Q1 2024 Tecsys Inc Earnings Call

Speaker 1: Good morning everyone. Welcome to Texas first quarter fiscal year 2024 results conference call. Please note that the complete first quarter report including MDNA and financial statements were filed on cedar plus after market closed yesterday.

Good morning, everyone welcome to Texas first quarter fiscal year 2024 results conference call.

Please note that the completion first quarter report, including M D and E and financial statements were filed on SEDAR plus after market closed yesterday.

Speaker 1: All dollar amounts are expressed in Canadian currency and are prepared in accordance with international financial reporting standards.

All dollar amounts are expressed in Canadian currency and are prepared in accordance with international financial reporting standards.

Speaker 1: Some of the statements in this conference call, including the question and answer period, may include forward-looking statements that are based on management's beliefs and assumptions.

Some of the statements in this conference call, including the question and answer period May include forward looking statements that are based on management's beliefs and assumptions.

Speaker 1: Actual results may differ materially from such statements.

Actual results may differ materially from such statements.

Speaker 1: I would like to remind everyone that this call is being recorded on Friday, September 8, 2024 at 830 Eastern Time. I would now like to turn the conference over to Mr. Peter Burinton, Chief Executive Officer at Texas. Please go ahead.

I would like to remind everyone that this call is being recorded on Friday September eight 2024.

At 830 Eastern time, I would now like to turn the conference over to Mr. Peter Burnton, Chief Executive Officer of Texas. Please go ahead.

Thank you.

Yeah.

Speaker 2: Good morning, everyone. Joining me today is Mark Ventler, our Chief Financial Officer. We appreciate you joining us for today's call.

Good morning, everyone. Joining me today is Mark Butler, our Chief Financial Officer. We appreciate you joining us for today's call.

Speaker 2: As many of you saw in our results posted yesterday, our company began fiscal 24 with another solid quarter led by record revenue and strong fundamentals. With 44% growth.

As many of you saw in our results posted yesterday, our company began fiscal 'twenty four with another solid quarter led by record revenue and strong fundamentals.

With 44% growth in SaaS revenue.

Speaker 2: We're thinking the results of our investments over the last several quarters in business development and R&D. We believe our continued momentum is a testament to our clarity of vision, sustained investment in technology, and I'm section with our customer success.

Where you're seeing the results of.

Our investments over the last several quarters and business development and R&D.

We believe our continued momentum is a testament to our clarity of vision sustained investment in technology and obsession with our customer success.

Speaker 2: Our primary mission remains unchanged, to empower supply chain users to perform their tasks efficiently and effectively.

Our primary mission remains unchanged to empower supply chain users to perform their tasks efficiently and effectively.

Speaker 2: Done right, organizations running these supply chains are able to operate more efficiently, mitigate risk, adapt to market demands, differentiate themselves from competition, and seize opportunities to grow.

Done right organizations running these supply chains are able to operate more efficiently mitigate risk adapt to market demands differentiate themselves from competition and seize opportunities to grow.

Speaker 2: Our role in Texas is to provide the right combination of software, services, and expertise to meet those business objectives.

Our role in Texas is to provide the right combination of software services and expertise to meet those business objectives.

Speaker 2: And that's what we have been doing. We have consistently demonstrated our ability as a technology partner to provide solutions that meet and exceed.

That's what we've been doing we've consistently demonstrated our ability as a technology partner to provide solutions that meet and exceed.

Speaker 2: That's the mere expectations. Much of this will be on full display in a couple of weeks, where we will be hosting the 2023 Texas User Conference, our first since the pandemic. With a high level of enthusiasm, we have higher registration numbers than any event in our 40-year history.

That's the where expectations much of this will be on full display in a couple of weeks well, we will be hosting the 2023, Texas user conference. Our first since the pandemic with a high level of enthusiasm, we have higher registration numbers than any event in our 40 year history.

Speaker 2: We've been laying the groundwork for this event over the last few months and have been promoting a remarkable lineup of customers and strategic partners to help strengthen our base and put the spotlight on the business successes experienced by them.

We've been laying the groundwork for this event over the last few months that had been promoting a remarkable lineup of customers and strategic partners.

<unk> strengthened our base and put the spotlight on the business successes experienced by them.

Speaker 2: from Warner Electric's journey of innovation and the AI-driven augmented cluster building to insight.

From winter Electrics journey of innovation in the AI driven augmented cluster building two insights.

Speaker 2: at St. Luke's Health Systems, speaking about their visionary consolidated Pharmacy Service Center. From Intermountain Health and Baylor's gotten White Health to need then North America, sharing their supply chain management stories. We are confident that the successes of our customers will create new market opportunities.

At St. Luke's Health systems speaking about their visionary consolidated Pharmacy service Center.

From Intermountain Health and Baylor, Scott <unk> White health to Nissan North America sharing their supply chain management stories.

We are confident that the successes of our customers will create new market opportunities.

Speaker 2: And with AWS, Locust Robotics, Zebra Technologies, right now and other partners, we have more partner representation than any other cloud crunch in our history as well. And endorsement of our strengthening global alliances ecosystem.

And with AWS, Lucas Robotics, Zebra technologies, right now and other partners, we have more partner representation than any other cloud offerings in our history as well.

An endorsement of our strengthening global alliances ecosystem.

Speaker 2: We look forward to hosting an amazing user conference, where we have the opportunity to showcase innovation, best practices, and knowledge sharing.

We look forward to hosting an amazing user conference, where we have the opportunity to showcase innovation best practices and knowledge sharing.

Speaker 2: Turning back to the results. I'd like to take a moment to summarize the key events in the first quarter of fiscal 24 and results of operations. Mark will then walk us through the financial results in more detail and finally I'll comment on our outlook followed by Q&A.

Turning back to the results I'd like to take a moment to summarize the key events of the first quarter of fiscal 'twenty four and results of operations.

Mark will then walk us through the financial results in more detail and finally I'll comment on our outlook.

By Q&A.

Speaker 2: Our company began fiscal 24 with sustained growth underscored by that 44% year over year, fast revenue growth, a 23% increase in total revenue, and a healthy RPO up to 36% over it. The same time last year. We added new logos across verticals and geographies.

Our company began fiscal 'twenty four with sustained growth underscored by that 44% year over year SaaS revenue growth.

A 23% increase in total revenue.

<unk> up 36% over the same time last year, we added new logos across verticals and geographies.

Speaker 2: including two new healthcare networks in the quarter, one of which was in Canada. We also find a new healthcare network in August , just after the quarter.

Including two new health care networks in the quarter, one of which was in Canada.

We also signed a new health care network can August just after the quarter end we.

Speaker 2: We gain close solid base business, including significant expansions across verticals and renewals that extended commitments from existing customers.

We again closed solid base business, including significant expansions across verticals and renewals that extended commitments from existing customers.

Speaker 2: Our SAS bookings at 1.9 million in the quarter were down compared to the same quarter last year.

Our SaaS bookings at $1 9 million in the quarter were down compared to the same quarter last year.

Speaker 2: Q1 of last fiscal year was an unusual comp with pent up demand releasing post COVID and an exceptionally large order in that quarter as well. Q1 of this fiscal year was a more normal Q1 with summer vacation impact. We remain encouraged by continued solid new pipeline creation and overall market activity.

Q1 of last fiscal year with an unusual comp with pent up demand releasing post COVID-19 and an exceptionally large order in that quarter as well.

Q1 of this fiscal year was a more normal Q1 with summer vacation impact we remain encouraged by continued solid new pipeline creation and overall market activity.

Speaker 2: So as we close out another successful quarter, we're pleased that we continue to capitalize on the opportunities in front of us. We continue to add new hospital networks and global brands to our repertoire of clients. And we enjoy an expanding pipeline of new SaaS opportunities, expansions, and conversions. We see a solid path for shareholders value creation. As we continue to invest in the solution.

So as we close out another successful quarter. We're pleased that we continue to capitalize on the opportunities in front of US we continue to add new hospital networks and global brands to our repertoire of clients.

And we enjoy an expanding pipeline of new SaaS opportunities expansions in conversions, we see a solid path for shareholder value creation.

As we continue to invest in the solutions we sell.

Speaker 2: And in the manner in which we sell them, Texas is proven to be among the best cloud-based solutions available in the markets we serve. And we have the people, the partners, the products, and the plan to provide what the market demands. Market will now provide further details on our first quarter financial results, as well as financial guidance at several key metrics.

And in the manner in which we sell them, Texas has proven to be among the best cloud based solutions available in the markets we serve.

And we have the people the partners the products and the plan to provide what the market demands market will Mark will now provide further details on our first quarter financial results as well as financial guidance on several key metrics.

Speaker 3: Thank you, Peter. We're pleased with strong performance in our first quarter ended July 31st, 2023. We had yet another record quarter in total revenue at 42 million. That's 23% higher than 34.2 million reported for the same period.

Thank you Peter were.

We're pleased with strong performance in our first quarter ended July 31 2023.

We had yet another record in total a record quarter and total revenue at $42 million, that's 23% higher than $34 2 million reported for the same period last year.

Speaker 3: As many of you know, a significant portion of our revenue, in fact about 73% this quarter, is denominated in US dollars. As a result, movements in currency exchange rates have an impact on our reported revenue and growth.

As many of you know a significant portion of our revenue in fact about 73%. This quarter is denominated in U S dollars as a result movements in currency exchange rates have an impact on our reported revenue and growth.

Speaker 3: FX rates, including the impact of hedging, had a positive $1.5 million impact on revenue in the quarter compared to the same quarter last year.

FX rates, including the impact of hedging had a positive $1 $5 million impact on revenue in the quarter compared to the same quarter last year.

Speaker 3: On a constant currency basis, total revenue growth was 17% in Q1. It's just gold 24 compared to the same quarter last year.

On a constant currency basis total revenue growth was 17% in Q1 and fiscal 'twenty four compared to the same quarter last year.

Speaker 3: Total revenue, excluding hardware, increased 16% compared to the same period last year, or 11% on a constant currency base.

Total revenue, excluding hardware increased 16% compared to the same period last year or 11% on a constant currency basis.

Speaker 3: We continue to experience strong and steady revenue streams underpin by a 44% increase in fast revenue.

We continue to experience strong and steady revenue streams underpinned by a 44% increase in SaaS revenue up from $8 million in Q1 in fiscal 'twenty three to $11 $5 million in Q1 of fiscal 'twenty four.

Speaker 3: up from $8 million in Q1, a fiscal 23 to $11.5 million in Q1, a fiscal 24.

Speaker 3: on a constant currency basis. Stas Revenue was up approximately 38% compared to the same quarter last year.

