Sylogist Ltd Q3 2024 Earnings Call Transcript

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

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Just a few questions. The first one, can you update us on the pace of your targeted competitor displacement? I'm wondering how does it compare to the previous few quarters? Is it holding steady or are you seeing it accelerate?

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Fantastic. On your NRR for the quarter and still just SylogistEd's, we saw a slight dip in NRR quarter-over-quarter. I also expected to see a bigger sales number in education especially with the strong bookings last quarter. The MD&A notes some anticipated attrition in the vertical that impacted NRR. Can you maybe give us color on that?

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Okay. And is that mostly done or do you foresee more of that over the coming quarters?

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Great. Then I guess on your partner strategy, I wonder can you share with us what kind of SaaS growth rates you'd anticipate as we enter 2025 with an increased implementation capacity both internally and externally? You're sort of growing SaaS in the mid-teens. Do you guys like foresee 2025 to be like materially higher in terms of like SaaS growth with the new capacity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, SYZ.TO - Q3 2024 Sylogist Ltd Earnings Call

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Yes, loud and clear. We missed all the good parts.

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Okay. I would have thought we'd see an inflection point given that you've got like increased implementation capacity. At some point, we see like SaaS grow from 15% to like 20%-something range?

Question: Amr Ezzat - Ventum Financial Corp. - Analyst : Understood. So it's happening, but it's hard to pinpoint when. That's great. Then maybe one last one. Any updates on SylogistPay that you guys can share with us?

Question: Gavin Fairweather - Cormark Securities Inc. - Analyst : Maybe just to start out, Bill, on the partner channel. Can you refresh us on how many partners you're up to now? And I'm also curious kind of how mature that partner cohort is? Are they all kind of reaching the level of bookings and deal generation that you would expect or are some of those still in the process of ramping?

Question: Gavin Fairweather - Cormark Securities Inc. - Analyst : Yes, that's great to hear. And then the KPIs you shared are super impressive in terms of the pipeline and the win rates that you're seeing. It strikes me as though you just need to see more deals. I mean I'm curious what those metrics are telling you in terms of the need to invest in marketing and partner enablement and potentially a few more bodies in the direct sales force.

Question: Gavin Fairweather - Cormark Securities Inc. - Analyst : Appreciate the color. And then just on gov, I know you've transitioned some customers on to the new SaaS platform and partners are increasingly working with it on deals. Can you just provide a bit of color on the feedback that you're getting from that existing customer cohort that's moved over and the partners that are increasingly looking to sell it? And how is that kind of influencing your view on the growth prospects for that platform going forward?

Question: Suthan Sukumar - Stifel Canada - Analyst : Congrats on a solid print. For my first question, I wanted to just touch on your go-to-market success to date. It's really good to hear that competitive placements are sustaining well. But just kind of curious, how much of your go-to-market success to date has been driven from greenfield opportunities meaning going after that segment of the market that has yet to adopt any meaningful technology?

Question: Suthan Sukumar - Stifel Canada - Analyst : Great. My second question, Bill, is really around the education vertical. Can you talk a little bit about the strength that you're seeing there? I think following last quarter, I may have been maybe incorrectly anticipating a little bit of normalization in the pace of bookings growth and how that translates to revenue growth, but it looks like the strength is continuing. Can you talk about some of the factors for the success underlying the strength there?

Question: Suthan Sukumar - Stifel Canada - Analyst : Excellent. And on the government segment, it's good to hear you're quite bullish on the opportunity there and really the opportunity to expand across North America. Can you speak a little bit about the strategy to protect your existing base I guess like from a migration standpoint and just a reminder of what are the key levers here to drive organic growth in the government segment?

Question: Suthan Sukumar - Stifel Canada - Analyst : Okay. Great. That's good color. Last one for me guys is just on Microsoft. Can you provide a quick update on how this relationship is evolving and what was the level of contribution to bookings and pipeline this quarter and what do you expect in the quarters ahead? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 1:30PM, SYZ.TO - Q3 2024 Sylogist Ltd Earnings Call

Question: Suthan Sukumar - Stifel Canada - Analyst : Great update. Thanks for taking my questions.

Question: Daniel Rosenberg - Paradigm Capital - Analyst : My first question was around the partner channel. And so I think you mentioned doubling the number of partners since last year, which is quite a positive to see. I was wondering going forward if you think bookings, is it about going deeper with these partners or do you plan on expanding again? That number was just quite -- doubling is quite significant. So just curious about any details there.

Question: Daniel Rosenberg - Paradigm Capital - Analyst : Okay. I was also curious about the displacement that you spoke of. I was wondering what is that balance between the local solution or smaller players versus some of the larger incumbents? Is any of that displacement coming from the big guys today and do you see that changing as you look to the future?

Question: Daniel Rosenberg - Paradigm Capital - Analyst : Okay. And then my last question is just around M&A. You mentioned the success of Mission or you provided some data around the success that you've had. I was wondering how you guys are thinking about the M&A market today? Any opportunities or challenges when you look at what's out there as it relates to Sylogist?

Question: Adam Wilk - Greystone Capital Management - Analyst : You guys had -- there's been a lot of focus on the sort of inflection of SaaS revenue growth in the near term and I guess over time. But you had previously mentioned the sort of balance of your internal capabilities and resources, making sure that the customers are taken care of rather than just plowing forward with as much growth as possible. Do you still feel like that remains the case in terms of where you sit today or can we just get an update on that sort of I guess bottleneck, my word not yours, in terms of where that sits today?

Question: Adam Wilk - Greystone Capital Management - Analyst : Okay. Excellent. And then just an update on capital allocation priorities would be great. I know previous caller asked about M&A. And maybe I'll just add if there was a deal that made sense for you guys, could you just talk about what that might look like in terms of would it be -- are you more focused on the product side, geography type of customer? Would just love to get your thoughts on that.

Question: Adam Wilk - Greystone Capital Management - Analyst : Excellent. Just 1 follow-up on that the synergistic partner efforts that you mentioned as a source of revenue. What has to take place for you to sort of turn that on so to speak?

Question: Adam Wilk - Greystone Capital Management - Analyst : Okay. Excellent. And then last question for me. You obviously know the sort of margin targets or sort of soft guidance that you've given in terms of your level of investment. But as you scale, I think I maybe ask this question every quarter; but as you scale, if there's opportunity to invest more or to throw some dollars at something you're trying to accomplish, whether it's white space, displacement? Are you comfortable maybe giving up some margin to do that or are you holding firm on where you guys are? Can you just talk a little bit about the tradeoff there?

Question: Adam Wilk - Greystone Capital Management - Analyst : Understood. That's it from me. Thank you very much and keep up the great work.