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01/11 04:02
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong SaaS and professional services revenue growth, improved margins, and a healthy cash position, which are positive indicators. However, concerns about elongated decision cycles, attrition in noncore customers, and macroeconomic challenges like tariffs and healthcare policy create uncertainties. The Q&A section reveals cautious management responses and elongated deal cycles, adding to the mixed sentiment. Despite financial strength, the uncertainties and cautious outlook balance the positive aspects, leading to a neutral sentiment prediction for the stock price over the next two weeks.
SaaS revenue $19.7 million in Q2 fiscal '26, up 22% year-over-year. Growth attributed to new bookings and favorable foreign exchange impact, partially offset by attrition in a small group of noncore customers.
SaaS ARR $81.1 million at the end of Q2 fiscal '26, up 16% year-over-year. Growth driven by Elite SaaS ARR, which grew by 21%.
Professional services revenue $17 million in Q2 fiscal '26, up 20% year-over-year. Growth attributed to robust professional services backlog.
Gross margin 52% in Q2 fiscal '26, up 400 basis points from 48% in the same period last year. Increase driven by higher SaaS margins and strength in professional services margins.
Net profit $1.8 million in Q2 fiscal '26, up from $758,000 in the same quarter last year. Growth attributed to increased revenue and improved margins.
Adjusted EBITDA $5.0 million in Q2 fiscal '26, up 71% year-over-year. Growth attributed to disciplined execution and scalability of the business.
SaaS RPO $240.4 million at the end of Q2 fiscal '26, up 18% year-over-year. Growth not materially impacted by foreign exchange.
Cash and short-term investments $30.5 million at the end of Q2 fiscal '26, with no debt. Cash used for share buybacks and dividend payouts.
Elite platform availability on AWS marketplace: The Elite platform is now available on the AWS marketplace, which shortens the path from interest to implementation, reduces friction in the buying process, and broadens Tecsys' reach.
TecsysIQ introduction: TecsysIQ, a unified data layer built on the Databricks Data Intelligence Platform, was introduced at the User Conference. Several customers have joined the new product introduction program as early adopters.
AI-driven innovations: Advancements include a content pack for point-of-use inventory optimization and enhancements to the Elite WMS platform, such as warehouse AI assistance.
Health care pipeline growth: The health care pipeline grew by about 60% compared to the same time last year, with accelerating traction in pharmacy and key markets within general distribution.
New logo win: Secured a new logo win with a marquee health care and life sciences brand.
SaaS revenue growth: SaaS revenue grew by 22% to $19.7 million in Q2 fiscal '26. SaaS ARR increased by 16% year-over-year to $81.1 million.
Professional services revenue: Professional services revenue increased by 20% year-over-year to $17 million in Q2 fiscal '26.
Gross margin improvement: Gross margin increased to 52%, up 400 basis points from the same period last year, driven by higher SaaS and professional services margins.
Recognition in Gartner Healthcare Supply Chain Top 25: Tecsys customers accounted for 10 providers on the list, with 2 more in the Masters category, highlighting Tecsys' influence in the healthcare supply chain.
Leadership in WMS Technology Value Matrix: Tecsys was recognized as a leader in the 2025 WMS Technology Value Matrix by Nucleus Research, emphasizing its innovation and expanding influence in healthcare.
U.S. healthcare policy environment and government shutdown: The company is facing headwinds from the U.S. healthcare policy environment and government shutdown, which have led to extended decision cycles and elongated procurement processes, potentially delaying revenue realization.
Shifting tariffs: Uncertainty created by shifting tariffs poses a risk to the company's operations and financial performance.
Attrition in noncore customers: There was attrition in a small group of noncore customers, which partially offset the favorable impact from foreign exchange and new bookings, potentially impacting SaaS ARR growth.
Professional services backlog decline: The professional services backlog decreased by 10% sequentially from the prior quarter, which may impact future revenue from this segment.
Long decision cycles: Long decision cycles have slowed bookings, which could delay revenue growth and impact the company's financial performance in the near term.
SaaS Revenue Growth: Maintaining full year fiscal '26 guidance for SaaS revenue growth of 20% to 22%.
Total Revenue Growth: Maintaining full year fiscal '26 guidance for total revenue growth of 8% to 10%.
Adjusted EBITDA Margin: Maintaining full year fiscal '26 guidance for adjusted EBITDA margin between 8% and 9%.
Pipeline Growth: SaaS pipeline continues to grow, with the healthcare pipeline up about 60% compared to the same time last year.
AI and Innovation: Investing in AI-driven innovations, including TecsysIQ and Agentic AI, to drive efficiency, adaptability, and automation, which are expected to be key drivers of long-term value creation.
AWS Marketplace Availability: Elite platform is now available on the AWS marketplace, expected to shorten the path from interest to implementation and broaden market reach.
Healthcare Supply Chain Leadership: Continued investment in leadership position across the end-to-end healthcare supply chain, with growing recognition and rising brand visibility positioning the company well for new business wins.
Dividend payout in Q2: $2.5 million
Quarterly dividend approved: $0.09 per share
Share buyback in Q2: $2.8 million under NCIB
The earnings call highlights strong SaaS and professional services revenue growth, improved margins, and a healthy cash position, which are positive indicators. However, concerns about elongated decision cycles, attrition in noncore customers, and macroeconomic challenges like tariffs and healthcare policy create uncertainties. The Q&A section reveals cautious management responses and elongated deal cycles, adding to the mixed sentiment. Despite financial strength, the uncertainties and cautious outlook balance the positive aspects, leading to a neutral sentiment prediction for the stock price over the next two weeks.
The earnings call reflects a positive outlook with strong financial metrics and optimistic guidance. Despite some uncertainties, the company projects robust growth, improved EBITDA, and increased innovation revenue. The Q&A section highlights strategic initiatives, stable vet visits, and competitive resilience, further supporting a positive sentiment. Additionally, the company's plans for innovation and market expansion suggest potential stock price appreciation over the next two weeks.
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