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01/09 23:13
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows strong financial metrics, a healthy project pipeline, and positive market conditions for gold. The company is confident in achieving growth targets, advancing key projects, and increasing shareholder returns. Despite higher costs, the optimistic guidance and strategic investments in exploration and resource expansion are likely to positively impact the stock price. The Q&A section supports this sentiment, with management expressing optimism about pipeline growth and competitive advantages. Overall, the positive outlook and strategic initiatives suggest a positive stock price movement over the next two weeks.
Subscription and Support Revenue $49.4 million, a 6% increase year-over-year. The increase was driven by new customer growth and strong expansion from existing customers, partially offset by churn in the U.S. K-12 market.
Annual Recurring Revenue (ARR) $213.4 million, a 6% increase year-over-year. Growth was supported by strong ARR bookings in higher education and corporate markets, which grew by 10% year-over-year.
Adjusted EBITDA $7.9 million, a decrease from $10.4 million in the same period last year. The decrease was due to a prior year professional services true-up and current period database technology migration costs.
Adjusted Gross Margin 67.8%, down from 69.9% in the same period last year. The decline was attributed to additional costs for planned database technology migration.
Gross Profit Margin for Subscription and Support Revenue 71.1%, down from 72.7% in the prior year. The decrease was due to the same database migration costs.
Gross Profit Margin for Professional Services 20.4%, down from 45.2% in the prior year. The decline was impacted by prior year true-up adjustments.
Operating Expenses (OpEx) $32.5 million, consistent with the prior year. OpEx as a percentage of revenue remained at 60%.
Free Cash Flow $18.8 million, up from $11.3 million in the same period last year, representing a 15% year-to-date increase to $32.2 million. The increase was due to improved cash flow management.
Income for the Period $4.4 million, down from $5.5 million in the same period last year. The decrease was linked to the same factors affecting adjusted EBITDA.
AI offering, Lumi: Now 5 quarters into its launch, Lumi has generated more than $2 million in ARR. The pipeline for Lumi is growing significantly, and AI remains a significant catalyst for new investment cycles.
Higher Education and Corporate Markets: ARR bookings grew 10% year-over-year in these markets. North America Higher Education is showing gradual improvement with increased activity in investments to improve outcomes and student retention.
International Expansion: Year-over-year international ARR growth exceeded 15% in Q3. New customers include the University of West Scotland and a leading global banking institute in Europe.
Corporate Learning: New customers include the Florida Center for Nursing, the Professional Association for Dentists in New Zealand, and a large nursing union. Employee training and upskilling are identified as significant growth pillars.
Subscription and Support Revenue: Increased 6% to $49.4 million in Q3. SaaS revenue grew 10% year-to-date.
Adjusted EBITDA: $7.9 million in Q3 with a margin of approximately 15%. Year-to-date adjusted EBITDA increased 33%.
Free Cash Flow: Grew 15% year-to-date to $32.2 million. Q3 free cash flow was $18.8 million, up from $11.3 million in the same period last year.
K-12 Market Challenges: Higher churn in the U.S. K-12 market due to leadership changes and a reversion to traditional education models. K-12 represents roughly 12% of ARR.
Database Technology Migration: Planned migration led to additional costs, impacting gross margins by 200 basis points. Expected to create incremental margin benefits in fiscal 2028 and beyond.
Higher churn in U.S. K-12 market: The company experienced higher churn in the U.S. K-12 market, attributed to internal leadership changes within customer organizations and a reversion to more traditional education models. This has negatively impacted subscription and support revenue.
Decreased professional services revenue: Professional services and other revenue decreased by 38%, reflecting reduced demand for larger engagements in the U.S. market and a prior year revenue true-up adjustment. This cautious spending environment has impacted near-term revenue.
Gross margin decline: Gross margin decreased due to additional costs associated with the planned migration of a database technology. This had a 200 basis point impact on margins, with benefits from the migration expected only in fiscal 2028 and beyond.
Cautious spending environment in U.S. market: The U.S. market exhibited reduced near-term demand for larger engagements, such as curriculum advisory services, reflecting a cautious spending environment that could impact revenue growth.
Impact of database technology migration: The planned migration of a database technology increased costs, negatively affecting gross margins in the short term. The benefits of this migration are not expected until fiscal 2028.
Pipeline and Market Conditions: Pipeline generation has been better than forecast for multiple consecutive quarters and remains healthy. North America Higher Education is seeing gradual improvement in market conditions with early signs of increased activity as institutions focus on investments to improve outcomes, find growth pathways, and strengthen student retention.
International Growth: Year-over-year international ARR growth exceeded 15% in Q3, with strong pipeline trends continuing. The company is expanding its footprint in targeted countries and seeing healthy adoption metrics globally.
Corporate Learning and Employee Training: The company sees employee training and upskilling as significant growth pillars for the future, with global trade missions highlighting this focus for businesses and governments.
AI and Product Expansion: The AI offering, Lumi, has generated over $2 million in ARR within five quarters of its launch, with a growing pipeline. AI is expected to act as a significant catalyst for a new investment cycle, driving customer adoption and expanding use cases.
Financial Guidance for Fiscal Year: Subscription and support revenue is expected to range between $198 million and $199 million, reflecting 10% growth over fiscal 2025. Total revenue is projected to be between $217 million and $218 million, a 6% increase over fiscal 2025. Adjusted EBITDA is forecasted to be between $32 million and $33 million, with an adjusted EBITDA margin of 15%.
Share Repurchase Program: In Q3, the company repurchased and canceled 223,500 Subordinate Voting Shares under its NCIB program, bringing the total for the fiscal year-to-date to roughly 600,000 shares as of October 31, 2025. Additionally, the company announced the launch of a new NCIB with increased capacity commencing December 12.
The earnings call summary shows strong financial metrics, a healthy project pipeline, and positive market conditions for gold. The company is confident in achieving growth targets, advancing key projects, and increasing shareholder returns. Despite higher costs, the optimistic guidance and strategic investments in exploration and resource expansion are likely to positively impact the stock price. The Q&A section supports this sentiment, with management expressing optimism about pipeline growth and competitive advantages. Overall, the positive outlook and strategic initiatives suggest a positive stock price movement over the next two weeks.
The earnings call highlights record revenue and earnings, debt repayment, and increased shareholder returns, suggesting strong financial health. Positive operational performance and a net cash position bolster the outlook. While cash costs are slightly higher, excluding royalties they remain within guidance. The Q&A reveals strategic focus on gold, potential in critical minerals, and positive government relations, further enhancing sentiment. However, inflation concerns and lack of detailed responses on some operational aspects slightly temper enthusiasm. Overall, the strong financial metrics and optimistic guidance suggest a positive stock price movement.
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