Q1 2025 Dye & Durham Ltd Earnings Call
Speaker Change: [music].
Good afternoon, My name is Constantine and I will be your conference operator today.
At this time I would like to walk I want you to die in Durham first quarter fiscal 2025 earnings call.
Speaker Change: I would now like to turn the call over to Hudson VP Investor Relations.
Speaker Change: Mr. Kimzey, you may begin your conference.
Mr. Kimzey: Thank you operator and good.
Speaker Change: Yeah.
Speaker Change: Welcome to the Dine Derm conference call.
Speaker Change: Before we start we'd like to remind you that all amounts discussed on this call are denominated in Canadian dollars unless otherwise indicated.
Speaker Change: Statements made during this call may include forward looking statements and information and future oriented financial information regarding <unk>.
Speaker Change: And its businesses and disclosure regarding possible events conditions or results that are based on information currently available to management to indicate managements' expectations of future growth results of operations business performance and business prospects and opportunities that.
Speaker Change: Such statements are made as of this date hereof, and Gyn derm. It seems no obligation to update or revise them to reflect events disclosures or circumstances, except as required by applicable securities laws such statements involve significant risks and uncertainties and are not a guarantee of future performance or results.
Speaker Change: A number of these risks or uncertainties could cause results to differ materially from the results discussed today.
Speaker Change: Given these risks and uncertainties, one should not place undue reliance on these statements and information.
Speaker Change: Please refer to the forward looking statements and information and future oriented financial information section of our public filings without limitation, our MD&A and our earnings press release issued today for additional information.
Speaker Change: Joining us on the call today are Matt crowd, Diane Durham, Chief Executive Officer, Frank Lee, So steines, our Chief Financial Officer, and he didn't know Chief Executive Officer for a financial services Division. Our question and answer session will follow the formal remarks of our research analysts.
Matt Crowd: Now I'll turn the call over to Matt for opening remarks.
Matt Crowd: Thanks, Josh and good afternoon, everyone.
Matt Crowd: Since going public in 2020, we built a leading software company that specializes in serving two large and growing end markets.
Matt Crowd: Legal practices and financial institutions.
We built significant scale within those two end markets with leading positions in our core markets of Canada, The U K, Ireland and Australia.
Matt Crowd: We have more than 60000 customers across the world.
Matt Crowd: 100, and including more than 100 of the largest financial institutions in Canada, and Australia, using our financial technology solutions.
Speaker Change: First I want to address some news that came out today.
Speaker Change: Earlier today, the Canadian competition Bureau issued a press release, which I'm sure. Many of you had the chance to read it.
Speaker Change: Let me address this directly we.
Speaker Change: We built a strong business that is the envy of many in the market.
Speaker Change: I want to be clear the competition Bureau is investigating market asset access to some of our products not price.
Speaker Change: To give you background, we've been in communication with the competition Bureau on many issues, including this one that the interoperability of our products, that's what our competitors since 2020.
Speaker Change: Today's press release is by no way of finding of wrongdoing as is stated by the competition Bureau themselves.
Speaker Change: Well, we can't speculate on the outcome at this stage. It's important it's important to note a number of investigations have been opened for no revenue was ever applied. This includes large companies such as Apple and care Pfizer.
Speaker Change: Jason Corp, and inputs.
Speaker Change: We remain confident in the integrity of our business practices, which align with the software industry and standards.
Speaker Change: Okay.
Speaker Change: This investigation does not restrict our strategy our operations, including the ability to freely set our price and products. These links.
Speaker Change: Processes can be easily multi year years, and take if not take longer.
Speaker Change: Now turning to results now I'll turn it over to results for the quarter.
Speaker Change: Our business fundamentals are strong and we're seeing the early signs that the macro environment conditions, improving could result in accelerated growth for us.
Speaker Change: We generated $120 million of revenue and $66 million adjusted EBITDA during the first quarter and $485 million and 255 million respectively for the last 12 months.
Speaker Change: Our consistent performance and the scale we've built in the past four years is a function of a sound strategy and a go to market approach is delivering results, but it starts before that.
Speaker Change: We have good results today, because we have a world class team delivering those results.
Speaker Change: You'll hear from Frank and me regularly.
Speaker Change: Last quarter, Martha bounds joined us on the call.
