Q4 2024 Tecsys Inc Earnings Call

Good morning, everyone. Welcome to Tecsys' fourth quarter and fiscal year 2024 results conference call. Please note that the complete annual and fourth quarter report, including MD&A and financial statements, were filed in CDERplus after market closed yesterday.

Operator: and Fiscal Year 2024 Results conference call. Please note that the complete annual and fourth 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. The company has added a companion presentation to today's call, which is available on their website at www.tecsys.com forward slash investors. 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. As for results, they may differ materially from such statements.

Operator: Thank you for joining us for the Cisco Year 2024 Results Conference Call. Please note that the complete annual and fourth quarter results, including MD&A and financial statements, were filed in Cedar Plus after the market closed yesterday. All dollar amounts are expressed in Canadian currency and were 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.

Operator: The company has added a companion presentation to today's call, which is available on their website at www.tecsys.com forward slash investment. 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. However, actual results may differ materially from such statements.

The company has added a companion presentation to today's call, which is available on their website at www.tecsys.com forward slash investors.

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 deletes and assumptions. Actual results may differ materially from such statements.

Operator: I would like to remind everyone that this call is being recorded on Friday, June 28, 2024, at 8:30 a.m. Eastern time.

Operator: I would like to remind everyone that this call is being recorded on Friday, June 28, 2024 at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer of Tecsys. Please go ahead.

Speaker Change: I would like to remind everyone that this call is being recorded on Friday, June 28, 2024, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer at Tecsys. Please go ahead, sir.

Peter Brereton: I would now like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer at Tecsys. Please go ahead, sir.

Peter Brereton: Good morning.

Peter Brereton: Joining me today is Mark Butler, our Chief Financial Officer. We appreciate you joining us for today's call. As most of you have likely seen in the results issues last night, fiscal 2024 has been an outstanding year for our organization, marked by significant achievements and strong organic growth. Our year over year sass revenue is up 39% and our RPO continues to grow up 43% over last year. Our momentum continues across the board with emerging opportunities in new marketplaces and a clear path for sustained performance. Our vision for growth is sharper than ever, supported by investment in technology and an obsession with customer success.

Peter Brereton: Joining me today is Mark Bentler, our Chief Financial Officer. We appreciate you joining us on today's call.

Peter Brereton: Good morning.

Peter Brereton: Joining me today is Mark Bentler, our Chief Financial Officer. We appreciate you joining us for today's call.

Peter Brereton: As most of you have likely seen in the results issued last night, Fiscal 2024 has been an outstanding year for our organization, marked by significant achievements and strong organic growth. Our year over year revenue for SAS is up 39 percent, and our RPO continues to grow 43 percent over last year. Our momentum continues across the board, with emerging opportunities and new marketplaces and a clear path for sustained performance. Our vision for growth is sharper than ever, supported by investment in technology and an obsession with customer success.

Peter Brereton: As most of you have likely seen in the results issued last night, Fiscal 2024 has been an outstanding year for our organization, marked by significant achievements and strong organic growth.

Peter Brereton: Our year-over-year SAS revenue is up 39% and our RPO continues to grow up 43% over last year. Our momentum continues across the board with emerging opportunities in new marketplaces and a clear path for sustained performance.

Peter Brereton: Our vision for growth is sharper than ever, supported by investment in technology and an obsession with customer success.

Peter Brereton: I'd like to take a moment to summarize the key events of our Q4 and full year results for fiscal 2024. Mark will then walk us through the financial results in more detail.

Peter Brereton: I'd like to take a moment to summarize the key events of our Q4 and full year results for Fiscal 24. Mark will then walk us through the financial results in more detail, and finally, I'll comment on our outlook, followed by a Q&A session. If you're following along in the companion deck, I'll be speaking on slide three.

Speaker Change: I'd like to take a moment to summarize the key events of our Q4 and full year results for Fiscal 24. Mark will then walk us through the financial results in more detail. And finally, I'll comment on our outlook, followed by a Q&A session.

Peter Brereton: And finally, I'll come with an outlook followed by the Q&A session. If you're following along in a campaign deck, I'll be speaking to slide three. Q4 has been a fantastic capstone for the fiscal years. We continue to break our own records. We achieved the highest quarterly revenue in our company's history. We achieved the highest SaaS bookings in our company's history, including migrations and expansions across vehicles. And we welcome two new healthcare IDMs. Our bookings this quarter were up 108% over last year. And 37% higher than our best quarter ever. While we hardly expect this to even in run rate, we're very happy with this high watermark and quarterly bookings, which brings our fiscal year bookings to a 13% increase year over year.

Speaker Change: If you're following along in the companion deck, I'll be speaking to slide 3.

Peter Brereton: Q4 has been a fantastic capstone for the fiscal year as we continue to break our own records. We achieved the highest quarterly revenue in our company's history. We achieved the highest quarterly bookings in our company's history, including migrations and expansions across verticals. And we welcome two new healthcare IDNs.

Mark J. Bentler: Q4 has been a fantastic capstone for the fiscal year as we continue to break our own records. We achieved the highest quarterly revenue in our company's history.

Mark J. Bentler: We achieved the highest SAS bookings in our company's history, including migrations and expansions across verticals, and we welcomed two new healthcare IDNs. Our bookings this quarter were up 108% over last year, and 37% higher than our best quarter ever.

Peter Brereton: Our bookings this quarter were up 108% over last year and 37% higher than our best quarter ever. While we hardly expect this to be the new run rate, we're very happy with this high watermark for quarterly bookings, which brings our fiscal year bookings to a 13% increase year over year. Now, on to RPO.

Mark J. Bentler: While we hardly expect this to be the new run rate, we're very happy with this high water mark in quarterly bookings, which brings our fiscal year bookings to a 13% increase year over year.

Peter Brereton: On to our PO due to strong bookings as well as extensions and renewals in fiscal 2024, our SaaS RPO is growing in a healthy clip, up 43% to 197 million compared to the same time last year. Just thinking about that, that means that over the last few years, we have built a backlog of sass that has something like 130 million of contracted but unrecognized gross margin contribution that will flow through in the years ahead. That is pretty exciting stuff.

Peter Brereton: Due to strong bookings as well as extensions and renewals in fiscal 2024, our SAS RPO business is growing at a healthy clip, up 43% to $197 million compared to the same time last year. Just thinking about that a bit, that means that over the last few years, we have built a backlog of SAS that has something like 130 million of contracted but unrecognized gross margin contribution that will flow through in the years ahead. That is pretty exciting stuff.

Mark J. Bentler: On to RPO. Due to strong bookings as well as extensions and renewals in fiscal 2024, our SAS RPO is growing at a healthy clip, up 43% to $197 million compared to the same time last year.

Mark J. Bentler: Just thinking about that a bit, that means that over the last few years we have built a backlog of SAS that has something like $130 million of contracted but unrecognized gross margin contribution that will flow through in the years ahead. That is pretty exciting stuff.

Peter Brereton: In terms of milestones a year ago, we announced that we crossed the 50% threshold of our recurring revenue being SaaS revenue. A year later, we're now looking at SaaS revenue representing 64% of our recurring revenue. It's worth mentioning that our positive momentum and growing sass customer base is underpinned by very robust gross and net retention levels. We are cementing our position as the system of choice for organizations grappling with supply chain complexity. From the Texas Children's Hospital, the largest pediatric facility in the United States, the Baptist Health, the major health system embarking on a consolidated pharmacy service center, and from TruPill, the pioneering digital pharmacy provider to Roach, which I mentioned in a previous call.

Peter Brereton: In terms of milestones, a year ago, we announced that we crossed the 50% threshold of our recurring revenue being SAS revenue. A year later, we're now looking at SAS revenue representing 64% of our recurring revenue. It's worth mentioning that our positive momentum and growing SAS customer base is underpinned by very robust growth and net retention levels. We are cementing our position as the system of choice for organizations grappling with supply chain complexity. From Texas Children's Hospital, the largest pediatric facility in the United States, to Baptist Health, a major health system embarking on a consolidated pharmacy service center.

Mark J. Bentler: In terms of milestones, a year ago we announced that we crossed the 50% threshold of our recurring revenue being SAS revenue. A year later, we're now looking at SAS revenue representing 64% of our recurring revenue.

Mark J. Bentler: It's worth mentioning that our positive momentum and growing SaaS customer base is underpinned by very robust growths and net retention levels.

Mark J. Bentler: We are cementing our position as the system of choice for organizations grappling with supply chain complexity. From the Texas Children's Hospital, the largest pediatric facility in the United States, to Baptist Health, a major health system embarking on a consolidated pharmacy service center.

Peter Brereton: And from TruPill, the pioneering digital pharmacy provider, to Roche, which I mentioned in a previous call, we are adding top-tier organizations to our customer list that recognize the value that Tecsys delivers. This value is reinforced by organizations like NISAN, Intermountain Health, and Mayo Clinic, who are sharing their experiences in panels and presentations like those at our user conference last September, as well as at regional workshops through the year, or in industry publications like Becker's Healthcare and Fortune. With this customer growth comes an expanding white space opportunity. In healthcare, this is especially significant because we often enter an account in a single department or with one solution.

Mark J. Bentler: and from TruPill, the pioneering digital pharmacy provider, to Roche, which I mentioned in a previous call. We are adding top-tier organizations to our customer list that recognize the value that Tecsys delivers.

Peter Brereton: We are adding top to your organizations to our customer list, to recognize the value of the Texas delivers. This value is reinforced by organizations like Nissan, Inter-Mountain Health, and Mayo Clinic, who are sharing their experiences in panels and presentations like those of our user conference last September, as well as at regional workshops throughout the year, or in industry publications like Becker's Healthcare and Fortune. With this customer growth comes an expanding white space opportunity. In healthcare, this is especially significant because we often enter an account in a single department, or with one solution. As we prove at the value of that solution, our end-to-end healthcare offering now gives us a lot of flexibility into how we can penetrate further into each account.

Mark J. Bentler: This value is reinforced by organizations like NISAN, Intermountain Health, and Mayo Clinic, who are sharing their experiences in panels and presentations like those at our user conference last September , as well as at regional workshops through the year, or in industry publications like Becker's Healthcare and Fortune.

Mark J. Bentler: With this customer growth comes an expanding white space opportunity. In healthcare, this is especially significant because we often enter an account in a single department or with one solution. As we prove the value of that solution, our end-to-end healthcare offering now gives us a lot of flexibility into how we can penetrate further into each account.

Peter Brereton: As we prove the value of that solution, our end-to-end healthcare offering now gives us a lot of flexibility in how we can penetrate further into each account. Earlier this year, we gained traction around the CPSC, or Consolidated Pharmacy Service Centre, model, essentially replicating the successful model that we brought to a health system's med-surg supply chain and adapting it for the pharmacy. With engagements at St. Luke's, Parkview Health, and Baptist Health, we're proving that the model and significantly increasing the white space in our existing base and the total addressable market within an industry where we already have a solid foothold.

Peter Brereton: Earlier this year, we gained traction around the CPSC or Consolidated Pharmacy Service Center model, essentially replicating this successful model that we brought to a health system's med-surge supply chain and adapting it for the pharmacy, with engagements at St. Luke's, Parkview Health, and Baptist Health. We're proving at the model, and significantly increasing the white space in our existing base and the total addressable market within an industry where we already have a solid foothold. We seem to be gaining margin as the market leader in this CPSC space, and we're very quickly securing wins with major IDNs.

Mark J. Bentler: Earlier this year, we gained traction around the CPSC, or Consolidated Pharmacy Service Centre model, essentially replicating the successful model that we brought to a health system's med-surg supply chain and adapting it for the pharmacy.

