Q4 2026 Tecsys Inc Earnings Call

June 30, 2026

Speaker #1: Good morning, everyone. Welcome to Tecsys Fiscal Year 2026 fourth quarter and full year results conference call. Please note that the complete file, including MD&A and financial statements, was filed on SEDAR+ after market close yesterday.

Operator: Good morning, everyone. Welcome to Tecsys Fiscal Year 2026 Fourth Quarter and Full Year Results Conference Call. Please note that complete filings including MD&A and financial statements were filed on SEDAR+ after market close yesterday. All dollar amounts are expressed in Canadian currencies and are prepared in accordance with international financial results. Some of the statements in this conference call, including the question and answer period, may include forward-looking statements that are based on the management's beliefs and assumptions. Actual results may differ materially from such statements. I would like to remind everyone that this call is being recorded on Tuesday, 30 June 2026, at 8:30 AM Eastern Time. I would like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer at Tecsys. Please go ahead, sir.

Speaker #1: All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards. Some of the statements in this conference call include questions and answers.

Speaker #1: May include forward-looking statements that are based on management's beliefs and assumptions. Actual results may differ materially from such statements. I would like to remind everyone that this call is being recorded on Tuesday, June 30, 2026, at 8:30 a.m. Eastern Time.

Speaker #1: I would now like to turn the conference over to Mr. Peter Burton, Chief Executive Officer at Tecsys. Please go ahead, sir.

Speaker #2: Thank you. Good morning, everyone. I'm joined today by Mark Bentler, our Chief Financial Officer. We appreciate you joining us. I'm pleased to report that fiscal '26 closed with records across the board.

Peter Brereton: Thank you. Good morning, everyone. I am joined today by Mark Bentler, our Chief Financial Officer. We appreciate you joining us. I am pleased to report that fiscal 2026 closed with records across the board. Record Q4 revenue of CAD 50 million, record Q4 adjusted EBITDA of CAD 6.7 million, and record full-year revenue of CAD 193 million. SaaS grew 20% for the year, and adjusted EBITDA reached 10% ahead of our guidance range. These results reflect the continued strength of our Elite platform and our healthcare solutions, which remain the core of our business and the primary driver of SaaS ARR growth. Before Mark covers the financials, I want to share some of the highlights from the year. In Q4, we added two significant new customers.

Speaker #2: Record Q4 revenue of $50 million. Record Q4 adjusted EBITDA of $6.7 million and record full year revenue of $193 million. SAS grew 20% for the year and adjusted EBITDA reached 10%, ahead of our guidance range.

Speaker #2: These results reflect the continued strength of our Elite platform and our healthcare solutions, which remain the core of our business and the primary driver of SAS ARR growth.

Speaker #2: Before Mark covers the financials, I want to share some of the highlights from the year. In Q4, we added two significant new customers. Memorial Hermann Health System, an $8.3 billion patient revenue health system and one of the largest not-for-profit systems in Texas, selected Tecsys to power supply chain operations across their network.

Speaker #2: And Shepherd Center, one of the country's leading specialty hospitals for spinal cord and brain injury rehab, represents our first win in the rehab space.

Peter Brereton: Shepherd Center, one of the country's leading specialty hospitals for spinal cord and brain injury rehab, represents our first win in the rehab space. Memorial Hermann Health System, a CAD 8.3 billion patient revenue health system, and one of the largest not-for-profit systems in Texas, selected Tecsys to power supply chain operations across their network. These wins cap a year that also brought in Memorial Sloan Kettering, UT Southwestern, and major names in life sciences and global distribution. New logo bookings were up 33% year over year, reflecting both the breadth of demand and the quality of our pipeline. The regulatory tailwinds we described in Q3, DSCSA enforcement, 340B scrutiny, are driving increasing urgency around modernization. We expect this to translate into accelerating investment as deal cycles mature.

Speaker #2: These wins cap a year that also brought in Memorial Sloan Kettering, UT Southwestern, and major names in life sciences and global distribution. New logo bookings were up 33% year over year, reflecting both the breadth of demand and the quality of our pipeline.

Speaker #2: The regulatory tailwinds we described in Q3—DSCSA enforcement and 340(b) scrutiny—are driving increasing urgency around modernization, and we expect this to translate into accelerating investment as deal cycles mature.

Speaker #2: And as AI evaluation matures, we believe buyers are gravitating towards domain-specific partners over general-purpose platforms—precisely where Tecsys is positioned. Our intelligence engine, Tecsys IQ, became commercially available in our Q3, and in Q4 we released Tecsys IQ Image Capture, automating a time-sensitive, labor-intensive step in supply chain receiving workflows.

Peter Brereton: As AI evaluation matures, we believe buyers are gravitating towards domain-specific partners over general purpose platforms, precisely where Tecsys is positioned. Our intelligence engine, TecsysIQ, became commercially available in our Q3. In Q4, we released TecsysIQ Image Capture, automating a time-sensitive, labor-intensive step in supply chain receiving workflows. We are on track to continue to release additional agents in fiscal 2027 with initial focus areas in point-of-use operations, pharmacy workflows, and administrative processes. TecsysIQ is built to draw on healthcare-specific sources such as the ASHP database, Good ID, FDA, and then combine that with our own real-time digital supply chain data, a data foundation that a horizontal vendor simply cannot replicate quickly. It is one of the reasons the intelligence we deliver is operationally meaningful rather than just directionally interesting.

Speaker #2: We are on track to continue to release additional agents in fiscal 2027, with initial focus areas in point-of-use operations, pharmacy workflows, and administrative processes.

Speaker #2: Tecsys IQ is built to draw on healthcare-specific sources such as the ASHIP database, GoodID, and the FDA, and then combine that with our own real-time digital supply chain data.

Speaker #2: A data foundation that a horizontal vendor simply cannot replicate quickly. It is one of the reasons the intelligence we deliver is operationally meaningful, rather than just directionally interesting.

Speaker #2: Across fiscal '26, our team completed more than 30 customer go-lives, spanning health systems, distributors, and pharmaceutical operations across North America and Europe. These completions matter because they are proof of execution.

