TECSYS Inc.

Good morning, everyone. Welcome to Texas fourth quarter and fiscal year 2025 results conference call. Please note that the complete fourth quarter, 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. 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 welcome everyone that this call is being recorded on Friday, June 27, 2025, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Peter Brereton, 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. As both of you have likely seen in the results issued last night, fiscal 2025 has been another strong year for Texas. Tax revenue grew 29% for the year, just shy of our 30% guidance, while our core product elite grew 32%, driven by high-quality multi-site lens and strong adoption in our core markets. Between new logos, renewing and expanding base accounts, and continued migration momentum, we obtained sustained indicators of business health, reflecting steady progress toward our long-term value creation goals, and fast RTO continues to grow. In healthcare, we added two new health system providers in the quarter and completed another large migration. We also saw continued uptake in our pharmacy offerings as more healthcare organizations respond to GFCSA and look to drive efficiency and visibility through their supply chains. Distribution also saw continued growth, with multi-site deals in electrical, industrial, and healthcare distribution, and important new customer additions in both North America and Europe. Our strategy of being selective but deliberate in the markets and geographies we pursue continues to bear fruit. Notably, healthcare distribution has emerged as a dynamic vertical, with increasing demand for scalable inventory management and drug supply chain security act-aligned logistics across the care continuum. Our pipeline is responding accordingly. We also had another standout quarter in professional services. Q4 marked another record for CF revenue, and we ended the fiscal year with the largest professional services backlog in our history at $49 million. That's up 52% over last year. These results indicate strong ongoing demand. That said, we anticipate that professional services revenue will continue to remain variable. influenced by the timing of project deliveries and the level of involvement from integration partners. We also saw several strategic milestones since our last results call. We announced a major milestone with Roche, with our SaaS platform now being progressively deployed at over 1,000 sites globally. This rollout demonstrates the scalability of our system and reinforces the trust that Roche places in us to support their operations across multiple regions. On May 1 of 2025, we announced the establishment of a new subsidiary in India as part of an acquisition that included the hiring of an India-based team. This acquisition enhanced our development and support capacity and capability, positioning us for long-term scalability and growth. As we continued to build momentum in the market, we also saw validation of the capability of our WMS for a 14th consecutive time by Gartner. Included in the Challenger quadrant, we were once again recognized for our product's completeness of vision and ability to execute. This is on top of the fact that Texas customers represent 40% of partners' health care supply chain top 25 list for Challenger 2024. While it came just after our fiscal year end, our Texas user conference was a key event for us. It's a chance to connect with our customers, highlight new products, build stronger relationships and explore new growth opportunities. This year, we had our largest turnout ever, with over 200 customers in progress. We also shared that we'll be making the conference an annual event moving forward, so we'll have this important touchpoint with our customers on a more regular basis. At the user conference, we announced two exciting innovations. First, we introduced an enhanced electronic shelf label, or ESL Plus, which represents an important investment in hospital supply chain management at the point of use. These are bidirectional smart tags that add real-time visual cues and allow clinical teams to reflect additional product or rush orders in real time. Secondly, we unveiled a brand-new data product we're calling Texas IQ, a data layer that interacts with the existing Texas ecosystem. Texas IQ is a major leap forward in applied AI, and the interaction among customers and partners was evident. Built on the Databricks data intelligence platform, Texas IQ helps organizations unify fragmented data and deliver AI-powered insights across clinical, operational, and financial systems. So we have good reason to feel confident about our position in the market, our basic financial rates, our backlog in both staff and professional services, and the strength of our vertical strategy. 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 we serve. The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our fourth quarter and year-to-date financial results, as well as financial guidance on several key measures.