Mark J. Bentler: With engagements at St. Luke's, Parkview Health, and Baptist Health, we're proving that the model and significantly increasing the white space in our existing base and the total addressable market within an industry where we already have a solid foothold.

Peter Brereton: We seem to be again emerging as the market leader in this CPSC space, and we're very quickly securing wins with major IDNs. We're also continuing to build and strengthen our partner ecosystem throughout this fiscal year. This effort has proven valuable, with 26% of our deals and half of our new logos being partner-influenced. As part of our partner program, we became the only WMS provider to achieve AWS supply chain competency in three categories, which was announced in January.

Mark J. Bentler: We seem to be again emerging as the market leader in this CPSC space, and we're very quickly securing wins with major IDNs.

Peter Brereton: We're also continuing to build and strengthen our partner ecosystem throughout this fiscal year. This effort is proven valuable with 26% of our deals and a half of our new logos being partner influenced. As part of our partner program, we became the only WMS provider to achieve AWS Supply Chain Competency in three categories, which was announced in January.

Mark J. Bentler: We're also continuing to build and strengthen our partner ecosystem throughout this fiscal year. This effort is proving valuable with 26% of our deals and a half of our new logos being partner influenced.

Mark J. Bentler: As part of our partner program, we became the only WMS provider to achieve AWS supply chain competency in three categories, which was announced in January .

Peter Brereton: As previously discussed, we initiated a major restructuring in the fourth quarter to boost long-term profitability. I'm pleased to confirm that the end results came out fairly closely with what we'd anticipate. Our expectations regarding the impact on our run rate and the cost we expected to incur were quite accurate. This restructuring was an important step for us as we continue to increase our investment in areas of growth. As we continue to invest in the products we sell 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.

Peter Brereton: As previously discussed, we initiated a major restructuring in the fourth quarter to boost long-term profitability, and I'm pleased to confirm that the end results came out fairly closely with what we'd anticipated. Our expectations regarding the impact on our run rate and the cost we expected to incur were quite accurate. This restructuring was an important step for us as we continue to increase our investment in areas of growth. As we continue to invest in the products we sell and the manner in which we sell them, Tecsys has proven to be among the best cloud-based solutions available in the markets we serve.

Mark J. Bentler: As previously discussed, we initiated a major restructuring in the fourth quarter to boost long-term profitability. I'm pleased to confirm that the end results came out fairly closely with what we had anticipated.

Mark J. Bentler: Our expectations regarding the impact on our run rate and the cost we expected to incur were quite accurate. This restructuring was an important step for us as we continue to invest increase our investment in areas of growth.

Mark J. Bentler: As we continue to invest in the products we sell and the manner in which we sell them, Tecsys has proven to be among the best cloud-based solutions available in the markets we serve.

Peter Brereton: The steady growth we have experienced affirms our vision and strategy for shareholder value.

Peter Brereton: The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our fourth quarter and full fiscal financial year results as well as financial guidance on several key metrics.

Mark J. Bentler: The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our fourth quarter and the full fiscal financial year results, as well as financial guidance on several key metrics.

Mark Butler: Mark will now provide further details on our fourth quarter and the full fiscal financial year results, as well as financial guidance on several key metrics.

Mark Butler: Thank you, Peter. We're very pleased with the strong performance in our fourth quarter and at April 30th, 2024. I'll start with slide four and focused first on tasks. SAS revenue continues to be the key driver for our growth, and we believe the key driver for value creation. Sass Revenue Growth is driving our recurring revenue, and during the fourth quarter, Sass Revenue Growth was 27% compared to the same quarter last year, reaching 14.2 million. The big news, as Peter mentioned previously, is our record-setting $8 million of Sass bookings in Q4. Our higher growth SaaS revenue is now poised to overtake professional services revenue as our largest single source of revenue, and we expect this to continue to play out in fiscal 2025 and beyond.

Mark J. Bentler: Thank you, Peter. We're very pleased with the strong performance in our fourth quarter and on April 30th, 2024. I'll start with slide four and focus first on tasks.

Mark J. Bentler: Thank you, Peter. We're very pleased with the strong performance in our fourth quarter and at April 30th, 2024. I'll start with slide four and focused first on SAS.

Mark J. Bentler: SAS revenue continues to be the key driver for our growth, and we believe the key driver for value creation. SAS revenue growth is driving our recurring revenue. And during the fourth quarter, SAS revenue growth was 27% compared to the same quarter last year, reaching 14.2 million. The big news, as Peter mentioned previously, is our record-setting $8 million of SAS bookings in Q4.

Mark J. Bentler: SAS Revenue continues to be the key driver for our growth and we believe the key driver for value creation.

Mark J. Bentler: SaaS revenue growth is driving our recurring revenue, and during the fourth quarter, SaaS revenue growth was 27% compared to the same quarter last year, reaching $14.2 million. The big news, as Peter mentioned previously, is our record-setting $8 million of SaaS bookings in Q4.

Mark J. Bentler: Our higher growth SaaS revenue is now poised to overtake professional services revenue as our largest single source of revenue, and we expect this to continue to play out in fiscal 2025 and beyond. Total revenue for the quarter was a record $44 million. That's several percent higher than the same period last year. On a constant currency basis, total revenue growth was 5%. Professional services revenue for the fourth quarter was $14.4 million. That was down 2% from $14.6 million reported for the same quarter last year but up 11% on a sequential basis from Q3. Professional services backlog continues to be strong at $32.1 million as of April 30, 2024.

Mark J. Bentler: Our higher growth SAS revenue is now poised to overtake professional services revenue as our largest single source of revenue, and we expect this to continue to play out in fiscal 2025 and beyond.

Mark Butler: Total revenue for the quarter was a record $44 million. That's 7% higher than the same period last year. On a constant currency basis, total revenue growth was 5%. Professional services revenue for the fourth quarter was $14.4 million. That was down 2% from 14.6 million reported for the same quarter last year, but up 11% on a sequential basis from Q3. Professional services backlog continues to be strong at 32.1 million as of April 30, 2024. For the fourth quarter of fiscal 2024, gross margin was 47%, compared to 45% in the same period last year. Combined Sass, maintenance, support, and professional services gross profit margin for the three months and in April 30, 2024 was 50%.

Mark J. Bentler: Total revenue for the quarter was a record $44 million. That's 7% higher than the same period last year. On a constant currency basis, total revenue growth was 5%.

Mark J. Bentler: Professional services revenue for the fourth quarter was $14.4 million. That was down 2% from $14.6 million reported for the same quarter last year, but up 11% on a sequential basis from Q3.

Mark J. Bentler: Professional services backlog continues to be strong at 32.1 million as of April 30th, 2024.

Mark J. Bentler: For the fourth quarter of fiscal 2024, gross margin was 47% compared to 45% in the same period last year. Combined SAS maintenance, support, and professional services gross profit margin for the three months ended April 30, 2024 was 50%. That's up compared to 47% in the same period of fiscal 2023. SAS margin expansion was the driver.

Mark J. Bentler: For the fourth quarter of fiscal 2024, gross margin was 47%, compared to 45% in the same period last year.

Mark J. Bentler: Combined SAS maintenance, support, and professional services gross profit margin for the three months ended April 30, 2024, was 50%. That's up compared to 47% in the same period of fiscal 2023.

Mark Butler: That's up compared to 47% in the same period of fiscal 2023. Sass margin expansion was the driver, and we're pleased to report that this continues to track as planned. Net profit in the quarter was relatively flat at $259,000, compared to $446,000 in the same quarter last year. Net profit in the quarter was negatively impacted by $2.1 million restructuring charges, and this was broadly offset by positive comparable impact from foreign exchange and income tax attribute recognition in the current quarter. Adjusted EBITDA was $2.8 million in Q4 of fiscal 24, compared to $2.4 million in the same period last year.

Mark J. Bentler: And we're pleased to report that this continues to track as planned. Net profit in the quarter was relatively flat at $259,000 compared to $446,000 in the same quarter last year. Net profit in the quarter was negatively impacted by $2.1 million in restructuring charges, and this was broadly offset by a positive comparable impact from foreign exchange and income tax attribute recognition in the current quarter. Adjusted EBITDA was $2.8 million in Q4 of fiscal 24 compared to $2.4 million in the same period last year.

Mark J. Bentler: SAS margin expansion was the driver, and we're pleased to report that this continues to track as planned.

Mark J. Bentler: Net profit in the quarter was relatively flat at $259,000 compared to $446,000 in the same quarter last year.

Mark J. Bentler: Net profit in the quarter was negatively impacted by $2.1 million restructuring charges, and this was broadly offset by positive comparable impact from foreign exchange and income tax attribute recognition in the current quarter.

Mark J. Bentler: Adjusted EBITDA was $2.8 million in Q4 of Fiscal 24, compared to $2.4 million in the same period last year.

Mark Butler: I'm going to turn now briefly to our results for the full fiscal year of 2024 and move to slide five if you're following along in the deck. Our total revenue was $171.2 million; that's up 12% compared to $152.4 million in the same period last year, and up 9% on a constant currency basis. Sass revenue for fiscal 24 was $51.9 million, up 39% from $37.5 million in the same period last year, and that was up 35% on a constant currency basis. Our adjusted EBITDA for fiscal 24 was $9.6 million, compared to $9.5 million in the same period last year.

Mark J. Bentler: I'm going to turn now briefly to our results for the full fiscal year 2024 and move to slide 5 if you're following along in the deck. Our total revenue was $171.2 million, that's up 12% compared to $152.4 million in the same period last year and up 9% on a constant currency basis. SAS revenue for fiscal 24 was $51.9 million, up 39% from $37.5 million in the same period last year, and that was up 35% on a constant currency basis.

Mark J. Bentler: I'm going to turn now briefly to our results for the full fiscal year 2024 and move to slide 5 if you're following along in the deck.

Mark J. Bentler: Our total revenue was $171.2 million, that's up 12%, compared to $152.4 million in the same period last year, and up 9% on a constant currency basis.

Mark J. Bentler: SAS revenue for fiscal 24 was 51.9 million, up 39% from 37.5 million in the same period last year. And that was up 35% on a constant currency basis.

Mark J. Bentler: Our adjusted EBITDA for fiscal 24 was $9.6 million compared to $9.5 million in the same period last year. Basic and fully diluted earnings per share were $0.13 in fiscal 24, compared to $0.14 in fiscal 23. We ended Q4 fiscal 24 with a solid balance sheet position. We had cash and short-term investments of $35.6 million and no debt. Operating activities provided $4.9 million of cash in Fiscal 24, and during the year, we used $7.2 million to repurchase shares under our NCIB. Additionally, the board yesterday approved a quarterly dividend of $0.08 a share.

Mark J. Bentler: Our adjusted EBITDA for Fiscal 24 was $9.6 million compared to $9.5 million in the same period last year. Basic and fully diluted earnings per share were $0.13 in Fiscal 24 compared to $0.14 in Fiscal 23.

Mark Butler: Basic and fully diluted earnings per share were 13 cents in fiscal 24, compared to 14 cents in fiscal 23. We ended Q4 fiscal 24 with a solid balance sheet position. We had cash and short-term investments of $35.6 million and no debt. Operating activities provided $4.9 million of cash at Fiscal 24. And during the year, we used $7.2 million to repurchase shares under our NCIV. Additionally, the board yesterday approved a quarterly dividend of $0.80 a share.

Mark J. Bentler: We ended Q4 fiscal 24 with a solid balance sheet position. We had cash and short-term investments of $35.6 million and no debt.

Mark J. Bentler: Operating activities provided $4.9 million of cash in fiscal 24, and during the year, we used $7.2 million to repurchase shares under our NCIB.

Mark J. Bentler: Additionally, the board yesterday approved a quarterly dividend of $0.08 a share.