Peter Brereton: Across fiscal 2026, our team completed more than 30 customer go-lives spanning health systems, distributors, and pharmaceutical operations across North America and Europe. These completions matter because they are proof of execution. Live customers running critical supply chain operations on Tecsys don't evaluate alternatives. They expand. By way of example, in Q4, we completed a WMS go-live at a clinical operations facility for one of the world's largest pharmaceutical companies. A new e-signature workflow was designed, built, and delivered in under three months and has since been incorporated into our latest Elite 2026.1 release as a standard capability.

Speaker #2: Live customers running critical supply chain operations on Tecsys don't evaluate alternatives—they expand. For example, in Q4, we completed a WMS go-live at a clinical operations facility for one of the world's largest pharmaceutical companies.

Speaker #2: A new signature, a new e-signature workflow, was designed, built, and delivered in under three months, and has since been incorporated into our latest Elite 2026.1 release as a standard capability.

Speaker #2: Also in Q4, Parkland Health in Dallas, one of the largest public health systems in the United States, went live on our point-of-use. And UNC Health went live on the Tecsys pharmacy inventory management system, adding to the Tecsys point-of-use solution that was already running across the system.

Peter Brereton: In Q4, Parkland Health in Dallas, one of the largest public health systems in the United States, went live on our point of use. UNC Health went live on the Tecsys pharmacy inventory management system, adding to the Tecsys point of use solution that was already running across the system. We hosted the 2026 Tecsys User Conference in Nashville from 31 May to 3 June, our strongest yet, with registrations up 44% year-over-year. Customer speakers included AdventHealth, Vanderbilt Health, St. Luke's, Wellstar Health, and Corevis, among others. Our partnership sponsorship succeeded targets. We continue to be recognized by the most influential analysts throughout fiscal 2026. We were positioned again as a challenger in the 2026 Gartner Magic Quadrant for Warehouse Management Systems, our 15th consecutive inclusion. 40% of the 2025 Gartner Healthcare Supply Chain Top 25, including two masters, are Tecsys customers.

Speaker #2: We hosted the 2026 Tecsys User Conference in Nashville from May 31 to June 3. It was our strongest yet, with registrations up 44% year over year.

Speaker #2: Customer speakers included AdventHealth, Vanderbilt Health, St. Luke's, Wellstar Health, and Kirby Risk, among others. And our partnership sponsorship succeeded targets. We continue to be recognized by the most influential analysts throughout fiscal '26.

Speaker #2: We were positioned again as a challenger in the 2026 Gartner Magic Quadrant for Warehouse Management Systems, marking our 15th consecutive inclusion. Forty percent of the 2025 Gartner Healthcare Supply Chain Top 25, including two Masters.

Speaker #2: Our Tecsys customers, and we were recognized as a leader in the 2025 Nucleus Research WMS Technology Value Matrix for the second consecutive year. Since quarter close, Tecsys has been designated FedRAMP Agency Auth and Process.

Peter Brereton: We were recognized as a leader in the 2025 Nucleus Research WMS Technology Value Matrix for the second consecutive year. Since quarter close, Tecsys has been designated FedRAMP Agency Auth in process, a meaningful milestone for any vendor operating in or adjacent to US federal healthcare environments, and a signal of the compliance infrastructure we are building as our customer base grows. Fiscal 2026 was a year of records, new logos, and a platform that advanced meaningfully. We enter fiscal 2027 with a 31% larger SaaS pipeline, operational AI in the market, and customers who are expanding and engaged. I'll now turn it over to Mark to provide some additional financial details for the year and quarter, as well as financial guidance on several key metrics.

Speaker #2: A meaningful milestone for any vendor operating in or adjacent to U.S. federal healthcare environments, and a signal of the compliant infrastructure we are building as our customer base grows.

Speaker #2: Fiscal '26 was a year of records, new logos, and a platform that advanced meaningfully. We enter fiscal '27 with a 31% larger SaaS pipeline, operational AI in the market, and customers who are expanding and engaged.

Speaker #2: I'll now turn it over to Mark to provide some additional financial details for the year and quarter, as well as financial guidance on several key metrics.

Speaker #3: Thank you, Peter. As a reminder, our fourth quarter ended April 30, 2026. I'll focus on Q4 results, and then follow that with brief highlights on full fiscal 2026 results.

Mark Bentler: Thank you, Peter. As a reminder, our Q4 ended 30 April 2026. I'll focus on Q4 results and then follow that with brief highlights on full fiscal 2026 results. Total SaaS revenue grew 17% in Q4, reaching CAD 21.5 million. That was up from CAD 18.4 million in Q4 last year. That growth was about 18% on a constant currency basis. Elite SaaS revenue, our core product and the predominant contributor to total SaaS revenue, increased by 21% compared to the same period last year. Total SaaS ARR was CAD 86.8 million at 30 April 2026. That was up 13% from CAD 76.5 million at the same point last year. On a constant currency basis, SaaS ARR growth was 15%. Our Elite SaaS ARR grew by 19% over the same period, representing 21% constant currency growth. SaaS RPO was CAD 243 million at 30 April.

Speaker #3: Total SAS revenue grew 17% in Q4, reaching $21.5 million, up from $18.4 million in Q4 last year. That growth was about 18% on a constant currency basis.

Speaker #3: Elite SaaS revenue, our core product and the predominant contributor to total SaaS revenue, increased by 21% compared to the same period last year. Total SaaS ARR was $86.8 million at April 30, 2026.

Speaker #3: That was up 13% from $76.5 million at the same point last year. On a constant currency basis, SaaS ARR growth was 15%. Our Elite SaaS ARR grew by 19% over the same period, representing 21% constant currency growth.

Speaker #3: SAS RPO was $243 million at April 30. That was up 12% from a year ago, or 14% on a constant currency basis. As Peter mentioned, Q4 fiscal 2026 total revenue was $50 million, a new record for Tecsys, compared to $46.6 million in Q4 last year.

