Tecsys Reports Financial Results for the Second Quarter of Fiscal 2025

SaaS revenue up 34% as ARR passes $100 million

MONTREAL, Dec. 4, 2024 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the second quarter of fiscal 2025, ended October 31, 2024. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

"Tecsys delivered strong second-quarter results, marked by major milestones in our SaaS business," said Peter Brereton, president and CEO at Tecsys. "We crossed some key thresholds as RPO surpassed $200 million and ARR exceeded $100 million, demonstrating the strength of our SaaS strategy and the trust our customers place in us. We are seeing the positive impact of our investments in innovation and customer success, positioning us well to capitalize on emerging opportunities."

Mark Bentler, chief financial officer of Tecsys Inc., added, "Our fiscal 2025 financial performance reflects steady progress across key metrics, with year-to-date SaaS bookings up 20% over last year and our SaaS margins continuing to improve as we scale the business and continue to invest in platform optimization." 

Second quarter highlights:

• SaaS revenue increased by 34% to $16.1 million, up from $12.1 million in Q2 2024.
• SaaS subscription bookingsⁱ (measured on an ARRⁱ basis) were $3.7 million, flat compared to the second quarter of fiscal 2024.
• SaaS Remaining Performance Obligation (RPOⁱ) increased by 39% to $203.8 million at October 31, 2024, up from $146.7 million at the same time last year.
• Total revenue increased to $42.4 million compared to $41.5 million in Q2 2024.
• Net profit was $0.8 million or $0.05 per share on a fully diluted basis in Q2 2025, compared to a net loss of $0.3 million or $0.02 per share for the same period in fiscal 2024.
• Adjusted EBITDAⁱⁱ was $2.9 million compared to $1.0 million reported in Q2 last year.
• In the second quarter of fiscal 2025, Tecsys acquired 51,600 of its outstanding common shares for approximately $2.1 million as part of its ongoing Normal Course Issuer Bid, compared to 25,800 shares acquired in the same period last year for approximately $0.7 million.

Year-to-date performance for first half of fiscal 2025

• SaaS revenue increased by 33% to $31.4 million, up from $23.6 million in the same period of fiscal 2024.
• SaaS subscription bookingsⁱ (measured on an ARRⁱ basis) increased by 20% to $6.8 million, compared to $5.7 million in the same period of fiscal 2024.
• Total revenue increased to $84.7 million compared to $83.5 million in the same period of fiscal 2024.
• Net profit was $1.6 million ($0.11 per basic share or $0.10 per fully diluted share) in the first half of fiscal 2025, compared to a net profit of $0.8 million ($0.06 per basic and fully diluted share) for the same period in fiscal 2024.
• Adjusted EBITDAⁱⁱ was $5.5 million compared to $4.2 million reported in the same period of fiscal 2024.
• In the first half of fiscal 2025, Tecsys acquired 111,200 of its outstanding common shares for approximately $4.3 million as part of its ongoing Normal Course Issuer Bid, compared to 25,800 shares acquired in the same period last year for $0.7 million.

Financial guidance:

Tecsys is maintaining FY25 guidance on SaaS revenue growth at 30-32% as well as FY25 and FY26 adjusted EBITDA margins at 8-9% and 10-11%, respectively. Based on the ongoing unpredictability of hardware revenue and a rapidly evolving business model that is impacting professional services, Tecsys is revising Fiscal 2025 total revenue guidance to roughly flat.

On December 4, 2024, the Company declared a quarterly dividend of $0.085 per share to be paid on January 3, 2025 to shareholders of record on December 18, 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 Q2 2025 Financial Statements.

ⁱⁱ See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q2 2025 Financial Statements

Q2 2025 Financial Results Conference Call
Date: December 5, 2024
Time: 8:30 a.m. ET
Phone number: 800-836-8184 or 646-357-8785
The call can be replayed until December 12, 2024, by calling:
888-660-6345 or 646-517-4150 (access code: 91117#)

About Tecsys

Tecsys is a global provider of advanced supply chain solutions. With a commitment to innovation and customer success, the company equips organizations with the essential software, technology and expertise needed for operational excellence and competitive advantage. Its cloud solutions serve a diverse range of industries, including healthcare, distribution and converging commerce, across multiple complex, regulated and high-volume markets. Built on the Itopia® low-code application platform, Tecsys' offerings include enterprise resource planning, warehouse management, consolidated service management, distribution and transportation management, supply management at the point of use and order management solutions. Tecsys provides critical data insights and control across the supply chain, ensuring that organizations are agile, responsive and scalable.

