Sylogist Q3 Fiscal 2021 Results: Sylogist Invests For Growth, Delivers Core Financial Performance
CALGARY, AB, Aug. 12, 2021 /CNW/ - Sylogist Ltd. (TSX: SYZ) ("Sylogist" or the "Company"), a provider of enterprise information management solutions, is pleased to announce its unaudited financial results for the third quarter of the 2021 fiscal year, ended June 30, 2021.
Bill Wood, President and CEO of Sylogist commented, "we are very pleased with our progress this quarter. We continued to make strategic investments to accelerate the Company's growth and build capacity to enable top-line expansion. Much of this is focused on go-to-market, earning customer advocacy, and innovation. We have strategically added talent companywide, reorganized the Company to align behind shared goals and value creation, and broken down divisional silos that have existed for some time. We also have now fully transitioned to an Agile product development methodology in which we release desired features and innovation on a faster, approximately monthly, cadence. These changes will help support accelerated growth in the coming quarters, strengthen customer connections, bolster our competitive position and improve operational excellence to support both organic and inorganic expansion going forward.
More specifically, we are investing in sales, marketing, and account management, with a view to enlisting and activating customer advocacy, driving high quality leads and expanding our thought leadership in the markets we serve. Happy customers and increased market awareness will drive word-of-mouth referrals and new bookings opportunities. We're beginning to see these investments translate into new wins, which is expected to drive top-line growth through the balance of this calendar year, and beyond.
Critical to these efforts is attracting, motivating, and retaining top talent in an increasingly competitive market. For that reason, the Board of Directors and its Compensation Committee have approved a new employee performance management framework. This includes individual and collective goal-setting, regular feedback, individualized professional development and a companywide performance bonus plan in which employees are eligible for bonuses depending on their individual performance and that of Sylogist as a whole; all aligned with value creation. The plan's recent approval has required us to book a retroactive, estimated $1.2 million bonus accrual in Q3 covering the first nine months of FY2021. This accrual results in a one-time, outsized impact to Adjusted EBITDA in Q3. We expect this commitment to our most valuable asset, our people, will further motivate and reward our already exceptionally strong team, while continuing to attract the best and brightest to Sylogist.
As I've said on prior calls, quite simply, strategic investment in the business and our people was overdue; and, will be our power source to take Sylogist to new heights going forward.
We also maintained strong financial performance in Q3. Although the above-mentioned investments compressed Adjusted EBITDA margins, core recurring revenue rose substantially in the wake of the MAS acquisition. This occurred despite material currency headwinds, to which we are heavily exposed, due to the vast majority of our revenue coming from the US. To illustrate the impact of FX on our Q3 numbers, total revenue would have been 9% higher under the same USD/CAD rates as Q3 2020. In total, year to date FY2021 revenue would have been $1.3 million higher, representing a 5% increase, on a YOY constant currency basis.
COVID-19 also continued to adversely affect bookings and professional services revenue, with many nonprofits delaying decisions and implementations. However, we are seeing this begin to shift, delayed deals are matriculating and we expect bookings and related project services to recover in the coming months.
Even with these investments in the Company and our employees, I'm confident in the Company's ability to maintain well above average free cash flows and a Rule of 40 posture going forward.
Lastly, I want to highlight that our M&A team has been further expanded and strategic deal discussions and activity is very encouraging.
Again, I am confident in the investments we're making, the progress we have made in executing against our strategy and growth plan, and I'm excited by the positive signals and new bookings activity we're seeing." concluded Mr. Wood.
Q3 2021 Summary (Comparisons are to Q3 2020, unless otherwise noted)
Revenues of approximately $9.5 million, compared to approximately $10.0 million in the third quarter of fiscal 2020, a decrease of 4%; on a year-over-year common currency basis, Q3 2021 revenue would have been approximately $10.4 million.
Recurring revenues from subscriptions and maintenance grew by 10% to $7.9 million, compared to $7.2 million for the third quarter of 2020.
Gross Profit of $6.7 million, compared to $7.2 million in the same period last fiscal year, a decrease of 7%.
Gross Profit Margin of 70%, compared to 73% in third quarter of 2020.
Loss before income tax of $0.2 million, compared to profit before income tax of $3.8 million in the third quarter last year.