Mark Butler: With respect to financial guidance and now moving to slide 6, we're providing full-year 25 guidance as follows. Number one, total revenue growth between 7% and 9%. Number two, SaaS revenue growth between 30% and 32%. And finally, adjusted EBITDA margin between 8% and 9%. Additionally, we're providing adjusted EBITDA margin guidance for fiscal 2026 of between 10 and 11%.

Mark J. Bentler: With respect to financial guidance, and now moving to slide six, we're providing full year 25 guidance as follows. Number one, total revenue growth between 7% and 9%. Number two, SAS revenue growth between 30 and 32%. And finally, adjusted EBITDA margin between 8% and 9%. Additionally, we're providing adjusted EBITDA margin guidance for fiscal 2026 of between 10 and 11%. I'll now turn the call back to Peter to provide some Outlook comments.

Mark J. Bentler: With respect to financial guidance, and now moving to slide six, we're providing full year 25 guidance as follows. Number one, total revenue growth between seven and nine percent.

Mark J. Bentler: Number two, SAS revenue growth between 30 and 32 percent.

Mark J. Bentler: And finally, adjusted EBITDA margin between 8 and 9 percent.

Mark J. Bentler: Additionally, we're providing adjusted EBITDA margin guidance for fiscal 2026 of between 10 and 11 percent.

Peter Brereton: I'll now turn the call back to Peter to provide some outlook comments. Thanks, Mark. Texas performance in fiscal 2024 started out strong, and that momentum continued through the year. We have a solid balance sheet and continue to have a robust backlog and sales pipeline. We are seeing widespread buyer intent across our target markets, and the opportunity cycles are being accelerated by a highly capable sales team with the tools, the talent, and the partners to capitalize on a market that's ready to invest. As I mentioned earlier, our expanded healthcare sector offering and growing footprint gives us confidence that the healthcare market will continue to be an important growth engine for us.

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

Peter Brereton: Texas performance in fiscal 2024 started out strong, and that momentum continued through the year. We have a solid balance sheet and continue to have a robust backlog and sales pipeline. We are seeing widespread buyer intent across our target markets, and the opportunity cycles are being accelerated by a highly capable sales team with the tools, the talent, and the partners to capitalize on a market that's ready to invest. As I mentioned earlier, our expanded healthcare sector offering and growing footprint gives us confidence that the healthcare market will continue to be an important growth engine for us.

Peter Brereton: Thanks, Mark.

Peter Brereton: Tecsys performance in fiscal 2024 started out strong and that momentum continued through the year. We have a solid balance sheet and continue to have a robust backlog and sales pipeline.

Peter Brereton: We are seeing widespread buyer intent across our target markets and the opportunity cycles are being accelerated by a highly capable sales team with the tools, the talent, and the partners to capitalize on a market that's ready to invest.

Peter Brereton: As I mentioned earlier, our expanded healthcare sector offering and growing footprint gives us confidence that the healthcare market will continue to be an important growth engine for us.

Peter Brereton: We have an exciting value proposition within that pharmacy space with multiple proof points and a growing acceptance of the consolidated service model for pharmacy distribution. Over and above our IDN business with the added pharmacy white space, we are seeing growth signals in our medical and farmer distribution sector driven partially by legislative pressure from the U.S. drug supply chain security actor DSCSA, which requires traceability to Texas solutions and angle. We are also well positioned to pursue new marketplaces and geographies within the converging distribution space, and we will continue to invest to expand our overall growth. Our distribution business represents a massive market opportunity, and we're still only scratching the surface.

Peter Brereton: We have an exciting value proposition within that pharmacy space with multiple proof points and a growing acceptance of the consolidated service model for pharmacy distribution. Over and above our IDN business, with the added pharmacy white space, we are seeing growth signals in our medical and pharma distribution business, driven partially by legislative pressure from the U.S. Drug Supply Chain Security Act, or DSCSA, which requires traceability, the Texas Solutions Enable.

Peter Brereton: We have an exciting value proposition within that pharmacy space with multiple proof points and a growing acceptance of the consolidated service model for pharmacy distribution.

Peter Brereton: over and above our IDN business with the added pharmacy white space.

Peter Brereton: We are seeing growth signals in our medical and pharma distribution sector.

Peter Brereton: driven partially by legislative pressure from the U.S. Drug Supply Chain Security Act, or DSCSA, which requires traceability, the Texas Solutions Enable.

Peter Brereton: We are also well positioned to pursue new marketplaces and geographies within the converging distribution space, and we will continue to invest to expand our overall growth. Our distribution business represents a massive market opportunity, and we're still only scratching the surface. We continue to hone our sweet spot there and carve out our share of that pie with rising market indicators driven by fundamental changes to the supply chain industry, changes spurred by aging legacy systems, digital adoption, and a realization that heightened consumer expectations are here to stay.

Peter Brereton: We are also well positioned to pursue new marketplaces and geographies within the converging distribution space.

Peter Brereton: and we will continue to invest to expand our overall growth.

Peter Brereton: Our distribution business represents a massive market opportunity, and we're still only scratching the surface.

Peter Brereton: We continue to hold our sweet spot there in Carvote; our share of that pie with rising market indicators driven by fundamental chains to the supply chain industry, changes burdened by aging legacy systems, digital adoption, and a realization of heightened consumer expectations are here to stay. We are pleased that our fiscal 2024 results continue to demonstrate our dominance in key markets and emerging opportunity and growth markets. The wave of change and system modernization and supply chain management is underway, and businesses are actively investing in the tools that they need to adapt to consumer expectations. As we look ahead to fiscal 2025, we are confident in our ability to seize market opportunity and presence in this rapidly growing market in North America and expand our footprint in European markets.

Peter Brereton: We continue to hone our sweet spot there and carve out our share of that pie with rising market indicators driven by fundamental change to the supply chain industry. Change is spurred by aging legacy systems, digital adoption, and a realization that heightened consumer expectations are here to stay.

Peter Brereton: We are pleased that our fiscal 2024 results continue to demonstrate our dominance in key markets and emerging opportunity and growth markets. A wave of change and system modernization and supply chain management is underway, and businesses are actively investing in the tools that they need to adapt to consumer expectations. As we look ahead to fiscal 2025, we are confident in our ability to seize market opportunities and presence in this rapidly growing market in North America and expand our footprint in European markets. And so, in summary, I want to share with analysts and investors some key things for fiscal 2025.

Peter Brereton: We are pleased that our fiscal 2024 results continue to demonstrate our dominance in key markets and emerging opportunity and growth markets. The wave of change and system modernization and supply chain management is underway, and businesses are actively investing in the tools that they need to adapt to consumer expectations.

Peter Brereton: As we look ahead to fiscal 2025, we are confident in our ability to seize market opportunity and presence in this rapidly growing market in North America and expand our footprint in European markets.

Peter Brereton: And so in summary, I want to share with analysts and investors and p-things for fiscal 25. First, an emphasis on continuing to refine our staff software, so it is easy to use and upgrade, and even easier to recommend appears. Second, a continued strategic partnership approach characterized by deeper and stronger alliances. This helps us tap into new opportunities and fuels our scalability around the world. Third, an emphasis on advancing deepening our healthcare vertical, covering both measure and pharma as we continue to solidify our position as the go-to provider for healthcare supply chain solutions. Fourth, our continuous evolution of our distribution and omnichannel business platform that takes advantage of innovative technologies and the power of data.

Peter Brereton: And so in summary, I want to share with analysts and investors some key things for Fiscal 25. First, an emphasis on continuing to refine our SAS software so it is easy to use and upgrade and even easier to recommend to peers.

Peter Brereton: First, an emphasis on continuing to refine our SAS software so it is easy to use and upgrade and even easier to recommend to peers. Second, a continued strategic partnership approach characterized by deeper and stronger alliances. This helps us tap into new opportunities and fuels our scalability around the world. Third, an emphasis on advancing and deepening our healthcare vertical, covering both MESRJ and pharma, as we continue to solidify our position as the go-to provider for healthcare supply chain solutions.

Peter Brereton: Second, a continued strategic partnership approach characterized by deeper and stronger alliances. This helps us tap into new opportunities and fuels our scalability around the world.

Peter Brereton: Third, an emphasis on advancing, deepening our healthcare vertical, covering both MESRJ and pharma, as we continue to solidify our position as the go-to provider for healthcare supply chain solutions.

Peter Brereton: Fourth, a continuous evolution of our distribution and omni-channel business platform that takes advantage of innovative technologies and the power of data. As a final point, I'd like to stress that across our markets, we will prioritize customer satisfaction and success. We have long stood by the philosophy of customers for life. A big part of that formula is to deliver value quickly, stay connected, and expand on the value delivered. With that, we'll open up the call for questions. Thank you.

Peter Brereton: Fourth, a continuous evolution of our distribution and omni-channel business platform that takes advantage of innovative technologies and the power of data.

Peter Brereton: As a final point, I'd like to stress that across our markets, we will prioritize customer satisfaction and success. We have long stood by the philosophy of Customers for Life. A big part of that formula is to deliver value quickly, stay connected, and expand on the value delivered.

Peter Brereton: As a final point, I'd like to stress across our markets, we will prioritize customer satisfaction and success. We have long stood by the philosophy of customers for life. A big part of that formula is to deliver value quickly, stay connected, and expand on the value delivered.

Operator: With that, we'll open up the call for questions. Thank you. Thank you, sir.

Peter Brereton: With that, we'll open up the call for questions. Thank you.

Operator: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any button. One moment, please for your first question. Our first question comes from the line of Andy Nguyen from Raymond James. Go ahead. I thank you for taking my call.

Operator: Ladies and gentlemen, you will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please lift the handset before pressing any key. One moment, please, for your first question.

Speaker Change: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Should you have a question, please press star followed by the 1 on your touchstone phone. You will hear a prompt that your hand has been raised.

Speaker Change: Should you wish to decline from the polling process, please press star followed by the number 2.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any key.

Speaker Change: One moment, please, for your first question.

Andy Run: Our first question comes from the line of Andy Run from Raymond James. Go ahead, please. I thank you for taking my questions. So your fiscal 25 guidance implies slow growth on the top line. Maybe you could share some of the color of what you see in the market.

Speaker Change: Our first question comes from the line of Andy Nguyen from Raymond James. Go ahead please.

Andy Nguyen: Thank you for taking my question. So your fiscal 25 guidance implies slower growth on the top line. Maybe you could share some color on what you're seeing in the market?

Andy Nguyen: Hi, thank you for taking my question. So your fiscal 25 guidance implies slower growth on the top line. Maybe you could share somewhat color what you're seeing in the market?

Peter Brereton: Peter, you want to take that, or you want me? Yeah, sure. You can add some details, but overall it's really just a question. There's our business continuous transition with, you know, with increasing partnerships and alliances and organizations, like whether it's the Deloitte or KPMG or Rise Now or Avalon. They're assisting us with a lot of implementation. So what you end up with here is a rapidly growing SaaS revenue line, but which, you know, currently represents, you know, let's round it off here, a third of our revenues. So when SaaS represents a third of our revenues, and it's growing in the, you know, 30 to 40% range.

Peter Brereton: Peter, you want to take that, or you want me to? I've got a... Yeah, sure, I can comment, maybe you can add some detail. But yeah, I mean, overall, it's really just a question because our business continues to transition with, you know, increasing partnerships and alliances and, you know, organizations like, whether it be Deloitte or KPMG or Risenow or Avalon, they're So what you end up with here is a rapidly growing SaaS revenue line.

Andy Nguyen: Yep.

Peter Brereton: Peter you want to take that or you want me I've got a yeah sure I can comment maybe you can add some add some detail but yeah I mean overall it's it's really just a question of is our business continues to transition with uh you know with increasing

Speaker Change: partnerships and alliances and, you know, organizations like whether it be Deloitte or KPMG or Risenow or Avalon, they're assisting us with a lot of implementations. So what you end up with here is a rapidly growing SaaS revenue line.