Tecsys is publicly traded on the Toronto Stock Exchange under the ticker symbol TCS. For more about Tecsys and its solutions, please 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 and restructuring costs. The exclusion of interest expense, interest income, income taxes and restructuring costs eliminates the impact on earnings derived from non-operational activities and non-recurring items, and the exclusion of depreciation, amortization and stock-based compensation 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-IFRS 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)		2024		2023		2024		2023		2024		2023
Net profit (loss) for the period	$	758	$	(340)	$	1,556	$	831	$	2,574	$	2,165
Adjustments for:
Depreciation of property and equipment and right-of-use assets		377		377		748		761		1,464		1,677
Amortization of deferred development costs		198		147		395		289		689		569
Amortization of other intangible assets		328		394		662		790		1,365		1,603
Interest expense		24		53		49		91		121		200
Interest income		(163)		(253)		(380)		(522)		(873)		(954)
Income taxes		427		(81)		863		778		726		1,988
EBITDA	$	1,949	$	297	$	3,893	$	3,018	$	6,066	$	7,248
Adjustments for:
Stock based compensation		993		724		1,640		1,176		2,765		2,169
Restructuring costs		-		-		-		-		2,122		-
Adjusted EBITDA^ii	$	2,942	$	1,021	$	5,533	$	4,194	$	10,953	$	9,417

Condensed Interim Consolidated Statements of Financial Position (Unaudited) (In thousands of Canadian dollars)
		October 31, 2024		April 30, 2024
Assets
Current assets
Cash and cash equivalents	$	16,848	$	18,856
Short-term investments		11,496		16,713
Accounts receivable		21,846		22,090
Work in progress		4,498		4,248
Other receivables		375		134
Tax credits		8,704		6,422
Inventory		2,116		1,359
Prepaid expenses and other		8,227		9,143
Total current assets		74,110		78,965
Non-current assets
Other long-term receivables and assets		545		421
Tax credits		5,748		4,737
Property and equipment		1,255		1,372
Right-of-use assets		1,044		1,251
Contract acquisition costs		4,356		4,478
Deferred development costs		3,173		2,683
Other intangible assets		7,196		7,703
Goodwill		17,570		17,363
Deferred tax assets		9,073		9,073
Total non-current assets		49,960		49,081
Total assets	$	124,070	$	128,046
Liabilities
Current liabilities
Accounts payable and accrued liabilities		18,933		20,030
Deferred revenue		36,925		36,211
Lease obligations		834		812
Total current liabilities		56,692		57,053
Non-current liabilities
Other long-term accrued liabilities		568		496
Deferred tax liabilities		649		826
Lease obligations		890		1,302
Total non-current liabilities		2,107		2,624
Total liabilities	$	58,799	$	59,677
Equity
Share capital	$	52,628	$	52,256
Contributed surplus		6,970		9,417
Retained earnings		7,309		8,121
Accumulated other comprehensive loss		(1,636)		(1,425)
Total equity attributable to the owners of the Company		65,271		68,369
Total liabilities and equity	$	124,070	$	128,046

Condensed Interim Consolidated Statements of Income (loss) and Comprehensive Income (loss) (Unaudited) (In thousands of Canadian dollars, except per share data)
	Three Months Ended October 31,				Six Months Ended October 31,
		2024		2023		2024		2023
Revenue:
SaaS	$	16,130	$	12,072	$	31,444	$	23,567
Maintenance and Support		7,703		8,899		16,418		17,197
Professional Services		14,145		12,869		27,532		27,777
License		444		252		1,305		708
Hardware		4,020		7,397		8,019		14,215
Total revenue		42,442		41,489		84,718		83,464
Cost of revenue		21,994		23,144		44,542		45,619
Gross profit		20,448		18,345		40,176		37,845
Operating expenses:
Sales and marketing		9,052		8,645		17,404		16,316
General and administration		3,199		2,971		6,177		5,930
Research and development, net of tax credits		7,205		7,133		14,536		14,245
Total operating expenses		19,456		18,749		38,117		36,491
Profit (loss) from operations		992		(404)		2,059		1,354
Other income (costs)		193		(17)		360		255
Profit (loss) before income taxes		1,185		(421)		2,419		1,609
Income tax expense (benefit)		427		(81)		863		778
Net profit (loss)	$	758	$	(340)	$	1,556	$	831
Other comprehensive income (loss):
Effective portion of changes in fair value on designated revenue hedges		(513)		(5,573)		(533)		(3,000)
Exchange differences on translation of foreign  operations		165		92		322		(334)
Comprehensive income (loss)	$	410	$	(5,821)	$	1,345	$	(2,503)
Basic earnings (loss) per common share	$	0.05	$	(0.02)	$	0.11	$	0.06
Diluted earnings (loss) per common share	$	0.05	$	(0.02)	$	0.10	$	0.06