Thank you, Peter. First, I'll focus on fourth quarter fiscal 2025 results. SAS revenue growth was 29%, reaching $18.4 million. SAS bookings were down year on year from a record $8 million last Q4, which was the high watermark so far for quarterly bookings, to $6.5 million this Q4. That $6.5 million, by the way, is the second highest SAS booking quarter in our history. Q4 was another record total revenue quarter at $46.6 million. That was up 6% from the same quarter last year. But if you exclude hardware revenue, that growth was 16%. Professional services revenue for the fourth quarter was a record $16.2 million. That was up 13% from the same quarter last year. We had another solid professional services bookings quarter in Q4. And as Peter noted, we ended the year with record professional services backlog. For the fourth quarter of fiscal 2025, gross margin was 51% compared to 47% in the same period last year. The key drivers here are increasing staff margins as well as strength in professional services margins in the quarter. Net profit in the quarter was $1.7 million compared to $259,000 in the same quarter last year. Fully diluted earnings per share were $0.11 in the current quarter compared to $0.02 in the prior year quarter. Adjusted EBITDA was $4.3 million in Q4 fiscal 2025 compared to $2.8 million in the same quarter last year. Turning briefly to our full fiscal 2025 highlights, SAS revenue for fiscal 2025 was $67.1 million. Again, that's up 29% from last year. SAS bookings for the year were $17.3 million. That was actually down 7% compared to last year. While this will have the impact of moderating SAS revenue growth in fiscal 2026, based on the size and quality of our pipeline, we're optimistic about the future of SAS revenue growth. Our total revenue reached $176.5 million. That was a 3% increase from last year. If you exclude hardware, overall revenue grew by 12%. For fiscal 25, our adjusted EBITDA increased to $13.4 million. That was up from $9.6 million last year. That's a 39% year-on-year increase in adjusted EBITDA. Basic and fully diluted earnings per share for fiscal 25 were $0.30. That compares to $0.13 in the same period last year. We ended fiscal 2025 with a solid balance sheet. We had cash and short-term investments of $39.3 million and no debt. We used about $6.9 million of cash in the year to buy back shares under our normal course issuer bid. Additionally, the board yesterday approved a quarterly dividend of eight and a half cents a share. Turning to financial guidance, we are providing fiscal 26 guidance for fast revenue growth of 20 to 22%, and total revenue growth of 8 to 10%. We've decided to increase our investment in R&D and marketing in fiscal 2026 to drive fast margin growth and fast revenue growth, respectively. As a result, we're revising our fiscal 2026 adjusted EBITDA margin guidance to 8 to 9%. And we expect adjusted EBITDA growth in the range of 20 to 30%. I will now turn the call back to Peter to provide some outlook comments.

Thanks, Mark. Catch this fourth quarter and full year results reflect the consistent execution and momentum we've built throughout the year. Our solid footprint in key markets reinforces our confidence that we are well positioned to upsell and cross-sell within healthcare. Our value proposition in pharmacies remains compelling. We believe we are uniquely positioned to capitalize on the expanding opportunities in pharmacy and other adjacent health care vectors, which we see as an important growth engine for us. Our conversion and general distribution also represents a substantial market opportunity. We are pursuing targeted marketplaces and geographies within this space, with an expanding emphasis on health care in this market as well. We are pleased that our pipeline is robust and we continue to see strong buyer intent across our verticals. As I mentioned in my opening, we just wrapped up our largest ever user conference in Nashville, and the energy from our customers was incredible. We heard from a great mix of voices, including presenters from Nissan, Vanderbilt Health, Mayo Clinic, Texas Children's Hospital, Wellstar Health, and Accuracy. These customer advocates shared some amazing insights on how Texas is making a real difference for them. It's clear we have a great opportunity to keep these conversations going, build on the momentum we've created, and capitalize on the market opportunity this event creates. So, in summary, I want to share with analysts and investors our key themes for fiscal 26. First, we will continue to invest to maintain and enhance our market leadership across the supply chain landscape, with an emphasis on the end-to-end healthcare supply chain. This includes investments in product development and marketing to drive fast margin expansion and booking strokes. Second, we are unlocking the full potential of data with our AI-driven Texas IQ platform to drive value and innovation across our solutions. This will be transformational for our customers. Third, we remain deeply focused on customer satisfaction, ensuring our software is reliable, scalable, and easy to use, giving our customers every reason to be passionate advocates for us. With that, we'll open the call up for questions. Thank you.

Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press star, followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star, followed by the tune. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Amir Azad with Ventum Capital Markets. Your line is now open.

Good morning. Thanks for taking my questions. My first one is on your staff revenue guidance of 20% to 22%. It's below what you guys just posted, like 29% for fiscal 25. I'm wondering what specifically are you guys seeing in the pipeline that leads you to expect a deceleration? Is it you guys just being conservative, or is there something more structural? And maybe this is related, so, you know, like if you could maybe talk about how bookings and pipeline activity are trending early into the year, you know, with both the House and Senate advancing to Medicaid, I think a stark contrast from the last conference called when we last had it. Can you elaborate on any early signs of caution from your clients or anything like that?

Sure, Mark, do you want to take the first part of that? Sure.