Speaker Change: This afternoon, we've asked Ive demand see your financial tax business to join us to describe our financial technology business. It's a business of scale in the first quarter. It represented 20% of our total revenue, which wanted to own is larger than many of the technology peers listed in Canada.
Speaker Change: It's also bigger than the business, we took public in 2020.
Speaker Change: Over the course of the past few years, we've purposely changed your go to market approach to move from a transactional based business to contracted business, leading with our software as a solution that minimum contract value approach.
Speaker Change: It's a strategy is working.
Speaker Change: We continue to deliver organic growth, which was over 5% in the quarter and our churn rate is low at under 4% with no customer concentration.
Speaker Change: Additionally, 54% of the business consisted of annual contracted revenue and within that 32% of total revenue with annual recurring revenue is at the end of our first quarter.
Speaker Change: <unk> reached $156 million, it's the end of September which represented growth of 43% year over year and is three times the level from just two years ago.
Speaker Change: The growth we delivered in these two key metrics provide greater certainty and transparency aligns with our ability our business to generate consistent free cash flow.
Speaker Change: Well, we invested heavily in previous years to build the product suite, where it is today.
Speaker Change: I heard clearly a year ago investors desire to see the business deliver levered free cash flow. The teams worked hard over the last 12 months I'm doing this.
Speaker Change: Levered free cash flow was 28 million in the first quarter, an improvement of over 34 million for the same period last year.
Speaker Change: This improvement is ahead of our plan based on normal course business.
Speaker Change: Dion Durham provides mission critical technology to law firms financial institutions rely on our technology to perform day to day tasks and transactions frequently an awfully spend their days our applications.
Speaker Change: Legal technology represents a large addressable market that is forecasted to grow at 10% through 2030.
Speaker Change: Law firms are focused on driving productivity gains and increasingly complex higher volume workflow the adoption of new technologies to support these workflows and reduce cost plays directly into our offering.
Speaker Change: Today, we are well positioned across tens of thousands of customers. We're looking for streamlined workflows deliberate through central dashboards, and we invested significant sums of money to make this for a route reality for our customers. This is paying off.
Speaker Change: Our unique global platform provides customers with interoperability between different workflows and tasks to a single sign on a single platform.
Speaker Change: They're looking to convey our real estate matter grasp the wheel for a customer helps on management state onboard new client Lee clients seamlessly perform account measurements, where gilligan's orbitals registrations dining room can help.
Speaker Change: Yeah.
Speaker Change: Unity is where the market's going we've already built and deployed the leading platform.
Speaker Change: And he really brings together all the tools are small and medium sized law firm needs and requires to run their practice. This saves our customers time and money and provides real operational cost efficiencies as well as the latest technologies in the market. This includes our reliance on AI.
Speaker Change: We're focused on adding functionality for existing customer base and driving increased adoption within that base.
Speaker Change: In Canada and in Ireland, we've already served the vast majority of that market. So further penetrate our existing customer base is a key driver in the UK and Australia. In addition to driving usage across that same existing customer base. We're also looking to drive adoption with new users.
Speaker Change: We believe new users, we attracted a superior of unity and this will really help us win in the market.
Speaker Change: Now moving to our Fintech business, our platform I'm going to introduce them to pass the call over to <unk> who's going to tell talk you remember that business.
Speaker Change: Thank you, Matt and good afternoon.
Speaker Change: Our financial Solutions Division operates globally as one business, serving more than 100, leading financial service providers in Canada and Australia.
Speaker Change: Is being managed with a distinct focus beyond the core legal software that is traditionally known as <unk> core offering.
Speaker Change: Today financial solutions as Matt mentioned represents a little over 20% of Dine Durham globally.
Speaker Change: Well, we do in a few words, we empower financial service providers through integrated technology solutions that connect them. So.
Speaker Change: The critical partners supporting the bill and tax payment and home buying journeys.
Speaker Change: We also provide leading credit unions and alternative lenders with manage banking services.
Speaker Change: The consistent reliable business with a strong value proposition and with virtually all revenue secured under long term contracts.
Speaker Change: We're pleased with their performance in the first quarter of fiscal 2025, and we're seeing year over year revenue growth of more than 20% let.
Speaker Change: Let me briefly expand expand with a few more details about the business.
Speaker Change: We serve customers and broadly across three segments.
