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Tecsys Reports Financial Results for the Second Quarter of Fiscal 2023

Revenue sets new record while SaaS revenue up 34% year-over-year

MONTREAL, Nov. 30, 2022 /PRNewswire/ — Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the second quarter of fiscal year 2023, ended October 31, 2022. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).


TECSYS (PRNewsfoto/TECSYS)

Second Quarter Highlights:

  • SaaS revenue increased by 34% to $8.8 million, up from $6.6 million in Q2 2022.
  • SaaS subscription bookingsi (measured on an ARRi basis) decreased by 31% to $2.8 million, compared to $4.0 million in the second quarter of 2022.
  • SaaS Remaining Performance Obligation (RPOi) increased by 51% to $109.5 million at October 31, 2022, up from $72.7 million at the same time last year.
  • Annual Recurring Revenue (ARRi) at October 31, 2022 was up 25% to $71.2 million compared to $56.9 million at October 31, 2021.
  • Professional services revenue was up 4% to $13.5 million compared to $13.1 million in Q2 last year.
  • Total revenue excluding hardware revenue was $31.5 million, 9% higher than $28.8 million reported for Q2 last year, while total revenue reached a record $38.1 million.
  • Gross margin was 44% compared to 45% in the same period in fiscal 2022.
  • Total gross profit increased to $16.7 million, up 7% from $15.5 million in Q2 last year.
  • Operating expenses increased to $15.6 million, higher by $1.7 million or 13% compared to $13.9 million in Q2 last year.
  • Profit from operations was $1 million, down from $1.6 million in Q2 last year.
  • Net profit was $0.7 million or $0.05 per share on a fully diluted basis for both Q2 2023 and Q2 2022.
  • Adjusted EBITDAii was $2.8 million, down 13% compared to $3.2 million reported in Q2 last year.

“We continue to see great traction across our vertical markets in the quarter with seven new logo wins as well as solid base account activity including another hospital network migration.  Among the new logo wins, we added two new hospital networks, as well as North American and international logos in our converging complex distribution market.” said Peter Brereton, president and CEO of Tecsys, Inc. “In spite of challenging general economic conditions in the near term, we continue to see robust pipeline activity and strong demand.  In light of this opportunity, we continue to invest to drive organic growth.” 

Mark Bentler, chief financial officer of Tecsys Inc., added, “We are pleased with our Q2 performance, a record revenue quarter led by 34% SaaS revenue growth. We also crossed an important milestone this quarter in that our SaaS revenue now represents more than 50% of all our recurring revenue, and we are seeing the momentum continue with year-to-date SaaS bookings up by 30%.”   

Three months

ended

Six months

ended

Trailing 12 months

ended

Results from operations

October
31, 2022

October
31, 2021

October
31, 2022

October
31, 2021

October
31, 2022

October
31, 2021

Total Revenue

$

38,111

$

34,269

$

72,315

$

67,501

$

142,014

$

131,817

Total Revenue Excluding Hardware

31,490

28,823

61,849

56,279

120,043

110,178

SaaS Revenue, Maintenance and
Support Revenue

16,896

14,765

33,165

28,744

64,048

55,938

Professional Services Revenue

13,539

13,076

27,170

26,202

53,008

50,691

Gross Profit

16,679

15,518

31,437

29,947

61,800

61,077

Gross Margin %

44 %

45 %

43 %

44 %

44 %

46 %

Operating Expenses

15,631

13,891

 

30,299

 

27,232

 

58,001

 

53,101

Op. Ex. As % of Revenue

41 %

41 %

42 %

40 %

41 %

40 %

Profit from Operations

1,048

1,627

1,138

2,715

3,799

7,976

Adjusted EBITDAii

2,777

3,206

 

4,261

 

5,662

 

8,729

 

13,543

EPS basic

$

0.05

$

0.05

$

0.05

$

0.07

$

0.29

$

0.34

EPS diluted

$

0.05

$

0.05

$

0.05

$

0.06

$

0.28

$

0.34

License Booking

1,006

1,061

1,255

1,347

2,310

3,270

SaaS ARR Bookings

2,796

4,050

6,704

5,149

13,476

9,635

Annual Recurring Revenue

71,198

56,939

SaaS RPO

109,534

72,673

Professional Services Backlog

31,869

33,124

 