Sure, sounds good. So thanks for the question, Emma. So the thing about our SaaS, I mean, we thought at the end of this fiscal year, we've got what we think is, you know, 90% plus of our revenue for SaaS in fiscal 26 already booked, right? So we're actually, if you kind of look at that and do the math on that, If you book a million-dollar fast deal in Q4, it adds basically a million dollars of revenue in the subsequent year, depending if there's a ramp in it or if there's a slight delayed start, which we do from time to time, but normally it starts right away. So we've got pretty good visibility into... you know, in the revenue in fiscal 26. We've also got, you know, line of sight to what we believe to be some pretty robust bookings and people talk maybe to the pipeline and market conditions afterwards. But, you know, we're seeing strong indications of pipeline activity and expecting strong bookings on top, you know, to add accretively to that. backlog of tasks that we have at the end of the year.

Yeah, and I was glad to hear that, you know, as Mark commented, we're not at this point seeing a slowdown in activity. There's no question, it's on everybody's mind. I was down at the SMI conference, whatever it was, and, you know, these are all supply chain leaders from hospital organizations, and, you know, the general consensus there was that all these sort of threats to Medicaid are sort of political fostering. Most of the dates that they're talking about in terms of when those cuts would kick in, if this bill passes with those cuts in it, the dates are sort of staggered over the next couple of years with sort of lots of time to delay or cancel those cuts before those dates actually arrive. So the feeling generally seemed to be that it was you know, largely political posturing. It wasn't going to happen because any party that actually cuts 16 million people out of Medicaid is, you know, doomed to lose the next election. But at the same time, there's no question, it was top of mind for everybody. I mean, it was a frequent matter of conversation. but the consensus came to be that it was unlikely to actually bite. So, we'll see. We're keeping an eye on it. At this point, though, we're not seeing any slowdown in activity. I mean, as you mentioned, we closed, you know, two deals in the fourth quarter when this was already sort of in the air, like two new accounts, you know, plus some expansions. So, and certainly the pipeline activity in the first quarter is showing, you know, it is remaining quite strong. So, We'll see how this ends. We're keeping an eye on it, but at this point, it's still all certain to go.

Fantastic. Appreciate the cover. I think one of the highlights of the quarter is the goal of launching expansion on staff. Can you elaborate on the key levers driving that? It seems to be traveling ahead of expectations. Is there anything abnormal helping the staff in this quarter specifically?

You know, no.

I mean, it's going to continue to bounce around a little bit. There's no question. But there's, you know, there's really sort of three core levers we have on that. You know, and I'll sort of try to keep this brief, but, you know, first is we still have a few older accounts that, you know, first came onto our platform back in 2019 and 2020, and even 2021 when we first introduced it, they came onto our first-generation stack. They have not migrated or forwarded onto our mainline platform that, you know, includes automatic upgrades and all those kinds of things. And that whole infrastructure and technology stack is much lower growth margins. So we are migrating those accounts forward onto our newest, you know, latest platform that includes automatic upgrades and the latest and greatest security and all those types of things. But also, as they move, we end up with a client coming off of a low gross margin stack onto a high gross margin stack. So that is a driver. We are also continuing to re-architect our overall platform for more and more public cloud infrastructure efficiency, and we're making very good headway on that. I think we've got probably two more years of investing in that where we're still dealing with pretty serious AVAX as we go. I think sort of two years from now, there's always going to be ways to continue to improve it, but I think the bulk of that progression will be complete within about two years. And then the last area is just as we continue to drive up quality and, you know, reliability and user-friendliness, we continue to drive down customer care costs. You end up with less and less calls, less and less tickets. And we're making pretty good headway on that. If I look at the last 12 months, we've actually brought our severity one and severity two tickets down by about 35% compared to a year ago. We're continuing to drive that number down. But that is another key factor in achieving higher cash growth margins. I mean, our objective over the next two to three years is actually to drive it to 80%. You know, we'll see how we do on that trajectory. I know our investor debt shows a progression to 75%. We're, you know, internally we're shooting a little higher than that, but we think we've got sort of these three key levers to make that list.

That's great to hear. There may be one last one, if you'll allow me. Your adjusted EBITDA guidance of 8%, 9% down from 10% to 11%. And this is quite, obviously, the goal is large in expansion. My quick math is it's like an extra $4 million of OPEX investments. I just wonder where exactly... Are you guys spending in R&D than in marketing, if you could just break down the different areas?