Peter Brereton: But which currently represents, you know, let's round it off here, a third of our revenues. So when SaaS represents a third of our revenues, and it's growing in the, you know, 30 to 40% range, but most of the rest of the businesses, the trend lines are close to flat. That's what you end up with.

Speaker Change: but which you know currently represents you know let's round it off here a third of our revenues.

Speaker Change: So when SAS represents a third of our revenues and it's growing in the, you know, 30 to 40% range. But most of the rest of the businesses, the trend lines are close to flat.

Peter Brereton: But most of the rest of the business is, the trend lines are close to flat. That's what you end up with. You kind of end up with a tennis kind of percent growth range. So, so that's what we're seeing. And, you know, I think is the business, you know, continues this transition. You know, SaaS revenues become a higher and higher percentage of the total. That top line growth revenue is going to rise right back up again, along with the SaaS.

Peter Brereton: You kind of end up with a 10-ish kind of percent growth range. So that's what we're seeing. And, you know, I think as the business continues this transition, as SaaS revenues become a higher and higher percentage of the total, that top line growth revenue is going to rise right back up again, along with the SaaS. This is probably our last year of transition out of the license model.

Speaker Change: That's what you end up with. You kind of end up with a 10-ish kind of percent growth range. So that's what we're seeing and, you know, I think is the business.

Speaker Change: you know, continues this transition as, you know, SAS revenues become a higher and higher percentage of the total, that top line growth revenue is going to rise, break back up again, along with the SAS.

Mark Butler: This is probably our last year of transition out of the license model. I mean, maybe you could say last year was, but it's the fact is the license revenue is now sort of virtually gone. So because of that, your, you know, your SaaS revenue comes to the, you know, it is well finally will start really shining through, no longer being dampened by declining license fees. But it is, you know, still has to get averaged into what is, you know, much, much slower growth professional services and virtually flat hardware sales. Andy, I would just add to that that if you hardware for us in 24 was a pretty, you see those growth numbers, I mean, it was up 21% year on year.

Speaker Change: This is probably our last year.

Peter Brereton: I mean, maybe you could say last year was, but the fact is, license revenue is now sort of virtually gone. So because of that, your, you know, your SaaS revenue comes to, the, you know, is, well, finally able to start really shining through, no longer being dampened by declining license fees.

Speaker Change: of transition out of the license model. I mean, maybe you could say last year was, but it's the fact is license revenue is now sort of virtually gone.

Speaker Change: So, because of that, your, you know, your SAS revenue comes to...

Speaker Change: Well, it's finally able to start really shining through, no longer being dampened by declining license fees. But it still has to get averaged into what is much, much slower growth, professional services and virtually flat hardware sales.

Mark J. Bentler: But it is, you know, still has to get averaged into what is, you know, much, much slower growth in professional services and virtually flat hardware sales. Yeah, Andy, I would just add to that that, you know, if you look at the hardware for us in 24 was pretty, you know, you see those growth numbers, I mean, it was up 21% year on year. And if you take that sort of hardware growth out of it, out of the numbers, you know, that 24 revenue growth was around 11%.

Andy Nguyen: Yeah, Andy, I would just I would just add to that that, you know, if you hardware for us in in in 24 was was a pretty, you know, you see those growth numbers. I mean, it was up 21% year on year.

Mark Butler: And if you take that sort of hardware growth out of it, at the numbers, that 24 revenue growth was around 11%. And we expect you know, in that seven to nine percent, if you take hardware out of that, we expect that growth rate to actually be higher than 11%. So we're actually seeing accelerating growth here. If you strip out the impact, the hardware, we entered fiscal 24 with a very real bust, a backlog of hardware that kind of built up during the COVID years, actually, where it was going to hard to get hold of some, some hardware stuff.

Andy Nguyen: And if you take that sort of hardware growth out of it, out of the numbers.

Andy Nguyen: You know, that 24 revenue growth was around 11%.

Mark J. Bentler: And we expect, you know, in that 7 to 9%, but if you take hardware out of that, we expect that growth rate to actually be higher than 11%. So we're actually seeing accelerating growth here. If you, if you strip out the impact, the hardware, we entered fiscal 24 with a very robust backlog of hardware that kind of built up during the COVID years, actually, where it was kind of hard to get ahold of some, some hardware stuff that stuff delivered out, you know, beyond proportionally and in, in fiscal 2024. So we actually expect hardware prices to moderate in 2025, back down to levels that are closer to what we saw in fiscal 23.

Andy Nguyen: And we expect, you know, in that seven to nine percent, if you take hardware out of that, we expect that growth rate to actually be higher than 11 percent. So we're actually seeing accelerating growth here. If you if you strip out the impact of hardware, we entered fiscal 24 with a with a very robust.

Andy Nguyen: backlog of hardware that kind of built up during the during the COVID years, actually, where it was kind of hard to get ahold of some, some hardware stuff, that stuff delivered out, you know,

Mark Butler: That's a delivered out, you know, beyond proportionally and in, in, in fiscal 2024. So we actually expect hardware to moderate in 2025, back down to levels that are closer to what we saw in, in, in fiscal 23.

Andy Nguyen: beyond proportionally in fiscal 2024. So we actually expect hardware to moderate in 2025 back down to levels that are closer to what we saw in fiscal 23.

Andy Run: Gotcha, that makes sense.

Peter Brereton: Gotcha. That makes sense. My next question would be about the wind rate in your complex distributions. Like, do you see that changing? Is it getting better?

Andy Run: My next question would be about the weed rate in your complex distribution. Like, do you see that changing? Is it getting better? It's, I mean, it's wholly fairly steady. I mean, part of it is that that's a market where there's, you know, that it began to get really active about a year ago. But we're really only starting to see deals, you know, go to signature now. And so we continue to win our fair share there. I mean, historically, we've won in the sort of 30 to 40 percent range of those deals. We're trying to nudge that up.

Speaker Change: Gotcha, that makes sense.

Peter Brereton: It's, I mean, it's holding fairly steady. Part of it is that that's a market where there are, you know, the, it began to get really active about a year ago. But we're really only starting to see deals, you know, go to signature now. And so we continue to win our fair share there. I mean, historically, we've won in the sort of 30 to 40% range of those deals. We're trying to nudge that up; we're trying to get that up closer to 50. There are quarters where it sags below 30. There are quarters where it does get up higher.

Speaker Change: It's, I mean, it's holding fairly steady. I mean, part of it is that that's a market where there's, you know, the

Speaker Change: It began to get really active about a year ago, but we're really only starting to see deals, you know, go to signature now. And so we continue to win our fair share there. I mean, historically, we've won in the sort of 30% to 40% range of those deals.

Andy Run: We're trying to get that up closer to 50. There's quarters, quarters where it sags below 30. There's quarters where it does get a fire. But the, the good news for us is that that market is actually starting to move and sign some deals. So we were pretty pleased with the performance of that particular market in fiscal 24.

Speaker Change: We're trying to nudge that up. We're trying to get that up closer to 50. There's quarters where it sags below 30. There's quarters where it does get up higher. But the good news for us is that that market is actually starting to move and sign some deals.

Peter Brereton: But the good news for us is that that market is actually starting to move and sign some deals. So we were pretty pleased with the performance of that particular market in fiscal 24, and we've got great hope for it in fiscal 25. Perfect. And maybe on the pipeline, complex versus healthcare.

Speaker Change: So we were pretty pleased with the performance of that particular market in Fiscal 24, and we've got great hope for it in Fiscal 25.

Andy Run: And we've got great hope for it in Fiscal 25.

Andy Run: Perfect.

Operator: And maybe on the pipeline, complex versus healthcare, what's the percentage mix between those?

Mark Butler: And, and maybe on the pipeline complex with its healthcare, what's the, you know, what's the, you know, it makes between those. Can you hear me? Sure, I will ask you there for a bit. You seem to be back now. Yeah, sorry. So I was asking how much of the pipeline makes between complex distributions and healthcare? Mark, what would it be right now? It's going to be close to 50-50, right? Like the thing is our win rate is so much higher in, in healthcare, that, you know, if you've got, you know, if you've got the same amount, you know, technically of the same amount in each pipeline, you know, you're still likely to book, you know, twice as much healthcare as complex distribution.

Speaker Change: Perfect. And maybe on the pipeline, complex versus healthcare, what's the percentage mix between those?

Operator: Sir, I lost you there for a bit, but you seem to be back now.

Speaker Change: Oh, can you hear me?

Operator: Yeah, sorry, so I was asking, how much does the pipeline make between complex distributions and healthcare?

Speaker Change: Sir, I lost you there for a bit. You seem to be back now.

Speaker Change: Yeah, sorry, so I was asking, how much does the pipeline make between complex distributions and healthcare?

Mark J. Bentler: Mark, what would it be right now? It's got to be close to 50-50, right? The thing is, our win rate is so much higher in healthcare that, you know, if you've got, you know, if you've got the same amount, you know, technically have the same amount in each pipeline, you're still likely to book twice as much healthcare as complex distribution. But I think in terms of total, we look at the 12-month pipeline, and they're pretty close at this point. Yep.

Speaker Change: Mark, what would it be right now? It's got to be close to 50-50, right? Like, the thing is, our win rate is so much higher in healthcare that, you know, if you've got, you know, if you've got the same amount, you know, technically the same amount in each pipeline, you know, you're still likely to book, you know,

Andy Run: But I think in terms of total, we look at the 12-month pipeline, and they're pretty close to this point. Gotcha. Yeah, and then, sorry, it's all just about that. So, on the revenue sign of view, part of view is probably roughly the same two, right?

Speaker Change: twice as much health care as complex distribution. But I think in terms of total, we look at that 12-month pipeline and they're pretty close at this point.

Speaker Change: Yep, gotcha.

Peter Brereton: Yeah, and then sorry, so I was just about to ask, so on the revenue side of view, the point of view is probably roughly the same too, right?

Speaker Change: Yeah, and then, sorry, so I was just about to ask, so on the revenue side of view, point of view, it's probably roughly the same too, right?

Mark Butler: Well, actually, our revenue mixes; it's an interesting question you asked there, Andy. I mean, this is sort of the first point where our healthcare business has actually just surpassed the complex distribution business in terms of annual recurring revenue. So it's still a pretty even split there. You might know that our legacy business was very much more directed at complex distribution, and more recently, the healthcare sector has been growing more rapidly, and that's finally resulted only recently in healthcare surpassing complex distribution as the bigger ARR contributor, but just barely.

Peter Brereton: Well, actually, our revenue mix is it's an interesting question you asked there, Andy. I mean, this is sort of the first point where our health care businesses actually just surpassed the complex distribution business in terms of annual recurring revenue. So it's still a pretty even split there.

Speaker Change: Well, actually, our revenue mix is, it's an interesting question you asked there, Andy. I mean, this is sort of the first.

Speaker Change: point where our health care businesses actually just surpassed

Speaker Change: the complex distribution business in terms of annual recurring revenue.

Peter Brereton: You might know that our legacy business was very much more directed at complex distribution. And more recently, the healthcare sector has been growing more rapidly, and that has finally resulted only recently in healthcare surpassing complex distribution as the bigger ARR contributor, but just barely.

Speaker Change: So, it's still a pretty even split there. You might know that our legacy business was very much more directed at complex distribution and more recently, the healthcare sector has been growing more rapidly and that's finally resulted only recently in healthcare surpassing.

Speaker Change: complex distribution as the bigger ARR contributor, but just barely.

Andy Run: Thank you so much; I'll pass the line. Thanks.

Operator: Gotcha. Thank you so much, Alpaca Lai.

Speaker Change: Thank you so much. I'll pass the line.

