AI assistant
Sylogist Ltd. Management Reports 2025
44632_rns_2025-03-13_84bac922-6695-4ad4-986e-4530cc4d2bdb.pdf
Management Reports
Open in viewerOpens in your device viewer
sylogist
FOR THE THREE AND TWELVE-MONTH PERIODS ENDED DECEMBER 31, 2024, AND 2023
Empowering the Good you Do
Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management Discussion and Analysis ("MD&A") dated March 13, 2025, comments on the Company's operations, financial performance, and financial condition as at and for the years ended December 31, 2024, and December 31, 2023, and should be read in conjunction with the audited consolidated financial statements of Sylogist Ltd. ("Sylogist" or the "Company") and the notes thereto. "Fiscal 2024" refers to the twelve-month period ended December 31, 2024, and "Fiscal 2023" refers to the twelve-month period ended December 31, 2023.
The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. The consolidated financial statements are prepared by and are the responsibility of the Company's management.
This document and the consolidated financial statements are expressed in Canadian dollars unless otherwise indicated. The functional currency of the Company is the Canadian dollar.
Where indicated, select prior period comparisons and year-to-date figures have been restated to reflect the impact of the divestiture of the Managed IT Services division. Refer to the "Selected Key Events" section of this MD&A for more information.
The consolidated financial statements were authorized for issue by the Board of Directors on March 13, 2025. Additional information about Sylogist, including copies of continuous disclosure materials such as the annual information form and the management information circular, can be obtained from SEDAR+ at www.sedarplus.ca.
Forward-Looking Information
This MD&A contains "forward-looking information" within the meaning of applicable securities legislation. Although the forward-looking information is based on what the Company believes are reasonable assumptions, current expectations, and estimates, investors are cautioned from placing undue reliance on this information since actual results may vary from the forward-looking information. Forward-looking information may be identified by the use of forward-looking terminology such as "allow", "believe", "assume", "intend", "may", "will", "expect", "estimate", "anticipate", "continue", "could", "can", "outlook" or similar terms, variations of those terms or the negative of those terms, and the use of the conditional tense as well as similar expressions.
In particular, this MD&A contains forward-looking statements pertaining to, but not limited to, the following:
- business plans and prospects;
- results with respect to Company growth, shareholder value creation, profit, sales and revenue;
- expectations regarding the growth over time of software-as-a-service ("SaaS") revenue as a percentage of total revenue and the corresponding general decline of maintenance and support services revenue;
- statements under the "Condition, Liquidity and Requirements Outlook" section of this MD&A
- expectations regarding the Company's investment and expansion in its target markets;
- ability to execute the Company's acquisition strategy and plans;
- ability to maintain, continue investing in, and expansion of the Company's partner channel;
- expectations regarding competition in the Company's products and services markets;
- the Company having sufficient liquidity and cash flow to support operations, meet Sylogist's commitments, invest in new opportunities and long-term growth, improve Sylogist's competitive position, invest in research and development (R&D"), and drive profitable growth;
- ability to obtain the financial resources, on favourable terms or at all, that may be required to successfully compete in the Company's products and services markets;
- the impact of escalated geopolitical tensions, including the recent introduction of tariffs between Canada and the U.S. which continue to generate considerable uncertainty;
- expectations regarding supply and demand fundamentals;
- expectations that the Company is adequately staffed for current industry activity levels, and that the Company will be able to retain and attract staff;
- expectations regarding the trends and factors affecting the pricing environment for the Company's services;
- expectations regarding the Company's financial results;
- expectations regarding the continued strategic increase in the Company's sales and marketing expenditure in 2025;
- expectations regarding the Company's capital spending plans and the ability to execute these plans;
- expectations regarding the Company's utilization of its NCIB program;
- expectations regarding the Company's stock price;
- expectations regarding the Company's ability to pay dividends;
- expectations regarding exposure to lawsuits, claims and contingencies, and the financial ability to settle any such obligations;
- expectations regarding customer needs, preferences and financial flexibility;
- ability to procure and retain customers and contracts;
- expectations regarding foreign exchange and seasonal fluctuations;
- anticipated compliance with debt and any other covenants;
- expectations that the Company can maintain its strong position in its products and services markets; and expectations regarding the nature and focus of the Company's share-based compensation programs.
Such forward-looking information that is not historical fact, including statements based on management's belief and assumptions, cannot be considered as guarantees of future performance. They are subject to a number of risks and uncertainties, including but not limited to future economic conditions, the markets that the Company serves, the actions of competitors, major new technological trends, and other factors, many of which are beyond the Company's control and could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. The forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. The Company undertakes no obligation to update publicly any forward-looking information whether because of new information, future events or otherwise other than as required by applicable legislation. Important risk factors that may affect these expectations include, but are not limited to, the factors described under the "Risks and Uncertainties" section of this MD&A. Readers are cautioned that the foregoing list of factors are not exhaustive.