Sure. I would lump it into two main areas. There is some additional spend in sales. We do continue to invest there. We brought on a senior expert of the hospital market to join the sales team. He's been a senior supply team leader at the hospital network. He's joined the sales organization as a sort of hospital supply team expert. He's going to be in the entire hospital sales team. So we do continue to invest in sales, but that's probably the smallest piece of that, I would think. Mark can correct me here. But the majority is really marketing, and we're looking to sort of get the messaging out around the end-to-end healthcare supply chain that we are, you know, not just hospitals, but we're also you know, distributors and 3KLs and manufacturers, you know, a complete end-to-end platform for the whole hospital supply chain continuum. And we want to get that message out across both North America and Europe. So we are cranking up marketing spend in that area with the interest of driving booking back up, booking growth back up to a higher level. We think we can get booking growth back up to close to 30%, but we think we've got to get that messaging out there loud and clear. And then on the R&D front, There is some additional investment going into FedRAMP because we really need to do a lot of government business and we really need to be FedRAMP compliant. So that's been driven some extra costs. But the bulk of the extra investment in R&D is just AI, AI, and AI. I mean, we're putting it everywhere across the product. We've got some really exciting stuff coming up. you know, the IROR cath lab, you know, nursing station, the warehouse, the warehouse execution system, et cetera, right across the board to create a platform that really takes full advantage of the actual data that we have in our platform.

Fantastic.

I think I would add one thing to that, Amar. I think is that we just closed up that asset acquisition in India. on May 1st, as Peter mentioned earlier in the call. And that's going to, you know, if you're looking at OPEX lines of cost, that's going to add sequential costs. There's some revenue that came with that, too, but it's going to add sequential costs into that R&D line and also a little bit in the margin, but mostly in the R&D line.

Yeah, and I suspect they use your conference as well. Yeah, you'll see that one too.

Exactly.

Fantastic. Thanks for telling us. Thank you.

Your next question comes from Gavin Fairweather with Cormark. Your line is now open. Oh, hey, good morning.

Thanks for taking my questions. Maybe just to start, you guys seem to be getting more traction in the broader healthcare supply chain, so outside the hospitals, and you're talking about leading in on sales marketing. I'm curious if you've done any work to size up that, Tim, and what are your thoughts about the velocity of that market in years ahead?

You're saying the US hospital market?

So, the broader supply chain, the distributors, like, have you sized up that pan? And what are your thoughts on the speed of that market of yours?

Well, I mean, it's interesting that the general, I mean, what we're seeing in the market is some really serious activity, right? We're you know, we're trying to tighten our focus because that market is actually so large, right? So if I look at the general supply chain market that we've played in for years, we would say there's 12,000 companies in North America, you know, with an average initial ARR of 500,000, you know, for a $6 billion ham. That's a very, very large market. Our win rate in that very large market tends to run, you know, 30-ish or 40-ish percent. we have decided we would rather narrow our focus in that market to only pursue the verticals within it, or sub-verticals, if you will, where our win rate is over 50%. So we're narrowing our focus to areas like, for instance, electrical. Our win rate is very high in electrical. You know, our win rate is very high in anything to do with health care. So that could be, you know, eye care products, ear products, foot products, you know, joints and knees and medical supplies and safety supplies and, you know, drugs, certainly drugs are a huge part of it. And then across all those sub-verticals, you have the manufacturers within those, the distributors within those, and the 3PLs within those. So when we narrow to that focus, we find our win rate. shoots a lot higher. We are still, and we're making that pivot. We've done some analysis to say how big is that TAM, and it's still very large. We can't give you precise numbers yet because we're also pulling in Europe. We're doing business in the U.K. You know, we added a nice deal in the fourth quarter over in the U.K. in the healthcare supply chain space. So we're, you know, we're still getting a handle on what that TAM is. If I were to hazard a guess, I think it's about a $2 billion dam across sort of Europe and North America. But we're still trying to get that nailed down. Velocity, it's moving at a good clip. You know, there's been some tariff fears, there's no question. There's a lot of disturbance around tariffs. But in the meantime... You know, as I think we've chatted about before, both of the systems these companies are running were put in in time for Y2K. So that story is coming to its last chapter. I mean, these systems need to be replaced. So you have, you know, organizations like Gartner and others saying that this market is going to grow at, you know, 10% to 15% a year for probably the next 10 years. And it's, you know, certainly what we're seeing. So we will see how this goes as we make this. It's a very broad market, but we're pretty excited with the possibilities.

