Q2 2025 Dye & Durham Ltd Earnings Call
Good afternoon.
Ina: My name is Ina and I will be your conference operator today.
Speaker Change: At this time, I would like to welcome everyone to the Dalian-Durham Second Quarter Fiscal 2025 Earnings Call. I would now like to turn the call over to Mr. Huss Hirji, VP Investor Relations of Dalian-Durham. Mr. Hirji, you may begin your conference.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Thank you, Operator, and good afternoon. Welcome to the DynDurham conference call. 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: Please note that statements made during this call may include forward-looking statements and information and future-oriented financial information regarding Dinedurum and its business and disclosure regarding possible events.
Speaker Change: conditions or results that are based on information currently available to management, which indicate management's expectation of future growth, results of operations, business performance, and business prospects and opportunities.
Speaker Change: Such statements are made as of this date hereof, and D&D assumes no obligation to update or revise them to reflect events, disclosures, or circumstances, except as required by applicable securities laws.
Speaker Change: Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. 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 in our 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 Hans Giesges, Dianne Durham Chair and Interim Chief Executive Officer, and Frank Liso, Dianne Durham Chief Financial Officer. A question and answer session will follow the formal remarks for research end.
Hans Giesges: I'll now turn the call over to Hans for opening remarks. Hans? Thank you Has. Good afternoon everyone and thank you for joining us today.
Speaker Change: I'd like to begin by sharing a few observations during my first two months with Dianne Durham as Interim CEO and Chair.
Speaker Change: Firstly, I've been impressed by the level of talent across the organization. The dedication of our teams and the innovative spirit I've seen are strong. The knowledge and ambition to innovate of the people in this company in combination with the many strong market positions we have.
are creating the right conditions for continued growth.
Speaker Change: Secondly, we're a company in motion. We are the number one Canadian provider for convincing attorneys. We have fortified a revenue base to perform across the market cycles by increasing our contracted revenue and growing our annual recurring revenue.
Speaker Change: From this position of strength, we now need to evolve our strategy and continue to execute. However,
Speaker Change: Our execution going forward will be focused on building and partnering to create exciting workflow solution software for our customers.
Speaker Change: It is a change compared to mainly growing our product offering through M&A in the past.
Speaker Change: In addition, we've been reaching out more proactively to customers as to their input in our product roadmap direction.
Speaker Change: more than hitherto and will continue to do so going forward.
We started the process of fine-tuning our strategy.
Speaker Change: This strategy review is focused on looking at how we can better pursue market leadership in the various geographic legal market segments we operate in.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: This process will be led by a new key member of our executive leadership team who joined last month. Pablo Rodriguez is our new Chief Strategy Officer.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Pablo brings more than 25 years of experience in the legal technology industry, having held progressively senior positions at Thomson Reuters and serving as a strategic advisor to Clio.
Speaker Change: He has significant expertise in market insight, strategy development, financial and operational management, and go-to market strategy and customer experience.
Speaker Change: This is a time of transition and transformation, but also of great opportunity.
Speaker Change: Turning to the quarter, I'm pleased to see the fundamentals of the business continuing to perform strongly.
Speaker Change: This translates to a top-line growth of 10% while organic revenue increased by 6%, driven primarily by Canadian practice management software and our financial services division.
Speaker Change: Frank will touch upon the ARR issue more, however I was happy to see that we continue to increase this metric which is now at 35 percent of total revenue compared to 27 percent in the prior periods.
Speaker Change: In summary, we possess a business of scale with strong fundamentals. We have endured one of the worst real estate markets globally since 2000 and continue to maintain a market-leading position.
We're committed to growing organically.
Speaker Change: In recent quarters, you start to see the type of cash flow the business can generate, with this quarter an exception due to one-time expenses, Frank will detail for you in a moment.
Speaker Change: Our margin profile remains strong. We're focused on debt reduction and de-levering the company so the markets start to recognize these strong fundamentals underpinning our business.
Speaker Change: Our transformation mission is not insignificant and will take some time as all transformation processes do, but I want to ensure you that we are well positioned to execute on this mandate and are on our way with a clear path forward.