Speaker Change: Banks credit unions, and alternative lenders and others we.
Speaker Change: We have long standing relationships with all the large banks in Canada and Australia.
Speaker Change: We already partner with many of the leading credit unions Theres definitely more that we can do here and we believe that this segment presents us with good opportunities to acquire new customers.
Speaker Change: The third group is alternative lenders and Fintech.
Speaker Change: Retail focused finance providers like Canadian tire alternate lenders, such as Dow easy and challenger banks.
Speaker Change: This is a growing and dynamic segment with demand for our solutions.
Speaker Change: We're excited about the number of positive conversations underway in our pipeline in Atlanta and recently some good wins.
Speaker Change: Such as the announced national Bank mortgage discharge surface.
Speaker Change: We run a platform as a service model.
Speaker Change: And our platforms to provide end to end solutions, which includes customer onboarding.
Speaker Change: Customer support and a fully contained technology infrastructure that makes things simple for financial service providers, allowing them to focus on their core business.
Speaker Change: Our level of integration is such that in many cases, our platforms, our seamless extension of our customer's value proposition and brand experience.
Speaker Change: And their end customers rely on us every day to complete important transactions that moved funds.
Speaker Change: That is a responsibility that we take very seriously.
Speaker Change: Our 30 plus year relationships with several of the largest that buys is a testament to the trust placed in our solutions, we continually invest to ensure that our technology solutions are reliable secure and compliant with the highest standards to ensure the efficient and cost effective fulfillment of mission critical financial.
Speaker Change: Actions.
Speaker Change: And most of our revenue drivers are transactions some examples.
Speaker Change: If a customer uses online banking to make a bill payment.
Or if a small business is remitting taxes to the Canada revenue agency using our tax platform.
Speaker Change: If a bank is sending mortgage instructions to lawyers or the execution of our property settlement.
Speaker Change: These transactions happen in large numbers consistently regardless of economic cycles and provide us with a reliable source of recurring revenue.
Speaker Change: In summary, we have a strong value proposition that's anchored by long standing relationships, we have deep integration with their customers and high quality and robust solutions, our technology platforms, our reliable and trusted.
Speaker Change: And for the most part we're able to offer them to financial service providers are standard industry wide digital infrastructure.
Speaker Change: That makes this business very scalable.
Speaker Change: Thank you and with that I'll turn it back over to Matt.
Speaker Change: Thanks, Steve before turning over to Frank it's important to address a few matters.
Speaker Change: Today with the news and the competition Bureau, we got a lot of inbound calls from shareholders and stakeholders asking how do I quantify what this is.
Speaker Change: To repeat again, we don't believe.
Speaker Change: We have done anything wrong here and this is not a finding of guilt.
Speaker Change: It's just an investigation.
Speaker Change: That said to help give you a reference the bureau provided guidance with respect to the process and potential outcomes on its website.
Speaker Change: Again, while we fully believe we've done nothing wrong for abuse of documents the maximum penalty range up 3% of revenue, which in our case is somewhere between $10 million to $15 million again.
Speaker Change: Last month, we announced that we've expanded the scope for our previously announced strategic review process to consider additional opportunities to enhance shareholder value.
Speaker Change: I am required to mentioned that no assurance team made this process will result in a transaction or offer nor any assurance of outcome or timing.
Speaker Change: What we've said publicly is we believe a takeover involving a zero premium is not in the interest of all shareholders and stakeholders.
Speaker Change: We will continue to work constructively with all shareholders to engage thoughtfully the benefit of all stakeholders towards the execution of our strategy and to drive value across the business.
Speaker Change: And to that end last month, we continued with our process of board renewal with the employee appointment of Luke Mccormick to the floor.
Speaker Change: The directors in connection with our cooperation agreement with Black sheep, Lucas experienced investment manager with expertise in capital allocation and BW software as a service companies.
Speaker Change: Blue represents the third new member appointed or elected within the past year on the board of directors Our board the total Sara.
Speaker Change: We have a clear growth strategy to drive value for shareholders that we believe is working.
Speaker Change: The activists attempt at a wholesale replacement of the board of manner team puts this extraordinary track record and future trajectory at risk.
Speaker Change: Let me spend a moment to explain the trajectory that we're seeing we're on what we're seeing in.
Speaker Change: In Q2, the current period.
