TECSYS Inc.

Good morning, everyone. Welcome to Texas' first quarter fiscal year 2025 results conference call. Please note that the complete first quarter report, including MD&A and financial statements, were filed on Cedar Plus after market closed yesterday. All dollar amounts are expressed in Canadian currency and are prepared in accordance with international financial reporting standards. The company has added a companion presentation to today's calls. which is available on the website at www.texas.com forward slash investors. Some of the statements in this conference call, including the question and answer period, 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 Friday, September 6, 2024, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer at Texas. Please go ahead, sir.

Thank you. Good morning, everyone. Joining me today is Mark Butler, our Chief Financial Officer. We appreciate you joining us for today's call. As many of you have likely seen in the results issued last night, our company began fiscal 25 with another solid quarter, led by strong SaaS revenue and bookings performance across market segments. With year-over-year SaaS revenue up 33%, and SaaS bookings up 57%, our momentum continues across the board. Our differentiation is clear. We are strategically positioned for growth, and our team is dedicated to delivering leading-edge solutions with a relentless focus on customer success. I would like to take a moment to summarize the key events of our Q1 results for Fiscal 25. Mark will then walk us through the financial results in more detail. And finally, I will comment on our outlook, followed by a Q&A session. If you're following along on our companion presentation, I'll be speaking to slide three. In Q1, we delivered solid performance with 3 million SAS bookings, up 57% year over year, driven by broad participation across our key verticals. We secured a major healthcare migration with one of the largest IDNs in North America, representing over 100 hospitals. which I'm calling out to highlight the significant scale and white space penetration potential of each new deal. We also saw another pharmacy expansion deal, reinforcing our continued progress and growth opportunity in the pharmacy sector, as discussed in previous quarters. Contributions from general distribution include a new logo, a new cloud migration, and a competitive win-back, reinforcing our position as the top choice for those investing in a modern supply chain solution, whether they're new, existing, or returning customers. On the SaaS and services side of the business, we are properly resourced for our guidance and growth, reinforced by a robust backlog. Our RPO is up 40% year over year, reflecting steady bookings and renewals. Adjusted EBITDA remains strong at 2.6 million. Additionally, we've continued to buy back shares under our normal course issuer bid, spending $2.2 million on share buybacks in Q1. The opportunity to expand within existing accounts is increasing across all our verticals as we continue to build upsell and cross-sell value propositions and refine how we deliver that value through product innovation, features, and functions. As I've shared previously, this is particularly true in healthcare. where we often start by addressing a single entry point, prove out the value, and expand across an entire organization. This is an important growth driver for us, with inroads into pharmacy serving as a key example. We continue to experience traction in the pharmacy supply chain with a growing interest in the Consolidated Pharmacy Service Center, or CPSC. This provides... Pardon me. This provides a centralized distribution model similar to what we do in hospital general supplies adapted for pharmacy. This quarter, we secured an add-on project at University of North Carolina Health. With the U.S. DSCSA compliance legislation coming into effect this November, recently released customer stories from Texas Children's Hospital and Baptist Health and half a dozen IDNs now on board. We are well positioned to build on this early momentum as the market solution within an industry where we already have a solid position. We're also accelerating that market access with a partner ecosystem that is stronger than ever. For example, you may have seen some co-marketing with Terso, Tracelink, and RiseNow, which highlights our differentiated position in key areas like DSCSA and pharmacy. This type of market engagement, not to mention newly certified technology integrations and ongoing go-to-market collaborations, continues to play an important role in product and pipeline development. This effort is proving valuable, with about a third of our deals being partner-influenced over the last 12 months. Whether directly with Texas or via partners, we are solidifying our position as the system of choice for organizations grappling with supply chain complexity. To cement that position, we are hyper-focused on customer sat. Last quarter, I emphasized the importance of customer success as we scale. As our base grows, markets diversify, and partner ecosystems develop, that effort is taking shape in the form of higher levels of customer service. We're actively involving customers in value-added activities like user groups, industry workshops, and proactive customer checkpoints. This ongoing effort is already reflected in positive NPS movement, and it will continue to drive our business strategy moving forward. Part of that customer success is looking for new ways to deliver value to them. In July, we announced the appointment of Rex Ahlstrom as Chief Strategy Officer. Tapping into his 25 years of experience, Rex will drive global initiatives to maximize the value of Texas' evolving SaaS offerings and data capabilities. His expertise in digital transformation and innovation aligns perfectly with Texas' vision, further positioning us to capitalize on market opportunities and enhance customer value. We've also added depth to our board, with two new directors voted in at yesterday's shareholder meeting, Stephanie Verstraet and Sri Priya Senegar. Stephanie is Chief Marketing Officer at Teladoc Health and has had leadership roles at Expedia and PepsiCo. She brings expertise in M&A, brand building, and performance marketing. Priya has extensive experience leading global teams in product and data engineering and and platform development at organizations including Olo, Manhattan Associates, and Bank of America. We're enthusiastic about the significant impact they will bring to the board. In more company news, in July, Texas was named a 2024 Great Place to Work in Canada, the U.S., and Denmark. This recognition not only speaks to the culture we've built around the world, which we're very proud of, It's also about what it means for our customers. Happy, engaged employees lead to better customer service and higher customer success rates. As we grow our team and capacity, this achievement reinforces our belief that a strong internal culture directly contributes to the quality of service, value, and innovation we deliver to our customers every day. And so, as we continue to invest in the products we sell and our go-to-market strategy, Texas has proven to be among the best cloud-based solutions available in the markets we serve. The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our first quarter financial results, as well as financial guidance on several key metrics.