Mark Bentler: That was up 12% from a year ago, or 14% on a constant currency basis. As Peter mentioned, Q4 fiscal 2026 total revenue was CAD 50 million, a new record for Tecsys, compared to CAD 46.6 million in Q4 last year. Our Q4 total gross margin was 52% this year, compared to 51% in Q4 last year. SaaS margin expansion was a key driver here. Net loss in Q4 fiscal 2026 was CAD 0.2 million, or CAD 0.02 per diluted share, compared to net profit of CAD 1.7 million or CAD 0.11 per diluted share in Q4 last year. The Q4 fiscal 2026 net loss reflects CAD 3.4 million in after-tax restructuring costs. Adjusted net profit, which excludes the impact of after-tax restructuring costs, was CAD 3.2 million in Q4 of this year, up significantly compared to CAD 1.7 million in the same quarter last year. Adjusted EBITDA was CAD 6.7 million in Q4 of fiscal 2026.

Speaker #3: Our Q4 total gross margin was 52% this year, compared to 51% in Q4 last year. And SaaS margin expansion was a key driver here.

Speaker #3: Net loss in Q4 fiscal 2026 was $0.2 million, or $0.02 per diluted share, compared to net profit of $1.7 million, or $0.11 per diluted share, in Q4 last year.

Speaker #3: The Q4 fiscal 2026 net loss reflects $3.4 million in after-tax restructuring costs. Adjusted net profit, which excludes the impact of after-tax restructuring costs, was $3.2 million in Q4 of this year—up significantly compared to $1.7 million in the same quarter last year.

Mark Bentler: The Q4 fiscal 2026 net loss reflects CAD 3.4 million in after-tax restructuring costs. Adjusted net profit, which excludes the impact of after-tax restructuring costs, was CAD 3.2 million in Q4 of this year, up significantly compared to CAD 1.7 million in the same quarter last year. Adjusted EBITDA was CAD 6.7 million in Q4 of fiscal 2026.

Speaker #3: Adjusted EBITDA was $6.7 million in Q4 of fiscal 2026. That was up 56% from $4.3 million in the same period last year. Turning briefly to our full-year highlights, SaaS revenue in fiscal 2026 was $80.4 million, up 20% from $67.1 million last year.

Mark Bentler: That was up 56% from CAD 4.3 million in the same period last year. Turning briefly to our full-year highlights, SaaS revenue in fiscal 2026 was CAD 80.4 million. That was up 20% from CAD 67.1 million last year. Elite SaaS revenue increased by 24% compared to the same period last year. Total revenue was CAD 193.1 million. That was up 9% from CAD 176.5 million last year. Adjusted net profit was CAD 7.5 million for the year, up 67% compared to the prior year. Finally, adjusted EBITDA for the full year was CAD 20 million. That is up 50% year on year and represents, as Peter indicated, a 10% EBITDA margin, demonstrating continued operational scaling of our business. We ended the year with cash and short-term investments of CAD 31.2 million and no debt. During fiscal 2026, we purchased approximately 424,000 shares for approximately CAD 13.2 million under our normal course issuer bid.

Speaker #3: Elite SAS revenue increased by 24% compared to the same period last year. Total revenue was $193.1 million, up 9% from $176.5 million last year.

Speaker #3: Adjusted net profit was $7.5 million for the year, up 67% compared to the prior year. Finally, adjusted EBITDA for the full year was $20 million, which is up 50% year on year and represents, as Peter indicated, a 10% EBITDA margin.

Mark Bentler: Finally, adjusted EBITDA for the full year was CAD 20 million. That is up 50% year on year and represents, as Peter indicated, a 10% EBITDA margin, demonstrating continued operational scaling of our business. We ended the year with cash and short-term investments of CAD 31.2 million and no debt. During fiscal 2026, we purchased approximately 424,000 shares for approximately CAD 13.2 million under our normal course issuer bid.

Speaker #3: Demonstrating continued operational scaling of our business, we ended the year with cash and short-term investments of $31.2 million and no debt. During fiscal 2026, we purchased approximately 424,000 shares for approximately $13.2 million under our normal course issuer bid.

Speaker #3: That compares to about 172,000 shares for $6.9 million last year. Finally, the board yesterday approved a quarterly dividend of $0.09 per share.

Mark Bentler: That compares to about 172,000 shares for CAD 6.9 million last year. Finally, the board yesterday approved a quarterly dividend of CAD 0.09 per share. Moving on now to fiscal 2027 guidance. Our total revenue growth guidance reflects sustained SaaS revenue growth and our expectation for stable professional services and hardware revenue, with ongoing declines in legacy maintenance revenue, including the effects of SaaS migrations. We also expect continued adjusted EBITDA margin expansion as the operating leverage of our business model continues to play out. Finally, to provide investors with greater visibility into the performance of our core growth engine, we are introducing guidance for Elite SaaS revenue growth. Our guidance for fiscal 2027 is as follows. Total revenue growth of between 2% and 4%. Elite SaaS revenue growth, between 18% and 20%. Total SaaS revenue growth, between 13% and 15%. Adjusted EBITDA margin, between 11% and 13%.

Speaker #3: Moving on now to fiscal 2027 guidance. Our total revenue growth guidance reflects sustained SaaS revenue growth and our expectation for stable professional services and hardware revenue.

Speaker #3: With ongoing declines in legacy maintenance revenue, including the effects of SaaS migrations, we also expect continued adjusted EBITDA margin expansion as the operating leverage of our business model continues to play out.

Speaker #3: Finally, to provide investors with greater visibility into the performance of our core growth engine, we are introducing guidance for Elite SaaS revenue growth. Our guidance for fiscal 2027 is as follows: total revenue growth of between 2 and 4 percent.

Speaker #3: Elite SaaS revenue growth between 18% and 20%. Total SaaS revenue growth between 13% and 15%. Adjusted EBITDA margin between 11% and 13%.

Speaker #3: I'll now turn the call back to Peter.

Mark Bentler: I will now turn the call back to Peter.

Speaker #2: Thank you, Mark. We are very pleased with our Q4 and full-year results, and I want to thank our investors and board, our partners and customers, and the entire team at Tecsys.

