TECSYS Inc. ((TSE:TCS)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for TECSYS Inc. reflected a generally positive sentiment, highlighting strong performance in SaaS revenue and professional services, alongside significant strategic achievements and product innovations. However, this optimism was tempered by a decline in SaaS bookings and modest overall revenue growth. The company also adopted a cautious approach in its revised guidance for adjusted EBITDA margin due to increased investments.
Strong SaaS Revenue Growth
SaaS revenue for TECSYS Inc. saw a substantial increase of 29% for the year, reaching $67.1 million, nearly hitting the 30% guidance mark. This growth was largely driven by the core product Elite, which experienced a 32% increase, buoyed by multi-site wins and strong adoption rates.
Record Professional Services Revenue
The company achieved a record in professional services revenue for the fourth quarter, totaling $16.2 million, a 13% rise from the same quarter last year. The professional services backlog also saw a significant increase, ending at $49 million, up 52% year-over-year.
Major Milestones and Strategic Achievements
TECSYS Inc. announced a major milestone with Roche, deploying its SaaS platform at over 1,000 sites globally. Additionally, the company established a new subsidiary in India, aimed at enhancing development and support capacity.
Strong Financial Performance
The company reported a strong financial performance with a gross margin for Q4 at 51%, up from 47% the previous year. Net profit rose to $1.7 million compared to $259,000 in the same quarter last year, and adjusted EBITDA increased to $4.3 million from $2.8 million last year.
Enhanced Product Offerings
TECSYS Inc. announced two significant product innovations: ESL+ for hospital supply chain management and Tecsys IQ, a data product designed for AI-powered insights.
SaaS Bookings Decline
Despite the overall positive performance, SaaS bookings experienced a decline year-over-year, dropping from a record $8 million last Q4 to $6.5 million this Q4. For the year, SaaS bookings were down 7% to $17.3 million compared to last year.
Modest Total Revenue Growth
Total revenue for fiscal 2025 reached $176.5 million, marking only a 3% increase from the previous year. However, excluding hardware, revenue grew by 12%, indicating stronger performance in other areas.
Adjusted EBITDA Margin Guidance Revised Down
The company revised its fiscal 2026 adjusted EBITDA margin guidance down to 8%-9% due to increased investments in R&D and marketing, reflecting a strategic shift towards long-term growth.
Forward-Looking Guidance
Looking ahead, TECSYS Inc. projects SaaS revenue growth of 20% to 22% and total revenue growth of 8% to 10% for fiscal 2026. Adjusted EBITDA is expected to grow between 20% and 30%, with the EBITDA margin guidance revised to 8% to 9% due to increased investments. The company plans significant investment in its AI-driven Tecsys IQ platform and aims to expand its market presence, particularly in the healthcare supply chain sector.
In conclusion, TECSYS Inc.’s earnings call conveyed a generally positive outlook, with strong SaaS and professional services performance, strategic achievements, and innovative product offerings. However, challenges such as declining SaaS bookings and modest overall revenue growth were noted. The company’s forward-looking guidance reflects a balanced approach, aiming for sustainable growth through strategic investments.