Amr Ezzat: Our next question comes from the line of Amr Ezzat from Benton Financial. Go ahead, please. Good morning, Peter and Mark. Thanks for taking my question. Just to close the loop on hardware for 2025, did I understand correctly that we should be looking for flatish hardware in 2025 as opposed to lower year on year from what was obviously a huge 2024? Yeah, I would say right now, our expectations are I think 24 was a bump up, and I think 25, you know, you should think more about 2023 sort of levels. Okay, okay. Okay, got it.

Amr Ezzat: Our next question comes from the line of Amr Ezzat from Ventim Financial. Go ahead.

Speaker Change: Thanks.

Speaker Change: Our next question comes from the line of Amr Ezzat from Ventim Financial. Go ahead, please.

Amr Ezzat: Good morning, Peter and Mark. Thanks for taking my question. Just to close the loop on hardware for 2025, did I understand correctly that we should be looking for flattish hardware in 2025 as opposed to lower year-on-year from what was obviously a huge 2024?

Speaker Change: Good morning, Peter and Mark. Thanks for taking my questions.

Amr Ezzat: Just to close the loop on hardware for 2025, did I understand correctly that we should be looking for flattish hardware in 2025 as opposed to lower year-on-year from what was obviously a huge 2024?

Mark J. Bentler: Yeah, I would I would say right now where our expectations are, I think 24 was a bump up. And I think 25, you should think more about 2023, sort of.

Speaker Change: Yeah, I would I would say I would say right now where our expectations are, I think 24 was a bump up. And I think 25, you know, you should think more about 2023.

Operator: sort of levels. Okay. Okay. Okay. Got it.

Mark Butler: Then maybe if we double click on stats, revenues, so as far as like your SaaS backlog and RPO are concerned, they seem to be growing at a higher growth metric relative to what you're guiding for SaaS growth in 2025. 30% is still impressive, but I just wonder, I'm wondering like, are you guys capacity constrained, be it internally or through your channel partners on delivery, or how do I reconcile that, you know, like higher sort of staff backlog and RPO number two, what's your guiding? Well, RPO, I mean, the big delta there is, you know, RPO is a multi-year calculation, of course.

Speaker Change: sort of levels. Okay. Okay. Okay. Got it. Then maybe if we double click on stats revenues,

Mark J. Bentler: Then maybe if we double-click on stats revenues, So as far as your SaaS backlog and RPO are concerned, they seem to be growing at a higher growth metric relative to what you're guiding for SaaS growth in 2025. 30% is still impressive. But I just wonder, I'm wondering, like, are you guys capacity constrained, be it internally or through your channel partners on delivery? Or how do I reconcile that, you know, higher sort of staff backlog and RTO numbers to what you're guiding?

Speaker Change: So as far as like your status backlog and RPO are concerned they seem to be growing at a higher growth metric

Speaker Change: relative to what you're guiding for fast growth in 2025. 30% is still impressive but

Speaker Change: I just wonder, I'm wondering, like, are you guys capacity constrained, be it internally or through your channel partners on delivery, or how do I reconcile that, you know, like higher sort of staff backlog and RTO number to what's your guidance?

Mark J. Bentler: Well, RPO, I mean, the big, big delta there is, you know, RPO is, is a multi-year calculation, yes, it's a multi-year calculation, of course. So renewals and renewal timing, which really for us sort of started to kick in, we actually, Q4 was really one of the first times where we had some pretty material renewals that actually impacted RPO, you know, in some meaningful kind of way So that started to – that drove up the RPO growth number.

Speaker Change: Well, RPO, I mean, the big delta there is, you know, RPO is a multi-year calculation, of course. So, renewals and renewal timing, which really, for us, sort of started to kick in. We actually, Q4 was...

Mark Butler: So renewals and renewal timing, which really for us sort of started to kick in. Actually, Q4 was really almost one of the first times where we had some pretty material renewals that actually impacted RPO, you know, in some meaningful kind of way. So that started to that drove up the, you know, the RPO growth number. The other thing is we've got some customers that are, you know, that are going, you know, with longer term contracts. You know, we usually talk about three to five year contracts, and we saw in that quarter, you know, a disproportionate amount on the high side of that and some even higher than that in terms of, you know, contract term, which is great because it shows that, you know, people are confident enough in us and are in our platforms to sign up for longer term contracts.

Speaker Change: Really, almost one of the first times where we had some pretty material renewals that actually impacted RPO, you know, in some meaningful kind of way. So that started to, that drove up the, you know, the RPO growth number.

Mark J. Bentler: The other thing is that we've got some customers that are going with longer-term contracts. We usually talk about three- to five-year contracts, and we saw in that quarter a disproportionate amount on the high side of that and some even higher than that in terms of contract terms, which is great because it shows that people are confident enough in us and our platforms to sign up for longer-term contracts. The positive side of that is increasing RPO, and in that scenario, it would increase faster than annual revenue growth.

Speaker Change: The other thing is we've got some customers that are going with longer-term contracts. We usually talk about three- to five-year contracts.

Speaker Change: And we saw in that quarter, you know, a disproportionate amount on the high side of that and some even higher than that in terms of, you know, contract term.

Speaker Change: which is great because it shows that people are confident enough in us and our platforms to sign up for longer-term contracts. The positive side of that is increasing RPO, and in that scenario, it would increase faster than annual revenue growth.

Mark Butler: The positive side of that is, you know, increasing RPO and in that scenario would increase, you know, faster than annual revenue growth. That's very clear.

Mark J. Bentler: Understand. That's very clear. Then can you just refresh us on the accounting? Is there any difference in the margin or the gross margin profile of renewals versus the initial contract?

Mark Butler: Then, can you just refresh us on the accounting? Is there like any difference in the margin, the gross margin profile of renewals versus like the initial like contract? Not really. I mean, a like-for-like renewal on the platform, we're going to get an uptick most typically when we do a renewal. We're going to get a CPI, CPI-plus kind of uptick. So that will be maybe a little bit of creative margin, but every year our costs go up as well. We have merit, we have salary increase, and all the rest of it. So I would say there's not, in a like-for-like deal, there's not necessarily much margin expansion.

Speaker Change: Understood. That's very clear. Then can you just refresh us on the accounting? Is there like any difference in the margin or the gross margin profile of renewals versus like the initial like contract?

Mark J. Bentler: Not really. I mean, a like-for-like renewal on the platform, you know; we're going to get an uptick, most typically. You know, when we do a renewal, we're going to get a CPI or CPI plus kind of uptick. So that will be, you know, maybe a little bit of creative margin, but, you know, every year our costs go up as well. You know, we have merit, you know, we have salary increases and all the rest of it. So there's not, I would say there's not, in a like-for-like deal, there's not necessarily much margin expansion.

Speaker Change: Not really. I mean, a like-for-like renewal on the platform, you know, we're going to get an uptick, most typically, you know, when we do a renewal.

Speaker Change: We're going to get a CPI or CPI plus kind of uptick.

Speaker Change: So that will be, you know, maybe a little bit of creative margin. But, you know, every year, our costs, you know, our costs go up, as well, you know, our we have merit, you know, we have salary increase and all the rest of it. So there's not I would say there's not, you know, in a like for like deal, there's not.

Mark J. Bentler: What typically happens though, Amr, is that that's the time when people are looking at that and sort of looking at the renewal period and ending up for the next sort of contract period. That's an awesome selling opportunity for us. So that's typically when we're in there, you know, working hard to add additional modules and expand the footprint of the platform with that customer. So, and when that happens, as I think, you know, that has a very significant, you know, expansion impact on SAS margins when we add on new modules to existing customers.

Mark Butler: What typically happens though, Amr, is that that's the time where when people are looking at that and sort of looking at the renewal period and ending up for the next sort of contract period, that's an awesome selling opportunity for us. So that's typically when we're in there working hard to add additional modules and expand the footprint of the platform with that customer. And when that happens, as I think you know, that has a very significant, you know, expansion impact on SaaS margins when we add on new modules to existing customers.

Speaker Change: necessarily much margin expansion.

Speaker Change: What typically happens though, Amr, is that that's the time where, you know, when people are looking at that and sort of looking at the renewal period and ending up for the next sort of contract period, that's an awesome selling opportunity for us. So that's typically when we're in there, you know, working hard to add additional modules and expand the footprint of the platform with that customer. So, and when that happens, as I think you know, that has a very significant, you know, expansion impact on SaaS margins when we add on new modules to existing customers.

Amr Ezzat: Fantastic.

Mark J. Bentler: Fantastic. Well, maybe one last one, speaking of like expansions, when thinking about your guidance for SAS next year, can you give us the high level of how much of the growth is like new logos versus expansions and migrations. I believe there are, like, fewer migrations now, but...

Amr Ezzat: Well, maybe one last one. Like speaking of expansions, when thinking about your guidance on SaaS next year, can you give us any high level, you know, like the splits of how much of the growth is like the logos versus expansions and migrations. I believe like less migration now, but yeah, yeah, I think I think that's right. I think that's what we expect to, Amr, especially on the healthcare side, when since we've converted, you know, a large quantity of those healthcare customers are already already on a SaaS platform, but there's still a lot of opportunity for migrations in complex distribution.

Speaker Change: Fantastic. Well, maybe one last one, like, speaking of, like, expansions, when thinking about your guidance on SAS next year, can you give us the high-level, you know, like, the splits?

Speaker Change: of how much of the growth is like the new logos versus expansions and migrations.

Mark J. Bentler: Yeah, yeah, yeah. I think that's right. I think that's what we expect to see from Amr, especially on the healthcare side, since we've converted, you know, a large quantity of those healthcare customers are already on the SaaS platform. But there's still a lot of opportunity for migrations and complex distribution. But that said, we do see that, you know, we do expect that migration componentry to slow down a little bit. In terms of the kind of the new versus base splits, I mean, if we look at what happens there historically, it runs from sort of 20 in the 20% to, you know, the mid-40s, and even 50% is new business in any given quarter. You know, if you average that out over time, it's sort of in the high 20s, around 30%, you know, around 30%.

Amr Ezzat: I believe, like, less migrations now, but...

Speaker Change: Yeah, yeah, yeah, I think I think that's right. I think that's what we expect to Amr Especially on the on the health care side when since we've we've converted You know a large a large quantity of those of those health care customers

Speaker Change: are already on the SAS platform. But there's still a lot of opportunity for migrations in complex distribution.

Mark Butler: But that said, we do see that, you know, we do expect that migration componentry to slow down a little bit. In terms of the kind of the new versus base splits, I mean, if we look, you know, what happened is what what happens are historically, you know, it runs from sort of 20 in the 20% to, you know, the mid mid 40s, mid 40s and even 50% is is new business, you know, in any given quarter. You know, if you average that out over time, it's sort of in that high 20s, around 30, you know, around 30%, and that's kind of how we model this going forward.

Speaker Change: But that said, we do see that, you know, we do expect that migration componentry to slow down a little bit. In terms of the kind of the new versus base splits, I mean, if we look, you know, what happens there historically, you know, it runs from

Speaker Change: sort of 20 in the 20% to, you know, the mid-40s, mid-40s and even 50%.

Speaker Change: is new business, you know, in any given quarter. You know, if you average that out over time, it's it's sort of in the high 20s.

Mark J. Bentler: And that's kind of how we model this going forward. If we look at our pipeline and the opportunities that are in the pipeline, I would say there's more new logo business in the pipeline now than there has been in the past if we look at the same time last year. However, our, you know, our win rates on those expansion deals in our pipeline, and the sales cycles on those expansion deals are much, much, much, much quicker.

Speaker Change: around 30, you know, around 30, 30%.

Speaker Change: And that's kind of how we model this going forward. If we look at our pipeline and the opportunities that are in the pipeline.