Peter Brereton: Thank you, Mark. We are very pleased with our Q4 and full year results, and I want to thank our investors and board, our partners and customers, and the entire team at Tecsys. In summary, our key themes from Q4 and fiscal 2026. Record revenue, record adjusted EBITDA, ahead on adjusted EBITDA margin, new logo momentum and a 31% stronger pipeline. TecsysIQ, live and expanding, with purpose-built agents hitting the market this year. Healthcare leadership reinforced through a record-breaking user conference and ongoing analyst validation. FedRAMP in-process designation, expanding our compliance posture for federal healthcare. We enter fiscal 2027 with a strong recurring revenue base, a differentiated position in healthcare and complex distribution, and a platform advancing in the direction that the market demands. We are very confident in the opportunities ahead. With that, we will open the call for questions. Thank you.

Speaker #2: In summary, our key themes from Q4 and fiscal '26: record revenue, record adjusted EBITDA, ahead on adjusted EBITDA margin, new local momentum, and a 31% stronger pipeline.

Speaker #2: Tecsys IQ is live and expanding, with purpose-built agents hitting the market this year. Healthcare leadership was reinforced through a record-breaking user conference and ongoing analyst validation.

Speaker #2: And FedRAMP in-process designation is expanding our compliance posture for federal healthcare. We enter fiscal '27 with a strong recurring revenue base, a differentiated position in healthcare and complex distribution, and a platform advancing in the direction that the market demands.

Speaker #2: We are very confident in the opportunities ahead. With that, we will open the call for questions. Thank you.

Speaker #1: Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad.

Operator: Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star then the number one on your telephone keypad. If you'd like to withdraw a question, please press star then the number two. Our first question comes from Doug Taylor from National Bank. Please go ahead.

Speaker #1: If you would like to withdraw a question, please press star, then the number 2. Our first question comes from Doug Taylor from National Bank.

Speaker #1: Please go ahead.

Speaker #4: Yeah, thank you. Good morning, gentlemen. I'll start with a question on the maintenance and support revenue. Some quick math suggests that if, you know, the services and hardware are flat, and with your SaaS growth, maintenance and support would be declining almost 20% this year.

Doug Taylor: Yeah, thank you. Good morning, gentlemen. I'll start with a question on the maintenance and support revenue. Some quick math suggests that if the services and hardware are flat and with your SaaS growth, maintenance and support would be declining almost 20% this year. First of all, I guess I'll ask if there's something I'm missing there. As a follow-on to that, perhaps it's worth revisiting the SaaS conversion of the legacy maintenance stream and the migrations you're talking about, and the magnitude of that and how that's expected to run off and convert this year and into the future.

Speaker #4: First of all, I guess I'll ask if there's something, you know, I'm missing there. And, you know, as a follow-on to that, you know, perhaps it's worth revisiting the SaaS conversion of the legacy maintenance stream, and the migrations you're talking about.

Speaker #4: And the magnitude of that, and how that's expected to run off and convert this year and into the future.

Speaker #2: Do you want to take that one, Mark?

Peter Brereton: You want to take that one, Mark?

Speaker #3: Yeah, sorry. Thanks, Doug. Thanks for the question. I just ticked myself off mute there. So, a couple of things to unpack in there. First of all, the, you know, the trajectory of maintenance and support revenue.

Mark Bentler: Yeah. Sorry. Thanks, Doug. Thanks for the question. I just took myself off mute there. A couple of things to unpack in there. First of all, the trajectory of maintenance and support revenue. We're definitely expecting to climb there. It's not the same level that you're triangulating into. It's going to be roughly half that size in gross terms. I think you said 20%. That number is declining, and what's causing that decline is, it's primarily the tail of the migrations that are winding off and converting to SaaS. That's point one. Number two, in terms of SaaS migrations and how that's played out, we saw big numbers for SaaS migration bookings in 2024 and 2025. In 2026, we saw a very significant decline in SaaS migration bookings as we get to the, I would say, the longer tail end of conversions.

Speaker #3: We're definitely expecting to climb there. It's not the—it's not the same level that you're triangulating into. It's, you know, it's going to be roughly kind of half that size.

Speaker #3: And in gross terms, I think you said 20%. So that number is declining. And what's causing that decline is—well, it's primarily the tail of the migrations that are winding off and converting to SaaS.

Speaker #3: So, that's point one. Number two, in terms of SaaS migrations and how that's played out, we did see, you know, we saw, you know, big numbers of SaaS migration bookings in '24 and '25.

Speaker #3: In '26, we saw a very significant decline in SaaS migration bookings as we get to, I would say, the longer tail end of conversions.

Speaker #3: We expect that SAS migrations will continue at the sort of 2026 level, a less a much less meaningful level going forward. And also expect that there's, you know, from my point of view, there's quite a number of years of tail on that, what's left in the to convert.

Mark Bentler: We expect that SaaS migrations will continue at the sort of 2026 level, a much less meaningful level going forward, and also expect that there's, from my point of view, there's quite a number of years of tail on that, what's left to convert.

Speaker #2: Okay, so fair to assume then that of the SAS growth that you anticipate, you know, much of that is going to be you know, net new customers and expansions and the conversion of your expanding pipeline you referenced versus, you know, the migration you know, impact.

Doug Taylor: Fair to assume then that of the SaaS growth that you anticipate, much of that is going to be net new customers and expansions and the conversion of your expanding pipeline you referenced versus the migration impact.

Speaker #3: Exactly. That's exactly right.

Mark Bentler: Exactly.

Doug Taylor: Okay.

Peter Brereton: That's exactly right.

Speaker #2: Given, you know, the mixed shift that, you know, is suggested as a part of that, would you expect, you know, the gross margin expansion here to be consistent with, you know, the EBITDA expansion, you know, versus the savings you're seeing in OPEX?

Doug Taylor: Given the mix shift that is suggested as a part of that, would you expect the gross margin expansion here to be consistent with the EBITDA expansion versus the savings you're seeing in OpEx?

Speaker #3: Yeah, I mean, what we're providing for you—you know, the guidance that we're providing is around total adjusted EBITDA margin expansion. And we're sort of at 11% to 13% in that guidance range.

Mark Bentler: Yeah, the guidance that we're providing is around total adjusted EBITDA margin expansion. We're sort of at 11% to 13% in that guidance range. We do expect that SaaS margins are going to continue to expand. We've got a multi-year trajectory there, line of sight to 75% plus over a number of years. We certainly expect that SaaS margins are going to continue to expand in the current year.