Year-to-date performance for first half of fiscal 2023:

  • SaaS revenue increased by 37% to $16.8 million, up from $12.2 million the same period of fiscal 2022.
  • SaaS subscription bookingsi (measured on an ARRi basis) increased to $6.7 million, 30% higher from $5.1 million in the same period of fiscal 2022.
  • Professional services revenue was up 4% to $27.2 million compared to $26.2 million in the same period of fiscal 2022.
  • Total revenue excluding hardware revenue was $61.8 million, 10% higher than $56.3 million reported for the same period of fiscal 2022.
  • Gross margin was 43% compared to 44% in the same period of fiscal 2022.
  • Total gross profit increased to $31.4 million, up 5% from $29.9 million in the same period of fiscal 2022.
  • Operating expenses increased to $30.3 million, higher by $3.1 million or 11% compared to $27.2 million in the same period of fiscal 2022.
  • Profit from operations was $1.1 million, down from $2.7 million in the same period of fiscal 2022.
  • Net profit was $755 thousand or $0.05 per share on a fully diluted basis in the first half of fiscal 2022 compared to a net profit of $952 thousand or $0.06 per share on a fully diluted basis for the same period in fiscal 2022.
  • Adjusted EBITDAii was $4.3 million, down 25% compared to $5.7 million reported in the same period in fiscal 2022.

On November 30, 2022, the Company declared a quarterly dividend of $0.075 per share, increasing the quarterly dividend from $0.07 per share. The dividend is to be paid on January 6, 2023 to shareholders of record on December 15, 2022.  

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be “eligible” dividends.

i See Key Performance Indicators in Management’s Discussion and Analysis of the Q2 2023 Financial Statements.
iiSee Non-IFRS Performance Measures in Management’s Discussion and Analysis of the Q2 2023 Financial Statements.

Second Quarter Fiscal 2023 Results Conference Call
Date: December 1, 2022
Time: 8:30am EDT
Phone number: (877) 521-4127 or (416) 641-6662
The call can be replayed until December 8, 2022 by calling:
(800) 558-5253 or (416) 626-4100 (access code: 22022988)

About Tecsys

Tecsys is a global provider of cloud-based supply chain solutions that equip the borderless enterprise for growth and competitive advantage. Serving healthcare, distribution and converging commerce industries, and spanning multiple complex, regulated and high-volume markets, Tecsys delivers dynamic and powerful solutions for warehouse management, distribution and transportation management, supply management at point of use, order management and fulfillment, as well as financial management and analytics solutions. 

Tecsys’ shares are listed on the Toronto Stock Exchange under the ticker symbol TCS. For more information on Tecsys, visit www.tecsys.com.

Forward Looking Statements
The statements in this news release relating to matters that are not historical fact are forward looking statements that are based on management’s beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of Tecsys Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with Tecsys Inc.’s business can be found in the MD&A section of the Company’s annual report and the most recently filed annual information form. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR (www.sedar.com).

Copyright © Tecsys Inc. 2022. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

Non-IFRS Measures

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods. The exclusion of interest expense, interest income and income taxes eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, share-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods eliminates the non-cash impact of these items.

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they are commonly used by investors and analysts to measure a company’s performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-GAAP financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under IFRS.

The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.

Three months

ended October 31,

Six months

ended October 31,

Trailing 12 months

ended October 31,

(in thousands of CAD)

2022

2021

2022

2021

2022

2021

Profit for the period

$

715

$

708

$

755

$

952

$

4,281

$

4,819

Adjustments for:

Depreciation of property and equipment and right-of-use assets

429

553

859

1,096

1,925

2,217

Amortization of deferred development costs

114

69

216

123

383

231

Amortization of other intangible assets

394

411

790

822

1,580

1,651

Interest expense

178

145

297

306

613

622

Interest income

(150)

(40)

(254)

(80)

(648)

(141)

Income taxes

389

791

414

1,520

(160)

2,719

EBITDA

$

2,069

$

2,637

$

3,077

$

4,739

$

7,974

$

12,118

Adjustments for:

Stock based compensation

708

569

1,184

923

1,945

1,425

Gain on remeasurement of lease liability

(573)

Recognition of tax credits generated in prior periods

(617)