Mark Butler: If you know, if we look at our pipeline and the opportunities that are in the pipeline, I would say there's more new logo business in the pipeline now than there has been in the past if we looked at the same time last year. However, our, you know, our wind rates on those expansion deals in our in our pipeline and in the sales cycles on those expansion deals are much, much, much, much quicker. So, you know that we've got a lot of white space in that base. You know, as you know, we're we're we're only about, you know, we're in the 20% level of penetration in our white space in healthcare.

Speaker Change: I would say there's more new logo business in the pipeline now than there has been in the past if we looked at the same time last year.

Speaker Change: However, our win rates on those expansion deals in our pipeline and the sales cycles on those expansion deals are much, much quicker. So we've got a lot of white space in that base. As you know, we're in the 20% level of penetration in our white space in healthcare, so there's still a lot of opportunity for us there.

Mark J. Bentler: So, you know, we've got a lot of white space in that base. You know, as you know, we're only about, we're in the 20% level of penetration in our white space in healthcare. So, you know, there's still a lot of opportunity for us there.

Mark Butler: So, you know, there's still a lot of opportunity for us there.

Mark J. Bentler: Fantastic, and just one last last one: when you're saying like that 20% penetration ID, you could still like upsell or expand like 80%.

Amr Ezzat: Fantastic. I'm just one last last one. When you're saying like that 20% penetration, i.e., you could like upsell or expand like 80% of your. I appreciate that.

Speaker Change: Fantastic and just one last last one when you're saying like that 20% penetration ID you could still like upsell or expand like 80% of your

Amr Ezzat: Yeah, exactly. Yeah. Okay. I appreciate that. I'll pass the line. Thanks, everyone.

Speaker Change: Yeah, exactly. Yep. Okay. I appreciate that. I'll pass the line.

Amr Ezzat: I'll pass the line.

Gavin Fairweather: Our next question comes from the line of given Fairweather from Cuorma Securities. Please go ahead. Yeah, that's good. Do you guys expect bookings to be more back and weighted, and do you plan to grow bookings in fiscal 25? Any color would be helpful. Sure, could you I think I didn't hear you at the beginning of that. I don't know if it was maybe just on my side, but could you could you start the front and could you start that question over? Sure, for sure. Just on the SAS growth guide, you expect bookings to be more back and weighted.

Gavin Fairweather: Our next question comes from the line of Gavin Fairweather from Cormark Securities. Please go ahead.

Speaker Change: Thanks, everyone.

Speaker Change: Our next question comes from the line of Gavin Fairweather from Cormark Securities. Please go ahead.

Gavin Fairweather: The SAS growth guide. Do you guys expect bookings to be more back-end weighted, and do you plan to grow bookings in fiscal 25? Any color would be helpful in that.

Gavin Fairweather: The SAS growth guide. Do you guys expect bookings to be more back-end weighted and do you plan to grow bookings in fiscal 25?

Operator: Sure. Could you, I think I didn't hear you at the beginning of that. I don't know if it was maybe just on my side, but could you, could you start the front end? Could you start that question over? Sure.

Speaker Change: Any color would be helpful on that.

Speaker Change: Sure, could you, I think, I didn't hear you at the beginning of that, I don't know if it was maybe just on my side, but could you start the front end, could you start that question over?

Gavin Fairweather: For sure. Just on the SAS growth guide, do you expect bookings to be more back-end weighted? If you could just talk about the cadence of bookings in the next year, that would be helpful. And then, given that record year in bookings, can you maybe just talk about any expectations for growth year-over-year in that booking figure? That would be helpful.

Speaker Change: For sure, just on the SAS growth guide, do you expect bookings to be more back-end weighted? If you could just talk about the cadence of bookings in the next year, that would be helpful. And then, just given that record year in bookings, can you maybe just talk about

Mark Butler: If you could just talk about the cadence of bookings in the next year, that would be helpful. And then just given that record year in bookings. Maybe just talk about any expectations for growth year over year in that booking figure that would be helpful. Yeah, I mean, just one overall comment. I mean, first of all, we don't give bookings guidance. It's too hard to give it. You know, our accounts tend to be that we book tend to be quite large. And as a result, the bookings are just plain lumpy. Always have been, they'll continue to be that, you know, when you're if you look at this, you know, past fiscal year, where we ended up with just 17 million and change your ever in bookings.

Speaker Change: Any expectations for growth year-over-year in that booking figure, that'd be helpful.

Peter Brereton: Just one overall comment. First of all, we don't give booking guidance. It's too hard to give it.

Speaker Change: Yeah, I mean just one overall comment. I mean, first of all, we don't give bookings guidance. It's too hard to give it. You know, our accounts tend to be, that we book, tend to be quite large.

Peter Brereton: Our accounts that we book tend to be quite large, and as a result, the bookings are just plain lumpy. They always have been. They'll continue to be that. If you look at this past fiscal year, where we ended up at $17 million and change or whatever in bookings, so you're looking at, you know, call it a 4.4 or whatever, four and a half million dollar average quarter. And meanwhile, you can have one booking that's worth $2 million.

Speaker Change: And as a result, the bookings are just plain lumpy.

Speaker Change: always have been, they'll continue to be that, you know, when you're...

Speaker Change: If you look at this, you know, past fiscal year where we ended up at, I'm sure, $17 million and change or whatever in bookings, so you're looking at a

Mark Butler: So you're looking at a, you know, call it a 4.4, whatever 4.5 million dollar average quarter. I mean, while you can have one booking that's two million bucks. It, you know, it's just too hard to predict that at the same time. What I would say is generally speaking, there is some seasonality to our bookings. I give you, if you look at our last, you know, 10, 15 years, you'll see it holds pretty steady; typically, some exceptions. But typically, the quarter we're in right now that ends July 31st tends to be a little lighting bookings you, you know, you clean it out for your end kind of.

Speaker Change: you know call it a 4.4 or whatever four and a half million dollar average quarter and meanwhile you can have one booking that's two million bucks uh it you know it's it's just too hard to predict that at the same time what I would say is

Peter Brereton: It's just too hard to predict that. At the same time, what I would say is, generally speaking, there is some seasonality in our bookings. If you look at our last 10, 15 years, you'll see it holds pretty steady. Typically, with exceptions, but typically, the quarter we're in right now, that ends July 31st, tends to be a little light in bookings. You clean it out for year end, kind of, so May is pretty dry, it starts to come back in June, you get some bookings in the early part of July, and then vacations kick in, and it's hard to get decision makers in a room to sign off on contracts, and work. So it's a good time to get a lot of business done. So it tends to kind of follow that pattern.

Speaker Change: Generally speaking, there is some seasonality to our bookings. If you look at our last, you know, 10-15 years, you'll see it holds pretty steady. Typically, some exceptions.

Speaker Change: But typically, the quarter we're in right now, that ends July 31st, tends to be a little light in bookings. You know, you clean it out for year-end, kind of, so May is pretty dry.

Mark Butler: So May is pretty dry. Starts to come back in June, get some bookings in the early part of July, and then vacations kick in, and it's hard to get the decision makers in a room to sign off on contract. So that one tends to be a little light. Q2 tends to pick up; that's the quarter ending October 31st, usually a little bit stronger. Q3 is, is, which is November, December, January; tends to get hit with a lot of vacations. Again, you got American Thanksgiving in there. You got Christmas in there, and so it tends to be a little bit slower.

Speaker Change: starts to come back in June , you get some bookings in the early part of July and then vacations kick in and it's hard to get decision makers in a room to sign off on contracts. So

Speaker Change: That one tends to be a little light.

Speaker Change: Q2 tends to pick up, that's the quarter ending October 31st, usually a little bit stronger. Q3...

Speaker Change: is which is November , December , January tends to get hit with a lot of vacations. Again, you got American Thanksgiving in there, you got Christmas in there, and so on, tends to be a little bit slower. And then Q4 is typically quite strong with

Peter Brereton: And then Q4 is typically quite strong with sort of no real vacations in there. If you're a market for this kind of just, you know, work work work. So it's a good time to get to get a lot of business done. So it tends to kind of follow that pattern. And because, of course, we continue to grow, you know, typically that it does tilt towards the back end of the year. But I would also say, Mark, I think you would agree that the fiscal 24 that just ended was tilted far more to the back end of the year than we typically see.

Speaker Change: sort of no real vacations in there. February , March, April is kind of just, you know, work, work, work. So it's a good time to get a lot of business done. So it tends to kind of follow that pattern.

Peter Brereton: And because, of course, we continue to grow, you know, typically, it does tilt towards the back end of the year. But I would also say, Mark, I think you would agree that the fiscal 24 that just ended was tilted far more to the back end of the year than we typically see. And I think the reason for that is what is going on in the healthcare market. I mean, calendar 2023.

Speaker Change: And because of course, we continue to grow, you know, typically that it does tilt towards the back end of the year. But I would also say, Mark, I think you would agree.

Mark J. Bentler: that the fiscal 24 that just ended was tilted far more to the back end of the year than we typically see. And I think the reason for that is what was going on in the healthcare market. I mean, calendar 2023, and I think I might have mentioned this last call, calendar 2023 was

Peter Brereton: And I think the reason for that is what was going on in the healthcare market. I mean, calendar 2023, and I think I might have mentioned this last call: calendar 2023 was with a year that was characterized by like 10, roughly 10 months of a negative cash flow for the average American hospital network. And it was really November before they started turning cash flow positive. So there was a lot of hesitancy in that market during that time period to sort of kick off new projects or accelerate projects, add additional resources to projects. So we saw it in bookings, we saw it in professional services revenues, we saw it hit a number of places, as they turned back cash flow positive in November to December, and it really stayed cash flow positive since then.

Peter Brereton: And I think I might have mentioned this last call calendar 2023 was a year that was characterized by roughly 10 months of negative cash flow for the average American hospital network, and it was really November before they started turning cash flow positive. So there was a lot of hesitancy in that market during that time period to sort of kick off new projects or accelerate projects, add additional resources to projects. So we saw it in bookings, we saw it in professional services revenues, we saw it hit a number of places.

Mark J. Bentler: was a year that was characterized by like 10, roughly 10 months.

Mark J. Bentler: of negative cash flow for the average American hospital network. And it was really November .

Mark J. Bentler: before they started turning cash flow positive.

Mark J. Bentler: So there was a lot of hesitancy in that market during that time period to sort of kick off new projects.

Mark J. Bentler: We saw it in bookings, we saw it in professional services revenues.

Peter Brereton: As they turned back cash flow positive in November and December, and it really stayed cash flow positive since then, you know, we saw a lot more activity starting to happen. So as a result, that really slowed down the first sort of two-thirds of our year, and then it sort of ended with a real kick at the end. So there is some seasonality, but fiscal 24 was exceptionally back-end weighted.

Mark J. Bentler: We saw it hit a number of places. As they turned back tax flow positive in November-December, and they've really stayed tax flow positive since then, we saw a lot more activity starting to happen. So as a result, that really slowed down the first...

Peter Brereton: We saw a lot more activity starting to happen. So, as a result, that really slowed down the first sort of two-thirds of our year, and then it sort of ended with a real kick at the end. So there is some seasonality, but Fiscal 24 was exceptionally back in wait.

Mark J. Bentler: sort of two-thirds of our year, and then it sort of ended with a real kick at the end. So there is some seasonality, but fiscal 24 was exceptionally back in weight.

Gavin Fairweather: Yeah, I get why you're asking the question there too because it's somehow, you know, it's hard if you think about how to model that revenue, you know, coming off of new bookings. You're kind of wondering, well, I expect, you know, bookings to decline or expecting bookings to grow because you don't necessarily, there's enough modeling flux in there to maybe not understand that. But, you know, we had 13% bookings growth in fiscal 24 and, you know, just to be clear, we expect bookings growth in fiscal 25. That's great. Thanks so much, guys.