Speaker Change: Finally, as an update, after careful consideration, the board has decided to terminate the strategic review process from last fall. That said, we may still consider opportunities to enhance shareholder value and accelerate debt reduction, including the divestiture of non-core assets.
Speaker Change: But we're excited about the assets we possess today and opportunity to drive further organic growth and cash generation.
Speaker Change: Before handing it over to Frank, I want to thank my predecessor, Matthew Proud, for all the hard work and dedication he's put into getting Diane Durham to where it is today.
Speaker Change: It's a solid foundation for the next phase of the company's success story.
Frank Liso: I will now pass it over to Frank before heading into Q&A.
Thank you, Hans, and good afternoon.
This afternoon report our second quarter 2025 results.
Frank Liso: Our results continue to demonstrate the underlying strength of our diversified business.
Frank Liso: This strength is underpinned by our organic growth and strong performance from our annual recurring revenue, ARR, as well as improving dynamics in the real estate and financial services markets we serve.
Frank Liso: We reported a revenue of $120.7 million, up 10% compared to the corresponding period in fiscal 2024.
Frank Liso: Organic revenue in the second quarter was $7 million, representing 6.3% growth compared to the same period in fiscal 24.
Frank Liso: Both metrics met the guidance range for Q2 as communicated in November 2024.
Frank Liso: Our annual contracted revenue remains robust at 57% of total revenue.
Frank Liso: Contracted revenue includes minimum commitment levels of ARR plus revenue from contracted overages and other service arrangements mainly in our financial technology service lines.
Frank Liso: Annual recurring revenue contracted was 34% as of December 31st, 2024, compared to 27% at the same point in the prior year.
Frank Liso: ARR was $152 million, up 36%, or $40.3 million as of December 31, 2024, compared to the same point last year.
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Frank Liso: Revenue exposed to real estate transactions globally was 41% in Q2 compared to 44% in the same period of fiscal 2024.
Frank Liso: Seasonally, Q4 followed by fiscal Q1 are the strongest seasonal periods for real estate transactions.
However, in Q2 2025...
Frank Liso: That period all performed on a sequential basis mainly due to $7.9 million of one-year contract revenue recognition consistent with the same period in the prior year.
Frank Liso: Looking ahead, two dynamics will influence our ARR and exposure to real estate.
Frank Liso: As the rate environment has normalized, we are seeing activity in the Canadian real estate market continue to improve in the early stages of calendar 2025.
Frank Liso: The structure of our minimum volume contracts in the practice management business enables us to capture the upside from increased real estate activity.
Frank Liso: More transactions generate more revenues from those customers under contract. The minimum portion of these contracts are included in ARR and any overusage is then included in annual contracted revenues.
Frank Liso: At the same time, three years ago, we modified our go-to-market approach in Canada with a minimum volume contract offering. The majority of those contracts were on three-year terms.
Frank Liso: The initial tranche of those contracts that we negotiated come up for renewal in the next few quarters.
Frank Liso: With the backdrop of an improving real estate market and the account executive team that are now focused on contract renewals.
Frank Liso: So, we have the tailwinds of higher activity with the potential headwind that we are managing from a contract renewal aspect that will influence our AR performance and our exposure to real estate for the balance of 2025 and beyond.
Frank Liso: We generated adjusted EBITDA of 66.5 million, up 11% or 6.5 million in the second quarter of fiscal 24 compared to the same period of fiscal 24.
Frank Liso: We continue to maintain our strong EBITDA margins, coming at 55% in the quarter.
Frank Liso: Total adjusted operating expenses, which includes direct costs, technology costs, G&A, sales and marketing, were $54 million for the quarter or 45% of revenues.
Frank Liso: Direct costs increased by $3.7 million this quarter, mainly due to higher revenues.
Frank Liso: New reseller relationship agreement signed in the UK during the period.
Frank Liso: and higher third-party costs in the UK, which we're actively looking to insource.
Frank Liso: Excluding the impact from acquisition divestitures and direct costs, adjusted operating expenses decreased by $0.8 million for the second quarter of 2025 as a result of cost reduction initiatives compared to the prior year.
