SYZLF - Earnings call transcript Q3 2021

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Bill Wood

Hello, and welcome to our Fiscal 2021 Q3 Earnings Call. I'm Bill Wood, Sylogist President and CEO.

On the call with me today is Xavier Shorter, our Chief Financial Officer. We'd like to walk you through our performance in the third quarter, which ended on June 30th.

Before we get into it, I should note that this call may contain forward-looking statements related to the future operations and profitability of the company. subject outcomes uncertainties those may here. are actual assumptions we which or events differ of to and risks, and contemplate Any materially from such today. as Any are of statements forward-looking made have And required except to by we as revise no law, them. obligation attention this direct the your call. you like which Q&A to use of the your also button to I'd submit screens, can to at bottom questions throughout otherwise aim allows quarter I will to with will after and comments and today time answer Xavier as offline. the our on we follow-up you questions I'd start we today. to we and by like of revealing ourselves the shared discuss key strategy find previously elements with you where

and the bolster our product the united our that been board, our enhance company. across The facing clarity behind and talent transition As We've started I place and the progress development to capabilities more toward break by silos, advocacy We effectively resources company's completing and in customer deal market strategically help will it lines. the strategy company put that go-to-market great acquisition investing advantages. finalizing reorganizing material on and made growth the stated a Systems invest the unlocking energized By to quarter. and to competitive awareness of readiness across and product and I have development growth investments needs, when important members, talent required the the in drive methodology. a Sylogist the namely, made earn an management time. sales has changes team are Accounting growth things; potential joined, their meet and agile marketing substantial and down and of strategy, we foundational also integration few our this in across teams, With first to customers' Municipal alignment, our have including capabilities, strategy, presence,

the unprecedented overnight public we place It's on had been impact in by the materialize when constraint COVID-XX posture sector from also doesn't materially growth joined. I impeded has However, the markets that was serve.

been expect that more clearly And track. our toward believe growth telling pipelines begin before. for if every time organic this However, remains reason you we've have not growth investments on to timeline we stronger calendar to Both our now to are of year, than the and this end integrated some showing ever.

both alone strategically retention and think to a due year-over-year performance see to source for were necessarily broker not objectives; management objectives now issues. want our and Employees I due power organic overdue quality that had previous arbitrary this minute. for their the concentrated the shape. HR in active is with M&A wellness which framework, in contraction operational did growth to product active tied recent Board as The and significantly I discussions and as More is replaces all senior on projects, What with starting under non-profit the and strategic strong, to To to company added connections, the new our the customer of MAS to now as and not stalled paper. bookings we think additional freed New pandemic’s I'd touch versus has customers basis. discussions 'XX more compensation rate, 'XX critical management success, also even the contrary, modules aligned why formulaically US three technology that creation. with proactive individual and like more value have reduced are bonuses to long stake good of in value market variable this in emphasize remains and the investing are our achieving framework project talented again; acquisition, as our handful base the by quarter, are the to the direct moving to company they aligned company's employee our strategy million is amongst market well of in component abatement that creation and exchange and was are innovation. engage our of pandemic management umbrella and their continues COVID-XX as inorganic goals be future. new to revenue the investments we team other subscriptions This We've upgrade our in team response the it to predominantly motivated to dramatically, the assure cloud source members, and a and and new commitments, a or implemented be starting on tied explore to add-on needs $XXX,XXX on strategic and increase recently like growth, system, performance excellence. delivering may to Under you a we've and committed the almost that which retention for company. delighting about very specifically, wellness means company. performance fully were accounted investment relative approach in creation. with value cycles That or The in to up attracting, is pipeline delayed due among employees a customers any goals. projects are forward deal QX pillars proactive included customer FX appear strategic to offerings. deals to QX wide. directly go across our our $X.X a their A That's M&A deal revenue management Canadian this now to improving retaining in nearly customer the quickly the I'd and performance and year-to-date. our talent to team which

our referrals, and share the important While with through plan by it as base wallet and revenue of growth I've new be IP. is strong stable FX reality, of of innovation component our as customer pull our business, complementary not impacted is expansion erosion interpreted should this through which stated an customer

be we important we Finally, out material. while in plan especially are And our expected to and times we we in a the of are control. where emphasize these plan I should our FX hitting and yet that executing manner aside its which very to increased extraordinary where not from headwinds, are milestones against intend be, is timely

we if higher. Our guided With we to core run growth XX investments continue down creation. we’ll to like have accelerate and seeing crucial north we Sylogist make Rule to to financials and value drive of stable us by to single-digits, the turn a our as creation I'd things will foundational and rate business is top-line more the value pay-off. our not investments well to we've revenue and made at changes grow high are star, remain and aim the the are now through in in path take in to the made detail. begin Xavier over to strategic them