Speaker #3: We do expect that, you know, we do expect that SAS margins are going to continue to expand. You know, we've got a multi-year trajectory there, line of sight to, you know, 75 percent plus over a number of years.

Speaker #3: But we certainly expect that SaaS margins are going to continue to expand in the current year.

Speaker #2: And, you know, the for the maintenance and support, you know, given you know, the declining top line do you expect any pressure on the margins as a result of that, or should those remain stable as you know, as that process continues?

Doug Taylor: For the maintenance and support, given the declining top line, do you expect any pressure on the margins as a result of that, or should those remain stable as that process continues?

Speaker #3: That should remain relatively stable. I mean, I think there'll be a little bit of a drag as, you know, over time, the mix of what's in that maintenance and support—there is some third-party maintenance in there—and it'll become, you know, a slightly bigger part of the total bucket over time.

Mark Bentler: That should remain relatively stable. I think there'll be a little bit of a drag as over time, the mix of what's in that maintenance and support. There is some third-party maintenance in there, and it'll become a slightly bigger part of the total bucket over time. We're talking about a multi-year period of time as migrations roll and things. We don't see near-term pressure on that maintenance and support margin.

Speaker #3: But we're talking about a multi-year period of time, you know, as migrations kind of roll and things. So we don't see, near term, we don't see near-term pressure on that maintenance and support margin.

Speaker #2: Okay, I appreciate that clarification. Last one for me, and I'll pass the line. You know, the restructuring savings—I think you quoted them at $8.1 million.

Doug Taylor: Okay. I appreciate that clarification. Last one from me, and I'll pass the line. The restructuring savings, I think you quoted them at CAD 8.1 million. Is that fully baked into the guidance, or is there any of that left to scale over the course of the year, and we'll have follow-on benefit in the years ahead?

Speaker #2: Is that fully baked into the guidance, or is there any of that left to kind of scale over the course of the year? And will that have follow-on benefit in the years ahead?

Speaker #3: Yeah, that's baked into the guidance. I mean, it has it has you know, we have we restructured we restructured that level of costs out of the business.

Mark Bentler: Yeah. That's baked into the guidance. We restructured that level of cost out of the business, and then as we mentioned at the end of Q3 in our commentary, and since then, our outlook includes reinvesting in the business. Not all the reinvestment has happened yet, but that's definitely fully baked into our adjusted EBITDA guidance.

Speaker #3: And then as we as we mentioned, you know, at the end of at the end of Q3 in our commentary and since then, you know, our outlook includes, you know, reinvesting in the business.

Speaker #3: And so you know, not all the not all the not all the reinvestment has happened yet, but that's definitely fully baked into our into our adjusted EBITDA guidance.

Speaker #2: Okay, I appreciate the answers. I'll pass the line.

Doug Taylor: Okay. I appreciate the answers. I'll pass the line.

Speaker #3: Thanks, Doug.

Mark Bentler: Thanks, Doug.

Doug Taylor: Thanks, Doug.

Peter Brereton: Thanks, Doug.

Speaker #2: Thanks, Doug.

Speaker #1: Your next question comes from the line of Suzanne Kamar from Stifel. Your line is open.

Operator: The next question comes from the line of Suthan Sukumar from Stifel. Your line's open.

Speaker #2: Good morning, gents. The first question—I wanted to touch on the U.S. healthcare backdrop. You know, it sounds like you guys are seeing sustained traction there.

Suthan Sukumar: Good morning, gents.

Mark Bentler: Morning.

Suthan Sukumar: For my first question, I wanted to touch on the US healthcare backdrop. It sounds like you guys are seeing sustained traction there. Can you provide an update on the demand signals you're seeing there, and how sales cycles are progressing today?

Speaker #2: Can you provide an update on the demand signals you're seeing there, and how sales cycles are progressing today?

Speaker #3: Yeah, I mean, the demand seems very strong. You know, we're continuing to see a very active pipeline. The sales team is extremely busy.

Peter Brereton: The demand seems very strong. We're continuing to see a very active pipeline. The sales team's extremely busy. Even as we head into summer months here, we're seeing pretty strong action. It's interesting. There's no question there's concern in the US healthcare market, the hospital market, about reimbursements. They're talking about potentially 20% of the people is the latest number I heard, 20% of the people that were covered by the Affordable Care Act seem to be dropping coverage as fees go up. That said, the hospitals seem to be taking a long view of it. They can't cut doctors' salaries. They can't cut nurses' salaries. Reimbursements are going down, so they have to find efficiencies throughout their whole operating platform. That's where we come in.

Speaker #3: We're, you know, even as we head into the summer months here, we're seeing, you know, pretty strong action. I mean, it's interesting. There's no question there's, you know, there's concern in the US healthcare market.

Speaker #3: The hospital market, about, you know, reimbursements. They're talking about, you know, potentially 20 percent of the people—the latest number I heard—20 percent of the people that were covered by the Affordable Care Act seem to be dropping coverage.

Speaker #3: As you know, as fees go up, but, you know, that said, the hospitals seem to be taking the long view of it. They, you know, they can't cut doctor salaries.

Speaker #3: They can't cut nurses' salaries, and reimbursements are going down, so they have to find efficiencies throughout their, you know, throughout their whole operating platform.

Speaker #3: And I mean, that's where we come in. You know, we recently looked at a midsize hospital network. They're—you know, it looks as though if they roll out our platform throughout just their general supply space, they'll save, you know, $80-plus million after, you know, after the full cost of our platform and the project and everything else.

Peter Brereton: We recently looked at a mid-size hospital network that it looks as though if they roll out our platform throughout just their general supply space, they'll save CAD 80+ million after the full cost of our platform and the project and everything else over the next few years. There's a lot of money to be saved by properly managing these supply chains, whether in general supplies or in pharmacy. We feel like the strong momentum's going to continue. The user conference was really exciting. The place was packed. We actually had to shut down registrations 2 weeks before the conference because we were just sold out. It was going to be standing room only. A lot of those were hospital networks coming to talk, coming to figure out how to further expand on the platform.

Speaker #3: Over the next few years. So there's a lot of money to be saved by properly managing these supply chains, whether in general supplies or in, you know, pharmacies.

Speaker #3: So, we seem to see, you know, feel like the strong momentum is going to continue. I mean, the user conference was really exciting.