Adjusted EBITDAii

$

2,777

$

3,206

$

4,261

$

5,662

$

8,729

$

13,543

 

Condensed Interim Consolidated Statements of Financial Position 
As at October 31, 2022 and April 30, 2022

(Unaudited)
(In thousands of Canadian dollars)

Note

October 31,

 2022

April 30,

 2022

Assets

Current assets

Cash and cash equivalents

$

21,331

$

23,004

Short-term investments

3

20,456

20,239

Accounts receivable

21,370

16,962

Work in progress

1,651

1,579

Other receivables

718

234

Tax credits

7,912

5,224

Inventory

949

806

Prepaid expenses

6,574

6,392

Total current assets

80,961

74,440

Non-current assets

Other long-term receivables

179

192

Tax credits

4,083

3,782

Property and equipment

1,775

2,064

Right-of-use assets

4

4,421

4,547

Contract acquisition costs

5

3,507

3,177

Deferred development costs

2,121

1,870

Other intangible assets

9,502

10,301

Goodwill

16,856

16,863

Deferred tax assets

8,613

8,608

Total non-current assets

51,057

51,404

Total assets

$

132,018

$

125,844

Liabilities

Current liabilities

Accounts payable and accrued liabilities

$

19,963

$

16,971

Deferred revenue

30,343

24,689

Current portion of long-term debt

6

1,200

1,200

Lease obligations

7

660

662

Total current liabilities

52,166

43,522

Non-current liabilities

Long-term debt

6

6,600

7,200

Deferred tax liabilities

1,257

1,258

Lease obligations

7

4,975

5,181

Total non-current liabilities

12,832

13,639

Total liabilities

$

64,998

$

57,161

Equity

Share capital

8

$

44,094

$

43,973

Contributed surplus

14,336

13,176

Retained earnings

11,685

12,968

Accumulated other comprehensive loss

12

(3,095)

(1,434)

Total equity attributable to the owners of the Company

67,020

68,683

Total liabilities and equity

$

132,018

$

125,844

 

Condensed Interim Consolidated Statements of Income and Comprehensive Income
For the three and six-month periods ended October 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars, except per share data)

Three Months Ended

October 31,

Six Months Ended

October 31,

Note

2022

2021

2022

2021

Revenue:

SaaS

$

8,798

$

6,565

$

16,799

$

12,218

Maintenance and Support

8,098

8,200

16,366

16,526

Professional Services

13,539

13,076

27,170

26,202

License

1,055

982

1,514

1,333

Hardware

6,621

5,446

10,466

11,222

Total revenue

38,111

34,269

72,315

67,501

Cost of revenue

10

21,432

18,751

40,878

37,554

Gross profit

16,679

15,518

31,437

29,947

Operating expenses:

Sales and marketing

6,703

6,022

12,953

11,704

General and administration

3,072

2,801

5,806

5,660

Research and development, net of tax credits

5,856

5,068

11,540

9,868

Total operating expenses

15,631

13,891

30,299

27,232

Profit from operations

1,048

1,627

1,138

2,715

Net finance (income) costs

11

(56)

128

(31)

243

Profit before income taxes

1,104

1,499

1,169

2,472

Income tax expense

389

791

414

1,520

Net profit, attributable to the owners of the Company

$

715

$

708

$

755

$

952

Other comprehensive (loss) income:

Effective portion of changes in fair value on designated revenue hedges

12

(2,007)

233

(1,853)

(125)

Exchange differences on translation of foreign operations

12

496

(452)

192

(485)

Comprehensive (loss) profit, attributable to the owners of the Company

 

$

(796)

$

489

$

(906)

$

342

Basic earnings per common share

8

$

0.05

$

0.05

$

0.05

$

0.07

Diluted earnings per common share

8

$

0.05

$

0.05

$

0.05

$

0.06

 

Condensed Interim Consolidated Statements of Cash Flows
For the three and six-month periods ended October 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars)

Three Months Ended

October 31,

Six Months Ended

October 31,

Note

2022

2021

2022

2021

Cash flows from operating activities:

Net profit

$

715

$

708

$

755

$

952

Adjustments for:

Depreciation of property and equipment and right-of-use-assets

429

553

859

1,096

Amortization of deferred development costs

114

69

216

123

Amortization of other intangible assets

394

411

790

822

Interest expense (income) and foreign exchange (gain) loss

11

(56)