Actual results and developments may differ, in some cases materially, from those expressed or implied by the forward-looking statements contained in this MD&A. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about: (i) competitive environment; (ii) operating risks; (iii) the Company's management and employees; (iv) capital investment by the Company's customers; (v) customer project implementations; (vi) liquidity; (vii) current global financial and geopolitical conditions; (viii) implementation of the Company's commercial strategic plan; (ix) access to credit sources and the terms of such financing; (x) potential product liabilities and other lawsuits to which the Company may be subject; (xi) additional financing and dilution; (xii) market liquidity of the Company's common shares; (xiii) development of new products; (xiv) intellectual property and other proprietary rights; (xv) acquisition and expansion; (xvi) foreign currency; (xvii) interest rates; (xviii) technology and regulatory changes; (xix) internal information technology infrastructure and applications; and (xx) cyber security.
Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Sylogist's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.
3
Additional information regarding Sylogist, including Sylogist's most recent AIF, is available under Sylogist's profile on SEDAR+ (www.sedarplus.ca).
Use of Non-IFRS Performance Measures
The Company uses certain non-IFRS financial performance measures in this MD&A and other communications which are described under the "Non-IFRS Performance Measures" section of this MD&A. These non-IFRS measures do not have any standardized meaning prescribed by IFRS and may not be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these measures is meant to add to, and not to replace, the discussion of financial results determined in accordance with IFRS. Management uses both IFRS and non-IFRS measures when planning, monitoring, and evaluating the Company's performance.
Overview
Founded in 1993, Sylogist is a SaaS provider of Enterprise Resource Planning ("ERP"), Customer Relationship Management ("CRM"), and other mission critical business administration software solutions to public-sector organizations that operate in the non-profit organization ("NPO")/non-governmental organization ("NGO"), public school administration, and local and municipal government market segments.
Sylogist is headquartered in Calgary, Alberta, with regional offices across the U.S., Canada, and the U.K., and currently employs approximately 200 professionals. The Company is led by an experienced executive team with a significant leadership, operational, and entrepreneurial track-record across the public-sector software markets. The Company has 2,000+ customers primarily located across North America.
Sylogist has invested in creating new market specific SaaS platform offerings, including the rewrite of strategic legacy products from the bottom up. In addition, made significant investments internally, which allowed it to transform from being a suite of siloed software solutions to a sophisticated provider of purpose-built integrated SaaS platforms. In addition, three strategic acquisitions 2021 accelerated this transformation and strengthened Sylogist's position as a prominent Microsoft partner focused on the public sector.
Financial Strategy and Business Model
Sylogist's financial strategy is overall focused on achieving a "Rule of 40"¹ posture over the long term, with organic revenue growth balanced by Adjusted EBITDA² margins. The overall strategy is therefore a combination of scalable growth leveraged off a strong foundation of profitability.
The Company aims to achieve SaaS ARR year-over-year growth in the low to mid-20% range, a Gross Margin of approximately 60%, and an Adjusted EBITDA margin in the mid-20% range over the next 12 months. As we execute our value creation strategy, we expect to drive further improvements across all these three financial metrics in the coming years.
The Company is focused on selling its product offerings primarily on a SaaS subscription basis. As a result, SaaS subscription revenue as a percentage of total recurring revenue is expected to go up over time and is a significant part of the Company's focus in terms of its product development and sales and marketing efforts. The Company generates additional recurring revenue in the form of maintenance and support services related to the Company's prior sales of perpetual licenses with attached maintenance and support contracts. The Company expects
¹ The Rule of 40" is a commonly used calculation for assessing the efficiency software companies. The premise behind the Rule of 40 is that software companies are thought as being efficiently run when the sum of their year-over-year revenue growth rate percentage and their EBITDA or Adjusted EBITDA as a percentage of revenue is at least 40% (refer to the "Non-IFRS Performance Measures" section for the definition of EBITDA and Adjusted EBITDA).
² Refer to the "Non-IFRS Performance Measures" section of this MD&A for definition.
maintenance and support revenue as a percentage of overall recurring revenue will continue to decline over time as new customers acquire SaaS subscriptions and existing customers migrate to the Company's new SaaS offerings.
The Company also earns non-recurring revenue in the form of project services and hardware sales. These revenue sources are viewed as ancillary to its pursuit of SaaS revenue.
Strategic Alliances and Partners
Over the past two years, Sylogist has made investments in the partner channel with a view to driving a larger portion of its project services delivery via partners.