Speaker #3: I mean, the place was packed. We actually had to shut down registrations two weeks before the conference because we were just sold out. It was going to be standing room only.

Speaker #3: So, and a lot of those were hospital networks coming to talk, coming to, you know, figure out how to further expand on the platform.

Speaker #3: A number of prospects came to the conference to be able to sort of see the platform, but also to be able to talk to other customers and hear how their experience had gone.

Peter Brereton: A number of prospects came to the conference to be able to sort of see the platform, but also to be able to talk to other customers and hear how their experience had gone. The momentum seems really strong, in spite of a lot of distractions that you would think could slow it down, they don't seem to be doing that.

Speaker #3: So, the momentum seems really strong, in spite of, you know, a lot of distractions that you would think could slow it down, but they don't seem to be doing that.

Speaker #2: Okay, great.

Suthan Sukumar: Okay, great. For my second question, I want to touch on ARR growth and the full year SaaS guide. You guys delivered on 13% ARR growth and the full year SaaS guide, you're calling for 13% to 15%, a little bit stronger on the top. What are your assumptions underlying the strength here on the upper end of the guide? Is that more a function of potential for lower churn, or is there potential for stronger bookings activity or something that's more top-line accretive?

Speaker #1: For my second question, I wanted to touch on ARR growth and the full-year SaaS guide. So, you guys delivered on 13% ARR growth.

Speaker #1: And the full-year SAS guide, you're calling for 13% to 15%. So a little bit stronger on the top. What are your assumptions underlying the strength here on the upfront of the guide?

Speaker #1: Is that more a function of lower potential for lower churn, or is there potential for stronger bookings activity, or, you know, something that's more top-line and accretive?

Speaker #3: Yeah, I mean, we are.

Peter Brereton: Yeah, we have.

Speaker #2: Yeah, I mean, we have a—oh, sorry, go ahead, Mark.

Mark Bentler: Yeah, we have.

Peter Brereton: Oh, sorry, go ahead, Mark.

Speaker #3: No, no, please, Peter. I was just going to say, we have a legacy product, right, that's buried in our overall SaaS numbers, which is sort of slowly fading away.

Mark Bentler: No, please, Peter.

Peter Brereton: I was just going to say, we have a legacy product that's buried in our overall SaaS numbers, which is sort of slowly fading away. Last year it was about CAD 8 million of SaaS, and this year it'll probably be, I don't know, CAD 4.5 million of SaaS or something like that. It's going to sort of disappear over the next couple of years. That ends up pulling down the top line overall SaaS growth number. That's why we're separately disclosing the Elite SaaS growth number, because that's really the go-forward platform. That's where we're saying it's really remaining close to a 20% growth. You look at what's driving that, the churn on that platform almost couldn't go lower. The churn on Elite right now averages less than 1.5% a year. It's very, very low.

Speaker #3: And it's, you know, last year it was about $8 million of SaaS, and this year it'll probably be, I don't know, $4.5 million of SaaS or something like that.

Speaker #3: It's going to sort of disappear over the next couple of years, so that ends up pulling down the top-line overall SaaS growth number.

Speaker #3: So, and that's why we're separately disclosing the Elite SaaS growth number, because that's really the go-forward platform. And that's where, you know, we're saying it's really, you know, remaining, you know, close to 20 percent growth.

Speaker #3: So you look at what's driving that, the churn on that platform almost couldn't go lower. I mean, it's the churn on elite right now averages less than 1 and a half percent a year.

Speaker #3: So, it's very, very low. So, really, the growth number is being driven by new accounts and expansions. We see very strong new account activity for that platform.

Peter Brereton: Really the growth number is being driven by new accounts and expansions. We see very strong new account activity for that platform. We see a lot of expansion opportunity for the platform and a little bit still of migration revenue coming from old on-prem accounts migrating over. Most of that's done. If I look at this year, I'd be surprised if we book more than CAD 2 million of additional SaaS coming out of old on-prem accounts. The vast majority is going to be new accounts and expansions.

Speaker #3: We see a lot of expansion opportunity for the platform, and a little bit still of migration revenue coming from, you know, old on-prem accounts migrating over.

Speaker #3: Most of that's done. So, you know, if I look at this year, I'd be surprised if we book more than, you know, $2 million of additional SaaS coming out of old on-prem accounts.

Speaker #3: The vast majority is going to be new accounts and expansions.

Speaker #2: Okay.

Suthan Sukumar: Okay. In terms of the SaaS growth trajectory, how do you expect that to play out over Q1 to Q4?

Speaker #1: And in terms of the SaaS growth trajectory, how do you expect that to play out over Q1 to Q4?

Speaker #3: I'm going to take that one, Mark.

Peter Brereton: You want to take that one, Mark?

Speaker #4: Yeah, I mean, I, you know, I think we're—I mean, obviously, that will ramp up. You’ve got to ramp up as the year goes, because, you know, the effective bookings is cumulative on, you know, on revenue.

Mark Bentler: Yeah. Obviously, that will ramp up as the year goes because the effect of bookings is cumulative on revenue. That said, as Peter said, we've got a very significant pipeline that's really quite active. We always, when we're planning our year, we're always planning on the summer months to be slightly slower months, which hits our Q1 and Q2, so we always have a little bit more expectation. If you look at the timing of our pipeline, deal closure tends to be higher in the back half of our year. That's kind of how we plan out the year and model it.

Speaker #4: But that said, you know, like, we've got, as Peter said, a very significant, you know, a significant pipeline that's really, that's really quite active.

Speaker #4: Whenever we're planning our year, we're always planning on, you know, the summer months to be, you know, slightly slower months—which covers, you know, which hits our Q1 and Q2.

Speaker #4: So, we always have a little bit more, you know, expectation, and if you look at the timing of our pipeline, it tends to be, you know, deals tend to—deal closure tends to be higher in the back half of our year.

Speaker #4: So that's kind of how we plan out the year and model it.

Speaker #2: Gotcha, then. So, from a trajectory perspective, deal activity should pick up in the back half of the year, and that should also be reflected in stronger ARR growth over the course of the year.