Mark J. Bentler: Yeah, I get why you're asking the question there, too, because it's somehow, you know, it's hard if you're thinking about how to model that revenue coming off of new bookings. You're kind of wondering, well, are you expecting, you know, bookings to decline or expecting bookings to grow? Because you don't necessarily, there's enough modeling flux in there to maybe not understand that.

Speaker Change: Yeah, I get why you're asking the question there, too, because it's somehow, you know, it's hard if you're thinking about how to model that revenue.

Speaker Change: You know, coming off of new bookings, you're kind of wondering, what am I expecting?

Speaker Change: you know bookings to decline or expecting bookings to grow because you don't necessarily there's enough modeling flux in there to maybe not understand that but you know we had 13 percent

Speaker Change: Bookings growth in in fiscal 24 and and and you know just to be clear we expect bookings growth in fiscal 25.

Mark J. Bentler: But, you know, we had 13% bookings growth in fiscal 24. And, you know, just to be clear, we expect bookings growth in fiscal 25.

Gavin Fairweather: That's great. Thanks so much, guys. And then, just given the cost cuts and the margin guide being unchanged, can you give maybe more color on your investment plans for sales and R&D?

Mark Butler: And then just given the cost cuts and the margin guide being unchanged, could you give maybe more color on your investment plans for sales in R&D? Sure, and we've got, I mean, as we sort of talked to it in the, you know, planned part of the script, I mean, we're seeing tremendous opportunity in areas like possible pharmacies. We're seeing opportunities to invest in AI to dramatically, you know, strengthen forecasting, demand planning, and inventory optimization. We're seeing opportunities around master file maintenance, using artificial intelligence. So we're seeing a lot of opportunities to enhance and strengthen our competitive position in markets that have a huge amount of growth.

Speaker Change: That's great. Thanks so much, guys. And then, just given the cost cuts, and the margin guide being unchanged, can you give maybe more color on your investment plans for sales and R&D?

Peter Brereton: Sure, we've got, I mean, as we sort of talked about in the planned part of the script. I mean, we're seeing tremendous opportunities in areas like hospital pharmacies. We're seeing opportunities to invest in AI to dramatically strengthen forecasting, demand planning, and inventory optimization. We're seeing opportunities around master file maintenance using artificial intelligence.

Speaker Change: Sure, we've got, I mean, as we sort of talked about in the, you know...

Speaker Change: you know, planned part of the script. I mean,

Speaker Change: We're seeing tremendous opportunity in areas like hospital pharmacies.

Speaker Change: We're seeing opportunities to invest in AI.

Speaker Change: to dramatically, you know, strengthen.

Speaker Change: Forecasting, Demand Planning, Inventory Optimization.

Speaker Change: We're seeing opportunities around master file maintenance.

Peter Brereton: So we're seeing a lot of opportunities to enhance and strengthen our competitive position in markets that are experiencing a huge amount of growth. So we did the restructuring, and we cut costs in a number of areas that we felt that we were sort of already, that we weren't benefiting from the additional investment. And we've really just shifted that investment over to areas of the business that we think will see some pretty exciting growth in the coming quarters and years.

Speaker Change: using artificial intelligence, so...

Speaker Change: So we're seeing a lot of opportunities to enhance and strengthen our competitive position.

Mark Butler: So we did the restructuring. We cut costs in a number of areas that we felt that were sort of already, sort of that we're not benefiting from the additional investment. And we've really just shifted that investment over to areas of the business that we think have, you know, some pretty exciting growth in the, you know, in the coming quarters and years. So, you know, and we, we send that at the time. I know a number of people sort of just expected sort of an extra four million bucks in profit. But, as we stated at the time, it was always our intent to shift the investment to areas of the business with, you know, strong growth potential.

Speaker Change: in markets that have a huge amount of growth.

Speaker Change: We did the restructuring, we cut costs in a number of areas that we felt had.

Speaker Change: we're sort of already sure that we're not benefiting from the additional investment.

Speaker Change: And we've really just shifted that investment over to areas of the business that we think have

Speaker Change: you know some pretty exciting growth in the you know in the coming quarters and years.

Peter Brereton: So, and we said that at the time, I know a number of people sort of just expected sort of an extra 4 million bucks in profit. But, as we stated at the time, it was always our intent to shift the investment to areas of the business with stronger potential. And that's what we did. And we're pretty excited about some of the stuff we're coming up with this year. We've got a release coming out in the fall, what we call our release 24.2. That is, we think it's going to be a pretty compelling market option.

Speaker Change: So, you know, we sent that at the time. I know a number of people sort of just...

Speaker Change: expected sort of an extra $4 million in profit.

Speaker Change: but as we stated at the time, it was always our intent to shift the investment to areas of the business with, you know, with stronger potential and that's what we've done and we're

Mark Butler: And that's what we've done. And we're pretty excited with some of the stuff we're coming up with this year. We've got a release coming out in the fall, what we call our Release 24.2. That is, we think it's going to be a pretty compelling market offer. That's great. Thanks.

Speaker Change: We're pretty excited with some of the stuff we're coming up with this year. We've got a release coming out in the fall, what we call our Release 24.2 that is we think it's going to be a pretty compelling market offer.

Gavin Fairweather: That's great, thanks. I'll pass the line.

Gavin Fairweather: I'll pass the line.

John Shaw: Thanks. Our next question comes from the line of John Shaw from National Bank of Canada. Go ahead, please. Hey, good morning, guys. Thanks for taking my question.

Speaker Change: That's great, thanks. I'll pass the line.

John Shao: Our next question comes from the line of John Shao from the National Bank of Canada. Go ahead.

Speaker Change: Thanks.

Speaker Change: Our next question comes from the line of John Shao from National Bank of Canada. Go ahead, please.

John Shao: Good morning, guys. Thanks for taking my question. Peter, how should we understand your comments that 2025 is perhaps the last year in the transition out of licensed revenue? Should we expect some changes in your sales strategy or just a changing revenue mix?

John Shaw: Peter, how should we understand your comments that 2025 perhaps the last year in a transition out of the license revenue? Should we expect some changes in your sales strategy, or just like changing revenue mix? Really just is changing revenue mix. I mean, you know, what continued to drive license revenue was really un-migrated customers, right? So you had customers still running the older on-prem software, and they were still, you know, needing to add another facility or, you know, adding more users or, you know, that kind of thing. They weren't yet ready to transition the SaaS, so they needed to just pay for more licenses.

John Shao: Hey, good morning, guys. Thanks for taking my question. Peter, how should we understand your comments that 2025 is perhaps the last year in the transition out of the licensed revenue? Should we expect some changes in your sales strategy or just changing revenue mix?

Peter Brereton: really just a changing revenue mix. I mean, you know, what continued to drive license revenue was really unmigrated customers, right? So you had customers still running the older on-premise software, and they were still, you know, needing to add another facility or, you know, adding more users or, you know, that kind of thing. They weren't yet ready to transition to SAS.

Peter Brereton: Really just a changing revenue mix. I mean, you know, what continued to drive license revenue was

Peter Brereton: was really un-migrated customers, right? So you had customers still running the older on-prem software, and they were still, you know, needing to add another facility or, you know, adding more users or, you know, that kind of thing. They weren't yet ready to transition to SaaS, so they needed to just pay for more licenses.

Peter Brereton: So they needed to just pay for more licenses. But, you know, as time has gone on, many of our larger accounts have migrated to our SaaS platform, so they're just off that platform. There's still a few that are left. I mean, in the quantity of clients, there's still many that are left. But in terms of sizable clients, there are not that many that are left on the old on-prem platform, and we have a strategy to continue to migrate those over.

Peter Brereton: But, you know, as time has gone on, many of our larger accounts have migrated to our SaaS platform, so they're just off that platform. There's still a few that are left. I mean, in quantity of clients, there's still many that are left, but in terms of sizeable clients, there's not that many that are left on the old on-prem platform. And, you know, we have a strategy to sort of continue to migrate those over. So, as a result, they're sort of the, you know, the white space, if you will, in that on-prem base is just evaporating.

Peter Brereton: But, you know, as time has gone on...

Peter Brereton: Many of our larger accounts have migrated to our SaaS platform. So they're just off that platform. There's still a few that are left. I mean, in quantity of clients, there's still many that are left. But in terms of sizable clients,

Peter Brereton: There's not that many that are left.

Peter Brereton: on the old on-prem platform and, you know, we have a strategy to sort of continue to migrate those over. So as a result, they're sort of the, you know, the white space, if you will, in that on-prem base.

Peter Brereton: So as a result, sort of the white space, if you will, in that on-prem base is just evaporating. And that was always our intention. I mean, we never intended to continue to sort of run the licensed business indefinitely. So it's finally really kicking in. And well, I shouldn't say finally, it's been gradually kicking in over the last few years. But it's now at a point where if I look at this coming year, you know, what's the license revenue going to be, you know, is it going to be, you know, 1%? You know, one and a half percent, three quarters of a percent, I don't know what it's going to be, but it's becoming pretty insignificant in terms of the total number for the year.

Peter Brereton: And, you know, it was always our intention. I mean, we never intended to continue to sort of run the license business indefinitely, so it's finally really kicking in. And well, I shouldn't say finally; it's been gradually kicking in over the last few years, but it's now at a point where, you know, if I look at this coming year. You know, what's the license revenue going to be? You know, is it going to be, you know, one percent? You know, one and a half percent, three quarters of a percent. I don't know what it's going to be, but it's becoming pretty insignificant in terms of the total number for the year.

Peter Brereton: It's just evaporated.

Peter Brereton: It was always our intention. We never intended to continue to run the licensed business indefinitely. It's finally really kicking in. Well, I shouldn't say finally. It's been gradually kicking in over the last few years, but it's now at a point where, if I look at this coming year,

Peter Brereton: You know, what's license revenue going to be? You know, is it going to be, you know, one percent? You know, one and a half percent, three quarters of a percent? I don't know what it's going to be, but it's it's becoming pretty insignificant in terms of the total number for the year.

John Shao: Okay, we understand the healthcare market is quite strong, but on the complex distribution front, any planning actions to potentially monetize the opportunity in the space, given, you know, some of the competitors are essentially gone.

Peter Brereton: Okay. We understand the self-care markets quite strong, but on the complex distribution front, any planet actions to potentially monetize the opportunity in the space given, you know, some of the competitors are essentially gone. Yeah, I mean, we're starting the general distribution space, right? Yes, that's correct. Yeah, yeah, I mean, it's something where we're actually turning up our marketing spend in that space where we're sharpening our message there. We're looking to add sales capability as well.

Speaker Change: Okay, we understand the healthcare market is quite strong, but on the complex distribution front, any planning actions to potentially monetize the opportunity in the space given, you know, some of the competitors are essentially gone.

John Shao: Yeah, I mean, you're talking about the general distribution space, right?

Speaker Change: Yeah, I mean, you're talking the general distribution space, right?

John Shao: Yes, that's correct.

Peter Brereton: Yeah, yeah, I mean, it's something where we're actually turning up our marketing spend in that space, sharpening our message there, and we're looking to add sales capability as well.

Speaker Change: Yes, that's correct.

Speaker Change: Yeah, yeah, I mean, it's something where we're actually turning up our marketing spend in that space. We're, we're sharpening our message there. We're looking to add sales capability as well. We're looking to add sales capability in Europe as well, because we're seeing opportunity over there and opportunity to pursue

Speaker Change: You know more global Opportunities So we're we're doing it cautiously. I mean the health care market is very hot right now the pharmacy market within health care is

Speaker Change: is incredibly active. So we're, you know, we don't want to spread ourselves too thin, but at the same time, that market is heating up. And you're right, the competitive situation has thinned out quite dramatically over the last couple of years. So we are

Speaker Change: turning up the investment there. We want to see how it goes. We'll probably give it, you know, the first two thirds or more of the year to see sort of is it shaping up the way we think it's going to shape up. And if so, I think you can expect to see us turning the investment up higher there towards the end of the year and into next fiscal.