The Company expects to continue expanding its partner ecosystem in 2025 and beyond to increase project delivery capacity and increase SaaS subscription deal flow. To this end, in the near term, the Company expects to continue to invest in its internal team of project services staff to support both directly delivered implementation services as well as the onboarding and empowerment of partners.
Partners also help Sylogist to uncover future displacement and upgrade opportunities in their communities of customers (e.g., opportunities related to the sunset of Microsoft Dynamics Great Plains ERP in 2028).
Technology
The Microsoft relationship is a competitive advantage for Sylogist, facilitating seamless integration of Sylogist's products into Microsoft's ecosystem and technology suite. This relationship provides Sylogist with significant technological benefits, including top-tier data security, reduction of its own data center requirements (as systems and data are hosted in Microsoft's Azure data centers) and enabling Sylogist to gain leverage from investments that Microsoft makes in its technology stack.
All of this makes for Research and Development ("R&D") cost savings for Sylogist, allowing the Company to focus its R&D spend on efforts that provide value addition and greater return on investment for its customers.
Additionally, the Microsoft relationship allows the Company's customers greater accessibility to Microsoft's artificial intelligence ("AI") capabilities as they consider generative AI adoption and as the Company incorporates AI into its offerings.
Go to Market ("GTM")
The Microsoft relationship provides the Company a competitive GTM advantage in the form of joint GTM activities, critical validation and brand recognition, in-bound referrals, the ability to leverage Microsoft's partner channels, easier adoption of Sylogist products by customers who are in the Microsoft ecosystem and additional 'referencability' in an RFP³ process.
Customer Centric focus
Sylogist's customer base is rooted in the mid to upper market. The Company prioritizes customer service, and its customer base is well diversified and loyal. The Company typically sees a three-to-nine-month sales cycle, with current SaaS gross revenue retention rates⁴ above 90% and SaaS net revenue retention rates⁵ above 100%.
Given the mission critical nature of the Company's platforms, it effectively creates a "moat" and barriers to entry for competitors due to high switching costs and risks for customers.
The Company's focus on customer-centric service has led to a steady increase in the Company's Net Promoter Score ("NPS") to 62 at Fiscal 2024, up from 51 at Fiscal 2023. Given the "collegial" nature of the public sector markets that Sylogist operates in, customer advocacy and "word-of-mouth" referrals are critical to winning new business. Additionally, the Company has moved very purposefully to an integrated platform. Therefore, customer satisfaction is a key factor in expanded customer utilization and revenue expansion for Sylogist.
³ Request for proposal.
⁴ Refer to the "Key Performance Indicators" section of this MD&A for the definition of gross revenue retention rate.
⁵ Refer to the "Key Performance Indicators" section of this MD&A for the definitions of net revenue retention rate.
6 A NCIB is a Canadian program that allows a for a public company's repurchase of its own stock and cancel it.
Research and Development
Sylogist has continued to make investments in strategic R&D, allowing it to create SaaS-based platforms tailored to its three strategic markets. As a result of these investments made to date the Company has streamlined its platforms and data centers significantly. These advancements are delivering Microsoft's "Azure" hosted SaaS solutions tailored to the Company's core markets and drive effective Artificial Intelligence capabilities for both internal use and external customers.
These investments included both in-house talent and contractor expansion in developing its modern SaaS platforms and included moving from a waterfall to agile software development methodology allowing it to deliver new innovation at a higher cadence.
Acquisitions
The Company views potential strategic acquisitions as an accelerator to its organic growth and operational targets to generate synergistic value creation.
Sylogist is a disciplined acquirer of the right businesses at the right price and cultivates a pipeline of qualified potential acquisition opportunities in-house. The Company also evaluates broker-originated opportunities.
Companies and/or assets that are acquired are typically fully integrated within six months, allowing the Company to gain the benefit of synergies in a short period of time. Importantly, the management team has deep expertise of integrating new acquisitions in the Company's existing business activities.
The Company has a strong balance sheet and capacity for acquisitions through its Credit Facility.
Dividends
Through fiscal 2023 and 2024 the Company paid a quarterly dividend of $0.01 per share. Future dividends will be determined at the discretion of the Board of Directors based on the Company's capital allocation priorities at that time in the future.
Share Buybacks
The Company has in place a Normal Course Issuer Bid ("NCIB") program allowing it to buy up to 10% of its outstanding stock. The NCIB program expires annually in November every year and has, since its inception in 2022, been renewed on an annual basis. During Fiscal 2024, the Company repurchased 154,200 common shares at an average price of $8.99 for a total cost of $1,390. During Fiscal 2023, the Company repurchased 343,600 common shares at an average price of $6.16 for a total cost of $2,118.