Suthan Sukumar: Got you. From a trajectory perspective, deal activity should pick up in the back half of the year, and that should also be reflected in stronger ARR growth then over the course of the year. Is that the right way to-

Speaker #2: Is that the right way to?

Speaker #4: That's what we would expect. That's what we would expect.

Mark Bentler: That's what-

Suthan Sukumar: Look at it?

Mark Bentler: That's what we would expect.

Suthan Sukumar: Okay. I think the last one from me, just on, I guess, more corporate development perspective. You guys are getting to a more normalized EBITDA profile that obviously signals stronger cash flow generation ahead. Is M&A a priority for capital allocation over the near to midterm?

Speaker #2: And then maybe just the last one for me, just on I guess more of a corporate development perspective. You guys are getting to a more normalized EBITDA profile.

Speaker #2: You know, that obviously signals stronger cash flow generation ahead. Is M&A a priority for capital allocation over the near to mid-term?

Speaker #3: We don't really see a lot of M&A in the near term. I mean, we continue to see—and some of that is just the math of the marketplace right now.

Peter Brereton: We don't really see a lot of M&A in the near term. Some of that is just the math of the marketplace right now. Most M&A opportunities are private companies. Private company valuations right now remain significantly elevated compared to public company valuations. It creates a bit of a complicated acquisition market for us. We know some companies are doing it anyway. We continue to feel like our own shares are probably the best deal for capital allocation. I think as we go forward, it'll be a question of, if the stock stays low, we probably continue with an NCIB approach. If the stock rebounds to higher levels, perhaps we turn up the dividends.

Speaker #3: I mean, most M&A opportunities are private companies. Private company valuations right now remain significantly elevated compared to public company valuations, so it creates a bit of a complicated acquisition market for us.

Speaker #3: We know some companies are doing it anyway. You know, we continue to feel like our own shares are probably the best deal for capital allocation.

Speaker #3: So I think, as we go forward, it'll be a question of, you know, if the stock stays low, it's, you know, we probably continue with an NCIB approach.

Speaker #3: If the stock, you know, rebounds to higher levels, perhaps we turn up the dividends. But the problem is, you know, in the private market, we've looked at companies that, you know, if we paid $30 million to buy them, the day we own them they're going to be worth $15 million.

Peter Brereton: The problem is, in the private market, we've looked at companies that if we paid CAD 30 million to buy them, the day we own them, they're going to be worth CAD 15 million. The math is not overly helpful for creating shareholder value. If we see something that's a good snap-in, and we continue to look for those, a small add-in that would strengthen our moat in the healthcare space. There's some interesting possibilities there around procurement or bone and tissue or surgical instrument tray tracking or that kind of thing. There's lots of sort of small pieces like that if we came across the right opportunity, we'd make a move, but they would not be significant.

Speaker #3: So the math is not overly helpful for creating shareholder value. So, I mean, if we see something that's a good snap-in, we continue to look for those.

Speaker #3: You know, a small add-in that would strengthen our moat in the healthcare space. And there are some interesting, you know, possibilities there around procurement, or bone and tissue, or surgical instrument tray tracking, or that kind of thing.

Speaker #3: There are lots of small pieces like that, and if we came across the right opportunity, we'd make a move, but they would not be significant.

Speaker #2: Okay. Okay, great. And then you know, just conversely on the M&A discussion, you know, given what looks like some elevated activity from a healthcare M&A perspective, you know, do you see opportunity to be acquired as you know, part of your journey by a larger or larger industry or strategic partner?

Suthan Sukumar: Okay. Great. Just conversely on the M&A discussion, given what looks like some elevated activity from a healthcare M&A perspective, do you see opportunity to be acquired as part of your journey by a larger industry or a strategic partner, or is really the opportunity here to remain independent and really focus on what looks like to be a pretty significant organic growth opportunity?

Speaker #2: Or is really the opportunity here to remain independent and really focus on what looks like a pretty significant organic growth opportunity?

Speaker #3: Yeah, I mean, our focus continues to be driving this company as a you know, as its own force going forward. I mean, we you know, we see a huge total addressable market.

Peter Brereton: Yeah. Our focus continues to be driving this company as its own force going forward. We see a huge total addressable market. We're the leader in the healthcare space. Our win rate is typically north of 80%, sometimes north of 90% in that market. There's really no direct competitor. For us, it's just all about execution. Go, go. Let's get it done.

Speaker #3: We're the leader in the healthcare space. You know, our win rate is typically north of 80 percent, sometimes north of 90 percent in that market.

Speaker #3: There's really no direct competitor, so for us, it's just all about execution. Go, go, go. Let's get it done.

Speaker #2: Okay. Okay, great.

Suthan Sukumar: Okay. Great. Thanks for taking my questions. I'll pass the line.

Speaker #1: Thanks for taking my questions. I'll pass the line.

Speaker #3: All right. Thanks.

Peter Brereton: Great. Thanks.

Speaker #5: Your next question comes from the line of Kareem Maher from ADV Cormorant Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Karim Maher from ATB Cormark Capital Markets. Please go ahead.

Speaker #1: Good morning, Dr. Lund. This is Kareem on behalf of Gavin. I just have two questions. Concerning order dynamics, we discussed in the past churn impacting that business through fiscal '26.

Karim Maher: Good morning, gentlemen. This is Karim on behalf of Gavin. Just have two questions. Concerning OrderDynamics, we discussed in the past churn impacting that business through fiscal 2026. Can you discuss the timing of renewals and what type of headwind to ARR you're expecting in fiscal 2027?

Speaker #1: Can you discuss the timing of renewals, and what type of headwind are you expecting in fiscal ’27?

Speaker #4: With respect to order dynamics?

Mark Bentler: With respect to OrderDynamics?

Speaker #1: Yes.

Karim Maher: Yes.

Speaker #4: Yeah, I mean, that story—the big part of that ARR impact—you know, remember, SaaS ARR is the leading indicator, right? So the way we measure that is we look at the ARR at a point in time and we look at how much contracted revenue we have for the next 12 months at that point in time.

