Tecsys reports strong Q1 and raises guidance

Tecsys (TSX: TCS ) released first-quarter financial results and hosted an earnings call on Monday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

Access the full call at Summary Tecsys opened fiscal 2027 with a strong Q1, achieving record bookings and the second-highest bookings quarter in its history. Healthcare sector expansion, particularly through existing customer growth with the Tecsys Elite platform, was a significant driver, with notable expansions at Prisma Health and others. Elite SaaS ARR grew by 24% year-over-year, with a total revenue growth of 9% compared to Q1 last year, and adjusted EBITDA up 113%. The company raised its full-year fiscal 2027 guidance based on strong Q1 performance, anticipating higher Elite SaaS revenue growth and total revenue growth.

Tecsys continues to invest in Tecsys IQ, with new AI-driven capabilities in development, while advancing its FedRAMP program for enhanced security and compliance. Professional services bookings were lighter, impacting PS revenue expectations for Q2, but the company expects recovery as SaaS bookings translate into professional services demand. Management expressed confidence in the pipeline and highlighted the increasing role of ROI studies in driving sales, particularly in the healthcare sector. Full Transcript OPERATOR Good morning, everyone.

Welcome to Tecsys fiscal year 2027 first quarter results conference call. Please note that the complete first quarter report, including MD&A and financial statements, was filed on SEDAR+ after market close yesterday. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards. Some of the statements in this conference call, including the question-and-answer period, may include forward-looking statements that are based on management's beliefs and assumptions.

Actual results may differ materially from such statements. m. Eastern Time. I would now like to turn the conference over to Mr.

Peter Brereton, Chief Executive Officer at Tecsys. Thank you. Please go ahead, sir. Peter Brereton, CEO Thank you, and good morning, everyone.

Thank you for joining us to discuss our Q1 2027 results. We're pleased to open fiscal 2027 with one of the strongest quarters in our history. Q1 delivered record bookings, in fact the second highest bookings quarter Tecsys has ever recorded, giving us real momentum and visibility as we head into the rest of the year. The story this quarter was expansion.

Our installed base, particularly in healthcare, continues to deepen its commitment to the Tecsys Elite platform, with existing customers substantially increasing their footprint with us. We're proud to count organizations like Prisma Health, UT Southwestern Medical Center and a leading cancer treatment center among the health systems that expanded their relationship with Tecsys during this period, a strong signal of the trust hospitals place in our hospital supply chain platform as they scale their operations. 6 million patients a year across 19 hospitals. Healthcare was the primary driver of this expansion activity, but it wasn't the whole story.

We also saw general distribution customers continue their migration to SaaS, including Rincem, a large global distribution customer. And we added a notable new logo in Europe with a growing life sciences company, evidence that our platform resonates well beyond our core North American healthcare base. Turning to our SaaS metrics, Elite SaaS ARR and revenue growth continue to accelerate. Elite SaaS ARR grew 24% year over year, or 22% in constant currency, and Elite SaaS revenue grew 24% in the quarter, or 23% constant currency.

This acceleration reflects both the strength of our SaaS-first strategy and the increasing scale of our Elite platform customer base. We also passed a significant milestone in Q1, with our remaining performance obligations, or RPO, crossing the quarter-billion-dollar mark for the first time, reaching 259 million, up 14% year over year, or 13% in constant currency. RPO is a key forward indicator of the durability of our SaaS business, and this milestone underscores the growing visibility we have into future revenue. Our strong SaaS bookings and momentum in Q1 give us the confidence to raise our full-year fiscal 2027 guidance across the board.

Mark will discuss the updated ranges shortly. On the product side, Tecsys IQ continued to gain momentum in the quarter, helping customers turn supply chain data into faster, more confident operational decisions. We continue to invest in Tecsys IQ's roadmap, with a number of new AI-driven capabilities in early development that we look forward to sharing more about as they mature. We also continued to advance our FedRAMP program throughout the quarter as we work towards full certification.

This progress reflects the broader investment we've made in our security and compliance posture, and it's given both public sector and enterprise healthcare customers greater confidence in Tecsys as a long-term trusted platform partner. We're also proud that our commitment to people and culture, including growth in our team in India, helped earn Great Place to Work certification for a third consecutive year across every country where we operate. With 91% of our employees telling us that Tecsys is a great place to work, that kind of consistency across every market we operate in is something we don't take for granted as we scale.

With that, I'll turn it over to Mark to walk through the financial results and updated guidance in more detail. Mark Bentler, CFO Thank you, Peter. As a reminder, our first quarter ended July 31, 2026. Q1 was an exceptional quarter for Tecsys, highlighted by record SaaS bookings for a first quarter, record total revenue and record adjusted EBITDA.