Invoicing Seasonality
Given the seasonality related to the buying cycle of customers within its education market segment (discussed in more detail below under the "Products and Services and Related Market Segments – SylogistEd" section of this MD&A), the Company's cash balances are typically at their highest point in the second half of the year.
6
Products and Services and Related Market Segments
The Company's product suite is tailored to three primary market segments: the non-profit and non-governmental organizations segment ("SylogistMission"), the public-school administration segment ("SylogistEd"), and the local and municipal government segment ("SylogistGov"). Additionally, software solutions and related services for customers outside its three primary markets segments are included under Sylogist Solutions ("SylogistSolutions").
The SylogistGov and SylogistMission ERP offerings are built on the Microsoft Dynamics 365 Business Central platform and the SylogistMission CRM offering is built on the Microsoft Dynamics 365 CRM platform. As mentioned previously in this MD&A, Sylogist believes this has significant advantages, including ongoing R&D and innovation, top-tier data security, agile go-to-market capability, and ease of synergistic third-party integration for its customers.
SylogistMission
SylogistMission provides mission critical, modularized SaaS-based ERP, CRM and analytics solutions for NPOs and NGOs. The end-to-end platform allows its customers to track the entirety of the fundraising cycle, from the point of receiving donations through to the deployment of funds and the measurement of outcomes.
The SylogistMission platform has two primary modules:
- SylogistMission ERP, a financial and grants management solution built on Microsoft Dynamics 365 Business Central; and
- SylogistMission CRM, an end-to-end donor engagement, campaign management and analytics platform built on Microsoft Dynamics 365 CRM, which includes the Microsoft non-profit common data model.
The functionality of this modularized and integrated platform includes accounting, fundraising and donation processing capabilities including: grant administration, constituent management, online donations, major gift cultivation, volunteer management, reporting and analytics, and program/event-based functionality. Additionally, its modularized design enables the Company to sell to the customer's primary need and then introduce the remainder of the platform's functionality over time.
Revenue generated from SylogistMission, inclusive of related project services revenue, was approximately 36% and 42% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively.
7 Previously referred to as "SylogistServices."
SylogistEd
SylogistEd is a wholly SaaS-based platform for K-12⁸ public school districts and career-technical institutes in North America. The platform was rebranded from the acquired WenGAGE brand as part of the Company's overall branding and GTM strategy. SylogistEd's modular functionality includes ERP and accounting, student information management, human resources and payroll, lunchroom administration, document management, online payments, and a teacher, parent/guardian and employee online portal. As referred to earlier, this market segment has a level of seasonality in terms of its sales cycle which is dictated by the school academic year. The result of this is that although bookings within SylogistEd happen throughout the year, software fulfillment and implementation typically happen during May through August of each year when students and faculty are on summer break.
Revenue generated from SylogistEd, inclusive of related project services revenue, was approximately 31% and 27% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively.
The SylogistEd U.S. suite is built utilizing the Microsoft development stack while the SylogistEd Canadian suite is built on the Microsoft Business Central platform and includes: ERP and accounting, human resource and payroll, and online payments.
Kindergarten to 12th grade.
SylogistGov
SylogistGov is a SaaS solution for local and municipal governments in North America. It includes a fully integrated ERP along with market-specific functionality including citizen engagement, taxation & billing, asset management, budgeting, analytics, case management, and payments. SylogistGov also offers the Victim Services Suite solution, which is a specialized victim notification solution for state criminal justice agencies in the U.S., addressing a niche market that is underserved and supported by dated legacy applications.
Revenue generated from SylogistGov, inclusive of related project services revenue, was approximately 12% and 11% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively.
SylogistSolutions covers the remainder of the Company's product offerings and includes:
- Dynamics 365 by Sylogist – Tailored Dynamics 365 software solutions for enhanced productivity and workflows.
- Epic Data by Sylogist (formerly known as Epic Data Solutions) – Software solutions for safety, defense and manufacturing that supports well-known public organizations and military-related entities across North America and the U.K.
- Portal Connector by Sylogist – Software solutions for building self-serve, customer facing web portals connected to enterprise back-end applications, such as Microsoft Dynamics CRM and ERP.
- Payroll by Sylogist – Payroll and human resource application modules that integrate seamlessly with SylogistMission, SylogistGov ERP and Microsoft Business Central.
- Managed IT Services by Sylogist – Expert service solutions for customers including computer software and hardware, cloud migration, cyber security, data backup and penetration testing. The Company has divested the Managed IT Services division. Refer to the "Selected Key Events" section of this MD&A for more information.
- FuelPay by Sylogist – A flexible and customizable payment processing solution with easy ERP integration tailored for fleet and retail fuel businesses, including features such as point of sale and standalone operation and support for multiple pump brands. Fuel Pay by Sylogist also targets businesses in the alternative fuel, marina fueling, and unattended operations space.