Frank Liso: During the second quarter, we successfully completed the transition of the financial technology solutions off of the Transition Services Agreement with TELUS.
Frank Liso: With the completion of this integration, our ongoing costs are now nearly comprised of private hosting and cloud usage fees, which are included in adjusted operating expenses.
Frank Liso: This transition involves a mix of cloud migrations and hardware upgrades to enhance the stability, security, and scalability of our platforms and services.
Frank Liso: Net finance costs were $66 million in the second quarter, an increase of $17 million compared to the corresponding period in FY24.
The change was primarily due to three factors.
Frank Liso: 1. Unfavorable net unrealized foreign exchange impacts particularly from our U.S. denominated debt. 2. Increases in fair value of contingent consideration.
Frank Liso: And three, a net unfavorable revaluation impact of the embedded derivative asset.
Frank Liso: Keep in mind, we are 100% hedged on our U.S. dollar interest and principal repayments from a cash basis.
Frank Liso: But our cross-currency swaps will create volatility through our balance sheet and income statement based on effects and interest rate movements.
Frank Liso: Adjusted finance costs, which adjust for these changes in fare values and contingent consideration.
Frank Liso: $33 million, a $5 million reduction compared to the prior Q2 period, which primarily reflects the savings from our refinancing transactions completed in April 2024 and the positive interest spread earned on investments held to retire our 2026 convertible debentures.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Frank Liso: As a result of the shareholder engagement in the lead-up to the Annual General Meeting, we incurred a significant level of cost in the quarter that will not be recurring.
Frank Liso: Acquisition, restructurings, and other costs were $30 million for the second quarter, compared to $5.5 million in the prior period.
Frank Liso: We do not expect this item to normalize, we do expect this item to normalize below prior levels over time given the focus on organic growth, ongoing completion of integration activities, and the suspension of new acquisitions.
Frank Liso: Leverage-free cash flow was negative $39 million for the second quarter compared to positive $3 million in the prior year.
Frank Liso: The change is primarily a result of payments with respect to the CEO separation agreement and shareholder engagement costs in the lead up to the AGM.
Frank Liso: The company also paid higher net interest of $46 million in the quarter compared to $15 million in the corresponding period of fiscal 24 due to the timing of interest payments on the 2029 Senior Secured Notes.
Frank Liso: Despite these specific shareholder engagement costs, we have sufficient resources to manage our debt and the business generates strong, sustainable cash flows.
Frank Liso: Adjusted at income was $13.4 million in the quarter and improvement of $7 million compared to the same period in fiscal 24.
Frank Liso: Improvement was the result of higher adjusted EBITDA and lower adjusted finance costs.
Frank Liso: Adjusted earnings per share was $0.20 in the quarter, an improvement of $0.09 or 82% compared to the same period of fiscal 24. Adjusted EPS is the closest measure to ongoing cash EPS for the business.
Frank Liso: Our net debt stood at approximately $1.38 billion as of December 31, 2024, which has been reduced by approximately $30 million since December 31, 2023.
Frank Liso: As a result of certain newly effective accounting pronouncements, we are now required to classify our 2026 and 2029 outstanding convertible debt as current.
This is to comply with IFRS presentation requirements.
Frank Liso: Restricted investments totaling $185 million intended to settle the original debentures are required to be classified as non-current assets.
Frank Liso: The board and management are committed to reducing our leverage by suspending M&A activity and focusing on organic growth through customer engagement and retention to generate free cash flow and pay down debt.
Frank Liso: As Hans mentioned, the board has terminated the strategic review process.
Frank Liso: The outright sale of the business is off the table. However, we may explore opportunities to enhance shareholder value and accelerate debt reduction, including the investment of non-core assets.
Frank Liso: With that, I'll turn it back to the operator for the Q&A session.
Speaker Change: and others. The end Thank you for watching. If you enjoyed this video, please click the Like button and subscribe to my channel. Also, if you have any questions or other problems, please post them in the comments. See you in the next video.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys.
One moment, please, for your first question.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Your first question comes from the line of Robert Young from Canaccord Genuity. Please go ahead.