Adjusted EBITDA(1) of $3.0 million, compared to $5.7 million for the same period last year; on a year-over-year constant currency basis, Q3 2021 Adjusted EBITDA would have been approximately $3.7 million.
Adjusted EBITDA Margin(1) of 32%, compared to 57% in Q3 2020; on a year-over-year constant currency basis, Q3 2021 Adjusted EBITDA Margin would have been approximately 35%.
Adjusted EBITDA per share(1) of $0.12 per share, compared to $0.24 per share in the third quarter of 2020; on a year-over-year constant currency basis, Q3 2021 Adjusted EBITDA per share would have been approximately $0.15.
Adjusted Working Capital(1) was $3.1 million as at June 30, 2021, compared to $45.2 million as at September 30, 2020.
Adjusted Working Capital(1) per share of $0.13 per share, compared to $1.84 per share in Q3 2020.
The Company paid regular dividends to shareholders of $3.0 million in the third quarter of 2021, compared to $2.6 million in the third quarter of 2020, an increase of 14%.
Cash and cash equivalents totaled $22.3 million compared to $42.8 million as at September 30, 2020.
Cash generated from operations totaled $3.8 million, compared to cash generated from operations of $5.1 million in the third quarter of fiscal 2020.
Combined tax pools at the end of the third quarter 2021 were approximately $12.2 million (CAD).
The Company's Board of Directors has approved a quarterly dividend to $0.125 per common share for shareholders of record as at August 31, 2021 to be paid on September 8, 2021, which is treated as an eligible dividend under the Income Tax Act (Canada).
First nine months of fiscal 2021 (Comparisons are to the first nine months of fiscal 2020, unless otherwise noted)
Revenues were $27.9 million, compared to $28.2 million; on a year-over-year common currency basis, YTD 2021 revenue would have been approximately $29.2 million.
Recurring revenues from subscriptions and maintenance were $21.9 million compared to $21.3 million for the first nine months of 2020, an increase of 3%.
Gross profit margins were 71% of revenue, compared to 75% for the same period in the prior year.
Adjusted EBITDA(1) was $12.4 million ($0.51 per share), compared to $16.5 million ($0.69 per share); on a year-over-year common currency basis, YTD 2021 Adjusted EBITDA would have been approximately $13.3 million ($0.55 per share).
Adjusted EBITDA Margin (1) was 44%, compared to 59%; on a year-over-year common currency basis, YTD 2021 Adjusted EBITDA Margin would have been approximately 45%.
The Company paid regular dividends to shareholders totaling $8.9 million during the first nine months of fiscal 2021, compared to $7.4 million in the same period in 2020.
For the nine months ended June 30, 2021, the Company repurchased 118,400 common shares at an average price of $10.96 for a total cost of $1.3 million.
Sylogist is a public sector SaaS company that provides comprehensive ERP, CRM, fundraising, education administration, and payments solutions that allow its customers to carry out their missions. It serves over 1,700 customers globally, including all levels of government, nonprofit and non-governmental organizations, educational institutions, and public compliance-driven and funded companies. The Company has industry-leading profitability, an exceptionally strong balance sheet, a track record of successful acquisitions, and a portfolio of mission-critical SaaS solutions. Full financial statements together with Management's Discussion and Analysis are available on SEDAR at www.sedar.com.
The Company's stock is traded on the TSX Exchange under the symbol SYZ. Information about Sylogist can be found at www.sylogist.com.
Sylogist solutions include:
Serenic Navigator: Financial Tracking and Management for Education and Nonprofits
NaviPayroll: Payroll & HR Solution for Microsoft Dynamics 365 Business Central Customers
WenGAGE: Accounting & Student Information Systems
MissionCRM: Donor Management and Fundraising
InfoStrat: Dynamics 365 for GovCon, Grants Manager Plus, and SAVIN360 Victim Notification
Sylogist Pay: Payment Processing and Fuel Payment Management
The Portal Connector: Secure Web Portals for Online Customer Experiences
pavliks.com: Network and IT Solutions
Bellamy and SunPac: Financial Management
EpicData: ERP Solution for Manufacturing & Distribution
Learn more about Sylogist.