Sylogist Ltd Q4 2022 Earnings Call Transcript

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

Question: Michael Wunderli - ECHELON Partners - Analyst : Good morning, Bill and Xavier. Thanks for taking my questions. It's Michael on behalf of Amr. Can you speak to how conversations are evolving with clients, both existing and potential, in light of a more fragile economic outlook?

Question: Michael Wunderli - ECHELON Partners - Analyst : And then how should we think of margins going forward in light of inflation and the investment in the business? Should we expect some compression from these levels or are we close to a trough?

Question: Michael Wunderli - ECHELON Partners - Analyst : Okay. And then on your M&A pipeline, should we expect you'd be more acquisitive in the next 12 months relative to the last? And then at the same time, with the NCIB, at what level do you prefer to repurchase shares over alternative uses of capital, while we're on the capital allocation question?

Question: Michael Wunderli - ECHELON Partners - Analyst : Okay, great. Thank you. That's all from me. I'll pass the line.

Question: Jim Byrne - Acumen Capital Partners - Analyst : Good morning, guys. Just a couple from me. Bill, I was wondering if you could just expand on any of the new bookings, whether that's maybe new logos, new sectors or any sectors of strength that you could give us some details on where those bookings are all coming from.

Question: Jim Byrne - Acumen Capital Partners - Analyst : Okay. And then I know your product innovation development works on -- obviously with customers in mind, and you're not creating blue-sky products. But just maybe give us an idea of what you are working on currently. What are you really focusing your energy on the product side or the IP side in terms of opening up, whether it's like, as you said previously, new logos or other geographic areas?

Question: Jim Byrne - Acumen Capital Partners - Analyst : Okay. Maybe just one note of clarification. Bill, I think in your opening remarks, you did say low double-digit growth for now fiscal and calendar 2023. I had in my head, maybe I misread it in the MD&A. I thought it said low single digit, but maybe I need just a little bit of clarification there?

Question: Jim Byrne - Acumen Capital Partners - Analyst : Okay. That's super helpful. Thank you.

Question: Gavin Fairweather - Cormark Securities - Analyst : Hey, good morning. Appreciate the disclosure around bookings and backlog. I was hoping we could go kind of one step up in the sales pipe and discuss some of the trends that you're monitoring in terms of the size of your pipeline, how some of your new sales numbers are developing pipe, and how that would distribute across top of funnel versus leads which are a bit more developed.

Question: Gavin Fairweather - Cormark Securities - Analyst : That's helpful. And then maybe kind of on a related topic. How do you think about the organic growth potential for this business? Obviously, you've done a lot of work on the R&D side and you discussed how your IP stack has evolved, but at the same time you're investing in sales. Those investment levels are moving a little bit higher near term. I think for fiscal 2022, you're targeting high single digit. You're saying low double digit for 2023, but I know you've got some sales cycles factors to consider. So do you think you can then push that higher in kind of 2024 and beyond? How do you think about that relative to your investment levels?

Question: Gavin Fairweather - Cormark Securities - Analyst : Then just on the municipal solution, curious for some further thoughts on how you're planning to attack this opportunity. Obviously, it's a pretty big market. Maybe just discuss your thoughts around maybe migrating the Bellamy customers and how you're thinking about really going after for new logos and what kind of typical deal sizes would look like in the space? Just some further thoughts there would be helpful.

Question: Gavin Fairweather - Cormark Securities - Analyst : Thanks so much. Very helpful. I'll pass the line.

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Yes, good morning, everybody. So Bill, how should we be thinking about the Rule of 40 posturing, given that you're now looking for a more accelerated organic growth in that low double-digit range? And this quarter we've seen a little bit of a slip on the EBITDA margin side. Should we -- when we think about Rule of 40, should we be thinking more of a company now that has an even higher organic growth rate and maybe you're going to have to spend a little bit more to get to that level? So a little bit of a pullback on the EBITDA margin? Or do you -- if you would be thinking about a Rule of 40 with a higher positioning versus where you would have been, say three months ago before you were thinking about higher organic growth?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. Appreciate that color. Second question is, you spoke about the growth on the bookings quarter-over-quarter, a record number, I believe. But you talked about some delays, I guess stuff that you expected in Q3 pushed into Q4. Maybe just a little bit more color as to why the delays and maybe why the free up in Q4?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay, fair comment. And then when you look at the new go-to-market strategy and the rebranding, through that whole exercise are there assets that have come up that maybe you feel don't fit the business model anymore? And if so, are you looking to maybe divest of some assets and have you taken -- have you started those initiatives?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. And then my last question, now that you've announced the dividend cut freed up some capital, I think in the past, your intent was to add about $20 million, $25 million of acquired M&A annually. Certainly for 2022, it's been very quiet on that front. Do you think that now that you've 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 15, 2022 / 2:00PM, SYZ.TO - Interim Q4 2022 Sylogist Ltd Earnings Call got more capital, that that's something that -- a target that you plan to achieve for 2023? Or are you looking at maybe lowering those M&A expectations?

Question: Nick Agostino - Laurentian Bank Securities - Analyst : Okay. I appreciate that color. I'll pass the line.