Robert Young: Hi, good evening. The first question I wanted to ask was around the chart on page 8 in the presentation that shows ARR and contracted revenue dipping down quarter over quarter.
And I was hoping that you could...
Robert Young: explain that dip in the context of churn. Has churn increased or decreased? You said that you're expecting this to be a busy period of contract renewals. Has that already started and has that been an impact? Maybe you just, you know, wrap those things together to better understand the dip in the ARR.
Hey Rob, it's Frank here. I think you're referring to...
Robert Young: $156 million in Q1, $152.4 in Q2. So that dip was primarily related to the Affinity acquisition that was completed in August. And earlier this summer, we had a reclassification of ARR versus maintenance revenue that was adjusted in the current quarter.
Robert Young: That was the primary difference of that amount. There was a minor amount coming in from Unity Contracts.
Robert Young: Not necessarily ready to churn, but we applied our Allowance for a Doubtful Account provisions to those contracts as well to be consistent with how we reported it in the income statement.
Robert Young: So those are the two primary factors, but as you would note, the percentage of ARR did increase.
Robert Young: from 32 to 34 as a result of lower transactional revenues relative to the previous quarter.
Robert Young: Okay, and other revenue under contract, that's overages, I guess that's not the contract of revenue or ARR, the 103 going to 100 in Q2.
Robert Young: Yeah, that would primarily be the reflection of the of the overusages of the of the ministry contracts.
Robert Young: Okay and if we maybe just take a step back I know there's a lot of maybe concern around you know where churn is right now.
Robert Young: And given the fact that these contract renewals are starting to roll through this year, has churn changed measurably positive or negative? I couldn't find a churn metric anywhere in the disclosure. I might have just missed it.
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Robert Young: There is no material change in churn or how we measure churn as you previously would have seen in a prior quarter.
Robert Young: Rob, you know, we are, as I mentioned in my script, focused on the contract renewals for the next two quarters, managing it proactively, but there has been no noticeable change in churn relative to prior quarters as we see now.
Speaker Change: Okay, last question for me. You said that the management team is going to focus on organic growth and pause M&A. In some of the presentation materials from the activists,
Speaker Change: suggested that organic revenue growth target would be 10%. Is that roughly where you see it this year? Is that a good number to think about?
And then I'll pass the line.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Huss Hirji, Huss Denomme, Huss Proud, Martha Vallance, Frank Liso
Speaker Change: Yeah, so Rob, the 10% that you have seen there, I mean, we're obviously in the midway point of the 100-day plan.
So yeah, we are targeting organic growth.
Speaker Change: We're looking at a complete set of assets at Dian Durham, fine-tuning the strategy, but we're not right now prepared to comment on the exact percentage increase that we're targeting. That will come at the conclusion of the plan roughly by early Q4.
Speaker Change: Okay, okay. Maybe, could you just give us a sense of whether you expect organic growth to be positive, if that's the focus?
Speaker Change: Yes, we expect them to be positive. That is the focus.
Okay, thank you. I'll pass the line.
Speaker Change: Thank you. And your next question comes from the line of Stanis Machopoulos from BMO Capital Markets. Please go ahead.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
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Mr. Meshopolis, your line is now open.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: With respect to the restructuring and other charges, there were obviously a bunch of one-time items this quarter, but just any color in terms of what kind of magnitude we might expect in the upcoming quarter? I mean, should there still be significant, you know, residual costs from recent events or should it be a dramatically lower number?
Yeah, sorry, Thanos.
Thanos: That's right. We had a heightened amount of costs in Q2, as you can imagine.
With the suspension of M&A, that will drop considerably.
Thanos: There will always be some some tail-off implications of some of these activities into Q3, but those will be relatively minor comparison.
Thanos: We're targeting reduced levels. I think if you look at our previous years, substantially reduced levels from previous years, we're driving that cost down accordingly, but we're not gonna give any guidance on that right now as we continue to work through the plan.
Thanos: And just to remind us on the puts and takes from a cash flow perspective, obviously, I'd be interested in this quarter.