9
Revenue generated from SylogistSolutions, inclusive of related project services revenue was approximately 21% and 20% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively.
Project Services
The Company also provides project services that are billed primarily on a time and materials basis. In some limited cases due to unique customer procurement obligations, project services are also provided on a structured, well-defined fixed fee basis.
Project services fall into two categories:
- Implementation, configuration and training services related to Company's three strategic proprietary SaaS offerings (SylogistMission, SylogistGov, and SylogistEd); and
- Project services rendered via the SylogistSolutions team relating to strategic and/or customized project work.
Description of Business Model
The Company has four principal sources of revenue:
SaaS subscription revenue (~50% and 45% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively) is derived from multi-year subscription agreements for access to the Company's SaaS solutions. These agreements typically range from three to five years and include a maximum 5% annual price increase, at the Company's discretion.
Maintenance and support revenue (~22% of total revenue for the three and twelve-month periods ended December 31, 2024) is derived from annual maintenance and support contracts related to legacy on-premise customers.
Project Services revenue (~28% and 32% of total revenue for the three and twelve-month periods ended December 31, 2024, respectively) consists of non-recurring services related to implementation, configuration, and upgrades. These services are typically charged on a time and materials basis.
Hardware and other revenue (~1% to 2% of total revenue for the three and twelve-month periods ended December 31, 2024) includes revenue generated from hardware, ad hoc on-premise license sales and other ancillary revenue.
Sylogist expects SaaS revenue as a percentage of total revenue to continue to grow over time. The Company expects maintenance and support services revenue to generally decline over time as new customers purchase SaaS subscriptions and existing customers migrate to Sylogist's SaaS offerings and the corresponding revenue converts to SaaS revenue.
Market and Competitive Conditions
The public sector software space is fragmented with a few large companies and numerous smaller regional providers. Additionally, several of Sylogist's competitors offer dated and/or not fully integrated SaaS solutions, which positions Sylogist well to gain new business. As supported by publicly available research data, the Company believes that a substantial portion of the public sector market continues to operate on legacy systems. Digital transformation in this sector has become a priority, creating a market opportunity for Sylogist. Competitors of Sylogist include Blackbaud Inc., Tyler Technologies Inc., Sage Group Plc, Central Square Technologies, Power School Holdings Inc., Cherry Road Technologies, Infinite Campus Inc., among others. The larger horizontal ERP and CRM companies such as Oracle Inc., Workday Inc., and Salesforce Inc. are also active in the public sector, but their offerings do not typically provide the required "out of the box" functionality, are more expensive, and take much longer to implement due to the customization they require. Sylogist competes favorably across its target markets on account of the modernity and purpose-built nature of its SaaS platforms and customer-centric approach.
10
11
Selected Key Events
On February 23, 2024, Sylogist acquired the assets of Time Clock Now ("Time Clock Now") for USD$1.65 million ($2,235) inclusive of a USD$400,000 ($539) holdback. Time Clock Now is a comprehensive SaaS solution for streamlining employee time tracking and scheduling. The integration of Time Clock Now's capabilities into Sylogist's cloud based SylogistGov, SylogistEd, SylogistMission and payroll platforms represents the expedited achievement of a targeted milestone on the Company's technology roadmap and the expansion of its addressable market. This offering included as part of our "Time and Talent Suite" is expected to see increasing adoption from Sylogist customers as well as the Microsoft Business Central user community via download from the Microsoft "AppSource". The holdback was paid in the third quarter of Fiscal 2024.
On June 28, 2024, Sylogist divested its non-strategic Managed IT Services division. The divestiture is in line with the Company's strategy to hand-off professional service activities to its vetted partner community over time, and to allow the Company to further concentrate efforts on growing its SaaS revenue profile.
Included below is a summary which provides the impact to revenues and EBITDA for the Managed IT Services division:
| FY 2023 | FY 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Total |
| Revenue | ||||||||
| SaaS subscriptions | $ 328 | $ 284 | $ 275 | $ 310 | $ 1,197 | $ 309 | $ 327 | $ 636 |
| Maintenance and support | 4 | 4 | 4 | 3 | 15 | 1 | 1 | 2 |
| Other | 258 | 205 | 272 | 331 | 1,066 | 216 | 250 | 466 |
| Total revenue | $ 590 | $ 493 | $ 551 | $ 644 | $ 2,278 | $ 526 | $ 578 | $ 1,104 |
| EBITDA (1) | $ (47) | $ (122) | $ (46) | $ (45) | $ (260) | $ (111) | $ (107) | $ (218) |
The Managed IT Services division has no expenses related to: amortization and depreciation, interest, income taxes.