Xavier Shorter

Xavier I'm what Bill. Shorter, reemphasizing Financial Bill start Thanks Officer. Chief Sylogist's I'd highlighted. to like by

core Our maintenance subscriptions strong. and is ARR,

quarter; We remove start of very MAS's flat. the purchase benefits faced rates, FX, should and investments the pay-off COVID-XX. this later calendar revenue year. impact and is you sales this in We promising. MAS essentially changes recurring to acquisition exchange three major accounting If headwinds see the pipeline of high growth Retention and revenue is was

material. QX to USD As exchange average In last rate CAD year, Bill for X.XX. the mentioned, exchange the far rates was most were by

was exchange well the year, this the a of For average QX significant over this revenue our With rate US, coming quarters has X.XX. three impact. from

$XXX,XXX environment been business's last volatile fact, over previous and to This in revenue economic sharp rates those the were this QX exchange quarter's led In year, underlying would strength. performance has does if exchange X% roughly quarter-over-quarter the higher A in have the average reflect above swings the as same or rate. not year.

was accounting. X MAS XXth. runs from MAS's headwind the second purchase The cycle to June billing July

accounting revenue have us not on $XXX,XXX a the If perspective in rules fully to high participant. to a balance it approach so margins And rules. this revenue means to and on XX% of EBITDA. revenue MAS's both we us MAS's from this but our take cost due approximately IFRS contracts, added bought market the been have when based that the revenue we haircut a perspective would IFRS inherited in QX, revenue forced recognized generic business. recognize customer plus based actual deferred a the deferred require

However, starting upside we're Sylogist came we're and More produce. the they pleased now revenue Xst, discussed the and previous of onto the mass calls. surprises contracts on MAS generally, are with July confident XXX% no able customers opportunities we've in There to very recognize integration. we're

trading pressure uncertain COVID-XX, NGOs was to directly headwind services response revenue environment. third which involved pandemic to put non-profits new cautiously in and bookings. our on due Many and continues the The are the or professional

So many have delayed implementation.

per NFP replacement comparable to month. would occurred. completed successfully are we year, have was last QX there in contributing that $XXX,XXX a implementation projects multi-country that instance over COVID-XX, no multi-year size of normally For Due

the COVID-XX we've are Our professional lumpy exasperated norm but services by unlike and anything seen. unpredictable nature

This However, as we're activity EBITDA $X.X in EBITDA and due year-over-year footing. $X.X seeing was mainly FX Again, majority North strengthened normal America been together to QX more down would basis, constant million. Bill with from margins. approximately returns million a Adjusted headwinds year. as investments highlighted, QX have These million was pipeline for FX. compressed growth alone adjusted last a to improved currency $X on

lower other EBITDA accrual. employee driver bonus was of The the main

are and and this team Talent goals covering stake to and expense system by wide help three in year a success. the bonus and book was board to 'XX Sylogist quarters. a committee. catch first accrual Bill approved to source us management creation by As company's mentioned, plan we its up a behind power performance motivated for giving expect company all estimated required the compensation align of share just people members value our FY This recently date employees the

gross QX investments business the is up oriented were XXXX. acquisition April service to XX% online. This from Our to XXXX. in due Operating were for of in quarter somewhat started the growth as to expenses profit XX%, mainly come in InfoStrat margins relatively down

engaged talent added in strategically resources the development over now are marketing. customer have contract talent principally past and product in adding several offshore and and teams, We the facing sales months,

to shareholders, up zero to $X wellness and share dividends Quarterly distributed make Returns customer remains per $X.XX go-to-market, in last and per excellence, creation. in from overall investors in operational support period $X.X dividends million the million We total, to was will In profits to value Earnings strong. QX year. from share. last remain aimed essentially down million and innovation all We continue scalability breakeven, $X.XXX XXXX. accelerating retention, same $X from year. down were strategic at QX investments

the the plus balance the Board facility. that conclude Our in of rate see by near-term Shortly investments increases them this margin in end team I'd aligned to and 'XX calendar remaining finished the million strategy $XX business's in like joined, sheet the strength. and strong. term cash emphasizing involve of involve growth fiscal minimum million to executive medium accessible always is growth QX fundamental in -- in targeting on This through with after We pay-off making the compression toward $XX.X business rule year. business's XX driving of posture. our a likewise credit Bill a begin was to to going

in We our are plan. confident

plan. in will Sylogist. Bill We you path are of execution few Thank the about a time we that for and excited I the take forward. interest And your now questions. on are and