Thanos: You won't have that, you know, impact next quarter. The one-time charges will be less. Any commentary on cash flow would be helpful.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Thanos: Yeah, I think they're going to hit the right elements. We don't have the six month interest payment again until Q4.
Thanos: I think there'll be a reduction in the one-time charges and I think also on the on the working capital.
Thanos: We obviously had chewed up a lot of the accruals and payments before year-end, so you won't see the same impact of a source of cash from AP going forward as well.
Speaker Change: Hans, you sort of touched on this in your prepared remarks as far as your early findings, but just to clarify, if we think about, you know, the investment thesis,
Speaker Change: that Injun had going into this process, and the first two months you've had at the company, learning more about the business. I mean,
Speaker Change: Anything that you found surprising or did it sort of just reconfirm what your initial impressions may have been before you entered the role?
Speaker Change: You always find surprises, both good and less good ones. I think what I really liked, what I found, is many of the market positions we got through acquisitions
Speaker Change: I'm much stronger than I thought because initially during our process we thought they didn't spend enough time on integrating, on enhancing, but all of these are great starting points to further enhance these products.
and Xpand.MarketLeadership. So I really like that.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Great. And then finally, any update in terms of the search process for Ferman and CEO?
that's that's fully ongoing and
It always takes time, but I think we're making progress.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
All right, that's a wrap. Thank you.
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Speaker Change: Thank you. And your next question comes from Gavin Fairweather from Cormark. Please go ahead.
Gavin Fairweather: Oh, good afternoon. Thanks for taking my questions. Maybe just to be clear on the minimum value contract renewals, so that that starts in your fiscal third quarter, and then you'll run through the base over the course of a year. Is that the right way of thinking about it?
Gavin Fairweather: Yeah, that's right. They start at the end of the current quarter Q3 and it'll run into the balance of the calendar year for the majority of those contracts.
Gavin Fairweather: Okay, that's helpful. And then maybe just on product integration, you know, single sign-on data integrations.
Gavin Fairweather: I'm curious for what's your view on how long it'll take to complete a lot of that work and how big of a lift that is.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: You mean within the Canadian product? Which one are you talking about?
Speaker Change: I mean product integration in general, you called out as an opportunity to focus.
Speaker Change: Yeah, well that's ongoing across so many products, across so many geographic areas we're in. Some will go very quickly, some already we're in process and will deliver but it's software building so it always takes time.
We certainly don't promise delivery dates for those.
Speaker Change: Understood, it'll be a work in progress. And then lastly for me on the financial solutions business, you mentioned.
Speaker Change: It was one of the key contributors to growth in the Canadian business. Maybe you can discuss kind of your perspective on the growth outlook for that business. And now that you've fully disconnected it from TELUS, does that impact its margins in any way?
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Gavin Fairweather: No, it won't impact the margins. Essentially, it will help reduce the acquisition and other charges, Gavin.
Gavin Fairweather: But we're seeing, you know, just on the on the backs of the Canadian real estate market, which is, you know, very well positively impacting that business.
from the mortgage instructions business.
Gavin Fairweather: to the settlements business in Quebec. There are obviously a lot of volumes coming through right now. And so is our relationships with the banks on our payment technology assets.
Gavin Fairweather: Those are performing well as well as as banks continue to to do more business with us on that on those fronts so so positive momentum there that we're seeing continuing.
Thanks so much, I'll pass the line.
Speaker Change: Thank you, and your next question comes from the line of Kevin Krishnarappi from Scotia Bank.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Kevin Krishnarappi: Hey there, good evening. I have another follow-up on the contract renewals. You talked about your account executives are engaged. What are some of the strategies that you're thinking about? How are the conversations going? Are you thinking about pricing? Anything we can think of there as you try to get ahead of all the renewals that are coming up?
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Yeah, there's, I mean, generally the conversations are going well. We are, you know, we obviously, for those that are looking to alter any parts of their contract, we'll work with them on that, whether that be for minimum commitment levels.
Speaker Change: or pricing, they kind of go hand in hand. So I would say it's a more of a unique case-by-case basis, Kevin.