Very helpful. And then secondly for me, I think last call you talked about a couple additional customers going live on pharma. So just curious how those implementations went, how the data coming out of that is looking in terms of the ROI and whether you think that that will catalyze activity in fiscal 2016 for you.

We certainly believe it well that the go-lives are quite recent. Like we've had, you know, we had one that sort of did a gradual go-live over April. I guess the initial inbound was in April, and then they started some of the outbound go-lives in June. We actually, one of our, one of the supply chain leaders was actually at our user conference, you know, pharmacy supply chain leaders was at our user conference, as their organization is in the process of going through the next phase of Go Live, which I thought actually showed a pretty strong, pretty confident. But they've now proceeded to the next phase. So, like, everything's progressing on track, but I would say it will be, I would think it will be this fall by the time they have enough data to really say sort of, okay, here's the before picture and here's the after picture and here's what we're seeing. I mean, we already have Parkview Health people who stand up and say, you know, they turned it all on over a year ago and they're seeing great results. But definitely this way, Northwestern and, you know, St. Luke's and others, I would think that it's probably this fall by the time we've seen that data.

Very helpful. And then maybe lastly for me is for Mark. I think last quarter you talked about a couple decent maintenance to staff migrations. I think that's correct. You talked about another one in healthcare maybe this quarter. So can you just help us frame, you know, how we should be thinking about the maintenance line going forward and how we should think about maybe winding down a little bit as that revenue flips to staff?

Yeah, that's a good point. And we do see it. I mean, it It came down a little bit, you know, from 24 to 25 as these, you know, historical migrations kind of go live on SaaS and turn off, you know, on-prem stuff. And there's, you know, there's definitely a wave of that coming. I think you'll see, you know, a like or actually probably slightly higher decline in year-on-year maintenance and support. if you look out at 26, you know, from 25 to 26 versus what happened in 24 to 25, which you would kind of, you know, you would kind of expect because we've been, you know, selling these on-prem migrations for a number of years and we've sold, you know, we've sold a good chunk of them. So, yeah, that's going to come rippling through and you'll see that in 26.

Thanks a lot for the offline. Thank you.

Your next question comes from John Sherwood, National Bank. Your line is now open.

Hey, good morning. Thanks for taking my question. I'm trying to get an understanding of your net revenue retention. I mean, you're still above 106%, but a bit lower compared to 2023 and 2024 levels.

So are we getting some normalizations following the COVID peak? Sorry, go ahead, Mark.

I think what you're seeing there is we've got, you know, that base of customers, that number that we disclosed there is ARR, you know, so it's all ARR based. And, you know, what we have going on in there is, you know, expansions and migrations drive that number up and, you know, churn drives that number down. And what we saw happening in the latest quarter, last year in Q4, of 2024, we had a really big booking quarter. There was a lot of expansion and migration in that booking quarter. And what you're kind of seeing here is that, you know, we do that measurement on an LPM basis. We're no longer picking up the large sort of outsized migration and expansion in that 1Q4. So it kind of dips down here as we normalize. But certainly, we expect that, you know, to climb, you know, to continue to climb back up. When we look forward and look at, you know, bookings and bookings mix, we're sure expecting, you know, that our base of customers that are existing SaaS customers now, you know, will continue to grow with us. The bookings that we reported in Q4 of this year, played that out, you know, pretty nicely, you know, for one quarter where we had, you know, a big chunk of those bookings in the current Q4 coming from migration. So we expect that to, you know, to continue in the future, expansion bookings and, you know, new logo bookings together will become a much bigger part of our total bookings. And that should drive that number, we believe, back north.

You have two years in a row where you report strong stats for Kings Park Q4. Is that a new trend, something we should expect going forward?

You know what? It's a good question. As much as we try to manage that to moderate out the lumpiness in our, forget about our year, but even our quarters, it's really tough to do. We've seen that historically, Q4 been, you know, been a time where bookings have peaked. And I think our, you know, the base of prospectors is pretty well trained to, you know, they know when our urines are and they kind of, they tend to kind of use it as well. So, yeah, it's hard to call, but I think that is, you know, we've tried to break that trend, but it is kind of the trend. So, I would expect that in the future. I would, you know, when we think about planning, we're certainly ramping up our bookings, you know, in the back half of our fiscal year in the Q4 as opposed to in the front half of the year.

Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from Suzanne. To Kumar with people. Your line is now open.

Hey, guys. This is SA speaking on behalf of CSAN.

