44,094

$

14,336

$

(3,095)

$

11,685

$

67,020


See accompanying notes to the consolidated financial statements.

SOURCE Tecsys Inc.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2023/30/c5361.html



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