Speaker Change: We're currently experiencing accelerated growth.
Speaker Change: <unk> preliminary results with the best on record for this month with double digit revenue growth.
Speaker Change: We expect the current quarter to be one of the best on record as well.
Speaker Change: Now I'll turn it over Frank to discuss the financials.
Frank Lee: Thank you, Matt and good evening everyone.
Frank Lee: Yes.
Speaker Change: This afternoon, we reported our first quarter 2025 results. Our results continue to demonstrate the underlying strength of our diversified business and its ability to deliver strong free cash flow performance.
Speaker Change: This strength is underpinned by our annual recurring revenue, which continues to grow and as a result reduces the reliance on real estate transactions.
Speaker Change: Our annual contracted revenue remains robust driven by both our practice management and our payments infrastructure service lines.
Speaker Change: Revenue exposed to real estate transactions globally in Q1 was 48% compared to 49% in the same period of fiscal 2024.
Speaker Change: Seasonally fiscal 'twenty four followed by fiscal Q1, our strongest seasonal periods for real estate transactions.
Speaker Change: Revenue exposed to real estate transactions in Canada was only 25% compared to 27% in the same period of last year.
Speaker Change: Our actual exposure to real estate transaction is even lower than its weight high percent as the Canadian figure includes refinancing transactions.
Speaker Change: Annual recurring revenue contracted was 32% as of September 32024, compared to 25% at the same point in the prior year.
Speaker Change: Keep in mind, there are components of our revenue, which we do not include an IRR such as revenue from contracted Overages and other revenues under contract with service agreements.
Speaker Change: These are included in the annual contracted revenue, which was 54% in the first quarter and including a R compared to 46% in the prior period year.
Speaker Change: Okay.
Speaker Change: We reported revenues of $120 million up 5% compared to the corresponding period in fiscal 'twenty four.
Speaker Change: The into consideration of the sale of CMG in August of 2023.
Speaker Change: Revenue was unchanged in Q1, excluding the impact of CMG and the prior period.
Speaker Change: Organic growth in the first quarter was 1% compared to the same period in fiscal 2024 and was 5% net of the impact of revenue adjustments, probably I mean really related to the recognition of revenue relating to new three year contracts. Following acquisitions made in the preceding 12 month period.
Speaker Change: We generated EBITDA agenda.
Speaker Change: We generated adjusted EBITDA of $65 9 million in the first quarter of fiscal 2024 compared to $68 7 million in the same period of fiscal 'twenty four.
Speaker Change: Continue to maintain our strong EBITDA margins coming in at 55% in the quarter, which is in line with our target range of between 50 and 60%.
Speaker Change: Total adjusted operating expenses, which include direct costs technology costs, G&A and sales and marketing were $54 million for the quarter of 45% of revenue.
Speaker Change: Direct costs increased by $5 $5 million this quarter, mainly due to new reseller relationship agreement signed in the UK during the period.
Speaker Change: Higher than anticipated third party data costs in the U K, which we are active looking to in source and an impact from acquisitions in the prior period.
Excluding the impact from acquisition divestitures indirect costs adjusted operating expenses for Q1 2025 decreased by $2 8 million.
Speaker Change: Cost reductions being utilized when compared to the prior year.
Speaker Change: Net finance costs were $21 million for the first quarter down, 41% compared to $35 million and a corresponding period of fiscal 'twenty four.
Speaker Change: The improvement in Q1 was primarily due to favorable unrealized foreign exchange impacts, particularly from our U S denominated debt as.
Speaker Change: As well as the net favorable revaluation impact on the embedded derivative asset.
Speaker Change: We also incurred lower interest cost and.
Speaker Change: And reduce the total holdback only resulting in an additional favorability.
Speaker Change: Adjusted finance costs, which adjust for these changes in fair values and settlement losses was $30 million lower by $7 million versus the prior Q1 period, which primarily reflects the savings from our free financing transactions completed in April 2024, and the positive interest spread earned on our 2026 convertible debentures.
Speaker Change: Okay.
Speaker Change: Acquisition restructuring and other costs were $8 7 million for the first quarter compared to $6 4 million in the prior period.
Speaker Change: We believe we can deliver additional improvements in its cost over time.
Speaker Change: As we take additional actions to complete integration activities and increased our overall cash flow performance.