Just a few questions for me. I know you mentioned that pro-services is variable, but pro-services, backlog, and merchants are strong in this quarter. So I was curious to know if you could just give an additional color on driving that and what that implies for SaaS revenue growth.

Mm-hmm. Yeah, it's a good question.

I think if I could take me to that question, the back half of our bookings year for PS this year was super robust, and that's driving that and in backlog. And I think what that tells us is, you know, the market, the purse strings of our prospects in that hospital network market have loosened up, we believe. And we saw that in the back half of the year with these big projects. you know, extending and more capital flowing into, you know, from the hospital networks into our professional services projects. So that's great because that means projects will continue to move. They'll move more quickly and customers go live. And that's great for us because it just firms up the customer, you know, commitment to the platform. So we feel good about that. And I think, you know, in some ways, especially that happening in light of, the market, some geopolitical turmoil and things, I think it gives us pause for optimism in hospital network budgets, at least for the near term and the future. We feel like that's a good positive sign. In terms of what that's going to do to professional services revenue, we crossed over. We just reported this $16 million professional services revenue quarter, which was You know, we've never been in the 16th before. In fact, we haven't been in the 15th before. So, you know, we think that with this backlog, we think we may not be at this sort of $16 million level, you know, in the coming quarters, but we're going to be at a very – we believe we'll be at a very robust level of professional services revenue in the coming quarters on the back of that backlog.

Okay. Thank you. Thank you.

And maybe a follow-up to that, uh, uh, SACS backlog, and, you know, it seems that there's still elevated activity and demand here. Um, could you provide, um, maybe a quick rehash on backlog conversion and how we should look, how we should see that, how we should think about that and how that looks like?

Um, well, um, Are you talking about, like, how contracts sort of convert into FAS revenue and how that backlog converts into FAS revenue? Yeah. Yeah. So, I mean, our typical contracts are, you know, three to five years long. So, when we track our FAS backlog, we're taking the totality of the future value of that contract. So, if we find a five-year contract, the FAS backlog is, you know, 5X that contract. staff ARR amount. So the revenue recognition of that is typically recognized ratably over the contract period, so over the five-year period. That backlog itself is made up by now of a mix of many different multi-year contracts, all with varying sort of end dates. So that's why when you look in the footnotes and you look at how we actually disclosed you know, when that revenue is expected to be recognized on those contract commitments, you can see that in our notes to our financial statements. So that's kind of how we disclose that backlog and, you know, how it looks like it's going to roll out in the future. Of course, you know, every quarter we book more FAS, which, you know, increases that RPO and

And revenue recognition, of course, you know, reduces that RPO. Great. And just one last one for me.

I was curious to know what the fiscal 26 guide is basing in terms of or with regard to contributions from healthcare versus distribution.

Yeah, I mean, if you look at kind of what we've been seeing over the last, you know, number of quarters and even number of years, and especially as we look at our marketplace, you know, our healthcare marketplace more broadly now, i.e., it's hospital networks plus it's, you know, it's hospital-related distribution companies like, you know, like the medical equipment supplier that Peter referred to that we signed in Q4. And if you look at that broader definition of the market, like a significant majority of our business and our growth is coming out of that healthcare marketplace. So that's where we're focused. That's where we're putting, you know, more marketing energy now with this additional investment. And that's where we expect the, you know, the majority of our, the significant majority of our duckies to come from.

Perfect. Thank you. I'll pass over to Mike. Thanks. This is the operator.

Your line is open, Steven.

Oh, hi. I'm fine. Hey, guys. Peter, your comments on not seeing any slowdown in activity, So when we think of fast bookings for fiscal 2026, you would truly expect to see, like, good bookings growth, right? Like, you would be very disappointed, let's say, if it's flat year over year, is that correct?

Yeah, I would be very disappointed. I'm not able to make a prediction, Steve, which I know is what you're trying to draw me into, but I would agree with you 100% that I would be very disappointed if I didn't see booking shows.

Okay, got it. And then I might have missed it, but did you have any IDNs? You won in Q4?

Two.

Two, okay. We added two new IDNs in Q4. Got it, thanks.

And for the questions at this time, I'll now turn the call over to management for closing remarks.

Great. Well, thank you, everyone, for joining us. I'm glad to have you with us. Thanks for taking time out of your day to be with us on the call. And as usual, if you have additional questions, please don't hesitate to reach out to Mark or myself, and we'll look forward to chatting to you in September after we release our Q1 results.

Thanks, and have a great summer. Bye for now.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.