TECSYS Inc.

Good morning, everyone. Welcome to Texas second quarter fiscal year 2025 results conference call. Please note that the complete second quarter report including MD&A and financial statements were filed on Cedar Plus after market close 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 call. which is available on their website at www.texas.com 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 belief and assumptions. Actual results may differ materially from such statements. I would like to remind everyone that this call is being recorded on Thursday, December 5, 2024, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Mr. Peter Berriton, Chief Executive Officer at Texas. Please go ahead, sir.

Thank you. Good morning, everyone. Joining me today is Mark Bentley, our Chief Financial Officer. We appreciate you joining us for today's call. We continue to see strong SAS revenue growth, which was up 34% in our second fiscal quarter, and SAS bookings were solid across our market segments. This quarter, we also reached two key milestones that I want to highlight. First, our annual recurring revenue reached $100 million, reflecting the strength of our SaaS model. And second, our SaaS RPOs surpassed $200 million, a testament to the solid foundation we're building through bookings and renewals. We see these metrics as indicators of our business health, reflecting steady progress toward our long-term value creation goals. I'd like to take a moment to summarize the key events of our Q2 and first half 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 terms of SaaS bookings, we landed at $3.7 million for the quarter, matching a strong comp from Q2 of last year. This translates into year-to-date SAS bookings up 20% over last year and up 28% on a trailing 12-month basis, driven by participation across all of our key verticals. Healthcare drove our Q2 bookings activity, led by significant migration and expansion deals. This performance came despite major disruptions in the healthcare market, notably the saline shortage resulting from Hurricane Helen's impact on Baxter's North Cove plant in North Carolina. plant supplies roughly 60% of the saline in the U.S., and taking that plant offline has been a significant distraction to the healthcare market. In converging distribution, we recently announced that Atwoods Ranch and Homes selected Texas Order Dynamics product for retail order management, and we closed deals in the quarter across our geographical markets, including North America, Europe, and Australia. Our RPO is up 39% year over year, reflecting steady bookings and renewals. Adjusted EBITDA strengthened to $2.9 million, up significantly from Q2 last year, and up 32% year to date. Additionally, we've continued to buy back shares under our normal course issuer bid, spending $2.1 million on share buybacks in Q2. In October, we rolled out version 24.2 of our elite I believe our flagship product. This release focuses on tools that help customers solve real-world problems with better data. I'm highlighting this release because it captures what we're trying to do with our solutions, using data to deliver value in new and innovative ways. In a very noisy AI space, we're identifying and delivering what we call purpose-driven innovation with specific use cases that have a real impact on our customers' businesses. We believe that innovation with this lens makes our solutions essential to an organization's operations and opens doors to new business opportunities. The importance of these advancements was reinforced last month with our inclusion as a leader in the 2024 WMS Technology Value Matrix published by Nucleus Research, a global technology research and advisory firm. Also just released, Gartner's Top 25 Healthcare Supply Chains for 2024, We're proud that 40% of the providers on the list are Texas customers. We're also accelerating our market access across a thriving partner ecosystem. Co-marketing with Locus Robotics, OneView Commerce, Tracelink, Exotech, and Sedlac, along with our recent inclusion into the Shopify App Store, highlights our growing reach and value in the market. This effort is proving valuable, with about a third of our deals being partner-influenced over the last 12 months. Since our last results call, we've shared the stage with Vanderbilt Health, AdventHealth, TriVenture Logistics, and Australian retailer Forever New on joint webinars. Forbes also published a highlight or a spotlight on the work done at St. Luke's Health in Boise. You may recall from last quarter, I mentioned that we're ramping up user groups and industry workshops. I'm happy to share that our most recent pharmacy summer took place in Newport Beach, California in October. And it was a great success, helping to drive innovation in the pharmacy supply chain. We're working on our next summit taking place in spring of 2025 in Philadelphia. And so as we continue to invest in the products we sell and in our go-to-market strategy, Texas is proven to be among the best cloud-based solutions available in the markets that we serve. The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our second quarter, and year-to-date financial results, as well as financial guidance on several key metrics.

Thank you, Peter. I'll start with slide four and focus first on SAS. SAS revenue growth was 34%, reaching $16.1 million. Highlighting the continued scaling of our SAS business, SAS revenue represented 23% of total revenue in Q2 of fiscal 2023. That was just two years ago. And now it represents 38% of total Q2 revenue. The strong underlying growth in SAS revenue is somewhat muted by year-over-year fluctuation in hardware revenue. It's important to note that when hardware revenue is excluded, our overall revenue growth rate in Q2 jumps to 13%. Professional services revenue for the second quarter was $14.1 million, up 10% from last year. We anticipate that professional services revenue will remain variable, influenced by the timing of project deliveries and the level of involvement from our integration partners. For the second quarter fiscal 25, gross margin was 48%, compared to 44% in the same period last year. The key drivers here are increasing SAS margins, as well as strengthened professional services margins in the current quarter. Net profit in the quarter was $758,000 compared to a net loss of $340,000 in the same quarter last year. Basic and fully diluted earnings per share were $0.05 in the current quarter compared to a loss of $0.02 in the prior year quarter. Adjusted EBITDA, as Peter mentioned, was $2.9 million in Q2 of fiscal 25. That compared to $1.0 million in the same quarter last year. Turning briefly to our year-to-date highlights, and that's slide five in the companion deck, SAS revenue for the first half of fiscal 2025 was $31.4 million. That was up 33% from the same period last year. Our total revenue reached $84.7 million, a 2% increase from last year. Excluding hardware, overall revenue grew by 11%. For the first half of fiscal 25, our adjusted EBITDA increased to $5.5 million. That was up from $4.2 million in the same period last year. And fully diluted earnings per share for the first half were $0.10 compared to $0.06 in the first half of last year. We ended the quarter with a solid balance sheet. We had cash and short-term investments of $28.3 million and no debt. As Peter mentioned, we use about $2.1 million of cash in the quarter to buy shares back under our NCIB. Additionally, the board yesterday approved a quarterly dividend of $0.085 a share. Turning to financial guidance on slide six now of the companion deck, Texas is maintaining fiscal 25 guidance on SAS revenue growth at 30% to 32%. as well as fiscal 25 and fiscal 26 adjusted EBITDA margins at 8 to 9% and 10 to 11%, respectively. Based on the ongoing unpredictability of hardware revenue and a rapidly evolving business model that's impacting professional services, Texas is revising fiscal 2025 total revenue guidance to roughly flat. I'll now turn the call back to Peter to provide some outlook comments.