Release Date: September 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tecsys Inc (TCYSF, Financial) reported a strong start to fiscal 2025 with a 33% year-over-year increase in SaaS revenue and a 57% increase in SaaS bookings.
- The company secured a major healthcare migration deal with one of the largest IDNs in North America, highlighting significant growth potential.
- Tecsys Inc (TCYSF) continues to experience traction in the pharmacy supply chain, with a growing interest in their centralized pharmacy service center model.
- The company has a robust backlog and a strong balance sheet with $27.1 million in cash and no debt, supporting its growth initiatives.
- Tecsys Inc (TCYSF) is expanding its partner ecosystem, with about a third of its deals being partner-influenced over the last 12 months, enhancing market access and product development.
Negative Points
- Total revenue growth was only 1% compared to the same period last year, with fluctuations in professional services and hardware revenue affecting overall growth.
- Professional services revenue decreased by 10% year-over-year, impacted by project delivery schedules outside of the company's control.
- Net profit for the quarter decreased by $400,000 to $798,000 compared to the same quarter last year.
- Adjusted EBITDA was down to $2.6 million from $3.2 million in the same period last year.
- The company faces challenges in the timing of SaaS revenue recognition, with some deals having delayed starts, affecting immediate revenue realization.
Q & A Highlights
Q: Are there any inorganic opportunities to accelerate Tecsys' penetration into the pharma market, such as acquiring a point solution provider?
A: Peter Brereton, CEO, stated that the market is largely greenfield, and there are no significant players doing what Tecsys is doing with centralized pharma. The company has built out a platform to manage 340b and daily drug distribution, and they plan to continue building and selling this solution.
Q: How does the expansion into pharma affect the average ARR per network?
A: Peter Brereton mentioned that for networks targeting pharma, the average ARR could increase by approximately CAD 1 million. This expansion is significant, especially as it can apply to networks with lower revenue thresholds.
Q: With more work being handled by implementation partners, how should we think about professional services revenues long-term?
A: Mark Bentler, CFO, explained that while professional services revenue growth will be moderated due to partner involvement, they do not expect it to decline or flatline. The company anticipates some growth, albeit slower than their main growth drivers.
Q: Can you provide insights on the competitive environment in the healthcare sector and typical expansion opportunities within healthcare networks?
A: Peter Brereton noted that Tecsys continues to face competition in areas like the OR and general supplies. However, Tecsys remains the only provider offering an end-to-end platform for all supply chain types within a network, which strengthens their competitive position.
Q: How is Tecsys leveraging data and AI to enhance its offerings, and what role will Rex Ahlstrom play in this initiative?
A: Peter Brereton highlighted that Rex Ahlstrom will focus on monetizing data and using AI to create client value. Tecsys plans to offer a new SaaS solution that leverages data across various verticals, enhancing decision-making and driving additional consulting opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
