TECSYS Inc. Earnings Call: Strong Growth Amid Uncertainties

TECSYS Inc. ((TSE:TCS)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for TECSYS Inc. revealed a mixed sentiment, characterized by strong revenue growth in SaaS and professional services, alongside impressive wins in the healthcare market. However, there were notable concerns regarding a decline in bookings compared to the previous year and the guidance being at the lower end of expectations due to prevailing market uncertainties.

Record Revenue Quarter

Tecsys reported a record revenue of $45.2 million for the quarter, representing a 3% increase from the same period last year. Excluding hardware sales, this growth was even more pronounced at 9%, showcasing the company’s robust performance in its core business areas.

Strong SaaS Revenue Growth

The company achieved a remarkable 22% growth in SaaS revenue, reaching $17.3 million for the quarter. When adjusted for last year’s one-time revenue recognition, the growth rate would be approximately 28%, highlighting the strong demand for Tecsys’ SaaS offerings.

Professional Services Bookings Surge

Professional services bookings surged to a record $24.4 million, marking a 170% increase from the same quarter last year. This significant growth indicates a strong pipeline and increased demand for Tecsys’ professional services.

Adjusted EBITDA Increase

Tecsys reported a 34% increase in adjusted EBITDA, reaching $3.5 million for the quarter. This improvement reflects the company’s effective cost management and operational efficiency.

Healthcare Market Wins

The earnings call highlighted notable momentum in the healthcare sector, with two new health system wins in the U.S. and Canada. The continued demand for pharmacy solutions further underscores Tecsys’ strong position in the healthcare market.

Decline in Bookings Compared to Prior Year

Despite the positive developments, Tecsys experienced a decline in quarterly bookings, which stood at $4 million, down from the previous year. However, on a last 12 months basis, bookings were up by 31%, indicating a longer-term positive trend.

SaaS Revenue and EBITDA Guidance at Lower End

The company expects SaaS revenue and EBITDA margins to be at the lower end of the guidance range for fiscal year 2025, primarily due to the timing of bookings and market uncertainties.

Market and Political Uncertainties

Tecsys expressed concerns about potential impacts from international trade tensions and possible Medicaid cuts in the U.S. While no immediate effects have been observed, these factors contribute to the cautious outlook.

Forward-Looking Guidance

During the earnings call, Tecsys maintained its fiscal 2025 guidance for SaaS revenue growth at 30% to 32% and adjusted EBITDA margins at 8% to 9%. The company also announced a $1.7 million share buyback and a quarterly dividend of $0.085 per share, reflecting confidence in its financial stability and future prospects.

In conclusion, the earnings call for TECSYS Inc. reflected a generally positive sentiment, driven by strong revenue growth in key areas and strategic wins in the healthcare market. However, concerns about declining bookings and market uncertainties tempered the overall outlook. Investors will be keen to see how the company navigates these challenges while capitalizing on its growth opportunities.