On a constant currency basis, SaaS revenue was up approximately 38% compared to the same quarter last year.

Speaker 3: Fast remaining performance obligation or SAS RPO was 139.4 million at the end of Q1 fiscal 24.

SaaS remaining performance obligation or a SaaS or P. L was $139 4 million at the end of Q1 fiscal 'twenty four.

Speaker 3: That's up 36% from 102.5 million at the same time last year.

That's up 36% from $102 5 million at the same time last year.

Speaker 3: On the constant currency basis, that growth was 33%.

On a constant currency basis that growth was 33%.

Speaker 3: Maintenance and support revenue for the three months ended July 31st, 2023 was 8.3 million. That was flat compared to the same quarter last year or down about 4% on a constant currency basis.

Maintenance and support revenue for the three months ended July 31, 2023 was $8 3 million that was flat compared to the same quarter last year are down about 4% on a constant currency basis.

Speaker 3: Maintenance and support revenue generally follows the trend of license revenue and we expect that as current customers migrate to our south-of-ring Maintenance and support revenue will decline over time

Maintenance and support revenue generally follows the trend of license revenue and we expect that as current customers migrate to our SaaS offering maintenance and support revenue will decline over time.

Speaker 3: Professional Services Revenue for the Quarter was 14.9 million. That was up 9% from 13.6 million reported for the same quarter last year, or up 5% on a constant currency base.

Professional services revenue for the quarter was $14 9 million that was up 9% from $13 6 million reported for the same quarter last year were up 5% on a constant currency basis.

Speaker 3: As we've noted in the last few quarters, we're starting to see the impact of our transition to SAS ultimately have on our professional services revenue line.

As we've noted in the last few quarters, we're starting to see the impact of our transition to SaaS ultimately have on our professional services revenue line.

Speaker 3: That is, we're seeing a continued reduction in custom development work as customers opt for a more out of the box approach to platform implementation.

That is we're seeing a continued reduction in custom development work as customers opt for a more out of the box approach to platform implementations.

Speaker 3: We're also continuing to experience the increased collaboration of our partner ecosystem and helping to implement our suite of solutions.

We're also continuing to experience the increased collaboration of our partner ecosystem and helping to implement our suite of solutions.

Speaker 3: While we expect it over time, these factors will continue to moderate our professional services revenue growth. We had another solid quarter of professional services bookings, which I'll speak to in a moment.

We expect that over time. These factors will continue to moderate our professional services revenue growth. We had another solid quarter of professional services bookings, which I will speak to in a moment.

Speaker 3: As we disclose in our published MDNA, we expect total services revenue. So that's combined SaaS, maintenance, support, as well as professional services, ranging between 34.5 million and 35.5 million per quarter in the short.

As we disclosed in our published and DNA. We expect total services revenue. So that's combined SaaS maintenance support as well as professional services ranging between $34 5 million and $35 5 million per quarter in the short term.

Speaker 3: Hardware revenue in Q1 fiscal 24 was 6.8 million, about 77% compared to the same period last.

Hardware revenue in Q1 fiscal 'twenty four was $6 8 million up 77% compared to the same period last year.

Speaker 3: As a reminder, we felt primarily third party hardware to our customers for warehouse operations and in hospital, point of use storage and track.

As a reminder, we sell primarily third party hardware to our customers for warehouse operations and in hospital hospital point of views storage and tracking.

Speaker 3: While hardware revenue can tend to be uneven, it is a key component of our market offering and thereby supports our recurring revenue business.

While our hardware revenue can tend to be uneven. It is a key component of our market offering and thereby supports our recurring revenue business.

Speaker 3: White glass quarter, our hardware backlog remains strong, driven primarily by hospital network point of view.

Like last quarter, our hardware backlog remained strong driven primarily by hospital network point of view orders.

Operator: Good morning, everyone. Welcome to Tecsys' first quarter, fiscal year 2024 Results Conference call. Please note that the complete first quarter report, including MDNA and financial statements were filed on Cedar Plus after market closed yesterday. All dollar amounts are expressed in Canadian currency and are prepared in accordance with international financial reporting standards. Some of the statements in this conference call, including the question and answer period, may include forward looking statements that are based on management's beliefs and assumptions. Actual results may defer materially from such statements. I would like to remind everyone that this call is being recorded on Friday, September 8, 2024, at 830 Eastern time.

Speaker 3: Turning now to bookings, the SAS bookings are reported on an annual occurring revenue basis. And as Peter mentioned, SAS bookings were $1.9 million in the quarter, which is down 50% compared to $3.9 million in the first quarter of last year.

Turning now to bookings SaaS bookings are reported on an annual recurring revenue basis, and as Peter mentioned SaaS bookings were $1 $9 million in the quarter, which is down 50% compared to $3 9 million in the first quarter of last year.

Speaker 3: Professional Services bookings were 13.8 million in the quarter. That's up 42% compared to 9.79 in the same quarter last year.

Professional services bookings were $13 8 million in the quarter, that's up 42% compared to $9 79 in the same quarter last year.

Speaker 3: Professional Services backlog was a robust 40.2 million at July 31st, 2023. That's up 31% from the same time last year.

Professional services backlog was a robust $40 2 million at July 31, 2023, that's up 31% from the same time last year.

Speaker 3: For the first quarter total gross profit was 19.5 million dollars. That's up 32% compared to 14.8 million dollars in Q1 last year. And that's led by higher gross profit contribution from staffs, maintenance, support, and professional services.

For the first quarter total gross profit was $19 $5 million, that's up 32% compared to $14 8 million in Q1 of last year and Thats led by higher gross profit contribution from SaaS maintenance support and professional services.

Peter Brereton: I would now like to send a conference over to Mr. Peter Brereton, chief financial officer. Good morning, everyone.

As a percentage of revenue.

Total gross margin was 46% in the quarter compared to 43% for the same period last year.

Speaker 3: Total gross margin was 46% in the quarter compared to 43% for the same period last year.

Mark Buntler: Joining me today is Mark Buntler, our chief financial officer. We appreciate you joining us for today's call. As many of you saw in our results posted yesterday, our company began fiscal 24 with another solid quarter led by record revenue and strong fundamentals. With 44% growth in SaaS revenue, we've seen the results of our investments over the last several quarters in business development and R&D. We believe our continued momentum is a testament to our clarity of vision, sustained investment in technology, and I'm section with our customer success.

Speaker 3: Combined SaaS maintenance and support and professional services gross profit margin for the three-month damage of July 31st, 2023, was 50%.

Combined SaaS maintenance and support and professional services gross profit margin.

The three months ended July 31, 2023 was 50%.

Speaker 3: compared to 46% in the same period in fiscal 2023.

Compared to 46% in the same period in fiscal 2023.

Speaker 3: The main component of the increase in this growth profit margin was sass margin expansion. There was also some tailwind here from FX.

The main component of the increase in this gross profit margin was SaaS margin expansion.

There was also some tailwind here from FX.

Switching now to our expenses for the quarter.

Mark Buntler: Our primary mission remains unchanged, to empower supply chain users to perform their tasks efficiently and effectively. Done right, organizations running these supply chains are able to operate more efficiently, mitigate risk, adapt to market demands, differentiate themselves from competition, and seize opportunities to grow. Our role of Texas is to provide the right combination of software, services, and expertise to meet those business objectives. And that's what we have been doing. We have consistently demonstrated our ability as a technology partner to provide solutions that meet and exceed customer expectations.

Speaker 3: Operating expenses increased to $17.7 million. That's higher by 3.1 million or 21 percent compared to 14.7 million in Q1 of fiscal 23.

Operating expenses increased to $17 $7 million, that's higher by $3 1 million or 21% compared to $14 7 million in Q1 and fiscal 'twenty three.

Speaker 3: The increase was primarily the result of higher research and development costs, as well as higher sales marketing.

The increase was primarily the result of higher research and development costs as well as higher sales and marketing costs.

Speaker 3: Looking ahead to Q2 of fiscal 2024, we expect sales of marketing costs to temporarily increase, primarily due to added marketing program investment, including costs related to our user conference, which Aspieter mentioned is in September .

Looking ahead to Q2 of fiscal 2024, we expect sales and marketing costs to temporarily increase primarily due to added marketing program investment.

Including costs related to our user conference, which as Peter mentioned is in September.

Mark Buntler: Much of this will be on full display in a couple of weeks when we will be hosting the 2023 Texas user conference. Our first since the pandemic. With a high level of enthusiasm, we have higher registration numbers than any event in our 40-year history. We've been laying the groundwork for this event over the last few months and have been promoting a remarkable lineup of customers and strategic partners to help strengthen our base and put the spotlight on the business successes experienced by them.

We also expect that research and development costs will increase slightly in Q2, resulting from investment in our platform and product offering and the normal impact of our annual salary increase cycle.

Speaker 3: We also expect the research and development cost will increase slightly in Q2, resulting from investment in our platform and product offering and the normal impact of our annual salary increase.

Net profit for the quarter was $1 $2 million or eight cents per fully diluted share compared to $40000 or zero per fully diluted share in the same period last year.

Speaker 3: Net profit for the quarter was $1.2 million or $8 cents per fully gluted share compared to $40,000 or $0 fully diluted share in this fan period last year.

Mark Buntler: From Warner Electric's journey of innovation and the AI-driven augmented cluster building to insights at St. Luke's health systems, speaking about their visionary consolidated Pharmacy Service Center. From Intermountain Health and Baylor Scott White Health to Nissan North America sharing their supply chain management stories, we are confident that the successes of our customers will create new market opportunities. And with AWS, Locust Robotics, Zebra Technologies, Rise Now and other partners, we have more partner representation than any other conference in our history as well. And endorsement of our strengthening global alliances ecosystem. Johnson.

Speaker 3: Compared to the same pretty last year, a net profit was positively impacted by the higher contribution from SAS and associate the higher gross profit and favorable.

Compared to the same period last year net profit was positively impacted by the higher contribution from SaaS and associated higher gross profit.

And favorable foreign exchange.

Speaker 3: Adjusted EBITDA was 3.2 million in Q1 at fiscal 24 compared to 1.5 million last year.

Adjusted EBITDA was $3 2 million in Q1 and fiscal 'twenty four compared to $1 5 million last year.

Speaker 3: Net profit and adjusted EBIT out were both positively impacted by 50% more in exchange of approximately $1.2 million compared to the same period last year.

Net profit and adjusted EBITDA were both positively impacted by favorable foreign exchange of approximately $1 $2 million compared to the same period last year.