Speaker Change: that, you know, we're keeping a track of and we're staying ahead of it as, you know, as we're talking to more and more clients as their renewals are coming up.
Speaker Change: I know it's probably a bit early, but you've given us organic growth. It looked like it picked up in Q2 versus Q1.
Speaker Change: What are your initial thoughts or thoughts on organic growth in Q3? You talked about the tailwind of potential real estate markets kicking up. You've got this potential headwind. Is there any way to kind of give us a rough view of what you're thinking in terms of organic growth?
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: The main drivers of organic growth, you know, are not something that is, you know, that is static in nature. So, you know, you look at our organic growth with...
Speaker Change: The tailwinds that we're seeing from the real estate markets in Canada and the UK and Australia.
Speaker Change: So that was a large factor in the organic growth measure. Our UK practice management business is largely subscription.
Speaker Change: Those have annual escalators in there and those will come through as well.
Speaker Change: So those are the main elements and then obviously what I've mentioned before about the mainly on the Canadian Financial Services side where we're seeing a really good momentum and growth there. So those are the those are the main drivers of organic growth that we expect to continue.
Speaker Change: I think prior range of, you know, 50 to 60 percent. So can we talk about that there? Do you expect to see margins to come down a little bit as you as you, you know, try to invest in these growth initiatives to get that organic growth closer to the 10 percent range?
Speaker Change: Yeah, again, it's too preliminary right now. We're halfway through the 100-day plan.
Speaker Change: As you pointed out, Kevin, that we did see 55% margins in Q2, which is consistent. We are making investments in our sales and product departments and our go-to-market strategy.
Speaker Change: We'll assess those as part of the 100-day plan and update you accordingly.
Speaker Change: Okay, last one for me. Is there any update to the issue with the competition bureau that came up during the last quarter? And then I'll pass the line.
Speaker Change: No, there's no update, just obviously we are complying with, you know, their initial deadline was for the end of February on the initial set of documents and we're on track to deliver that.
Great, thanks.
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Speaker Change: Thank you. And your next question comes from the line of Scott Fletcher from CIBC. Please go ahead.
Speaker Change: Hi, good evening. I wanted to ask about the customer engagement work that you're doing. Just curious what you're hearing in those initial sets of conversations, and as you're speaking to customers, are they giving you an indication of what some of the other competitive products are like in the market, and how you stack up against those now as they sort of, you know, we're hearing that they're getting a little better.
Speaker Change: Yes, Ed, with the new CEO in the business and a new board, we're clearly interested in finding out exactly what customers are thinking and saying. And those first meetings are very interesting because you can say to customers,
Speaker Change: We have the things on your mind last year, we need to know about it now, because there is a new, if you like, regime, and we really want to make sure which other things in which order that you would like us to improve or change.
Speaker Change: going forward. And the response is quite positive, both on the product side of things we can develop for them that they've been wanting to have for a long time and we never got to because we're too busy buying more products.
Speaker Change: for that. So I think the response is positive and the amount of customer outreach and discussion we're having.
He's gone up substantially compared to last year.
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[inaudible]
Speaker Change: Okay, thanks. That's interesting. And then maybe one for Frank. You mentioned in the quarter there was 7.9 million of one-time contract revenue recognition, one-year contract revenue recognition, and that was flat year-on-year. Can you sort of just give us a quick overview of what
Speaker Change: differentiates those contracts from the rest of the rest of the business and why they stand out.
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: Yeah, so those are not one-time, those are recurring at every Q2, I mean you would have seen the initial one happen last Q2, so those are essentially our
Those practice contracts that hit
Speaker Change: in South Africa and in Canada, more on the accounting practice management side. So they are essentially one-year subscription contracts that are essentially paid by the customer on a monthly basis.
Speaker Change: And we recognize those because the actual service has been delivered upon renewal. So those will be hitting us every Q2 as there are annual contracts, Scott.
Okay, thanks. That's all for me.
Thank you.
Speaker Change: Thank you, and your next question comes from the line of Stephen Boland from Raymond James. Please go ahead.
Stephen Boland: Hopefully you can hear me. I'm not in an ideal position to do this call. Hopefully you can hear me. Can you hear me okay?