128

(31)

243

Unrealized foreign exchange and other

1,063

(333)

691

928

Non-refundable tax credits

(439)

(366)

(860)

(732)

Stock-based compensation

8

708

569

1,184

923

Income taxes

305

680

330

1,373

Net cash from operating activities excluding changes in non-cash
working capital items related to operations

3,233

2,419

3,934

5,728

Accounts receivable

(3,847)

(223)

(4,390)

(2,715)

Work in progress

883

(1,275)

(71)

(1,822)

Other receivables

105

106

(230)

72

Tax credits

(1,081)

(911)

(2,129)

(1,821)

Inventory

112

(53)

(143)

(65)

Prepaid expenses

380

(443)

(182)

(908)

Contract acquisition costs

(77)

(226)

(330)

(98)

Accounts payable and accrued liabilities

2,931

(750)

(81)

(4,683)

Deferred revenue

4,415

2,000

5,653

1,941

Changes in non-cash working capital items related to operations

3,821

(1,775)

(1,903)

(10,099)

Net cash provided by (used in) operating activities

7,054

644

2,031

(4,371)

Cash flows from financing activities:

Repayment of long-term debt

(300)

(304)

(600)

(616)

Payment of lease obligations

7

(178)

(224)

(422)

(455)

Payment of dividends

(2,038)

(1,889)

(2,038)

(1,889)

Interest paid

(178)

(145)

(297)

(306)

Issuance of common shares on exercise of stock options

35

1,020

97

1,020

Net cash used in financing activities

(2,659)

(1,542)

(3,260)

(2,246)

Cash flows from investing activities:

Interest received

11

150

40

254

80

Acquisitions of property and equipment

(171)

(304)

(231)

(534)

Acquisitions of other intangible assets

(7)

(22)

Deferred development costs

(258)

(195)

(467)

(681)

Net cash used in investing activities

(279)

(466)

(444)

(1,157)

Net increase (decrease) in cash and cash equivalents during the period

4,116

(1,364)

(1,673)

(7,774)

Cash and cash equivalents – beginning of period

17,215

19,342

23,004

25,752

Cash and cash equivalents – end of period

$

21,331

$

17,978

$

21,331

$

17,978

 

Condensed Interim Consolidated Statements of Changes in Equity

For the six-month periods ended October 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars, except number of shares)

Share capital

Contributed

surplus

Accumulated
other
comprehensive
loss

Retained
earnings

Total

Note

Number

Amount

Balance, May 1, 2022

14,562,895

$

43,973

$

13,176

$

(1,434)

$

12,968

$

68,683

Net profit

755

755

Other comprehensive income:

Effective portion of changes in fair value on designated revenue hedges

12

(1,853)

(1,853)

Exchange difference on translation of foreign operations

192

192

Total comprehensive loss income

(1,661)

755

(906)

 

Stock-based Compensation

8

1,184

1,184

Dividends to equity owners

8

(2,038)

(2,038)

Share options exercised

8

5,999

121

(24)

97

Total transactions with owners of the Company

5,999

121

1,160

(2,038)

(757)

Balance, October 31, 2022

14,568,894

$

44,094

$

14,336

$

(3,095)

$

11,685

$

67,020

Balance, May 1, 2021

14,505,095

$

42,700

$

11,745

$

226

$

12,419

$

67,090

Net profit

952

952

Other comprehensive income:

Effective portion of changes in fair value on designated revenue hedges

(125)

(125)

Exchange difference on translation of foreign operations

(485)

(485)

Total comprehensive income

(610)

952

342

 

Stock-based Compensation

8

923

923

Dividends to equity owners

(1,889)

(1,889)

Share options exercised

8

57,800

1,273

(253)

1,020

Total transactions with owners of the Company

57,800

$

1,273

$

670

$

(1,889)

$

54

Balance, October 31, 2021

14,562,895

$

43,973

$

12,415

$

(384)

$

11,482

$

67,486

 

SOURCE Tecsys Inc.

Written by Tenner Smith

Tenner Smith - I have experience in financial intelligence and automated intelligence. In industry I have worked on artificial intelligence and machine learning. Tenner Smith is a reporter at DF media.

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