(1) See "Non-IFRS Performance Measures" section of this MD&A
Key Performance Indicators
The Company has articulated certain key performance indicators in this MD&A and other communications which are described in the following section. These key performance indicators do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled indicators reported by other companies and cannot be reconciled to a directly comparable IFRS measure. Readers are cautioned that the disclosure of these metrics is meant to add to, and not to replace, the discussion of financial results determined in accordance with IFRS. Management uses IFRS and non-IFRS measures as well as key performance indicators when planning, monitoring, and evaluating the Company's performance. The Company believes that these metrics are relevant indicators of business performance.
Annual Recurring Revenue
Annual Recurring Revenue ("ARR") is defined as the annualized value of contractually committed SaaS and maintenance and support services. This quantification assumes that customers will renew the contractual commitment on a periodic basis as they come up for renewal unless the customer has notified the Company of its intention to cancel. This portion of the Company's revenue is relatively predictable and stable.
SaaS ARR
SaaS ARR refers to ARR attributable to SaaS customer contracts.
12
Bookings
Bookings refer to the total value of customer accepted contracts during the reporting period. This includes SaaS bookings (the value of SaaS contracts for the entire contracted term) and the project services bookings (the full value of contracted project services).
Remaining Performance Obligation
Remaining Performance Obligation ("RPO") generally refers to the value of contracted revenue that is expected to be recognized to revenue for the next twelve months. The Company defines RPO as the sum of its deferred revenue, and the total annualized value of un-invoiced SaaS and project services bookings.
Gross Revenue Retention Rate and Net Revenue Retention Rate
Gross Revenue Retention ("GRR") refers to the percentage beginning of period ARR retained over a given 12-month period inclusive of the impact of contractions and losses. For instance, if at the beginning of the measurement period ARR is $100 million, and the Company retained $95 million of ARR inclusive of the net impact of contractions and losses over the ensuing 12-month period, then GRR is 95%.
Net Revenue Retention ("NRR") refers to the percentage of beginning of period ARR retained over a given 12-month period inclusive of the impact of contractions, losses and the impact of any additional expansion revenues and price increases from customer upgrades within the existing customer base. For instance, if at the beginning of the measurement period ARR is $100 million, and the Company's ARR at the end of the ensuing 12-month period is $105 million inclusive of the impact of contractions, losses and expansion revenue, then NRR is 105%. The Company's calculation of SaaS NRR includes the impact of customers converting from the Company's maintenance and support offerings to its SaaS offerings.
Net Promoter Score
Net Promoter Score ("NPS") is a customer "experience" metric that measures the willingness of customers to recommend a company's products or services to others.
Results of Operations
The following table presents a summary of the results of operations:
| Three months ended December 31, | Twelve months ended December 31, | |||||
|---|---|---|---|---|---|---|
| (in thousands of CAD, except earnings per share) | 2024 | 2023 | Change ($) | 2024 | 2023 | 2022 |
| Statement of Operations | ||||||
| Revenue | $ 15,331 | $ 16,170 | $ (839) | $ 65,599 | $ 65,514 | $ 56,438 |
| Cost of revenue | 6,302 | 6,530 | (228) | 27,053 | 25,983 | 20,988 |
| Gross profit | 9,029 | 9,640 | (611) | 38,546 | 39,531 | 35,450 |
| Operating expenses | 5,789 | 4,880 | 909 | 22,382 | 22,270 | 18,287 |
| Adjusted EBITDA (1) | $ 3,240 | $ 4,760 | $ (1,520) | $ 16,164 | $ 17,261 | $ 17,163 |
| Other costs, net | 2,611 | 4,277 | (1,666) | 17,367 | 15,717 | 14,307 |
| Gain on sale of assets | — | — | — | 130 | — | — |
| Income taxes | 107 | (259) | 366 | 346 | (444) | (149) |
| Net (loss) profit | $ 736 | $ 224 | $ 512 | $ (727) | $ 1,100 | $ 2,707 |
| Basic and diluted (loss) earnings per common share | 0.03 | 0.01 | (0.03) | 0.05 | ||
| RPO (2) | $ 33,376 | $ 31,000 | $ 30,300 | |||
| ARR (2) | 44,876 | 42,592 | 38,371 | |||
| SaaS ARR (2) | 31,107 | 27,925 | 24,712 |
(1) See reconciliation of EBITDA and Adjusted EBITDA under the "Non-IFRS Performance Measures" section of this MD&A for the most directly comparable IFRS measure.
(2) See "Key Performance Indicators" section of this MD&A for definition.
The figures presented in the discussion to the results of operations reflect performance of the company both including and excluding the divested Managed IT Services division.