Speaker 3: We ended fiscal 2024 with a solid balance sheet position. We had cash and short term investments of $31.9 million and no debt.

We ended fiscal 2024 with a solid balance sheet position, we had cash and short term investments of $31 9 million and no debt.

Mark Buntler: We look forward to hosting an amazing user conference where we have the opportunity to showcase innovation, best practices, and knowledge sharing.

Speaker 3: Q1 net cash used in operations with 6.9 million, primarily the result of normal season of working capital changes in that quarter.

Q1, net cash used in operations was $6 9 million, primarily the result of normal seasonal working capital changes in that quarter.

Mark Buntler: Turning back to the results, I'd like to take a moment to summarize the key events of the first quarter of fiscal 24 and results of operations. Mark will then walk us through the financial results in more detail, and finally I'll comment on our outlook followed by Q&A. Our company began fiscal 24, which sustained growth underscored by that 44% year over a year's fast revenue growth, a 23% increase in total revenue, and a healthy RPO up 36% over it.

Speaker 3: Finally, with respect to financial guidance, with our growing SaaS revenue, driving up recurring revenue, we have greater visibility in the future revenue. As a result, recall the last quarter for the first time we provided financial guidance.

Finally, with respect to financial guidance with our growing SaaS revenue driving up recurring revenue, we have greater visibility into future revenue as a result recall the last quarter for the first time, we provided financial guidance.

Speaker 3: We would like to reiterate that guidance for total revenue growth in fiscal 24 in a range of between 10 and 15%.

We would like to reiterate that guidance for total revenue growth in fiscal 'twenty, four and a range of between 10 and 15%.

Speaker 3: Total SAS revenue growth for fiscal 24 in a range between 35 and 37%.

Total SaaS revenue growth for fiscal 'twenty four in a range between 35 and 37%.

Mark Buntler: At the same time last year, we added new logos across verticals and geographies, including two new healthcare networks in the quarter, one of which was in Canada. We also find a new healthcare network in August, just after the quarter end. We again closed solid base business, including significant expansions across verticals, and renewals that extended commitments from existing customers. Our SaaS bookings at 1.9 million in the quarter were down compared to the same quarter last year.

Speaker 3: And in terms of profitability, we're reiterating financial guidance for adjusted EBITDA margin in fiscal 24 of 6%. And in terms of profitability, we're reiterating financial guidance for adjusted EBITDA margin in fiscal 24 of 6%.

And in terms of profitability, we are reiterating financial guidance for adjusted EBITDA margin in fiscal 'twenty four up 6%.

Speaker 3: And at fiscal 25, I adjusted EBITDA margin and a range between 8 and 9%.

And in fiscal 'twenty, five adjusted EBITDA margin in a range between eight and 9%.

I'll now turn the call back to Peter to provide some outlook comments.

Speaker 3: I'll now turn the call back to Peter to provide some outlet comments.

Yeah.

Mark Buntler: Q1 of last fiscal year was an unusual comp with pent up demand releasing post-COVID, and an exceptionally large order in that quarter as well. Q1 of this fiscal year was a more normal Q1 with summer vacation impact. We remain encouraged by continued solid new pipeline creation and overall market activity. So as we close out another successful quarter, we're pleased that we continue to capitalize on the opportunities in front of us. We continue to add new hospital networks and global brands to our repertoire of clients, and we enjoy an expanding pipeline of new SaaS opportunities, expansions, and conversions.

Thanks Mark.

Speaker 2: Texas stable growth continues through the first quarter of fiscal 2024 with a strong balance sheet and a robust backlog and sales pipeline. We are seeing widespread wiring tend to cross target markets, solid opportunity cycles, highly capable sales team with the tools and talent to capitalize on a market that is ready to invest in new technology.

Texas stable growth continues through the first quarter of fiscal 2024, with a strong balance sheet and a robust backlog and sales pipeline.

We are seeing widespread buyer intent across target markets solid opportunity cycles are highly capable sales team with the tools and talent to capitalize on a market that is ready to invest in new technology.

Speaker 2: We continue to solidify our leadership position in the healthcare market supported by a great partner network and rising adoption of the clinically integrated supply chain and consolidated service center model. The upcoming November 20 23 compliance deadline for the U.S. Drug Supply Chain Security Act provide the favorable backdrop for our consolidated pharmacy inventory management solution.

We continue to solidify our leadership position in the health care market supported by a great partner network and rising adoption of the clinically integrated supply chain and consolidated service Center model.

Upcoming in November 2023 compliance deadline for the U S drug supply chain Security Act provides a favorable backdrop for our consolidated pharmacy inventory management solution.

Mark Buntler: We see a solid path for shareholder value creation. As we continue to invest in the solutions we've sell, and in the manner in which we sell them, Texas is proven to be among the best cloud-based solutions available in the markets we serve, and we have the people, the partners, the products, and the plan to provide with the market demands.

With customer proof points from organizations like Parkview health and St. Luke's Health system, we are well positioned to be the preferred preferred vendor to <unk>.

Speaker 2: We've cut some approved points from organizations like Parkview Health and St. Luke's Health System. We're well positioned to be the preferred vendor to support this developing best product.

Support this developing best practice.

Mark Buntler: Market will now provide further details on our first quarter financial results, as well as financial guidance on several key metrics. Thank you, Peter. We're pleased with strong performance in our first quarter, ended July 31st, 2023. We had yet another record quarter in total revenue at 42 million. That's 23% higher than 34.2 million reported for the same period last year. As many of you know, the significant portion of our revenue, in fact about 73% this quarter, is denominated in U.S, dollars.

Speaker 2: our expanding, our expanded healthcare sector offering and growing footprint gives us confidence that the healthcare sector will continue to serve as an important revenue stream.

Our expanding our expanded health care sector, offering and growing footprint gives us confidence that the health care sector. We will continue to serve as an important revenue stream.

For us.

Speaker 2: Our converging distribution business continues to represent a massive market opportunity. We continue to hone our sweet spot there in private. Our share of that pie with rising market indicators driven by fundamental change to the supply chain industry. Changes spurred by aging legacy systems, digital adoption and a realization that heightened consumer expectations are here to stay. So in summary, I want to remind analysts and investors of some key themes for fiscal 20 who are the on.

Are converging distribution business continues to represent a massive market opportunity, we continue to hone our sweet spot there and carve out our share of that pie with a rising market indicators driven by fundamental change to the supply chain industry changes spurred by aging legacy systems digital adoption and a realization that heightened consumer expectations are here to stay.

So in summary, I want to remind analysts and investors are sort of key themes for fiscal 'twenty for the O N.

Mark Buntler: As a result, movements and currency exchange rates have an impact on our reported revenue and growth. Effects rates, including the impact that hedging, had a positive $1.5 million impact on revenue in the quarter compared to the same quarter last year. On a constant currency basis, total revenue growth was 17% in Q1, it's just goal 24, compared to the same quarter last year. Total revenue, excluding hardware, increased 16% compared to the same period last year, or 11% on a constant currency basis.

Speaker 2: First, a sustained commitment to our expanding SaaS revenue model, which will drive changes in the way we deploy solutions and delight best.

First a sustained commitment to our expanding SaaS revenue model, which will drive changes in the way, we deploy solutions and delight customers.

Speaker 2: Secondly, it has continued strategic partnership approach, characterized by deeper and stronger alliances. This will help us tap into new opportunities and fuels our scalability around the world. Third, an emphasis on advancing and deepening our healthcare vertical covering.

Secondly, our continued strategic partnership approach characterized by deeper and stronger alliances. This will help us tap into new opportunities and fuels, our scalability around the world.

Third an emphasis on advancing and deepening our health care vertical covering.

Speaker 2: Our healthcare vertical covering both meds surge and pharma. We continue to solidify our position as the go-to provider for healthcare supply chain solution.

Our health care vertical covering both med surge and Barbara.

We continue to solidify our position as the go to provider for health care supply chain solutions.

Speaker 2: Lastly, a continuous evolution of our distribution and Omni-channel business platform that takes advantage of innovative technologies and the power of data.

Lastly, a continuous evolution of our distribution of the Omnichannel business platform that takes advantage of innovative technologies and the power of data.

Mark Buntler: We continue to experience strong and steady revenue streams under pin by 44% increased and fast now, up from $8 million in Q1 of fiscal 23 to $11.5 million in Q1 of fiscal 24. On a constant currency basis, SAS Revenue was up approximately 38% compared to the same quarter last year. SAS remaining performance obligation or SAS RPO was 139.4 million at the end of Q1 fiscal 24. That's up 36% from $102.5 million at the same time last year.

Speaker 2: And as a final point, I just like to stress across our markets that we will play emphasis on customer success. We have long stood by the philosophy of customers for light. A big part of that formula is to deliver value quickly, stay connected, and then expand on the value delivered. With that, we will open the call up for questions. Thank you.

And as a final point I'd, just like distress across our markets that we will place emphasis on customer success. We have long stood by the philosophy of customers for like a big part of that Formula is to deliver value quickly stay connected and then expand on the value delivered.

With that we will open the call up for questions. Thank you.

Speaker 1: Thank you. If you are an analyst and would like to register a question, please press the one four on your telephone. You will hear it three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one four by the three. Once again, to register a question, please press the one four on your telephone. One moment please for the first question.

Thank you.

You are an analyst and would like to register a question. Please press the one four on your telephone.

You will hear it we don't prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press the one followed by the three.

Mark Buntler: On a constant currency basis, SAS growth was 33%. Maintenance and support revenue for the three months ended July 31, 2023 was $8.3 million. That was flat compared to the same quarter last year, or down about 4% on a constant currency basis. Maintenance and support revenue generally follows the trend of license revenue, and we expect that as current customers migrate to our SAS offering, maintenance and support revenue will decline over time. Professional services revenue for the quarter was 14.9 million, that was up 9% from 13.6 million reported for the same quarter last year, or up 5% on a constant currency basis.

11 again to register a question. Please press the one four on your telephone.

One moment please for the first question.

Speaker 1: Our first question comes from Amar Ezapt with Industrial Alliance. Please proceed.

Our first question comes from Omar <unk> with Industrial Alliance. Please proceed.

Speaker 4: Good morning, it's Andre on behalf of Amher. Thank you for taking our questions. You're tracking above your guidance for top line and SAS growth last quarter. You also had strong momentum. Just wondering what's driving the out performance relative to your initial guidance? And do you foresee this momentum continuing?

Good morning, it's Andre on behalf of Ann Marie Thank you for taking our question.

We're tracking above your guidance for top line in SaaS growth last quarter. You also had strong momentum just wondering what's driving the outperformance relative to your initial guidance and do you foresee this momentum continuing.

