Sylogist Ltd Q1 2022 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Good morning. It's Michael Vaccarino here on behalf of Amr. You spoke a bit about this in your prepared remarks, but can you provide a bit more color on how your two recent acquisitions are performing relative to your expectations?

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Great. And then on gross margins, should we expect mid-60% going forward in light of the recent acquisition? Or are there other moving parts that we should be thinking about?

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Great. Thank you. Can you remind us of what revenues are from the legacy platforms that you're sunsetting? Trying to get a sense of how this compares to the new three-year contract that you secured.

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Okay. And last one for me, can you give us a sense of how we should expect operating expenses to evolve going forward? There are a couple of moving parts with investments in the business and widespread wage inflation. Maybe you can give us a sense of what stage you're at in terms of reinvesting in the business. And can you also speak to how pronounced the wage inflation you're experiencing is?

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Great. Thanks for taking my --

Question: Michael Vaccarino - Echelon Wealth Partners - Analyst : Great. Thanks for providing more color on that. Thanks for taking my questions. I'll pass the line.

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Yes. Good morning. So a few questions on my part. First, Bill, with regards to that three-year contract that you renegotiated, are there any other contracts or any other relationships that maybe are in a similar jeopardy? Because you said that these contracts were at risk late this year. Are there any other contracts that are in a similar situation, either for fiscal 2022, or even fiscal '23, where you might need to offer similar pricing discounts?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay, appreciate that color. And then looking at -- because you spoke about rule of 40. Obviously this quarter, when you look at EBITDA margin and your overall revenue growth, I think you're now of 60%. But the same time, when I look at your EBITDA margin, it has been coming down from the 50% level. Like this quarter, you're down to 30%. Just maybe give us an idea as to how when you guys are looking at the business and how you're modeling the business. where do you guys see the floor when it comes to the EBITDA margin side of the whole equation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2022 / 4:00PM, SYZ.TO - Q1 2022 Sylogist Ltd Earnings Call

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. But just to confirm, you did say that those impacts you saw through the first quarter, that those are, I guess, pretty much behind you right now?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. And then my follow-up question with regards to professional services. Certainly very strong number in the quarter, $2.9 million. Obviously, you've got those contracts you guys call out back in November of last year, and then you've got these professional services component tied to these new three-year contracts. Any color you guys can provide as far as the run rate that we should be thinking about when it comes to professional services as we move through fiscal 2022? Should we be thinking of a $3-million-plus run rate over the next few quarters?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. And then my last question. Obviously, just within the US market, the Infrastructure Bill or bills have made their way through the House. Have you guys started to see any of those funds flow down to some of your customers and therefore started to see the benefits of that? Or is that something we should anticipate through the rest of this year? And I'll leave there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2022 / 4:00PM, SYZ.TO - Q1 2022 Sylogist Ltd Earnings Call

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay, great. Thank you.

Question: Gavin Fairweather - Cormark Securities - Analyst : Hey, good morning. I thought we'd start out on organic growth. You outlined some of the headwinds that the business saw in Q1 that led us to be negative in the quarter. Obviously, you remained confident in your high single-digit target for fiscal '22 overall. So, I was hoping you could just provide a bit more color on what you're seeing in the pipeline in terms of new revenue from the base and new logos as well, just to help us bridge that gap between Q1 and your fiscal '22 expectations.

Question: Gavin Fairweather - Cormark Securities - Analyst : That's great. And then just within the Bellamy and SunPac customer communities, can you give us a sense of what level of interest there is in those communities in upgrading or migrating to cloud? And then maybe you can just provide us with some color on kind of the revenue lift for you on the recurring and from a services perspective as you execute on those migrations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 10, 2022 / 4:00PM, SYZ.TO - Q1 2022 Sylogist Ltd Earnings Call

Question: Gavin Fairweather - Cormark Securities - Analyst : That's great. And maybe from a product R&D perspective, I know one of your priorities is getting to market with navigator for municipalities. Can you just provide us an update on that initiative, when you expect to be in market and how you're thinking about the ability to win new logos with that product?

Question: Gavin Fairweather - Cormark Securities - Analyst : That's great. Then just lastly for me. Obviously, the credit facility moving up to $125 million from $75 million previously. Obviously, the thought process that I've imagine is tied to M&A. So, perhaps you can just give us an update on the deal flow that you're seeing and the deal environment that you're encountering out there.

Question: Gavin Fairweather - Cormark Securities - Analyst : Great. That's it for me. Thanks so much.