Speaker Change: Leveraged free cash flow was $28 2 million in first quarter, and an improvement of $34 5 million compared to the corresponding period in fiscal 'twenty four.
Speaker Change: This improvement includes savings achieved in the reduction of capital expenditures and lower net interest costs as well as an increase of $5 1 million in cash flows operations, mainly as a result of improved working capital.
Speaker Change: Even if we include the crude bond interest, which was paid in October 2024, Levered free cash flow would have been approximately $12 million, an increase of $19 million year over year.
Speaker Change: Now turning to our balance sheet.
Speaker Change: Net debt stood at approximately 132 billion as of September 32004, which has been reduced by approximately $49 million since June 30 of 'twenty four.
Speaker Change: As a result of strong cash flows in the quarter, we made a voluntary payment of $20 million towards the term loan facility.
Speaker Change: In addition, we aligned our cross currency swaps to maintain an 85% fixed interest rate hedge and a 100% foreign exchange hedge which protects us against volatility between the Canadian and U S. Dollar.
Speaker Change: Lastly, effective July one 2020 forward were acquired by <unk> to classify all of our outstanding convertible debt as current and witnessed adoption of Ias one we have recast the prior year's balance sheet respectively.
Speaker Change: The maturity date of our convertible debt remains unchanged no modifications to any terms, we have $185 million of restricted assets and investments earmarked for the original debentures.
Speaker Change: Which are classified as non current assets.
Speaker Change: This creates an accounting mismatch there is no such discrepancy in substance.
Speaker Change: We understand the importance of reducing our leverage and we have set a target to reduce it below four times net debt to adjusted EBITDA.
Speaker Change: By suspending significant M&A activity and to move the level of M&A activity that supports our long term revenue long term target range of two five to three five times.
Speaker Change: That said, we have sufficient resources to manage our debt.
Speaker Change: The business generate strong and sustainable cash flows.
Speaker Change: And with that I'll turn it back to the operator for Q&A.
Speaker Change: Thank you very much ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone if you.
Speaker Change: 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 too.
Speaker Change: If you are using a speaker phone please make sure to lift the handset before pressing any case.
Speaker Change: Your first question comes from the line of Robert Young from Canaccord Genuity. Please go ahead.
Hi, good evening, thanks for the context around the competition Bureau announcement, one thing in there that might.
Speaker Change: We worth clarifying you said that the elements of concern or not pricing, but market access in one of your releases today, you said that it was subscription contract terms discounted pricing and product suite offerings.
Maybe if you could just elaborate on those two things and maybe give us just a little more context, there if you could clarify the difference there.
Speaker Change: Yeah, no. Thanks, Rob I appreciate the question.
Speaker Change: I was referring to.
Speaker Change: There have been some references that may be related to price increases and that that was not the case.
Speaker Change: It's related primarily to interoperability and length of contracts et cetera bundling.
Speaker Change: So that's what I meant there.
Speaker Change: Okay. Thank you.
Speaker Change: I think you just noted Frank suspending M&A.
Speaker Change: And I think looking through the financials. There was an acquisition in the quarter I believe that was the M&A announced and a subsequent event last quarter is there anything anything new that's unannounced any new on any M&A, if you could clarify that.
Relative priority between debt Paydown and tuck in M&A that would be helpful.
Speaker Change: Yeah, no. Thanks, Rob.
Speaker Change: There was no additional M&A in the quarter.
Speaker Change: And look as we said before we're focused on deleveraging the business. So thats our primary our primary focus today and it will be or what.
Speaker Change: We're spending our time trying to achieve.
Speaker Change: Okay last question for me.
Speaker Change: Can you give us any sense of timing around the circular when that might be out.
And then I'll pass the line.
Speaker Change: It will be able the coming weeks.
Speaker Change: Okay. Thanks, I'll pass line.
Speaker Change: Your next question comes from the line of sadness must shop list from BMO capital markets. Your line is now open.
Speaker Change: Hi, good afternoon.
Speaker Change: Revenue in Canada was down year over year, and that's despite the strong growth.
Speaker Change: As seen in his business can you clarify what drove the decline.
Speaker Change: I will say that strike here.
Speaker Change: We did mentioned in his part of the organic revenue story that there was some.
Speaker Change: A new three year contracts are entered in entered into in the prior year.