Okay.

Mark Buntler: As we've noted in the last few quarters, we're starting to see the impact of our transition to SAS ultimately have on our professional services revenue line. That is we're seeing a continued reduction in custom development work as customers opt for a more out-of-the-box approach to platform implementations. We're also continuing to experience the increased collaboration of our partner ecosystem and helping to implement our suite of solutions. While we expect it over time, these factors will continue to moderate our professional services revenue growth. We had another solid quarter of professional services bookings, which I'll speak to in a moment.

Let me take that one mark.

Yes sure.

Speaker 3: Yeah, thanks for the question. I mean, I think our top line revenue was really strong. And when we provided the guide poster for total revenue, we were thinking about a full year, and that's the guidance we provided.

Yes. Thanks for the thanks for the question I mean, I think R. R.

Our topline revenue was really strong.

And when we provided the guide post serve for total revenue.

We were thinking about our full year and that's the guidance. We provided I think the thing you have to watch pretty carefully and are in our numbers is that hardware number in our P&L, which can move around quite a bit.

Speaker 3: I think the thing you have to watch pretty carefully in our numbers is that that hardware number in our P&L, which you know can move around quite a bit. And we had a pretty robust hardware quarter this quarter. We also have a pretty good backlog, but

And we had a pretty robust hardware quarter. This quarter. We also have a pretty good backlog, but if you look across last year, our hardware quarters range from $3 8 million to $6 $9 million, so theres quite a bit of a movement that can happen in there so I think that.

Speaker 3: If you look across last year, our hardware quarters range from $3.8 million to $6.9 million. So there's quite a bit of movement that can happen in there. So I think that provides a little color around that. That 10% to 15% guidance range that we...

Mark Buntler: As we disclose in our published MDNA, we expect total services revenue, so that's combined SAS, maintenance, support, as well as professional services, ranging between 34.5 million and 35.5 million per quarter in the short term. Hardware revenue in Q1 fiscal 24 with 6.8 million, up 77% compared to the same period last year. As a reminder, we sell primarily third-party hardware to our customers for warehouse operations and in-hospital point-of-use storage and tracking. While a hardware revenue can tend to be uneven, it is a key component of our market offering and thereby supports our recurring revenue business.

That provides a little color around that that 10% to 15% guidance range that we.

Speaker 3: you know that we provided and are sticking with for right now.

You know that we provided and are sticking with for right now.

Got it thanks, and how much are you budgeting for your user conference later this month.

Speaker 4: Got it, thanks. And how much are you budgeting for your user conference later this month?

Speaker 3: I mean, that's, we, we, we haven't really disclosed that number, but I mean, really rough orders of magnitude. That's, you know, that's roughly a half a million dollar, half a million dollars and.... ain'tctic.

I mean, that's.

We haven't really disclosed that number but I mean really rough orders of magnitude. That's that's roughly a half a million dollar.

Half a million dollar of event for us.

Speaker 4: God, thanks. And one more for me. The last couple of calls you noted that you didn't see many opportunities for inorganic growth, duty rich pricing. Just wondering how that has evolved since the last call.

Got it thanks, and one more for me. The last couple of calls you noted that you didn't see I didn't see many opportunities for inorganic growth that duty rich pricing just wondering how that has evolved since the last call.

Mark Buntler: White last quarter, our hardware backlog remains strong driven primarily by hospital network point-of-use orders. Turning now to bookings, SAS bookings are reported on an annual occurring revenue basis. And as Peter mentioned, SAS bookings were $1.9 million in the quarter, which is down 50% compared to $3.9 million in the first quarter of last year. Professional services bookings were 13.8 million in the quarter. That's up 42% compared to 9.79 in the same quarter last year.

Speaker 2: Yeah, there's no real change there. I mean, we continue to poke around and look at what's out there, but we have not, our focus at this point is on the organ side.

Yeah, there's no real change there I mean, we you know we continue to.

Poke around and look at what's out there, but we have not our focus at this point it is on the organic side.

Thank you I'll pass the line.

Thank you thanks for the questions.

Our next question comes from Gavin Fairweather with <unk> Securities. Please proceed.

Speaker 1: Gavin Fairweather with Cormorant Securities. Please proceed.

Mark Buntler: Professorial Services backlog was a robust 40.2 million at July 31st, 2023. That's up 31% from the same time last year. For the first quarter, total growth profit was 19.5 million dollars. That's up 32% compared to 14.8 million dollars and Q1 last year. And that's led by our gross profit contribution from staff, maintenance, support, and professional services. As a percentage of revenue, total growth margin was 46% in the quarter compared to 43% for the same period last year.

Speaker 5: Oh hey good morning maybe just a quicky for Mark to start. Just looks like the CAD strengthened a little bit in the quarter.

Oh, Hey, good morning, maybe just a quickie for mark to start just a it looks like the cat strengthened a little bit in the corner could you just discuss the impact that FX had on air our growth this quarter.

Speaker 5: to discuss the impact that FX had on ARR growth this quarter.

Yeah.

Uh huh.

Speaker 3: Yeah, the headline growth there, I mean, I think we, you know, if you think about it,

Yeah, the headline the headline growth there I mean, I think we if you think about it.

Speaker 3: You know, sequentially, we move from like a 132 level last quarter to a 136.

Sequentially, we moved from 132 level last quarter to a $1 36.

Speaker 3: I'm level so I think there was about maybe three to four percentage points of uptelling there.

So I think there was about three.

Three to four.

Mark Buntler: Combined, staff, maintenance, and support, and professional services, gross profit margin for the three months in July 31st, 2023 was 50%, compared to 46% in the same period in fiscal 2023. The main component of the increase in this gross profit margin was SaaS Margin Expansion. There was also some tailwind here from FX.

Percentage points of a tailwind there.

Yeah.

Speaker 5: got it. And then maybe for Peter, just can we dig it a little bit deeper into the healthcare sales environment. How would you kind of describe Byron 10? Obviously saw a couple new healthcare networks, join in one...

Got it.

And then maybe for Peter just can we dig it a little bit deeper into the health care sales environment. How would you kind of describe buyer intent. Obviously you saw a couple of new health care networks join them on subsequent to the quarter, but I guess when you look into the pipeline. How are you thinking about the number of I D. And then how are they moving in and how are you thinking about your.

Speaker 5: How are you thinking about the number of IDNs and how are they moving and how are you thinking about your ability?

Mark Buntler: Switching now to our expenses for the quarter, operating expenses increased to $17.7 million. That's higher by 3.1 million or 21% compared to 14.7 million in Q1 of fiscal 23. The increase was primarily the result of higher research and development costs as well as higher sales marketing costs. Looking ahead to Q2 of fiscal 2024, we expect sales of marketing costs to temporarily increase, primarily due to added marketing program investment, including costs related to our user conference, which, as Peter mentioned, is in September.

The ability to increase the pace of audio nuts.

Speaker 2: Yeah, I mean, we're sort of waiting to see and it actually fully pick up speed. It seems to be accelerating. That team is, you know,

Yeah.

We're sort of waiting to see and it actually fully pick up speed.

Yet it seems to be accelerating that team is.

Speaker 2: Probably brown numbers that teen is probably 30% larger. The sales team is right 30% larger than it was this time last year.

Probably brown numbers that team is probably 30% larger the sales being a straight 30% larger than it was this time last year.

Speaker 2: And yet they are very busy. The total pipeline in health care is up measured by sort of potential fast revenue. Is up over 50% from this time last year. So we're seeing a lot of excellent activity. You know, at the same time, we're seeing here, I think, frankly, it seems like after management teams who are trying to close deals with and we're in Europe for a vacation this summer.

And yet they are very busy the total pipeline and sales in health care.

Is up.

Measured by sort of SaaS potential SaaS revenue is up.

Over 50% from this time last year. So so we're seeing a lot of excellent activity at.

Mark Buntler: We also expect that research and development costs will increase slightly in Q2, resulting from investment in our platform and product offering and the normal impact of our annual salary increase cycle. Net profit for the quarter was $1.2 million or 8 cents per fully-gluted share, compared to $40,000 or 0 per fully-gluted share in the same period last year. Compared to the same period last year, Net profit was positively impacted by the higher contribution from SaaS and associated the higher gross profit and favorable foreign exchange.

At the same time, we are seeing.

Frankly, it seems like after the management teams, who are trying to close deals with where in Europe for vacations et cetera.

Yes.

Speaker 2: So it's, you know, everything's now returning as we get into September and things and we've taken up speed to a lot to see how the year works out. But if I look at the sort of what we see on the dashboard, great sales team significantly larger than it was last year and a pipeline up by, you know, more than 50%. So we're feeling pretty bullish about, you know, looking, you know, in health care, that's for sure.

So it's everything.

Everything is now returning as we get into September and and things seem to be picking up speed. So what we'll have to see how the year works out, but if I look at the sort of what we see on the dashboard.

Great sales team significantly larger than it was last year and our pipeline up by.

More than 50%. So we're we're feeling pretty bullish about the outlook.

And in health care that's for sure.

Mark Buntler: Adjusted EBITO was 3.2 million in Q1 of fiscal 24 compared to 1.5 million last year. Net profit and adjusted EBITO were both positively impacted by favorable foreign exchange of approximately $1.2 million compared to the same period last year. We ended fiscal 2024 with a solid balance sheet position. We had cash and short term investments of $31.9 million and no debt. Q1 net cash used in operations with $6.9 million, primarily the result of normal season working capital changes in that quarter.

Okay. Good to hear I mean, maybe some of that AR will turn into a tailwind in the quarters ahead here.

Speaker 5: Maybe hear him and maybe some of that will turn into a tail.

Speaker 5: Maybe just on maintenance. Being holding pretty steady, I keep expecting a bit of a deceleration.

Maybe I'm just on maintenance been holding pretty steady I keep expecting a bit of a deceleration maybe you can update us on the planned pace of migrations and how those conversations are going.

Speaker 5: Update us on the plant pace of migrations and how those conversations are going. You know what I mean? You talk about me.

You talked about maintenance kind of starting to moderate in the years ahead, but it seems to be holding steady so maybe just unpack that a bit for us.

Speaker 3: I think the conversions from on-prem to STAS, they do continue and if we look at our pipeline or the activity there.

Yeah I think.

The conversions from on Prem to SaaS. They do continue and if it were looking at our pipeline or the activity there.