The following table presents a summary of the results of operations, excluding the Managed IT Services division:
| Three months ended December 31, | Twelve months ended December 31, | |||||
|---|---|---|---|---|---|---|
| (in thousands of CAD, except earnings per share) | 2024 | 2023 | Change ($) | 2024 | 2023 | Change ($) |
| Statement of Operations | ||||||
| Revenue | $ 15,331 | $ 15,527 | $ (196) | $ 64,495 | $ 63,236 | $ 1,259 |
| Cost of revenue | 6,302 | 5,939 | 363 | 25,889 | 23,906 | 1,983 |
| Gross profit | 9,029 | 9,588 | (559) | 38,606 | 39,330 | (724) |
| Operating expenses | 5,789 | 4,782 | 1,007 | 22,224 | 21,809 | 415 |
| Adjusted EBITDA (1) | $ 3,240 | $ 4,806 | $ (1,566) | $ 16,382 | $ 17,521 | $ (1,139) |
| Other costs, net | 2,611 | 4,277 | (1,666) | 17,367 | 15,717 | 1,650 |
| Gain on sale of assets | — | — | — | 130 | — | 130 |
| Income taxes | 107 | (259) | 366 | 346 | (444) | 790 |
| Net (loss) profit | $ 736 | $ 270 | $ 466 | $ (509) | $ 1,360 | $ (1,869) |
| Basic and diluted (loss) earnings per common share | 0.03 | 0.01 | (0.02) | 0.06 | ||
| RPO (2) | $ 33,376 | $ 30,397 | $ 2,978 | |||
| ARR (2) | 44,876 | 41,256 | 3,620 | |||
| SaaS ARR (2) | 31,107 | 26,600 | 4,507 |
(1) See reconciliation of EBITDA and Adjusted EBITDA under the "Non-IFRS Performance Measures" section of this MD&A for the most directly comparable IFRS measure.
See "Key Performance Indicators" section of this MD&A for definition.
(2) See "Key Performance Indicators" section of this MD&A for definition.
Non-IFRS Performance Measures
This MD&A includes certain measures which have not been prepared in accordance with IFRS, namely "EBITDA", "Adjusted EBITDA", "Annual Recurring Revenue" ("ARR"), "SaaS ARR", "Bookings", "Remaining Performance Obligation" ("RPO"), "Gross Revenue Retention Rate" ("GRR") and "Net Revenue Retention Rate" ("NRR"). The terms and definitions of the non-IFRS measures used in this MD&A, along with reconciliations to the closest directly comparable IFRS measures, are provided below.
These non-IFRS measures do not have any standardized meanings prescribed by IFRS and may not be comparable to similar measures presented or calculated by other companies since other companies may not calculate such non-IFRS measures in the same manner. Accordingly, they should not be considered in isolation or as a substitute for analysis of the Company's results as reported under IFRS. These measures have been described and presented in this MD&A to provide shareholders and potential investors with additional information regarding the Company's results, liquidity and its ability to generate funds to finance its operations.
EBITDA and Adjusted EBITDA
EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation, and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, foreign exchange gains/losses and the impact of acquisitions and restructuring. The Company believes that the exclusion of these items eliminates the impact on earnings derived from non-operational activities, as well as the non-cash impact of these items, where applicable.
The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in operating performance. In addition, they are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders, and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.
The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.
14
The following table presents the reconciliation of EBITDA and Adjusted EBITDA:
| Three months ended December 31, | Twelve months ended December 31, | ||||||
|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | 2022 |
| Net (loss) profit | $ 736 | $ 224 | $ 512 | 229% | $ (727) | $ 1,100 | $ 2,707 |
| Adjusted for: | |||||||
| Amortization and depreciation | 2,574 | 2,550 | 24 | 1% | 10,606 | 10,144 | 10,381 |
| Interest expense, net | 317 | 439 | (122) | (28)% | 1,522 | 1,925 | 1,329 |
| Income taxes | (107) | 259 | (366) | (141)% | (346) | 444 | 149 |
| EBITDA | $ 3,520 | $ 3,472 | $ 48 | 1% | $ 11,055 | $ 13,613 | $ 14,566 |
| Adjusted for: | |||||||
| Equity based compensation | (350) | 319 | (669) | (210)% | 2,295 | 1,435 | 271 |
| Foreign exchange loss | (45) | 19 | (64) | n/m | 14 | 99 | (1) |
| Acquisition and restructuring costs | 115 | 950 | (835) | (88)% | 2,930 | 2,114 | 1,116 |
| Gain on sale of assets | — | — | — | —% | (130) | — | — |