Thank you, Peter. We're pleased with the performance in our first fiscal quarter ended July 31st, 2024. I'll start with slide four and focus first on FASP. SAS continues to be the key driver for our growth, and we believe the key driver for value creation. SAS revenue growth is driving our recurring revenue, and during the first quarter, SAS revenue growth was 33%, reaching $15.3 million. As Peter mentioned previously, our SAS bookings were up 57% to $3 million in the quarter. Our higher growth SAS revenue has now overtaken professional services revenue as our largest single source of revenue, and we expect this to continue to play out in fiscal 2025 and beyond. Total revenue for the quarter reached 42.3 million, representing a 1% increase compared to the same period last year. It's important to note that when hardware revenue is excluded, the growth rate jumps to 9%. The strong underlying growth in SAS revenue is somewhat muted here by year-over-year fluctuations in both professional services and hardware. Our primary focus remains on driving consistent growth in our core SaaS revenue stream, and we're not concerned about the variability in professional services and hardware components of the business. Professional services revenue for the first quarter was 13.4 million. That was down 10% from 14.9 million reported for the same quarter last year, and down from $14.4 million sequentially compared to Q4. As noted in our MD&A, the timing of professional services revenue is affected by project delivery schedules, which can be outside of our control. Recent quarters have demonstrated that we're staffed to deliver more than $14 million of professional services revenue per quarter, and based on our current backlog and visibility into project timelines, we expect to return to this level. Supporting this, we had strong professional services bookings in Q1 at $17.2 million, and that was up 25% compared to the same period last year. We expect professional services revenue will continue to fluctuate based on the balance of integration partner involvement and project delivery timing. For the first quarter of fiscal 2025, Gross margin was 47% compared to 46% in the same period last year. Combined SAS, maintenance, support, and professional services gross margin for the three months ended July 31, 2024, was 49%. That was down compared to 50% in the same period last year. The impact of increasing SAS margins in the first quarter of fiscal 2025, which, by the way, continue to track as planned, was offset by the impact of reduced professional service margins in the current quarter. We're very happy with the continued positive trajectory in our SaaS margin profile. Net profit in the quarter was down about $400,000 to $798,000 compared to $1.2 million in the same quarter last year. Adjusted EBITDA was $2.6 million in Q1 fiscal 2025 compared to $3.2 million same period last year. We ended Q1 fiscal 25 with a solid balance sheet. We had cash and short-term investments of $27.1 million and no debt. As Peter mentioned, we used $2.2 million of cash in the quarter to buy back shares under our normal course issuer bid. And additionally, the board yesterday approved a quarterly dividend of 8 cents a share. With respect to financial guidance and moving now to slide five, we are reiterating full year 25 guidance as follows. Total revenue growth between 7% and 9%. SAS revenue growth between 30% and 32%. And adjusted EBITDA margin between 8% and 9%. Additionally, we're reiterating adjusted EBITDA margin guidance for fiscal 2026 of between 10% and 11%. I'll now turn the call back to Peter to provide some outlook comments.