Mark Buntler: Finally, with respect to financial guidance with our growing SaaS revenue, driving up recurring revenue, we have greater visibility in the future revenue. As a result, we called the last quarter for the first time we provided financial guidance. We would like to reiterate that guidance for total revenue growth in fiscal 24 and a range of between 10 and 15%. 7. Total SaaS revenue growth for fiscal 24 in a range between 35 and 37%. And in terms of profitability, we're reiterating financial guidance for adjusted EBITDA margin in fiscal 24 of 6%, and at fiscal 25, adjusted EBITDA margin in a range between 8 and 9%.

Speaker 3: It's actually the pipeline is actually ahead of where we expected it to be right now in terms of, you know, addition, additive conversion opportunities. But you raise a good point like we're expecting that number to go down and it doesn't. You know, our retention rates are super high.

It's actually the pipeline is actually ahead of where we expected it to be right now in terms of.

<unk> additive conversion opportunities, but you raise a good point like we're expecting that number to go down and it doesn't.

Our retention rates are Super high in fact, they do we measure those LTE M and they ticked up to like 97%.

Speaker 3: They took, we measure those LTM and they, and they ticked up to like 97%. You know, gross retention in this, in this last, you know, 12 month period ended July 31st, 2023.

Gross retention in this in this last 12 month period ended.

July 31st 2023.

Speaker 3: So, so really solid retention is helping, you know, support that that number bit. The other thing is, you know, our some of our other businesses, in particular that hardware business and that proprietary technology business that we do, it does attach some maintenance and support to that business.

So it's a really solid retention is helping.

Support that number a bit the other thing is.

Or are some of our other businesses in particular that that hardware business on that proprietary technology business that we do it.

Peter Brereton: I'll now turn the call back to Peter to provide some outlet comments. Thanks, Mark. Texas stable growth continues through the first quarter of fiscal 2024 with a strong balance sheet and a robust backlog and sales pipeline. We are seeing widespread buyer intent across target markets, solid opportunity cycles, highly capable sales team with the tools and talent to capitalize on a market that is ready to invest in new technology. We continue to solidify our leadership position in the healthcare markets supported by a great partner network and rising adoption of the clinically integrated supply chain and consolidated service center model.

It does attach some maintenance and support to that business.

Speaker 3: And so that's conspiring also along with price increases and strong levels of retention to kind of moderate the decline there. But we do see that conversion pipe building and expect that it's gonna continue to head down rather than out that total maintenance and support line.

And so that's that's conspiring also along with price increases and strong levels of retention to kind of moderate the decline there, but we do see that conversion pipe building and expect that.

Got it.

<unk> had down rather than out that total maintenance and support line.

Speaker 5: God, and then maybe lastly before I recue, to some task, gross margin, you provide that kind of illustrative walk over the next few years on...

Got it and then maybe lastly, before I re queue just on SaaS gross margin that you provide that kind of illustrative walk over the next few years on on a kind of services gross margins in SaaS gross margins.

Peter Brereton: The upcoming November 20, 23 compliance deadline for the U.S. Drug Supply Chain Security Act provides a favorable backdrop for our consolidated pharmacy inventory management solution. With customer proof points from organizations like Parkview Health and St. Luke's Health System, we're well positioned to be the preferred vendor to support this developing best practice. Our expanding, our expanded healthcare sector offering and growing footprint gives us confidence that the healthcare sector will continue to serve as an important revenue stream for us.

Speaker 5: I'm curious how the back end optimization work is progressing.

Curious how the backend optimization work is progressing and in that deck, you kind of have assumptions around 75% incremental gross margin on sauce cures.

Speaker 5: that deck you kind of have assumptions around 75% incremental growth margin on fast. Curious if that kind of incorporates...

Curious if you know that kind of incorporate some of the efforts youre, making on on the backend and if theres also an opportunity to kind of improve the existing south space as well.

Speaker 3: Yeah, it does incorporate that, but I think the more we scale there, and the more we scratch and invest there, the more efficient way to come.

Yeah. It is.

It does incorporate that but but I mean, I think the more we the more we scale there tomorrow.

Peter Brereton: Our converging distribution business continues to represent a massive market opportunity. We continue to hone our sweet spot there in Parvote, our share of that pie with the rising market indicators driven by fundamental change to the supply chain industry, changes spurred by aging legacy systems, digital adoption and a realization that heightened consumer expectations are here to stay.

And invest there.

The more the more efficient.

More efficiently the com.

Speaker 3: You know, so we're making, we're making, we continue to make progress on.

So we're making we're making we continue to make progress on.

Speaker 3: you know, the key metrics in there for us are public cloud and restructure costs as a percentage of revenue. We continue to make progress there. That's with, you know, with platform optimization and overall, you know, infrastructure efficiency, how we set up the platform and utilize public cloud and restructure. So we continue to make.

The key metrics in there for us our public cloud infrastructure costs as a percentage of revenue we continue to make progress there.

Peter Brereton: So in summary, I want to remind analysts and investors of some key themes for fiscal 24 and beyond. First, a sustained commitment to our expanding SaaS revenue model, which will drive changes in the way we deploy solutions and delight customers. Secondly, it has continued strategic partnership approach characterized by deeper and stronger alliances. This will help us tap into new opportunities and fuels our scalability around the world. Third, an emphasis on advancing and deepening our healthcare vertical covering our healthcare vertical covering both Med Surge and Pharma.

With with.

With platform optimization, and overall infrastructure efficiency, how we set up the platform and utilize our public cloud infrastructure. So we continue to make progress.

Speaker 3: progress there and the other you know the other vectors are you know that the other main vectors are cloud operations costs and our ability to to execute there you know so we measure that metric is

Progress there and the other the other vectors are.

Main vectors, our cloud operations costs, and our ability to execute there so.

So we measure that metric is as internally as pads cloud operation costs.

Speaker 3: as internally as cloud operation costs, you know, X.

Ex <unk>.

Speaker 3: public cloud infrastructure costs and monitor that as a percentage of revenue. And we see that, you know, still doing interesting things as well as we scale and continue to leverage, you know, our technology, our platform, and external technologies that we use to monitor, etc. that help us manage that metric. So I think there's more, you know, there's more goodness to

Public cloud infrastructure costs, and monitor that as a percentage of revenue.

Peter Brereton: We continue to solidify our position as the go-to provider for healthcare supply chain solutions. Lastly, a continuous evolution of our distribution and omnichannel business platform that takes advantage of innovative technologies and the power of data. And as a final point, I'd just like to stress across our markets that we will place emphasis on customer success. We have long stood by the philosophy of customers for light. A big part of that formula is to deliver value quickly, stake it, acted, and then expand on the value delivered.

And we see that still doing doing interesting things as well as we as we scale them and continue to leverage our.

Our technology, our platform and external technologies that we use to monitor et cetera that that help us manage that that metric. So I think there's more there's more goodness to.

Speaker 3: to continue to, you know, to continue to squeeze out of that margin as we move forward and getting your scale.

To continue to to.

Can you continue to squeeze out of that margin as we move forward and continue to scale.

Operator: With that, we will open the call-up for questions. Thank you.

Great I'll pass the line. Thank you.

Thanks.

Okay. Thanks.

Operator: If you are an analyst and would like to register a question, please press the one-four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one-four, about a three. Once again, to register a question, please press the one-four on your telephone.

Speaker 1: HardX question comes from John Shaw with National Bank. Please proceed.

Our next question comes from John Chow with National Bank. Please proceed.

Yeah.

Speaker 5: Good morning, guys, and thanks for taking my question. I also have a question on gross margins. So you guys definitely have a decent margin expansion is quarter driven by the SaaS business. So from a modeling perspective, is this improvement permanent? And also, how would you think? How would you think about the margin pro-funding future quarter?

Good morning, guys and thanks for taking my question I also have a question on gross margins. So you guys definitely have a decent margin expansion this quarter driven by the SaaS business. So from a modeling perspective is this improvement permanent and also how we should think how should we think about the margin profile in future quarters.

Operator: One moment, please, for the first question. Thank you.

Amr Ezzat: Our first question comes from Amr Ezzat with industrial lines. Please proceed.

Yeah, I mean, I think we I would direct you to our investor deck, there John and we provided some kind of.

Speaker 3: I mean, I think we, I think we, I would direct you to our investor deck there, John , and we provided some, you know, kind of.

Peter Brereton: Good morning. It's Andre on behalf of Amr. Thank you for taking our questions. You're tracking above your guidance for top line and SAS growth. Last quarter, you also had strong momentum. Just wondering, what's driving the outperformance relative to your initial guidance? And do you foresee this momentum continuing? Let's take that one more. Yeah, sure. Thanks for the question. I think our top line revenue was really strong. And when we provided the guide poster for total revenue, we were thinking about a full year and that's the guidance we provided.

Speaker 3: projection numbers I I I had to call them forecast but certain projection numbers based upon some assumptions and and you know we saw we we we we started publishing those a couple of quarters ago. We outperformed what we expected there in Q4 slightly and I would say right now we're tracking with you know our our expectations. And I would leave it at that.

Projection numbers.

Hesitate to call them forecast, but sort of projection numbers based upon some assumptions and we.

We saw we started publishing those a couple of quarters ago.

We outperformed what we expected there in Q4 slightly.

And I always say right now we're tracking with our expectations.

And that would leave it at that.

Speaker 5: Okay, thanks. And in terms of ARR, how should we read into the Q1 number given it's just for crunchily flat? It's also because of the timing of deolomponous.

Okay, Thanks, and in terms of pay or how should we read into the Q1 number given it's a sequentially flat is also because of the timing of deal Lumpiness.

Peter Brereton: I think the thing you have to watch pretty carefully in our numbers is that hardware number in our P&L, which can move around quite a bit. And we had a pretty robust hardware quarter this quarter. We also have a pretty good backlog. But if you look across last year, our hardware quarters range from $3.8 million to $6.9 million. So there's quite a bit of movement that can happen in there. So I think that provides a little color around that. That 10 to 15 percent guidance range that we provided and are sticking with for right now. Got it. Thanks.

Speaker 3: Yeah, I mean the the error number being sequentially flat, I think we had.

Yeah, I mean, the the air number being sequentially flat I think we had.

Speaker 3: you know, we have that one, that 1.9 million book, SaaS bookings number, which was, you know, not a fantastic quarter. So that didn't drive up that ARR as much as, as much as it otherwise, you know, would have increased. So I think that's probably the main, you know, the main driver for the sequential, the sequential flatness there.

We have that one that $1 9 million books.

SaaS bookings number which was which was not a fantastic quarter. So that didn't drive up that IRR as much as as much as it otherwise would've increased so I think that's probably the main the main driver for the sequential sequential.

Sequential flatness there.