Speaker Change: Okay, thanks for the colors. And in terms of the $8,000,000 Southville Kings, could you maybe help us understand?

Speaker Change: you know, the components of that number. Are they multiple small deals or a few large ones? And also, how much of the bookings are related to new wins versus expansions?

Speaker Change: Finally, somebody asking a question about that fantastic booking quarter. Mark, do you want to talk through some of those numbers?

Mark J. Bentler: Yeah, sure. Yeah, John , the, you know, the mix in that was, was pretty, was was pretty, pretty spread around. You know, it's

Mark J. Bentler: We had health care contribution in there, we had good solid complex distribution contribution in there. We had several migrations.

Mark J. Bentler: in there. You know, we had a couple of, actually three

Mark J. Bentler: Healthcare migrations in that thing, which kind of...

Mark J. Bentler: You know, kind of back to the other point, you know, what's kind of left in there to migrate after this quarter in health care, like, that was three, you know, reasonably good size migrations.

Mark J. Bentler: in there, which we absolutely love because these are IDNs that know us. They know our platform as on-prem customers and all three of these have decided in that quarter to kind of join in and migrate over and continue.

Mark J. Bentler: you know, continue the journey of

Mark J. Bentler: expanding and improving their supply chain management with our platform, so we're pretty excited about that.

Mark J. Bentler: We had another migration in that quarter that was in a complex distribution.

Mark J. Bentler: which is...

Mark J. Bentler: You know, which is again, fantastic having that sort of, you know, vote of confidence from that sector and from an existing customer.

Peter Brereton: On the new business side, Peter mentioned we had a couple of new IDNs, a couple of new health care IDNs in there, not massive for starts, but kind of normative size ARR WINS on those two, still a bunch of white space for both of those.

Peter Brereton: We had also...

Peter Brereton: sort of a 3PL

Peter Brereton: Medical Supply 3PL related company that

Peter Brereton: was a new logo in that quarter, so it was really kind of all over the place.

Peter Brereton: We had some nice expansions, we had some expansions that were driven by pharmacy, you know, Peter mentioned.

Speaker Change: as mentioned and talked in the opening comments about that marketplace. And we had some nice wins in that market. So it's kind of, it was one of those quarters that kind of, you know, it was kind of firing on...

Speaker Change: You know, on all cylinders, I would say there was more from a dollar basis. There was definitely more new, definitely more base business in there. I mentioned all those migrations. So there was definitely more, you know, kind of base business and expansion business coming out of that in dollar terms than new logos. But we were happy to see the new logos from across, you know, from across both those verticals.

Speaker Change: Okay, that's great colors. And Mark, when you say migration, are they migrating from competitors or migrating from legacy platforms?

Mark J. Bentler: Yeah, yeah, good question. I was using that term in the latter sense, meaning, you know, on-prem customers migrating to our SaaS platform.

Speaker Change: Okay, thank you so much. I'll pass the line.

John Shao: Thanks, John .

Speaker Change: Just a reminder should anyone have any questions please press star followed by the number one on your touchstone phone. Our next question comes from the line of Suthan Sukumar from CFO . Go ahead please.

Suthan Sukumar: Good morning, gents. For our first questions, one of the...

Speaker Change: It's good to hear that you guys are seeing.

Suthan Sukumar: your win rate sustained with potential for that to improve. Can you speak a little bit about what pricing power you're seeing in the market today?

Speaker Change: Let me just comment on pricing power and then Mark can talk about average contract size. I mean, from a pricing standpoint, we are seeing

Mark J. Bentler: I'll divide the markets in my comments on the healthcare side we're seeing a very good pricing power partly because the ROI is so clearly definable. You know we go into a typical hospital situation we can do a high-level analysis with them to show them what their return on investment is going to be.

Mark J. Bentler: And that return on investment is very strong.

Mark J. Bentler: We increased our prices by about 30% approximately a year ago.

Mark J. Bentler: you know we were waiting to see sort of how that went over and and was it sustainable.

Mark J. Bentler: It went over just fine and it has been perfectly sustainable. So we're, you know, we're seeing sort of similar discount rates to prior, even though we increased the prices by 30%.

Mark J. Bentler: So it's because, again, it's a proven solution with a strong ROI, it's easy to justify that pricing.

Mark J. Bentler: The general distribution market is more, you know, it is more competitive. You're typically replacing existing systems, so the ROI is often harder to, to, sort of,

Mark J. Bentler: You know, nailed down in concrete terms, usually these systems are being replaced because they have to be replaced, you know, they've literally just aged out or they're not secure anymore, they're not coping with current business needs.

Mark J. Bentler: So, there is some ROI, but it's not quite as black and white, and there's more competition in that space. That said...

Mark J. Bentler: The average price of a user, I would say, has not really...

Mark J. Bentler: moved other than sort of inflationary adjustment.

Mark J. Bentler: in over the last four to five years. It's actually held pretty steady. And if you compare us, you know,

Mark J. Bentler: Our price per seat that we're able to get is very similar to what, you know, Oracle is charging and, you know, SAP is charging and, you know, Manhattan and other, other players in supply chain.

Speaker Change: And in terms of contract size there, Suthana, the...

Speaker Change: You know, the average contract size. We usually think about that in the context of just the, you know, the SAS ARR componentry there. So that's how we

Speaker Change: kind of track that number and and and talk about it internally and it's it's a it's a bit of a tale of two different sizes depending on which

Speaker Change: you know, which vertical we're in, there's there's big ranges in both verticals, you know, I mean, Peter mentioned, you know, 2 million ARR booking deals, you know, there's there's 2 million plus deals out there on the

Speaker Change: on the large side and on the smaller side, you know, there's sort of sub 200,000 air ordeals and

Speaker Change: And so if I separate, you know, the broad averages between those two markets, healthcares,

Speaker Change: Average ARR is somewhere right around $600,000, again, with a big broad range. And distribution and retail is a little bit lower than that, about $300,000 to $400,000 average ARR.

Speaker Change: Okay, great. No, thanks. That's helpful.

Speaker Change: The big question I had was more on the expansion.

Speaker Change: motion that you guys have in play here. What are some of the leverage that you have here when you are going through these expansion conversations?

Speaker Change: or Grinewald's with existing customers. You know, is there a larger, you know, is there an opportunity here to capture more value with migrations?

Speaker Change: And, you know, what do expansions typically look like for you guys?

Speaker Change: I mean, across the two markets, first of all, the general distribution market, it's pretty straightforward. Expansions are either, you know, if you look at our order management platform for, you know, direct-to-consumer, expansions typically seem to involve new countries.

Speaker Change: They may have already put France and Germany on the platform, and now they're going to add the Middle East, or they're going to add some other area. They may already be in the US, and they're expanding somewhere else. In splicing execution, it tends to be additional facilities. We've got, for instance, electrical distributors that ...

Speaker Change: you know, every quarter to, you know, add another distribution center onto the platform. And so that's the expansion there.

Speaker Change: In the healthcare market, it tends to be a whole new area of the hospital. Sometimes it's an additional hospital building they may have started with, you know, they've got 18 hospitals they may have started with.

Speaker Change: doing you know general supplies and six of the hospitals and now they're circling back to do the other twelve.

Speaker Change: But very often it's a complete new initiative for a whole new area of the hospital's, you know, business. Most recently, of course, as we've discussed, it's been pharmacy. You know, a lot of additional...

Speaker Change: opportunities in pharmacy to manage the whole pharmacy supply chain from forecasting and demand planning right through to patient bedside.

Speaker Change: with, you know, 340B price management and Drug Supply Chain Security Act compliance.

Speaker Change: and so on. So that is, you know, what they're doing there in many cases is they're moving to individual patient dosages being shipped directly from a central pharma facility.

Speaker Change: So rather than sort of a patient checks into a hospital and he, you know, the patient's in for, you know, they think it, let's say, a week,

Speaker Change: So he arrives on a Monday and it used to be the pharmacy would send out to that ward enough drugs for that patient for the week. Well then on, you know, he arrives on Monday, he checked out on Wednesday instead of being there for a week. Well now there's five days worth of drugs left over out of that department.

Speaker Change: They pretty much never get cycled back into Central. I mean, depending on how they've been handled and where they've been stored, you might not even be allowed to cycle them back in.

Speaker Change: So that drug is just wasted.

Speaker Change: Whereas in a central pharmacy distribution model on our platform, you know, the drugs are literally being sent out every day for patients, every day with individual dosages for those patients. So you virtually eliminate that kind of waste. You know where the drugs are throughout the supply chain and with the cost of drugs these days, you know, that is worth.

Speaker Change: In many cases, tens of millions or more to Austin level on an annual basis. So that is an area that is probably the hottest white space for us right now.

Sutan: And Suthan, I would add to that, that, you know, we scale that market, you know, there's 373.

Suthan Sukumar: IDNs in the U.S. market that are our target, and they're over a billion in patient revenue. And we sort of scale that market, I think, conservatively, you know, at over $3 million on average of ARR opportunity per network.

Suthan Sukumar: So the market's massive. And I just mentioned our average, you know, deal size in that market, a big, big variety, but, you know, an average of 600. So if you just think about that 600 deal,

Suthan Sukumar: You know, we're trying to penetrate into an opportunity that's bigger than $3 million with that IDN. So, you know, for new deals that we're signing when we're creating that additional logo, we're creating a 5 to 6x opportunity on white space expansion.

Speaker Change: To be great? No, that makes sense.

Speaker Change: And the last question for you guys, just on the legacy maintenance and support line.

Speaker Change: How are you guys thinking about you know the erosion in that revenue line as you start to migrate the long tail of customers still on a on-premise model

Speaker Change: Yeah, it's a good question. We talked a little bit before about, you know, that revenue growth guidance that we provided and, you know, why is it when SAS is growing so quickly, why is that overall revenue growth guidance so important? I don't know. I don't know.

Speaker Change: line, you know, much more moderated. And I talked a little bit about hardware and the impact that has on on that number. But the point you're bringing up is is another one like, you know, that number has been sort of flattish this this year.

Speaker Change: You know, and we expect, and we've been talking about it, sort of declining, you know, as more migrations, you know, kick in and, you know, the payment of maintenance supports, you know, ends and turns into a SAS.

Speaker Change: SAS only revenue stream. Like we're in the we're in the process of that still expecting that.

Speaker Change: You know, that line is not going to grow, you know, it's going to, it's probably going to decline, you know, we're probably going to be declining on maintenance and support.

Speaker Change: I mean we said that we said that last year too that that was our expectation it didn't quite happen. It's it's kind of being supported by some of our other

Speaker Change: non-SAS annual recurring revenue on in particular on on on hardware maintenance you know that comes into that maintenance and support line but we do expect that line to be you know flat to declining and in fiscal 25

Speaker Change: Okay, thank you.

Speaker Change: Thank you, guys. I'll pass it along.

Speaker Change: Thank you.

Speaker Change: Thanks.

Speaker Change: Thank you. There are no further questions at this time. I'd now like to turn the call back over to Mr. Brereton for final closing remarks.

Peter Brereton: Great, well thank you everyone. Thanks for spending time with us today. We're saved the light of how we ended Fiscal 24 and the next call will be about first quarter of Fiscal 25, so we'll talk to you in early September . In the meantime, if you have any questions, don't hesitate to reach out to Mark or myself. We're always happy to have further dialogue.

Peter Brereton: Thanks. Have a great day.

Speaker Change: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line. Have a lovely day.