mdf commerce inc.

Thank you for standing by. This is the conference operator. Welcome to the MDF Commerce Q2 Fiscal 2024 Financial Results Investor Conference Call. Today's call will provide information and commentary on the corporation with a focus on the financial results released yesterday after the markets closed. We will hear from Luke Filiatro, President and Chief Executive Officer, Deborah Dumoulin, Chief Financial Officer. If you have questions following the call, you can reach MDF Commerce at the address on their website, www.mdfcommerce.com. First, here are a couple of housekeeping notices. All participants are in a listen-only mode for the duration of the call. The call is being recorded, and we expect that the recording will be available on the MDF Commerce website later today. The information on today's remarks, including any forward-looking statements, has been prepared as of September 30th 2023, unless otherwise indicated. MDF Commerce assumes no obligation to update or revise the forward-looking statements to reflect any news or circumstances except as may be required pursuant to securities law. We remind you that today's remarks will include forward-looking statements and non-IFRS measures that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please see the reader advisory at the bottom of MDF Commerce's news release, which is on their website, and it has been filed on www.cidarplus.com. The company's actual performance could differ materially from these statements. I will now hand the call over to Mr. Filiacho. Please go ahead.

Good morning, everyone, and thanks for joining us for Q2 Fiscal 24 Financial Results Call.

Before turning to the financial results that we filed after the markets closed yesterday, I'll present an overview of the corporation's performance and an operational update. Beginning with a few Q2 fiscal 24 highlights, the revenues for fiscal 24 were $30.7 million, with recurring revenue now representing almost 80%, actually 79.2% of total revenues. Q2 year-over-year revenue grew by $1 million, or 3.2%, when we exclude the Q2 fiscal 23 revenue of $3.4 million from InterTrade Systems, a subsidiary that was sold on October 4, 2022. Profitability has improved significantly in year-to-date fiscal 24 compared to where we were at this time last year. We have been focused on operational efficiency which included various right-sizing measures that we took in the last half of fiscal 23 and in Q1 fiscal 24. We are now seeing the positive impact on that overall profitability in our Q2 results. Q2 fiscal 24 adjusted EBITDA was $4 million, and this marks the fifth sequential quarter with positive adjusted EBITDA. Adjusted EBITDA has improved significantly compared to Q2 fiscal 23 at 1.4 million and compared to Q1 fiscal 24 at 2.6 million. We're particularly excited that in Q2, we saw continued pipeline conversion for our comprehensive suite of eProcurement products. Delighted to announce that the State of Hawaii signed a multi-year agreement to use our advanced eProcurement technology suite of products. Our solutions will enable the state's digital transformation strategy by streamlining their end-to-end procurement process with our full suite of products, including our source, contract, procure, connect, and shopped modules. Hawaii is a transaction model agreement that we define as TRX, where funding will come from supplier-paid convenience fees. This model has proven to align well with the U.S. public sector context and needs. MDF Commerce is the only company that offers this unique transaction funding model option, which provides high gross margins on these long-term contracts. The State of Hawaii became the 10th state and or province to join the MDF Commerce eProcurement customer community. We also gained sorry, we also gain traction in pipeline conversion of our mid-market e-procurement customer strategy. We recently announced that the Texas Comptroller of Public Accounts will use our source-to-contract solution, and that the counties of Rockland, Chemung, Orange, and Ulster in New York State have signed a multi-year agreement to use our source-to-contract module and our innovative shop module, a marketplace to shop from available cooperative contracts. Our mid-market growth strategy, which we launched just a little more than six months ago in April 2023, has been gaining momentum and we've been successful so far this year. In the first half of the fiscal year, we won contracts for over 30 new buying agency customers, resulting in bookings with annual recurring revenue totaling over $2 million. This will have a positive impact on revenue growth over the next few quarters. This is a record number of new mid-market customer wins over a six-month period. We believe that this testaments to our strong competitive positioning for our e-procurement products, which are tailored made for government procurement. Our deep network of government agency customers and a comprehensive end-to-end suite of e-procurement solutions provides a strong competitive advantage. We expect an increased government's focus on digital transformation over the next few years and the prevailing macroeconomic landscape with government spending initiatives in the US are working in our favor and provide strong growth potential for our e-procurement solutions.