Condensed Interim Consolidated Statements of Cash Flows (Unaudited) (In thousands of Canadian dollars)
	Three Months Ended October 31,				Six Months Ended October 31,
		2024		2023		2024		2023
Cash flows from operating activities:
Net profit (loss)	$	758	$	(340)	$	1,556	$	831
Adjustments for:
Depreciation of property and equipment and right-of-use-assets		377		377		748		761
Amortization of deferred development costs		198		147		395		289
Amortization of other intangible assets		328		394		662		790
Interest (income) expense and foreign exchange (gain) loss		(193)		17		(360)		(255)
Unrealized foreign exchange and other		206		600		83		(598)
Non-refundable tax credits		(505)		(774)		(934)		(1,214)
Stock-based compensation		993		724		1,640		1,176
Income taxes		184		362		187		376
Net cash from operating activities excluding changes in non-cash working capital items related to operations		2,346		1,507		3,977		2,156
Accounts receivable		(2,132)		4,045		302		2,225
Work in progress		2,245		(1,390)		(241)		(2,219)
Other receivables and assets		84		214		(436)		(48)
Tax credits		(1,325)		(1,248)		(2,359)		(2,319)
Inventory		(40)		(242)		(754)		(1,084)
Prepaid expenses		60		(358)		963		(641)
Contract acquisition costs		119		137		80		140
Accounts payable and accrued liabilities		1,119		273		(2,000)		(3,293)
Deferred revenue		3,652		1,246		691		2,622
Changes in non-cash working capital items related to operations		3,782		2,677		(3,754)		(4,617)
Net cash provided by (used in) operating activities		6,128		4,184		223		(2,461)
Cash flows from financing activities:
Payment of lease obligations		(204)		(199)		(402)		(398)
Payment of dividends		(2,368)		(2,208)		(2,368)		(2,208)
Interest paid		(24)		(53)		(49)		(91)
Issuance of common shares on exercise of stock options		320		881		597		2,644
Shares repurchased and cancelled		(2,101)		(673)		(4,312)		(673)
Net cash used in financing activities		(4,377)		(2,252)		(6,534)		(726)
Cash flows from investing activities:
Interest received		3		33		27		69
Transfers from short-term investments		5,022		-		5,570		22
Acquisitions of property and equipment		(200)		(163)		(409)		(265)
Deferred development costs		(433)		(253)		(885)		(500)
Net cash provided by (used in) investing activities		4,392		(383)		4,303		(674)
Net increase (decrease) in cash and cash equivalents     during the period		6,143		1,549		(2,008)		(3,861)
Cash and cash equivalents - beginning of period		10,705		15,825		18,856		21,235
Cash and cash equivalents - end of period	$	16,848	$	17,374	$	16,848	$	17,374

Condensed Interim Consolidated Statements of Changes in Equity  (Unaudited) (In thousands of Canadian dollars, except number of shares)
	Share capital				Contributed Surplus		Accumulated other comprehensive (loss) income		Retained earnings		Total
	Number		Amount
Balance, May 1, 2024	14,840,150	$	52,256	$	9,417	$	(1,425)	$	8,121	$	68,369
Net profit	-		-		-		-		1,556		1,556
Other comprehensive (loss) income:
Effective portion of changes in fair value on designated revenue hedges	-		-		-		(533)		-		(533)
Exchange difference on translation of foreign operations	-		-		-		322		-		322
Total comprehensive (loss) income	-		-		-		(211)		1,556		1,345
Shares repurchased and cancelled	(111,200)		(394)		(3,918)		-		-		(4,312)
Stock-based Compensation	-		-		1,640		-		-		1,640
Dividends to equity owners	-		-		-		-		(2,368)		(2,368)
Share options exercised	23,899		766		(169)		-		-		597
Total transactions with owners of the Company	(87,301)	$	372		(2,447)	$	-	$	(2,368)	$	(4,443)
Balance, October 31, 2024	14,752,849	$	52,628	$	6,970	$	(1,636)	$	7,309	$	65,271
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

SOURCE Tecsys Inc.

Public Relations: Adam Polka ([email protected]); Investor Relations: [email protected]; Solutions and General info: [email protected]; By phone: [phone] or [phone]