Speaker 5: Okay, thanks. Last question is to Peter. So Peter, you mentioned your sales team is 30% larger than compared to last year. So my question is around date, you're planning to continue to grow the heck count for the rest of the year.

Okay. Thanks last question is to Peter So Peter you mentioned your sales team is 30% larger than compared to last year. So my question is around your plan to continue to grow the head count for the rest of the year.

Mark Buntler: And how much are you budgeting for your user conference later this month? I mean, that's that we haven't really disclosed that number. But I mean, really rough orders of magnitude. That's, you know, that's roughly a half a million dollar, half a million dollar event for us. Got it. Thanks.

Speaker 2: Yeah, I was specifically, first of all, I was specifically referring to the health care side of the failed team. So that, you know, that's where the bulk of the growth has gone. And that's where we've seen that substantial increase in the size of that team. We do plan to continue to invest in the team. I mean, you know, when you look at our LTV to CAC numbers, you know,

Yeah, I was specifically first of all I was specifically referring to the health care side of the sales team. So that that's where the bulk of the growth is going and that's where we've seen a substantial increase in the size of that team. We do plan to continue to invest in the team I mean.

When you look at our LTV to CAC numbers.

Peter Brereton: And one more for me. The last couple of calls you noted that you didn't see many opportunities for inorganic growth due to rich pricing. Just wondering how that has evolved since the last call. Yeah, there's no real change there. I mean, we, you know, we continue to poke around and look at what's out there. But we have not our focus at this point is on the organic site. Thank you. I'll pass the line. Thank you. Thanks for the questions.

Gavin Fairweather: The next question comes from Gavin Fairweather with Cormorant Securities. Please proceed.

Speaker 2: general guidance in sort of best practices in the fast world. You know, if you're all DB2CAC is above three, you should be pouring more money into sales marketing.

General guidance.

In sort of best practices in the SaaS World.

Your LTV to CAC is is above three it should be putting more money into sales and marketing.

Speaker 2: And you know, if you look at our general trend over the last

And if you look at our general trend over the last.

Speaker 2: you know, four quarters or eight quarters or whatever, whatever time frame you want to pick, we're well above that number. So we continue to invest more in sales and marketing. We'll continue to see that number rise. We limit our investment there.

Four quarters or eight quarters or whatever whatever timeframe you want to pick we're well above that number. So we continue to invest more in sales and marketing you'll continue to see that number.

Right.

We we limit our investment there.

Speaker 2: largely just to manage productivity. There is a point to which you grow that organization too quickly and you can actually end up with declining sales results. Because just too many new people, not enough sort of.

Largely just to manage productivity. There is a there is a point at which you can grow that organization too quickly and you could actually end up with declining sales results could you just too many new people not it up sort of in depth knowledge of the marketplace you started blowing opportunities and so it's a week so that you know.

Mark Buntler: Oh, hey, good morning. Maybe just a quickie for Mark to start. Just looks like the CAD strength and a little bit in the quarter. Can you just discuss the impact that effects had on error growth this quarter? Yeah, and the headline, the headline growth there. I mean, I think we, you know, if you think about it, you know, sequentially, we, we move from like a 132 level last quarter to 136 level. So I think there was about maybe three to four percentage points of uptelling there. Thank you. Got it.

Speaker 2: in depth knowledge of the marketplace, you start blowing opportunities and so on. So that, you know, the practical considerations of growing an X-Honeless Team are what limit the investment there. Because the underlying financial metrics that we track and the KPIs we track tell us that we should be continuing to expand that team quite rapidly.

The practical considerations of growing an excellent sales team or what limit the investment there because the underlying financial metrics that we track in the Kpis, we track tell us that we should be.

And just to expand that team quite rapidly.

And John John.

Speaker 3: John , just going back to your last question about ARR8, I failed to mention, but I should have the FX impact, the sequential FX impact from the end of Q4 to the end of Q1, was actually a negative drag on that ARR number.

Yes, John just going back going back to your last question about air Alright.

I failed to mention but I should have the the FX impact that sequential FX impact from the end of Q4 to the end of Q1 was actually a negative drag on that on that.

Number so.

Speaker 3: So, you know, that kind of offset the gains of the increase in error from the fast bookings.

So.

You know that kind of offset the gains of the of the increase narrowed from the SaaS bookings.

Peter Brereton: And then maybe for Peter, just can we dig it a little bit deeper into the healthcare sales environment? How would you kind of describe Byron Tent? Obviously, saw a couple new healthcare networks join in one subsequent quarter. But I guess when you look into the pipeline, how are you thinking about the number of IDNs and how are they moving and how are you thinking about your ability to increase the pace of IDNs?

Okay, Thanks, Peter and that makes sense.

Thank you.

Speaker 1: Our next question comes from Southan Sukamar with Diffle. Please proceed.

Our next question comes from Susan <unk> with Stifel. Please proceed.

Speaker 6: Hi, Daniel on for Suthin today. Morning Peter Mark. My first question here is on the EBITDA-BEEKIS quarter. Can you speak to what drove the BAT? Was it due to the pace of timing of growth investments or are you seeing early leverage benefits at end of this?

Hi, Daniel address two things today morning, Peter Mark My first question here is on <unk>.

Peter Brereton: Yeah, I mean we're sort of waiting to see and it actually fully pick up speed. It seems to be accelerating. That team is probably brown numbers. That team is probably 30% larger. The sales team is probably 30% larger than it was this time last year. And yet they are very busy. The total pipeline in health care is up measured by potential fast revenue is up over 50% from this time last year.

This quarter and can you speak to what drove the beat at was it due to the pace of timing gross investments or are you seeing early leverage benefits in the business.

Speaker 3: Daniel, can you repeat that question? I didn't quite hear the beginning of kind of broke up a little bit for me at the beginning. Yeah, sure. On your admitted deep, this quarter, can you speak to what drove the beat? Would it do to the pace or timing of growth investment?

Daniel can you can you repeat that question I didn't quite hear the beginning of kind of broke up a little bit for me at the beginning yeah sure.

On your I'm going to beat this quarter can you speak to what drove the beat was due to the pace.

Timing of growth investments.

Speaker 3: Yeah, I mean, our off-ex was up pretty significantly in the quarter, but the big contribution, the big change was a contribution, the contribution margin in the quarter, which was really solid, as we mentioned, driven mostly by fast, you know, expansion, but also with a little bit of FX tailwind in that number.

Yes, I mean, we are our opex was up.

Peter Brereton: So we're seeing a lot of excellent activity. You know, at the same time we're seeing frankly it seems like after the management teams we were trying to use deals with during Europe for vacation this summer. So everything is now returning as we get into September and things seem to be picking up speed to a lot to see how the year works out. But if I look at what we see on the dashboard, great sales team significantly larger than it was last year at a pipeline up by more than 50%.

Pretty pretty significantly.

In the quarter, but.

The big the Big contribution the Big Big change was the contribution you know the contribution margin in the quarter.

Which was which was really really solid as we mentioned driven mostly by by SaaS.

Expansion.

But also with a little bit of FX tailwind on that number.

Speaker 6: Good. On professional services revenues, growth appears to be quite healthy again this quarter. Is there anything specific to call out? And can you speak how much partner engagement there was during the quarter?

Okay.

Good.

Peter Brereton: So we're feeling pretty bullish about how they look in health care. That's for sure. Okay, good to hear. I mean maybe some of that will turn into a tail end in the corner of the head here.

Services revenues growth.

Appears to be quite healthy again this quarter is there anything specific to call out and can you say how much partner engagement there was during the quarter.

Speaker 3: Yeah, I mean, I think the thing to call out there, Daniel, is our backlog heading into this quarter was very large. We did actually quite a bit of bookings in the quarter as well. So, you know, it continues to be, you know, over 40 million dollars of backlog, which for us historically is still a very robust number. So, we think that probably bodes pretty well for the upcoming.

Yes, I mean, I think that I think the thing to call out there. Daniel is is our backlog heading into this quarter was was was very large we did actually quite a bit of bookings.

Peter Brereton: Maybe just on maintenance. Being holding pretty steady, I keep expecting a bit of a deceleration. Maybe you can update us on the plan pace of migrations and how those conversations are going. You talk about maintenance kind of starting to moderate in the years ahead, but it seems to be holding studies. Maybe just to unpack that for us. Yeah, I think you know the conversions from on-prem just fast. They do continue. And if we look at our pipeline there are the activity there.

In the quarter as well so continues to be a you know over $40 million of backlog, which which for US historically is it's still a very very robust very robust number.

So we think that probably bodes pretty well for the upcoming.

Speaker 3: upcoming quarters in terms of partner engagement and partner involvement.

Upcoming quarters.

In terms of partner engagement in partner involvement I guess, Peter Peter mentioned.

Speaker 3: I guess Peter mentioned, you know, we've got a whole, we've got a just a

Peter Brereton: It's actually the pipeline is actually ahead of where we expected it to be right now in terms of addition additive conversion opportunities. But you raise a good point like we're expecting that number to go down. And it doesn't. You know our retention rates are super high. In fact, they ticked. We measure those LTM and they and they ticked up to like 97%. You know, gross retention in this in this last, you know, 12 month period ended July 31st, 23.

We've got a whole we've got just a great great stuff happening on that front you know we continue to add.

Speaker 3: Great, great stuff happening on that front. You know, we can choose the ad.

Speaker 3: you know, interested SI partners. They're more and more involved in our deals. They're more and more involved in the front end, you know, and opportunities. And that gang is.

Interested S I S I partners.

There are more and more involved in our and our and our deals they're more and more involved and even on the front end opportunities.

And that in that gang is getting yeah. It's getting the names that are in that in that group are getting bigger and the participation is getting.

Speaker 3: Yeah, it's getting the names that are in that group or are getting bigger and the participation is getting.

Speaker 3: You know, more fulsome. So we're pretty excited about what's happening now.

More fulsome. So so we're pretty excited about about what's happening there.

Speaker 6: That's good to hear. Now just to quickly recap in case I missed it, I think you mentioned that you guys won two additional IDN when this quarter, what are your expectations for the year? Is this still around 12?

Okay, that's good to hear.

Peter Brereton: So so really solid retention is helping, you know, support that that number bit. The other thing is, you know, our some of our other businesses in particular that hardware business and that proprietary technology business that we do. It does attach some maintenance and support to that business. And so that's that's conspiring also along with price increases and strong levels of retention to kind of moderate the decline there, but we do see that that conversion pipe building and expect that, you know, that's going to continue to, you know, to head head down rather than out that total maintenance and support line. Thank you.

Now just to quickly recap in case I missed it I think you mentioned that you got.

Right.