If your name with. institution you do you're please provide so, and

Unidentified Company Representative

Thank you, Bill and Xavier.

question first the and and your Bill, Partners. thoughts [E-Grantz]. from Acumen Jim of Capital get is [Alio] deal link recent to with Byrne likes Our on comments Jim

not dynamics read terms on M&A putting throughs or up as for today pressure sector, So on industry multiples? and and are in whether of possible the commentary and things Sylogist hitting

Bill Wood

opportunities. COVID The been there an has feel of compelling link systems corners, reach have was it itself legacy opportunity all as from out of period. I didn't they Overall, gone needed regional particularly quiet, this to that during to was somewhat It challenged quite were deal think out with opportunities. through acquisitive was further. that us deals think interest firm PE-backed to and is for that the aware in them that impetus in strike continues attracting consummated a players the surprisingly at to they been the to landscape space, are looking mix that seemingly that actually are lend that I we It ultimately that

conversations and we so pipeline with certainly like our those. And look at within opportunities continue

Unidentified Company Representative

sales backlog? in is On be and services, any question projects trough the of billings Do of seeing from Gavin for will funnel? backlog what you Fairweather think Next you and the Cormark. notable in sense QX are the professional

Bill Wood

I think triggered by the things. project services are two largely

my their So better comments more mentioned seen able to budgets they upgrades, the been services, on their for handle since customers I Those in projects, as here. to modules, than well offering. I've have as feeling their to and as are like be our the engage new add-on I've active stability SaaS

so sign. think And that's a very positive I

replace in as of those in part to paper. the seeing the services been the very and to Xavier large of the year, the am actually some have headed time. on project project terms pipeline, commented the are up those we I tied comments, In latter deals last conversations that for likes those in wrapped mentioned these that activity that I in And some of our pipeline of and pleased my matriculation toward with of

so I that we've in more seen return past And the the services our that future. near do project a feel will in norm to

Unidentified Company Representative

fiscal EBITDA the directionally XX to Next move question referenced also to of Should building XXXX? growth ahead over release The return to press near-term from we Gavin. lower of expect posture. returns

Bill Wood

around continue our believe made the do I to strategy. be need to Yes, investments

of that growth the to be company alignment foundational we're reward investments an posture processes, it infusion It that put and state structure that return in. the forward I so growth steady that's our for kind able we sustained terms to people, in the to of Those bonus posture a place. go and And across are overtime. mentioned took to end, in

Board accelerate days year those over feeling here so this and the working made there finalize be had as we year. our need creation. behalf to latter and drive XX to that to continue together in of in through am investments be come to budget on to calendar business the invest no and the to next present value it to certainly And We'll we've into But of growth XX part hesitancy to able I and the discussions that strategy to and the Board. the continue is be through

Unidentified Company Representative

states? Bill, can MAS. other items we take Gavin to are the also asks gating Wen-GAGE’s on platform before What the

Bill Wood

the conversation two a sure A, We go-forward discussions to relative Great customer IP. what question, they are them several communities needs. strategy we we and existing be through the significant orient we that had make space, vis-à-vis their I it we lenses. focus table to to to to answer our that communities so We've our that wanted with bring that with vis-à-vis us. mass currently sure they the the to those done make about position in our clear to wanted K-XX in IP enjoy understood from group offerings,

sure and customer and them. to aligned we that And so community existing very the go were end, much our to with with in make accelerating wanted relative touch to we to forward MAS’s visibility

covenants hurdles there to introducing are in of about process technology Secondly, states. state each those the every in and relative

are. and where We hurdles to relative have we seem of most sure diligence to part we we accreditation are amenable need our where days and XX, we if same then to the and at understand maybe be we curated process, the XX most while fit those to would of and over make less, review material go state as the opportunity time through the see XX, they be what that beyond seemed to last

to to about states to largely entry those it's the another. that and one understanding nuances end, And from the so

Unidentified Company Representative

can Gavin profit non from question an is on you've provide One Final for you Fairweather. this adjacency highlighted initiative? update payments,

Bill Wood

the areas, impact the lunches we year because some mass COVID. upcoming of see within of with waived have payment has a side such within customer The of what good good that. the there. the third fees In taken continuing lies do associated already a inventory some had We've Oklahoma of business, of those look all where our to where school postponed, are to customer being we and state opportunity parties of and communities now opportunity as transacting community, using and understanding our for

at to is community looking platform we're by ready itself community. it customer The go. So customer

basically a parcel adapted and We plug different with that capability have kind offerings. our and into play sits of part

fuel to outside both feel and that technology It's And a newly So fuel as can market what community to now that doesn't customer And technology relative rollout the we and we to partnerships to there's piece where our leaning of as the the plan that's the been have and we that we in completed. current opportunities through us space within within customer opportunity. area. business direct see puzzle current in base is used created our strategically where that preclude our is the where are, go.