Speaker Change: Yeah, we can hear you loud and clear, Stephen. Alright, thanks. Okay, so the first question I have is, there's a couple points in the presentation that talks about divestment.
You know, some pretty strategic things about...
Speaker Change: Getting rid of assets and not to be disrespectful here, but
Speaker Change: We don't have a permanent CEO yet, you know, no disrespect. So I'm not sure how you can make those comments about possibly looking at divestments until you get a permanent CEO.
Speaker Change: Could you just explain that to me, because a permanent CEO comes in, maybe wants to keep everything, wants to acquire, maybe not, but could you just explain that, those comments in the presentation?
Speaker Change: Yeah, that's fair. I don't think any incoming interim CEO in the first month would do divestments.
Speaker Change: not even proposed full divestments to the board to discuss. So what I've said is we've taken a large number of assets, a large number of geographic market positions and are reviewing where we have the best chances to become market leaders, where we're not market leaders now.
Speaker Change: In that review we look at all the products we have. We may find our products have become either
Speaker Change: surplus because they're being replaced for other products we've also acquired and integrated and others. So we're doing nothing more than an inventory of what the product roadmap will look like. And what we're saying is there may be assets that we decide.
Speaker Change: We no longer need, because we can partner whatever function these products have without owning them. But there's no decisions on divestment, there's no negotiations, we are in the inventory stage.
Speaker Change: of deciding what we will do going forward. We thought we'd just flag it that there's a possibility we'll do divestments, which would have both the function of
Okay, so basically this was just you're doing...
Speaker Change: work ahead of a permanent CEO coming in and then providing the information
Speaker Change: to that person. Yeah, the difficulty of being interim CEO is you want to make sure that you don't lose any pace on a transformation that you intend to.
Put the company through
Speaker Change: without making decisions that your permanent successor may either regret or not agree with, because he or she will have to execute those. So we're trying to find the right balance between the board and myself, deciding what can we decide now, what do we have to do without any delay. But things like divestments,
Speaker Change: would certainly be something that we'll end up doing if we end up doing them with a permanent CEO at the wheel and the board with more experience at the same time.
Speaker Change: Okay and like you know I'm not sure you can answer this but like
Speaker Change: Is there anybody on the call that can actually make a determination when a permanent CEO will be appointed? Is it in the next three months, six months, because that seems to be the biggest
Speaker Change: I would say question I get yeah, you know Like is this the next three months six months? That seems to be the biggest hurdle to maybe getting the stock up and You know getting to the next stage
Speaker Change: If you ask my wife, she would say tomorrow, please, because I'm traveling every week to Toronto, which is not a very popular move. Clearly, the answer is ASAP, but we need to dodge all the I's and cross all the T's there. I don't want to jinx it by putting a time on it, but we're going full speed on that.
I'm with Stanton Florida.
Yeah.
Speaker Change: So, Frank, can you provide any breakdown on the one-time costs? Like, I know...
CEO, departure costs, legal costs, can you provide any...
Speaker Change: breakdown on the one-time stuff that happened leading into the boat you know over 30 million I think it was over 30 million dollars just quickly little looking at it is there any breakdown you can provide
Huss Hirji, Matthew Proud, Martha Vallance, Frank Liso
Speaker Change: We do have a breakdown of that in our notes, the financial statement. So I know perhaps you probably don't have time yet to go through that. But yeah, there is a breakdown there that would be useful. But again, the vast majority of that would have been.
professional services incurred.
on all parties.
right, to essentially conclude the process.
Speaker Change: So, and that's in addition to the CEO separation costs that were also disclosed. Okay. It was, yeah, they're listed in the financial statements that you can take a look at, but there is no, obviously the vast majority of the $30 million was because of that activity.
Speaker Change: Okay, thanks. I'll go back and review. Thanks so much, guys.
Speaker Change: Great. Thanks for all who attended and we look forward to connecting with you for our Q3 full year 25 results to be communicated at a date later in the near future. Until then, have a great day everyone. Thank you.
Speaker Change: Thank you and this concludes today's call. Thank you for participating. You may all disconnect.
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