Speaker Change: And so those primarily related to contracts signed in Canada.
Speaker Change: Okay, So basically a tough year over year comp.
Speaker Change: Chris.
Speaker Change: Correct.
Speaker Change: Yes.
Speaker Change: Gross margin was.
Speaker Change: Later was that a function of the external factors you called out the higher third party data costs.
Speaker Change: And if so.
Over what timeframe, but she tried to work that back up to historical levels.
Speaker Change: Yes, that's something that.
It has been hitting us over the last fiscal period.
Speaker Change: We are actively trying to address that and reduce those costs accordingly.
Speaker Change: But as I mentioned in my script.
Speaker Change: We do still expect.
Speaker Change: Our target.
Speaker Change: Adjusted EBITDA margins to remain at that 50% to 60% range.
Speaker Change: So while we try to try to reduce those costs, that's still the applicable rage.
Speaker Change: Okay.
Speaker Change: Finally, just expanding on that.
Speaker Change: Matt's comments regarding.
Speaker Change: The strong month of October.
Is that a function of just.
Speaker Change: Higher transaction volumes and.
Speaker Change: If that's the case what geographies are you seeing that in.
Speaker Change: Yeah.
I can address that so yeah in October I mean.
Speaker Change: As you heard in some of the news outlets.
Speaker Change: <unk> commented on the.
Speaker Change: Stronger.
Speaker Change: The stronger transaction volume that they're seeing in some of the larger urban areas in Canada, such as Toronto Vancouver.
Speaker Change: So we have seen that.
Speaker Change: In our results as well.
Speaker Change: And so with that with the continued strength of.
Speaker Change: The financial services business.
Speaker Change: And our growth we are seeing all that transpire into a good uplift on record.
Speaker Change: Great Best of luck. Thank you.
Speaker Change: Your next question comes from the line of Kevin <unk> from Scotiabank. Please go ahead.
Speaker Change: Hey, good evening and.
Speaker Change: Thanks, as well for the.
Speaker Change: More color that you gave on the competition here are just a couple of rounding up questions. There I know you mentioned and on the competition Bureau website.
Speaker Change: Detail that Max.
Speaker Change: Monetary penalty $10 million to $15 million, but in that.
Speaker Change: Keith we're saying the CB does find U a E.
Speaker Change: You are required to pay that can you talk about like the next steps would you be required to then provide some remedies with those partners. The integration working it has talked about.
Speaker Change: The next steps.
Speaker Change: If it were to go down that route.
Speaker Change: I appreciate the question look.
Speaker Change: It's really hard to speculate on that.
Speaker Change: I mean at this point all the competition Bureau has done is asked us for data.
Speaker Change: That's a really talking to here a data request.
Speaker Change: So it's far too premature to kind of get into hypotheticals, but what could happen I mean, nothing could happen, which is often the case. If you look back at what happens on the type of transactions.
Speaker Change: The way to work with them provide the data and be very cooperative.
To make sure they get all the information they need keep in mind.
Speaker Change: Unlike yourself and some of our investors who are experts on our space in our business and our industry Theyre not so part of this process is bringing them up to speed and helping them understand what we do.
Speaker Change: But how our business works and look we're confident that the day, we do.
Speaker Change: Nothing wrong, and we hope to reach the same conclusion once they have the data to do so.
Speaker Change: Okay, Great <unk> Super helpful.
Maybe one for Frank can you talk about some of the puts and takes on free cash flow.
Frank Lee: For the upcoming quarter I know we've got.
Frank Lee: Semiannual interest payment. There is also the deferred payment that will come through but maybe.
Frank Lee: I know you mentioned in the script eight 7 million of integration cost in Q1.
Speaker Change: Our view of that moving down in time, but does the strategic review have any any considerations for expenses that we may see through that line.
Speaker Change: No there is nothing material there on the strategic review in terms of free cash flow impacts.
Speaker Change: I mean, obviously the.
Speaker Change: The continued integration of our business, we'll bleed into into Q2.
Speaker Change: Keep in mind that what other factors of the increased costs that we've seen in Q1.
Speaker Change: Relative to Q4 of prior period is.
Speaker Change: Some of the money, we're spending on on the Actavis activities.
Speaker Change: And then as it through legal and through our communications firm so.
Speaker Change: Likely we'll continue.