Mark Bentler: Yeah. The big part of that ARR impact, remember SaaS ARR is the leading indicator, right? The way we measure that is we look at the ARR at a point in time, and we look how much contracted revenue we have for the next 12 months at that point in time. It's a real leading indicator, and we assume it's going to renew unless we know the customer's leaving. It's a pretty good indicator of the forward growth rate for that revenue. You saw the impact of the most significant part of the OrderDynamics attrition come through our SaaS ARR numbers in fiscal 2026. That's why they didn't grow as fast as they would have otherwise grown.

Speaker #4: So it's a real leading indicator, and we assume it's going to renew unless we know the customer is leaving. So it's a pretty good indicator of the, you know, the forward growth rate for that revenue.

Speaker #4: And you saw the impact of the most significant part of the order dynamics attrition come through our SaaS ARR numbers in fiscal '26. That's why they didn't grow as fast as they would have otherwise grown.

Speaker #4: In fiscal ’27, you're going to see, going forward—and you see it in our total SaaS revenue growth guidance—you're going to see the drive from that SaaS ARR actually flow through revenue in fiscal ’27.

Mark Bentler: In fiscal 2027, you're going to see going forward, and you see it in our total SaaS revenue growth guidance, you're going to see the drive from that SaaS ARR actually flow through revenue in fiscal 2027. By the time we get to the end of fiscal 2027, what's going to be left in OrderDynamics SaaS ARR is going to be at a level where we don't expect that it's going to be causing any kind of a real significant drag on revenue growth after fiscal 2027. I really expect that 2027's total SaaS revenue growth dip, which is exactly why we're highlighting this Elite SaaS revenue growth underneath, like that Elite SaaS revenue growth number, the total SaaS revenue growth number is going to start gravitating towards that Elite SaaS revenue growth number, and you're going to see that play out pretty dramatically in fiscal 2028.

Speaker #4: By the time we get to the end of fiscal '27, what's going to be left in order dynamics SaaS ARR is going to be at a level where we don't expect that it's going to be a significant drag on revenue growth after fiscal '27.

Speaker #4: So I really expect that, you know, Q4's total SaaS revenue growth did dip, which is exactly why we're highlighting this elite SaaS revenue growth underneath. Like, that elite SaaS revenue growth number is going to start to—the total SaaS revenue growth number is going to start gravitating towards that elite SaaS revenue growth number.

Speaker #4: And you're going to see that play out pretty dramatically in fiscal '28.

Speaker #1: Perfect, thank you for that. My second question is on professional services. We've seen the backlog normalize where you exited in fiscal '24, but in your guidance you called for relatively flat PS.

Karim Maher: Perfect. Thank you for that. My second question is on professional services. We've seen the backlog normalize where you exited in fiscal 2024, but in your guidance, you called for relatively flat PS. Fair to say we need to see the bookings picking up back to keep that business flat? Can you discuss what you're seeing in the pipeline for professional services?

Speaker #1: Fair to say we need to see the bookings pick back up to keep that business flat. And can you discuss what you're seeing in the pipeline for professional services?

Speaker #4: Yeah, yeah. There was definitely a decline in our opening backlog of professional services coming into this fiscal year, and our ending fiscal 2026 backlog was quite a bit lower than the end of fiscal 2025.

Mark Bentler: Yeah. There was definitely a decline in our opening backlog of professional services coming into this fiscal 2027, and our ending fiscal 2026 backlog was quite a bit lower than the end of fiscal 2025. I did indicate in the MD&A that we've got pretty good visibility on the near-term impact of that on revenue, and Q1, we're pretty positive on the PS sequential number there. We do expect it to be, as we said in the prepared remarks, sort of a stable revenue number, 2026 compared to 2027. The pipeline looks really good and very strong, and that's primarily because a lot of that pipeline comes through connected to SaaS ARR deals.

Speaker #4: I did indicate in the MD&A that, you know, we've got pretty good visibility on the near-term impact of that on revenue. And Q1, we're, you know, we're pretty positive on the PS, you know, sequential number there.

Speaker #4: But we do expect it to be, you know, as I said—as we said in the prepared remarks—a sort of stable revenue number, 2026 compared to 2027.

Speaker #4: The pipeline looks really good and very strong, and that's primarily because, you know, a lot of that pipeline comes through connected to SaaS ARR deals.

Speaker #4: So, you kind of look at that pipeline, and you look at the, you know, you look at the SaaS pipeline, which is up 31%.

Mark Bentler: You kind of look at that pipeline, and you look at the SaaS pipeline, which is up 31%, and think through that, well, all those deals come through with attached PS revenue and PS bookings, and we can sort of triangulate what that should do to continued backlog growth in the coming quarters. We definitely need to book PS revenue to continue to fill that backlog. Like we said, the pipeline does look pretty strong right now.

Speaker #4: And think through that, well, all those deals come through with attached PS revenue and PS bookings. And you can sort of triangulate, you know, what that should do to continue backlog growth.

Speaker #4: In the coming quarter. So you know, we need to book we definitely need to we definitely need to book PS revenue to continue to fill that backlog.

Speaker #4: But like we said, the pipeline does look pretty strong right now.

Speaker #1: All right, that's it for me. Thank you. Passing the line.

Karim Maher: Great. That's it for me. Thank you. I'll stay on the line.

Speaker #3: Thanks.

Speaker #4: Thanks, Kareem.

Peter Brereton: Thanks.

Mark Bentler: Thanks, Karim.

Speaker #5: Again, if you would like to ask a question, please press star 1 on your telephone keypad. I can see there are no further questions.

Operator: Again, if you would like to ask a question, please press star one on your telephone keypad. I can see there are no further questions. I'll turn the call back over to the presenters. Please continue.

Speaker #5: I'll turn the call back over to the presenters. Please continue.

Speaker #3: Okay. Well, thank you, everyone, for joining us for these results and the discussion of the results. And, as always, if you have any questions, don't hesitate to reach out to Mark or me.

Peter Brereton: Okay. Well, thank you everyone for joining us for these results and the discussion of the results. As always, if you have any questions, don't hesitate to reach out to Mark or I, and we will look forward to speaking to you in September with our Q1 results. Thanks. Have a great day. Bye for now.

Speaker #3: And we will look forward to speaking to you in September with our Q1 results. Thanks. Have a great day. Bye for now.

Speaker #4: Thanks.

Mark Bentler: Thanks.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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