Unidentified Company Representative

give Next you M&A? into question comfortable sense like Partners. Amr you a your there Specifically, is Are Echelon and from Can pipeline? M&A masks capital there many how us Ezzat much of of targets are deploying how out

Bill Wood

the more more as get team the able strong and it said, is have I've I the The seen be added the kudos outbound we've And in lines to pipeline to as water activity. team. as to resources direct to and

our over being like and relative to out over XXX to using well feel we refreshed direct sale is and see well said to motivate I that try I on maybe to a strategy and as for can network in goings in or constantly that process. are see connections tracking strategic marketplace. we is opportunities We reach that themselves the conversations evaluated don't if through a target

And in and those their seen that a do blocks I of get earnest plus kind usually expand. run forward basis. in companies is those they to of then minus much where so hurdles as size, rate capital to $X there's end, of generally that since I've of conversations team. just MAS or because running million from some joined representative factor they're to $XX technology to the And -- net sort, or million into I go with the feel The as are to credit

the opportunities at the pipeline strong. the we're to very market a in think I continue And in overall position and and secure I look is future. feel So opportunities to good

Unidentified Company Representative

in M&A? investment does Amr. your of light profile also dividend a Next question heavier strategy sit Where from into

Bill Wood

relative a long-standing component is community. to shareholder The our value dividend

it in it be our is that it respect represents of golden counterbalanced conversations remain at each to strong. continue what value with dividend forward. to dividend the time the cherished this could going egg, the and But want use to overall, that we'll capital quarter. the Obviously, look passing that commitment not elsewhere, is it with use something degree it's that of to is capital and have While at at we we of look terms

Unidentified Company Representative

from Amr. question Final

efforts? you as some On you where currently implementation, on give cross-selling of can an sit, MAS you update the your well, can on touch

Bill Wood

integration brute we in of sales. and XXX mentioned comments, needed the in an in in from in north playbook force bring what was efficiency not processes, together, teams together it it I bringing had only As all the embraced and people, ultimately in comes we the say the the business not HR, past. on the diligence table, systems, the people of moved that because a sure our then my we to together, was the learnings, of that our really not was development build of aspects touched could those tasks with kind largely companies with effective plan learned multi-faceted I of a meshing execute that a It included marketing, integration of included way to speed the teams board. was across listening and can that it priority level really realities but that and collaboration, way, all that we which that work teams we and product the and making off but that

secured take attention what company it they I stage very but are. there a think resources and that drains or to an importantly the for ourselves the companies, it lot integration shining acquisition a for success now of fold, on I'm acquisitions real a and -- proving brought And into from So become like be of is that the a the more many away activities and setting to isn't other really orphaned pleased. can really process good where light

for to look While acquisitions it's I that for be stage sets feel a to going do task and no at easy and us able huge success company it was the confidence forward. the

Unidentified Company Representative

now. Ezzat from just issues We’ve any you had retaining final one Amr and/or question talent? recruiting coming Are facing

Bill Wood

more say proudly energized granted. I seen. I our feel and excited never that for I've take that But more than will I team it is

where communication, the to a is how the think I has the in of important trust strategy get quality people internally some time transparency the excited our made we're speaks and having energized to there. product being and to idea for lot that customer also going innovation, of and important commitment that gained investments that, is how have here has a and ultimately been are about

our that career that Sylogist. on we sure that people So in And all. is them proactively clearly management put are path component place performance a resting that the I we was to see not structure laurels their crucial making with something of at investing in and think

And the I and bring On attract I the the us. both the markets attributes a think an is we because that actually for serve only and the would company. Sylogist interesting We attracting feel innovation young not have. but side, investments and seasoned an touch of actually professionals to ultimately we’re lot we products of that mix and interesting

positions, And landscape. we we do are com post to at that so the when component that good candidates very bonus and now to ultimately think packages I'm competitive look is with the I getting feeling are willing now

Unidentified Company Representative

Sylogist. time you, That's Thank attending everyone your questions. in appreciate this your you We Thank interest it for and morning. Bill. for

Sylogist (SYZLF) 17 Aug 212021 Q3 Earnings call transcript