One two additional wins this quarter.

What are your expectations for the year.

So around 12.

Okay.

Speaker 2: Good question. We debate that all the time. I mean, we're seeing we are seeing every larger opportunities. At the same time, we are seeing quite a large number of opportunities. You know, average deals size continues to sort of slowly increase.

Yeah. Good question, we debate that all the time I mean, we're seeing we are seeing every larger opportunities at the same time, we are seeing quite a large number of opportunities.

Our average deal size continues to sort of slowly increase so where that number will land.

Speaker 2: So where that number will end, it's hard to call. You know, we certainly are investing in the sales organization and structuring the sales organization to continue to drag that number up. And we would like to see a sketch.

Nicole.

We certainly are investing in the sales organization and structuring children organization to continue to drive that number up and we would like to see us get.

Mark Buntler: And then maybe lastly before I recue, just on SAS Gross Marge, and you provide that kind of illustrative walk over the next few years on kind of services Gross Marge and SAS Gross Marge. I'm curious how the back end optimization work is progressing. In that deck, you kind of have assumptions around 75% incremental gross margin on SAS. Curious if that kind of incorporates some of the efforts you're making on the back end, and if there's also an opportunity to kind of improve the existing SAS base as well.

Speaker 2: in the 12 of a syringe for the year and continue our markup. Our plan is still to get to the point where we can add 20 networks a year, which we'd like to get to within a couple of years. But we're not a firm forecast. That's just what we're trying to do with them.

In the in the 12 ish range for the year and continue our Mark up our plan is still to get to the point, where we can add.

20 networks, a year, which we'd like to get to within a couple of years.

But.

That's not a firm forecast that's just what we're trying to trying to poach.

Speaker 6: Okay, last one for me, can you just update us on the current demand environment for the complex distribution side? Have you seen any changes in urgency from a customer before?

Okay.

One for me can you just update us on the current demand environment.

Does she music distribution side have.

Mark Buntler: Yeah, it does incorporate that, but I think the more we scale there and the more we scratch and invest there, the more efficient we become. So we're making, we're making, we continue to make progress on, you know, the key metrics in there for us are public cloud and restructure costs as a percentage of revenue. We continue to make progress there. That's with, you know, with, with platform optimization and overall, you know, infrastructure efficiency, how we set up the platform and utilize public cloud infrastructure.

Have you seen any changes in urgency from our customers this quarter.

Speaker 2: No, not really change the urgency. We are seeing deals starting to flow on that side. We've got...

No not really a change in urgency, we arent seeing deals starting to flow on that side.

We've got.

Speaker 2: I think we'll see more signed deals probably in this quarter on that side. We did see some activity in the first quarter on that side. So it seems like that marketplace has started.

I think we will see more sign deals probably in this quarter on that side.

Mark Buntler: So we continue to make progress there. And the other, you know, the other vectors are, you know, the other main vectors are cloud operations costs and our ability to execute there. So we measure that metric as internally as cloud operation costs, you know, X public cloud infrastructure costs and monitor that as a percentage of revenue. And we see that, you know, still doing, doing interesting things as well as we scale and continue to leverage, you know, our technology, our platform and external technologies that we use to monitor, et cetera, that help us manage that metric. So I think there's more, you know, there's more goodness to continue to, to, you know, to continue to squeeze out of that margin as we move forward and continue to scale. Great.

We did we did see some activity in the first quarter on that side.

So it seems like that marketplace is starting to.

Operator: I'll pass one. Thank you.

Speaker 2: you know, get out of panic load, you know, the inventory is flowing, the ports are wide open, then, you know, factories are open, you know, that things are just generally returning to normal, and as they return to normal, we're paying the back to where we were in 2019, which...

Operator: Thanks. Great.

Get out of panic, what would be the <unk>.

Slowing the ports are wide open.

Our factories are open.

Things are just generally returning to normal as they returned to normal we're paying it back to where we were in 2019, which which is that.

Operator: Thanks.

Speaker 2: which is that whole sector you know realizing that they're running platforms that were implemented in time for Y2K. And they're not really designed for today's world at all.

That whole sector.

Using that Theyre running platforms that were implemented in time for White T K.

And it's you know theyre not there aren't really designed for today's world at all.

Speaker 2: So we are seeing action on that side. And I think, you know, as I think I said in the spring, we kind of expected that it would be sometime this fall that the deal flow would actually begin. And I think we're still tracking to that. Thanks for taking.

So we are seeing we are seeing action on that side and I think as I think I've said in the spring, we kind of expected that it would be sometime this fall that the deal flow would actually begin and I think we're still tracking.

To that.

Yeah.

Thanks for taking my questions I'll pass the line.

Great. Thank you. Thank you.

Our next question comes from Steven Li with Raymond James. Please proceed.

Speaker 1: ArtX question comes from Stephen Lee with Raymond James. Please proceed.

Speaker 7: Thanks. Hey guys, I may have missed it, but the sad scroll for 40% did you say how much came from current customers and how much from new logos?

Thanks, Hey, guys I may have missed it but the fast growth of 40% did you say how much came from current customers and how much from new logos.

Speaker 3: Yeah, we didn't say that, but in the quarter, the bigger driver there, this quarter, was expansion business.

Yes, we didnt.

John Shaw: Hardback question comes from John Shaw with National Bank. Please proceed.

We didn't say that but in the quarter are the bigger driver. There this quarter was expansion expansion business.

Mark Buntler: Good morning, guys. And thanks for taking my questions. I also have a question on gross margins. So you guys definitely have a decent margin expansion is quarter driven by the SaaS business. So from a modeling perspective, is this improvement permanent? And also how would you think, how should we think about the margin profile in future quarters? I mean, I think we, we, I would direct you to our investor deck there, John.

Speaker 7: Okay, that's right. And also on your bookings, what would be the split between healthcare and complex?

Okay. Okay no.

That's right and.

Also on the on your bookings are what would be the split between <unk> complex.

Yeah, I don't we didn't.

Speaker 3: We didn't really disclose that when either Stephen, but it would have been, actually it would have been tips. It would have been,

We didn't really disclose that one either.

Steven.

But it would have been actually it would've been tipped.

Mark Buntler: And we provided some, you know, kind of projection numbers. I, I, I, I had to call them forecast, but certain projection numbers based upon some assumptions. And, and, you know, we saw, we, we, we started publishing those a couple of quarters ago. We outperformed what we expected there in Q4 slightly. And now we say right now we're, we're tracking with, you know, our, our expectations. And I would leave it at that.

It would have been.

Speaker 3: It was actually pretty even because the expansion deals had included some nice complex distribution, some nice complex distribution customers. So, you know, both I think it would have been, it would in fact it was slightly towards healthcare, but complex was definitely contributing to that one as well, but slightly more than 50% healthcare.

It's actually pretty even because the expansion.

Spansion deals.

Had included some some nice complex distribution.

Some nice complex distribution customers. So those I think it would have been it would in fact, it was slightly tipped towards health care, but complex.

Contributing to that one as well, but slightly more than 50% health care.

Speaker 7: Okay, got it. And then when you when we're talking about bookings here, it applies to both AR and TS, right?

Okay got it and then and when you when you're talking about bookings it applies to both <unk> and PFS rate Mark.

Mark Buntler: Okay, thanks. And in terms of ARR, how should we read into the Q1 number given it's just potentially flat? It's also because of the timing of deal on finance. Yeah, I mean, the ARR number being sequentially flat, I think we had, you know, we have that 1.9 million book, SaaS bookings number, which was, you know, not a fantastic quarter, so that didn't drive up that ARR as much as it otherwise, you know, would have increased. So I think that's probably the main, you know, the main driver for the sequential, the sequential flatness there. Okay, thanks.

Speaker 3: No, I'm talking, I'm talking fast. Oh, you're talking fast, okay. Got it, got it, okay. And then just Peter, your comment earlier, I heard you say your total pipeline in healthcare is up 50%. But then the number of ideas you won was two. Does that mean conversion is very lumpy? Can you talk about conversion rates?

No I'm I'm talking I'm talking to SaaS.

Are you talking fast Okay got it got it Okay and then just.

Peter Your comments earlier I heard you say your total pipeline in healthcare is up 50%.

But then the the number of IBM you you you won was too.

Does that mean conversion is is very lumpy can you just talk about conversion rates are.

Speaker 2: Yeah, I mean, conversion rates are not only lumpy. There's, you know, in healthcare, we don't have that much conversion left to do. I mean, most, you know, most of the, I'm maybe not most, but I mean, a significant portion, I'm trying to think they'll offstop my head, but Mark, we're probably at its point where what 75% of our healthcare clients are already on set.

Yeah, I mean conversion rates are not only lumpy there as you know in health care, we don't have that much conversion left to do I mean, most you know most of the <unk>.

Maybe not most but a significant portion I'm trying to think now off the top of my head, but mark we're probably at its point, where what 75% of our health care clients are already on SaaS.

Peter Brereton: Last question is to Peter. So, Peter, you mentioned your sales team is 30% larger than compared to last year. So, my question is around a, your plan to continue growth at California for the rest of the year? Yeah, I was specifically, first of all, I was specifically referring to the healthcare side of the sales team, so that, you know, that's where the bulk of the growth has gone, and that's where we've seen that substantial increase in the size of that team.

Speaker 2: Yeah. Something like that. Even more so, so there's not that much conversion left to do there. What you're mainly seeing there is that the the expansion in existing fast.

Yeah, something like that.

Even more so so there's not that much conversion left to do there or what you're mainly seeing there is that the the expansion in existing SaaS.

Speaker 2: hospital clients is continuing to be quite strong. So, you know, when we look at our, when we look at our pipeline, our pipeline includes some very significant opportunities.

Hospital clients is continuing to be quite strong.

So when we look at our what do we look at our pipeline. Our pipeline includes some very significant opportunities, but that are from existing customers. So they you know they don't become you know they don't show up as new customer wins in the quarter, but they might still show up it's very substantial additional SaaS bookings in the quarter and I you know I mean.

Peter Brereton: We do plan to continue to invest in the team. I mean, you know, when you look at our LTV to CAC numbers, you know, general guidance in sort of best practices in the fast world, you know, if your LTV to CAC is above three, you should be pouring more money into sales marketing. And, you know, if you look at our general trend over the last, you know, four quarters or eight quarters or whatever you, whatever time frame you want to pick, we're well above that number.

Speaker 2: but that are from existing customers. So they don't become, you know, they don't shop as new customer wins in the quarter, but they might still show up. It's very substantial additional fast bookings in the quarter. And, you know, I mean, to me, it's just underscores the value of building out the fast customer basis. You see that sort of one of these networks becomes a great opportunity in and of itself.