1 million in Q1 last year. That growth was about 17% on a constant currency basis. As Peter mentioned, Elite SaaS revenue, our core product and the predominant contributor to total SaaS revenue, increased by 24% compared to Q1 last year, at 23% growth on a constant currency basis. 7 million at July 31, 2026, up 18% from the same time last year.

On a constant currency basis, SaaS ARR growth was 17%. You'll notice that we've begun disclosing Elite SaaS ARR separately in our MD&A. This additional disclosure is intended to highlight the underlying growth trend we have discussed over the past several quarters and provide greater visibility into a key leading indicator of future SaaS revenue growth. 6 million at the end of Q1, up 24% year over year, representing 22% growth on a constant currency basis.

2 million at July 31, 2026, up 14% from a year ago, or 13% on a constant currency basis. Professional services bookings were lighter, which brought our PS backlog down somewhat. As a result, we expect PS revenue to tick down slightly on a sequential basis in Q2. It's important to note that it's not uncommon for professional services bookings to follow SaaS bookings with a timing lag.

As a result, the strong SaaS bookings in Q1 may not translate into professional services demand until later in Q2 or subsequent periods as customers advance through deployment planning and execution. Q1 fiscal 2027 total revenue was $50 million compared to $46 million in Q1 last year. That's 9% growth, 8% on a constant currency basis. 21 per diluted share.

8 million in Q1 last year. 2 million in the same period last year. We ended the quarter with cash and short-term investments of $35 million and no debt. Cash flow from operating activities was particularly strong, driven by profit and strong cash collections.

6 million under our normal course issuer bid. 8 million in Q1 last year. Finally, the Board yesterday approved a quarterly dividend of per share. Moving on now to fiscal 2027 guidance: based on strong Q1 Elite SaaS bookings, continued pipeline strength and robust hardware bookings, we're raising our fiscal 2027 guidance ranges for Elite SaaS revenue growth, total SaaS revenue growth, total revenue growth, and adjusted EBITDA margin.

Our updated guidance for fiscal 2027 is as follows: Elite SaaS revenue growth of 21% to 23%—that's up from 18% to 20% in previous guidance; total SaaS revenue growth of 16% to 18%—and that's up from 13% to 15% previous guidance; total revenue growth of 5% to 8%—and that's up from previous guidance of 2% to 4%; and finally, adjusted EBITDA margin—we're broadening the range and extending it on the high side to 11% to 14%—and that's up from 11% to 13% previous guidance. I'll now turn the call back to Peter. Peter Brereton, CEO Thank you, Mark.

Record SaaS bookings, our second highest ever, accelerating Elite SaaS ARR growth of 24%, and crossing a quarter billion dollars in RPO for the first time all point to real momentum as we open fiscal 2027. That strength gives us the confidence to raise our full-year guidance, and we are excited about what's ahead. With that, we will open the call for questions. OPERATOR Thank you, ladies and gentlemen.

We will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys.

One moment, please, for your first question. Thank you. And the first question comes from the line of Amir Izat from Canaccord Genuity. Please go ahead.

Amir Izat, Analyst at Canaccord Genuity Good morning, Peter, Mark. Congrats on the strong performance. Peter, clearly a very strong bookings quarter. In your prepared remarks, you highlighted expansions, I believe, as the primary driver, and I'd like to know if you could give us a better sense of the mix between new logos and expansion.

Then on the pipeline conversion side, did Q1 reflect a release of deals that have been delayed over the last couple of quarters, or are you seeing broader acceleration in decision-making? Peter Brereton, CEO On your first question? There's no question this quarter was heavily slanted towards expansions. You know, it's been interesting for us, of course, we really have these three contributors to SaaS bookings.

We have migrations from old on—prem software, we have new accounts, and then we have expansions of customers that are already on our platform. And we've seen over the last few years a dropping off, particularly over the last two years, a real dropping off of SaaS bookings coming from migrations from our base. So we knew we had to sort of get over that. It's like it was this wonderful source of SaaS bookings, but it was, you know, eventually you run out of accounts to move across and, you know, most of the sort of early and mid crowd have moved.

There's really just sort of a few laggards that are left. So we know that's going to decrease. And certainly this quarter that was a, it was a contributor, but it was a small contributor. New account bookings are typically light in summer.

You know, our year—end is April 30, so typically whatever is close to closing, we kind of push to get it closed for year—end. So then you’ve got sort of May is kind of cleaned out by the April push. You’ve got June to sell something and by July everybody's leaving on vacation. So it's typically a tough quarter for new accounts.

