Quisitive Technology Solutions Inc.

Good afternoon and welcome to QISTIV's second quarter 2024 earnings conference call. Joining us for today's call are QISTIV's Chief Executive Officer Mike Reinhart and Chief Financial Officer Scott Merriweather. Following their remarks, we will open the call for your questions. Before we begin, I would like to remind everyone that during the conference call, management will be making statements that contain forward-looking statements within the meaning of the equitable Canadian securities legislation. please refer to the company's forward-looking information disclaimer statement, which can be found on the notice for this call, the website, and the second quarter 2024 release. Now, I'll turn the call over to Mike Reinhart. Sir, please proceed.

Thank you, Alicia, and good afternoon, everyone.

We appreciate you taking time to join our second quarter 2024 earnings call. The first half of 2024 has progressed as expected. with stable revenue and earnings alongside indicators of rising customer demand as we exit the first half. As we transitioned into the second half of the year, these positive trends are gaining momentum, setting a solid foundation for us to capitalize on the emerging AI opportunities and the required cloud solutions in 2025. In Q2, we successfully closed several large-scale deals exceeding a million dollars each, We are witnessing a growing demand for our professional services with an upward trend in our average deal sizes. Our pipeline continues to expand and the momentum we have gained makes us optimistic about the future. Notably, over 90% of our revenue in the first half of 2024 came from customers who have been with us more than one year. This underscores the exceptional value Quisitive consistently provides and highlights the deep relationships, loyalty, and trust we have built with our clients. Our AI initiatives have been particularly impactful, attracting a growing number of engagements as we assist customers in developing their AI roadmap. The response to our services has been overwhelmingly positive. as we have begun to deploy AI solutions that allow customers to explore use cases within their own environments. This initial phase of readiness is critical as we prepare for the full-scale deployment of AI in collaboration with Microsoft. Ensuring our customers are well-prepared with the appropriate infrastructure for AI integration is essential, not only for them to fully leverage AI's benefits, but also for Quisitive and Microsoft. to maximize the return on significant investments that we are making in this AI-driven transformation. This progress has been further bolstered by an enhanced partnership and investment agreement with Microsoft. In previous calls, we highlighted our joint marketing campaigns and funding programs with Microsoft, designed to offer assessments in security, data, AI, co-pilot, solutions, and others to help customers shape their AI strategy and plans. Building on this solid foundation, Microsoft has recently committed to investing in our AI go-to-market efforts, specifically our Black Belt AI strategy, to enhance our team and capabilities during this crucial readiness phase. This investment includes funding to expand our AI Black Belt team with AI strategists and pre-sale solution architects, supporting Microsoft's key priority to secure an AI design win in every account. Additionally, it includes marketing campaign funds to support demand creation and a unique incremental program pool to fund AI roadmap strategies and architectural design projects for both existing and new customers. We are honored to be one of a short list of companies in the Americas region to receive this unique support from Microsoft, reflecting the strength of our strategic partnerships. As we continue to work closely with Microsoft, this investment in expanding our AI Black Belt team will help grow our deal pipeline, accelerate system adoption, and allow us to scale more rapidly, all reducing the need for incremental investment from our own resources. We are already seeing significant pipeline growth across all our AI offerings, including Copilot, with over 170 customers currently engaged in various stages of AI discussions, and early stage projects. On the marketing front, we have been collaborating with Microsoft to host AI strategy roadshows at Microsoft technology centers across the US, where Quisitive has taken the lead in delivering keynote presentations. These sessions have been instrumental in expanding our pipeline, engaging customers to assess their readiness for co-pilot, and further developing roadmap strategies and AI design win use cases for Azure AI services. In addition to our AI advancements, our healthcare industry team recently achieved a new significant customer by securing a multi-million dollar win with a large university medical center. This solution leverages our basic care software and Microsoft Dynamics to help the medical center recruit and hire medical professionals during their major expansion. Quizzit was chosen due to our expertise in healthcare and unique capabilities of our basic care solution built on Microsoft Dynamics and the Power Platform. We are also proud to have been recognized as the 2024 Microsoft Global Analytics Partner of the Year. This award acknowledges the impact our team made in implementing Microsoft Fabric for healthcare for the Ontario Workers Network, where we helped create more precise and tailored patient care plans while enhancing clinical efficiency. The healthcare industry remains a key focus for us as we drive innovation and deliver personalized solutions that create significant value for businesses. Our efforts are concentrated on addressing challenges and needs within this sector, enabling healthcare organizations to prove outcomes, enhance efficiency, and deliver better patient care. We are optimistic about the opportunities that continue to emerge within the healthcare industry, and we're keen on pushing the boundaries of innovation with MacyCare in partnership with Microsoft. Furthermore, we were honored to be recognized as Board International Solution Partner of the Year for the second consecutive year, a testament to our expertise in financial planning and analysis innovation. This recognition underscores the strength of our partnership with Board International, which enhances our office of the CFO Services and Solutions, enabling us to transfer data into actionable insights and deliver customized analytic solutions for our enterprise customers. In the manufacturing sector, we secured a significant million-dollar expansion project with a long-standing Dynamics F&O customer who is utilizing our ShopForce software solution. This expansion supports the deployment of Dynamics 365 across additional divisions within their business, demonstrating the continued trust and reliance on our services and solutions. Alongside this expansion, we are also providing ongoing long-term managed support to ensure their operations run smoothly. In the public sector, we achieved a major win by securing a multi-million dollar managed support extension for a state retirement system solution, further solidifying our role as a trusted partner in delivering critical services. Additionally, our team has demonstrated strong financial stewardship by effectively managing expenses, which has significantly bolstered our overall profitability. This disciplined approach has led to notable improvements in both gross profits and adjusted EBITDA, key metrics that reflect our financial health and operational efficiency. At the same time, we have strategically increased our investments in sales capacity to enhance our ability to drive organic growth in the future. Leveraging a portion of these cost savings to invest in sales will allow us to build momentum as we enter 2025. Scott will provide a more detailed analysis of these improvements shortly. As we progress into the latter part of the year and look ahead to 2025, we are gaining momentum with favorable tailwinds supporting our efforts. Customer buying behavior is moving in a positive direction, and growing demand for Microsoft's co-pilot, fabric, and generative AI offerings clearly indicates widespread market acceptance in the integration of AI into everyday business operations. The strategic expansion of our sales team, bolstered by investments from both Microsoft and Quisitive, will further enhance our ability to drive growth. Our vision remains unwavering to provide premier technical guidance and integration strategies, develop personalized AI solutions tailored to each customer's unique needs, and continue our alignment as a proud Microsoft go-to market partner in this transformative era of AI. With encouraging signs of customer engagement and growing demand for AI, We are excited about what the future holds for Quisitive. Thank you all for joining us today.