To me it just underscores the value of.

Building out the SaaS customer basis, you see that sort of every one of these networks becomes a great opportunity in and of itself.

Peter Brereton: So, we continue to invest more in sales marketing. We'll continue to see that number rise. We limit our investment there, largely just to manage productivity. You know, there is a, there is a point to which you grow that organization too quickly, and you can actually end up with, you know, declining sales results to do, just too many new people, not enough sort of indefinology of the marketplace. You start blowing opportunities and so on.

Speaker 7: Right, and but when we think of significant opportunities with existing customers, is the cycle quicker, shorter?

Right and but when we think there's significant opportunities with existing customers is the cycle that Quaker sure that.

Speaker 2: Oh, yeah, for sure it is. For sure it is. I mean, we already have, you know, we already have a relationship. We've already got trust built off. They've already got a good understanding of our platform and how to use it and how to deploy it. They've usually built up an internal team that knows how to sort of, you know, support our platform internally from an end user standpoint. So it's,

Oh, yes for sure. It is for sure. It is I mean, we already have you know we already have a relationship we've already got trust built up they've already got a good understanding of our platform and how to use it how to deploy it usually built up an internal team that knows how to sort of support.

Peter Brereton: So, we, so that, you know, the practical considerations of growing an excellent sales team are what limits the investment there because the underlying financial metrics that we track and the KPIs, we track, tell us that we should be continuing to expand that team quite rapidly. And, John, John. Yeah, John, just going back, going back to your last question about error, all right, I failed to mention, but I should have the, the FX impact, the sequential FX impact from the end of Q4 to the end of Q1 was actually a negative drag on that, on that AR number. So, you know, that kind of offset the gains of the increase in error from the fast bookings. Okay, thanks, Peter, to make sense. Thank you.

Support our platform internally from an end user standpoint.

So it's a.

Speaker 2: definitely quick. I mean, there's there's agreements I'm just thinking like in Q1 for instance, we signed a fairly substantial expansion and extension of contract fast contract and that whole process took you know less than 90 days

It's definitely quicker I mean, there's there's agreements I'm just thinking like in Q1 for instance, we signed a fairly substantial expansion and.

Extension of contracts SaaS contract.

And that whole process took.

Less than 90 days.

Speaker 7: Good morning and last one for me and again I probably messed it but did you say how much is your partner influencer deals in the corner thanks

Got it and then last one for me and again I probably missed it but did you say how much is your partner influenced deals in the quarter. Thanks.

Speaker 3: Yeah, well, we did what we did this close there. Steve is the the percentage of our pipeline that's this partner influence at the end of the quarter and that number was 30%. 30% perfect. Thanks guys. Great. Thank you. Thanks.

Yeah, well, we did what we did disclose there Steve is that the percentage of our pipeline that's partner influence at the end of the quarter and that number was 30%.

70% perfect. Thanks, guys.

Alright, thank you thanks.

Thanks for the questions.

Gentlemen, there are no further questions at this time.

Daniel Tran: Our next question comes from Suthan Sukramar with Tiffel. Please proceed. Hi, Daniel, on for Suthan today. Morning, Peter, Mark. My first question here is on the EBITDA beefless quarter. Can you speak to what drove the beef at? Was it due to the pace of timing of growth investments, or are you seeing early leverage benefits in the business? Daniel, can you, can you repeat that question? I didn't quite hear the beginning of kind of broke up a little bit for me at the beginning.

Okay.

Speaker 2: Okay, well thank you everyone for joining us. And as usual, if you have any additional questions, please don't hesitate to reach out to Mark or I, and we will talk to you at the end of Q2. Thanks again for your time and bye for now.

Okay, well, thank you everyone for joining us.

And as usual if you have any additional questions. Please don't hesitate to reach out to mark or I and we will talk to you at the end of Q2. Thanks.

Daniel Tran: Yeah, sure. On your EBITDA beefless quarter, can you speak to what drove the beef? Was it due to the pace of timing of growth investments? Yeah, I mean, our off-ex was up pretty significantly in the quarter, but the big contribution, the big change was a contribution, the contribution margin in the quarter, which was really solid, as we mentioned, mostly by fast expansion, but also with a little bit of effects tailwind in that number.

Thanks again for your time and bye for now.

Speaker 1: That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your line have a great day everyone.

Speaker 8: The I.

Okay.

Uh huh.

[music].

Okay.

Yeah.

[music].

Okay.

Hum.

Okay.

Uh huh.

Okay.

Uh huh.

Uh huh.

Uh huh.

[music].

Mark Buntler: Okay, good. On professional services revenues, growth appears to be quite healthy in this quarter. Is there anything specific to call out? And can you speak how much partner engagement there was during the quarter? Yeah, I think the thing to call out there, Daniel, is our backlog heading into this quarter was very large. We did actually quite a bit of bookings in the quarter as well, so it continues to be over $40 million of backlog, which for us historically is still a very robust number.

Mark Buntler: So we think that probably bodes pretty well for the upcoming quarters. In terms of partner engagement and partner involvement, I guess Peter mentioned, we've got a whole, we've got just a great, great stuff happening on that front. We continue to add, you know, interested SI partners, they're more and more involved in our deals, they're more and more involved, and even on the front end, you know, on opportunities. And that gang is getting, yeah, it's getting the names that are in that group are getting bigger and the participation is getting, you know, more full soon.

Mark Buntler: So we're pretty excited about what's happening now. That's good to hear. Now just to quickly recap in case I missed it. I think you mentioned that you guys won two additional ideas when this quarter, what are your expectations for the year? Is this still around 12? Good question. We debate that all the time. I mean, we're seeing, we are seeing every larger opportunities. At the same time, we are seeing quite a large number of opportunities.

Mark Buntler: You know, average deals size continues to sort of fully increase. So where that number will land, you know, it's hard to call. You know, we certainly are investing in the sales organization and structuring sales organization to continue to drive that number up. And we would like to see us get in the, you know, in the 12 of a syringe for the year. And, you know, continuing our markup, our plan is still to get to the point where we can add, you know, 20 networks a year, which we'd like to get to within a couple of years.

Peter Brereton: But, you know, we're not, that's not a firm forecast, that's just what we're trying to, trying to accomplish. Okay, last one for me, can you just update us on the current demand environment for the complex distribution side? And have you seen any changes in urgency from a customer before? No, not really a change in urgency. We aren't seeing deals starting to flow on that side. You know, we've got, you know, I think we'll see more, you know, side deals probably in this quarter on that side, we'll, you know, we did, we did see some activity in the first quarter on that side.

Peter Brereton: So it seems like that marketplace is starting to, you know, get out of panic mode, you know, the inventory is flowing, the ports are wide open, the, you know, factories are open, you know, the things are just generally returning to normal. And as they return to normal, we're paying the back to where we were in 2019, which is, you know, that whole sector, you know, realizing that they're running platforms that were implemented in time for Y2K.

Peter Brereton: And it's, you know, they're not, they're not really designed for today's world at all. So we are seeing, we are seeing action on that side. And I think, you know, as I think I said in the spring, we kind of expected that it would be sometime this fall that the deal flow would actually begin. And I think we're still tracking to that. Thanks for taking my questions. I'll pass the line.

Steven Li: Great, thank you.

Operator: Thank you. Our next question comes from Steven Li with Raymond James. Please proceed. Thanks. Hey, guys. I may have missed it, but the fast growth for 40 percent. Did you say how much came from the current customers and how much from new logos? Yes, we didn't say that, but in the quarter, the bigger driver there, this quarter was expansion business. That's right. And also on your bookings, what would be the split between healthcare and complex?

Operator: Yeah, we didn't, we didn't really disclose that when either Steven, but it would have been, actually it would have been tips. But it would have been, it was actually pretty even because the expansion, the expansion deals, you know, had included some nice complex distribution, some nice complex distribution customers. So, you know, both, I think it would have been, in fact it was slightly towards healthcare, but complex was definitely contributing to that one as well, but slightly more than 50 percent healthcare.

Operator: Okay, got it. And then, and when you, when we're talking about bookings here, it applies to both AR and TS, right, Mark? No, I'm talking, I'm talking SAS. Oh, you're talking SAS, okay. Got it. Okay. And then just Peter, your comment earlier, I heard you say your total pipeline in healthcare is up 50 percent, but then the number of ideas you, you won was two. Does that mean conversion is very lumpy?

Operator: Can you talk about conversion rates? Yeah, I mean, conversion rates are not only lumpy, there's, you know, in healthcare, we don't have that much conversion left to do. I mean, most, you know, most of the, maybe not most, but I mean, a significant portion. I'm trying to think now off the top of my head, but Mark, we're probably at its point where what 75 percent of our healthcare clients are already on SAS.

Operator: Yeah, something like that. Even more so, so there's not that much conversion left to do there. What you're mainly seeing there is that the, the expansion in existing fast hospital clients is continuing to be quite strong. So, you know, when we look at our, when we look at our pipeline, our pipeline includes some very significant opportunities, but that are from existing customers. So they don't become, you know, they don't show up as new customer wins in the quarter, but they might still show up.

Operator: It's very substantial additional fast bookings in the quarter. And, you know, I mean, to me, it just underscores the value of building out the fast customer basis. You see that sort of one of these networks becomes a great opportunity in and of itself. Right. And, but when we think of significant opportunities with existing customers, is the cycle quicker, shorter? Oh, yeah, for sure it is for sure it is. I mean, we already have, you know, we already have a relationship.

Operator: We've already got trust built off. They already got a good understanding of our platform and how to use it and how to deploy it. They've usually built up an internal team that knows how to sort of, you know, support our platform internally from an end user standpoint. So it's definitely quick. I mean, there's there's agreements. I'm just thinking like in Q1, for instance, we signed a fairly substantial expansion and extension of contract fast contract.

Operator: And that whole process took less than 90 days. And last one for me, and again I probably missed it, but did you say how much is your partner influence deals in the corner? Thanks. Yeah, what we did, what we did disclose there, Steve, is the percentage of our pipeline that's this partner influence at the end of the quarter, and that number was 30%. 30%. Perfect. Thanks, guys. Thank you. Thanks for the questions. Thank you. John and Arnold for the questions at this time. Okay.

Operator: Well, thank you everyone for joining us, and as usual, if you have any additional questions, please don't hesitate to reach out to Mark or I, and we will talk to you at the end of Q2. Thanks again for your time and bye for now. That does conclude the conference call for today. We thank you for your participation, and as that you please disconnect your line. Have a great day, everyone. Thank you.