And this was no exception. I mean it was light on new accounts. We did land one new account in Europe that said the. Well, let me just finish on that thought.

Whereas conversions, sorry, expansions I should say were widespread and we booked a number of deals, one larger deal, a wide variety of sort of small and medium—sized deals. It was a pretty exciting quarter from an expansion standpoint. Some of that I think is partly driven by people understanding what Tecsys IQ is going to do for them and the fact that they have to sort of further roll out our underlying platform in order for Tecsys IQ to have the data that it needs for the AI engine to operate. But, you know, pretty interesting there from the standpoint of the overall pipeline.

You know, as you know, the pipeline really grew substantially a little over a year ago. It's continued to grow. It's up again over this time last year. And we knew that at some point that dramatically larger pipeline was going to start to break and convert to closed business.

And that's what seems to be happening. I mean we saw some of the surge start to happen in Q4 continue. A very strong Q1 and even now where we are in Q2, you know, the activity level remains very high and that is across new accounts and expansions from our base. Again, there's a small amount still in there that's migrations.

But, I mean, it added up. We're probably talking well over 90% of the pipeline activity is a pretty even mix between new accounts and expansions of existing SaaS customers. Amir Izat, Analyst at Canaccord Genuity Fantastic. Just on expansions, and I asked you this a few quarters ago and wanted to revisit it.

Among the IDNs that initially came to you specifically for pharmacy, have any expanded into your broader solutions? Peter Brereton, CEO I don't think so yet. No, not yet. Am I right, Mark?

Mark Bentler, CFO Expansions. One of the expansions that we had this quarter was one that had Purchase Pharmacy, but they were also using other products as well. Amir Izat, Analyst at Canaccord Genuity Fantastic. I'll leave this in a few quarters just to close the loop on the non—core piece.

5 million sequentially and the non—Elite ARR declined by roughly half a million. Is that the right way to think about the quarter, or is my math wrong and are we now at a point? Go ahead. Mark Bentler, CFO That's good math.

Amir Izat, Analyst at Canaccord Genuity Okay, fantastic then. 7 already near the top of the new 11% to 14% range. At Q4 you said the restructuring savings were fully embedded in your original guidance, but not all the planned reinvestment has happened yet. But when I'm looking at your Q1 numbers, should we expect any meaningful step—up in operating investments through the balance of the year, or is the quarter closer to the underlying sort of earnings run rate?

Mark Bentler, CFO Yeah, no, we're expecting to increase investment. You know, we'll be doing some hiring, we'll be doing some hiring, you know, pretty broadly across different functional areas. I mean, we continue to scale the business. I think that investment is going to be quite measured.

But you will see an increase in investment in the quarters ahead this fiscal. Amir Izat, Analyst at Canaccord Genuity Fantastic. Congrats again. I'll pass the mic, thanks.

Thanks. OPERATOR Thank you. And your next question comes from the line of Gavin Fairweather from ADP Core. Gavin, please go ahead.

Gavin Fairweather, Analyst at ADP Core Oh, hey, good morning, and congrats on the strong quarter. Maybe just circling back to bookings. I mean, just very strong, especially for Q1, which is, you know, seasonally weak. Like I'm just curious what you attribute that to.

I mean, are you seeing just more buying intents or urgency in the base? I mean, any kind of further color would be helpful. Peter Brereton, CEO Yeah, I mean, first of all, Gavin, there is always a certain amount of lumpiness in our business, right. You know, just the sheer deal size relative to our size creates lumpiness.

And I don't think that lumpiness is going to go away for quite a while. So we, you know, some of it I would just attribute to normal lumpiness, if there's such a thing as normal when you're talking lumpiness. But the other factor is I think in fact our sales organization is getting much better at using the data out of the hospital networks to put together a return on investment prediction that can now be backed up with sort of real—life stories from other accounts that have already done it.

And once you get an ROI study in front of a hospital executive team that shows they're going to save, you know, $200 million over the next five years by deploying our platform or whatever the number is, it's created some real urgency around it. And, you know, most of these hospital networks are now in a position where, you know, whatever, I mean politics in the US continues to sort of ebb and flow and there's lots of different factors going on there. But the overall long—term trend is, you know, reimbursements are declining and the population is aging and doctors want to make more money every year and nurses want to make more money every year.

So there's only so many places they can go to save money and try to sort of balance the cash—flow picture. And much better management of supplies and drugs is a huge source of potential savings and may be in fact the primary source of potential savings.