Speaker Change: But you did hit on the on the major ones, which is the.
Speaker Change: The bond interest which has been paid.
Speaker Change: And it's a bit of an anomaly because it impacts the last two quarters.
Speaker Change: So that one there.
Speaker Change: You can do the simple math on that and Thats the biggest change between the previous two quarters and what we expect for Q2.
Speaker Change: Got it maybe just one last one just on the <unk>.
Speaker Change: Three year sort of revenue recognition from a year ago I think it was.
Speaker Change: Something like $6 million last year $1 million.
Speaker Change: And this year is that.
Any more of that kind of year over year tough comp in the in and out.
Speaker Change: Upcoming quarters or was that kind of it.
Speaker Change: Hey, Janice Matt.
Janice Matt: Happy to take that one just from a process perspective.
Janice Matt: So when we bought those practice they had a small Canadian business that had a desktop component part of our integration process is to move business we buy.
Janice Matt: When the subscription from either month to month or one year contracts are three year contracts that resulted in this case.
Janice Matt: It's onetime revenue.
Janice Matt: It happens from time to time with some of the smaller desktop based off we have around the business.
Janice Matt: But it's a very very small part of our revenue to be clear.
Janice Matt: And the vast vast majority as kind of cloud based vast majority cloud based revenue. There is hope that provide some context on why from a business perspective.
What happened there we thought it is important to show it on a like for like basis, though.
Janice Matt: You can see the true performance of organically of the business frankly.
Speaker Change: I think I missed there.
Speaker Change: Just the only other so it means that these three year contracts.
Speaker Change: They are they are billed on a monthly basis. So while the recognition has happened in the prior year, we do get the benefit of the.
Speaker Change: Of the cash that is coming in and Youll see that positive impact in our working capital for Q1.
Speaker Change: Got it that's super helpful. Thanks, a lot.
Your next question comes from the line of Stephen Boland from Raymond James. Please go ahead.
Speaker Change: Matt You said something in your prepared remarks that you've dealt with the competition Bureau.
Before over the years on different matters, but I don't think I'm seeing them actually press release.
Speaker Change: Destination.
Speaker Change: I'm just wondering what.
Speaker Change: I presume you knew this was coming.
Speaker Change: But I'm just curious what's different do you think this time than the conversations you've had in the past.
Speaker Change: Hmm.
Speaker Change: Would you say that you've not seen the press release are you speaking in regards to <unk> or in regards to any other companies.
Speaker Change: Clarity.
Speaker Change: I think you said you've dealt with the competition Bureau in the past.
Speaker Change: So yes.
Speaker Change: Ross really said before on specifically you. So I'm just wondering what's different.
Speaker Change: Yes look I mean, there has been media reports about the competition Bureau, having conversations with us in the past.
Speaker Change: And we May have commented on it.
Speaker Change: The difference here is as I said to.
Speaker Change: Kevin earlier there.
Speaker Change: They are going through a process to learn about our business and collect data.
Speaker Change: We've been very collaborative with them, so far and provide them data, but there's a formal process. They have to go through.
Speaker Change: As they get in order to get more data and they part of their practices to announce that to the market.
Speaker Change: So again we.
Speaker Change: Yes.
Speaker Change: But somewhat perplexed by the reaction today to it.
Speaker Change: We want to help the bureau learn more about our business because we don't believe we have done anything wrong with a great business.
Speaker Change: Okay and then.
Speaker Change: Apologize for my lots of them.
Speaker Change: There was some pressure on some elevated costs on new reseller agreements.
Speaker Change: Maybe somebody could explain that to me.
Speaker Change: Yes.
Speaker Change: We entered into a new contract with a customer of ours in the U K, who is reselling our products on our behalf that resulted in elevated direct costs.
Speaker Change: The other item that taken account there is one of our data suppliers increased our price and we're actually working to kind of.
Speaker Change: One of our internal supplier suppliers, 100% IAA product, we owned versus theirs and in the coming quarters that should bring down that direct cost as well so those were.
Speaker Change: Two of the main drivers.
Speaker Change: Okay and then.
Speaker Change: I know you probably can't answer this but I'm going to ask you Danielle.
Speaker Change: Heading into heading into this meeting.
Speaker Change: Five or six weeks it is now.
Speaker Change: And are you confident can you can you talk about.
Speaker Change: I know you say that you've been working with all your shareholders, which is good to hear.
Speaker Change: But obviously this is going to come down too.
Speaker Change: Votes, if it does come down to that so I'm just wondering how are you feeling going into this meeting.
Speaker Change: If you can answer it.
Speaker Change: Yes.
Speaker Change: Well.
Speaker Change: That's a fair question look.
Speaker Change: I would like to stand behind our performance.
Speaker Change: We've achieved.
Speaker Change: I mean, where we're going.
Speaker Change: And our strategy and I think the numbers prove that its working.
Speaker Change: We don't we don't want to have is contested election, we never have we've always been willing to compromise with a beside.
Speaker Change: As we think it's silly in a waste of time and money.
Speaker Change: That said, we you know we we ask the shareholders to kind of judge us on our performance and our merit.
Speaker Change: And based on that we think we'll succeed.
Speaker Change: But again at any point in time, we would be willing to sit down on their side and kind of try to wait and try to find a way not to have this fight because we think it's.
Speaker Change: At this point, it's we're never sure we're fighting over.
Speaker Change: Okay I appreciate that comment I know, that's not easy to discuss.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad and if you'd like to withdraw your question. Please press star two if you are.
We're using a speaker phone please make sure to Mr handset before pressing any keys.
Speaker Change: Your next question comes from Scott Fletcher from CIBC. Please go ahead.
Scott Fletcher: Hi, Good evening most of everything has been covered off at this point so I just.
Scott Fletcher: Asking another question on the geographic mix the U K looks stronger in the quarter just ended.
Scott Fletcher: You can call it there and then on that all the other revenue, obviously, it's lumpy, but I mean sort of it was weaker.
Speaker Change: Weaker in the quarter. So just some geographic commentary would be helpful.
Speaker Change: Thanks.
Speaker Change: Yes.
Speaker Change: Hey, Scott Frank here, So a couple of factors in the U K.
Speaker Change: We are seeing some good.
Speaker Change: Momentum on the practice management side. So these are the other licenses that we sell as part of <unk>.
Speaker Change: A lot of firms everyday practice management needs.
Speaker Change: In terms of license adoption and.
Speaker Change: And some of the PPA growth at <unk>.
Speaker Change: That we've seen following the acquisitions that we've made in <unk>.
Speaker Change: In 'twenty three the.
Speaker Change: The other factor would be.
Speaker Change: Entering into search commitment contracts and that was a factor for the increased <unk> in the quarter and then thirdly is the obviously the FX rate.
Speaker Change: There is obviously a strengthening of the U K pound.
Speaker Change: Which effects our bottom line.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay. Thanks.
Speaker Change: Your next question comes from Robert Young from Canaccord Genuity. Please go ahead.
Speaker Change: Okay.
Speaker Change: Mr. Robert Jones. Your line is now open your question sorry, I was on mute.
Speaker Change: In your commentary you said that in Canada and in Ireland Unity.
Speaker Change: Serving the vast majority of the market and then the next wave of growth if I heard correctly would be driven by the UK and Australia could you flush out that comment.
Speaker Change: Have you started to enter the U K with.
Speaker Change: With unity, where are you in that rollout, maybe just a little more information there because given the strong growth in <unk>, maybe there is another like thanks, yes.
Speaker Change: Yes, sorry, I might have kind of somewhat misspoke there Rob. So apologies, we do have unique practice manager in the U K and in our Unity Cola practice search platform.
Speaker Change: I've been this bespoke so apologies for that.
Speaker Change: So at this stages.
Speaker Change: Unity fully rolled out in the UK and in Australia, or maybe just.
Speaker Change: Revisit where you are in that rollout.
Speaker Change: It's fully rolled out in the U K and Australia, we have unity practice management and research, though they're not integrated together you can access them both on our website by by logging into one or the other but they're not fully integrated the same way it would be in say.
The U K.
Speaker Change: Okay. Thanks for that clarification.
Speaker Change: There are no further questions at this time I would like to turn the call back over to Hassan for Jay for some closing remarks. Please go ahead.
Speaker Change: Great. Thanks for all who attended and we look forward to connecting with you for our Q2 full year 25 results to be communicated at a later date in the near future until then have a great day. Thank you.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen. This concludes today's conference. Thank you very much for your participation you may now disconnect.