| Executive retirement compensation | — | — | — | —% | — | — | 1,211 |
| Adjusted EBITDA | $ 3,240 | $ 4,760 | $ (1,520) | (32)% | $ 16,164 | $ 17,261 | $ 17,163 |
The following table presents the reconciliation of EBITDA and Adjusted EBITDA, excluding the Managed IT Services division:
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| Net (loss) profit | $ 736 | $ 270 | $ 466 | 173% | $ (509) | $ 1,360 | $ (1,869) | (137)% |
| Adjusted for: | ||||||||
| Amortization and depreciation | 2,574 | 2,550 | 24 | 1% | 10,606 | 10,144 | 462 | 5% |
| Interest expense, net | 317 | 439 | (122) | (28)% | 1,522 | 1,925 | (403) | (21)% |
| Income taxes | (107) | 259 | (366) | (141)% | (346) | 444 | (790) | (178)% |
| EBITDA | $ 3,520 | $ 3,518 | $ 2 | —% | $ 11,273 | $ 13,873 | $ (2,600) | (19)% |
| Adjusted for: | ||||||||
| Equity based compensation | (350) | 319 | (669) | (210)% | 2,295 | 1,435 | 860 | 60% |
| Foreign exchange loss | (45) | 19 | (64) | n/m | 14 | 99 | (85) | (86)% |
| Acquisition and restructuring costs | 115 | 950 | (835) | (88)% | 2,930 | 2,114 | 816 | 39% |
| Gain on sale of assets | — | — | — | —% | (130) | — | (130) | —% |
| Adjusted EBITDA | $ 3,240 | $ 4,806 | $ (1,566) | (33)% | $ 16,382 | $ 17,521 | $ (1,139) | (7)% |
Overview
Total revenue, excluding the Managed IT Services division, for the three and twelve-months ended December 31, 2024, was $15.3 million and $64.5 million, respectively, down $0.2 million or 1% and up $1.3 million or 2%, respectively, relative to the same periods of Fiscal 2023. The change was primarily driven by SaaS subscription revenue, which grew by 15%, over the same periods of Fiscal 2023, offset primarily by decreases in project services, and hardware and other revenue. Foreign exchange positively impacted the year-over-year change in revenues by $0.3 million and $0.6 million for the three and twelve-months ended December 31, 2024, respectively, compared to the same periods of Fiscal 2023.
ARR and SaaS ARR for the fourth quarter of Fiscal 2024 were $44.9 million and $31.1 million, growing at 9% and 17% year-over-year, respectively. ARR growth came primarily from SylogistMission and SylogistEd supplemented by increases in SylogistGov and offset by a slight decline in Sylogist Solutions. SaaS ARR grew overall with the increase coming primarily from SylogistMission and SylogistEd supplemented by increases in SylogistGov and SylogistSolutions.
Additionally, SaaS NRR stayed relatively consistent for Fiscal 2024 at 108%, up from 107% at the end of the third quarter of 2024 and 109% at the end of the fourth quarter of Fiscal 2023.
Revenue
Total revenue, excluding the Managed IT Services division, for the three and twelve-months ended December 31, 2024, was $15.3 million and $64.5 million, respectively, down $0.2 million or 1% and up $1.3 million or 2%, respectively, relative to the same periods of Fiscal 2023. Overall revenue changed year-over-year primarily on account of growth in SaaS revenue offset by lower maintenance and support, project services, due to an anticipated shift to a partner led strategy, and hardware and other revenue. Foreign exchange positively impacted the year-over-year change in revenues by $0.3 million and $0.6 million for the three and twelve-months ended December 31, 2024, respectively, compared to the same periods of Fiscal 2023.
Revenue for each of these periods is broken down as follows:
| Revenue by product type | Three months ended December 31, | Twelve months ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| SaaS subscriptions | $ 7,644 | $ 6,974 | $ 670 | 10% | $ 29,408 | $ 26,112 | $ 3,296 | 13% |
| Maintenance and support | 3,334 | 3,543 | (209) | (6)% | 13,945 | 14,111 | (166) | (1)% |
| Recurring revenue | $ 10,978 | $ 10,517 | $ 461 | 4% | $ 43,353 | $ 40,223 | $ 3,130 | 8% |
| Project services | 4,260 | 4,793 | (533) | (11)% | 20,719 | 22,051 | (1,332) | (6)% |
| Hardware and other | 93 | 860 | (767) | (89)% | 1,527 | 3,240 | (1,713) | (53)% |
| Total revenue | $ 15,331 | $ 16,170 | $ (839) | (5)% | $ 65,599 | $ 65,514 | $ 85 | —% |
| SaaS as a percentage of recurring revenue | 70 % | 66 % | 68 % | 65 % | ||||
| Recurring revenue as a percentage of total revenue | 72 % | 65 % | 66 % | 61 % |
Revenue for each of these periods, excluding the Managed IT Services Division, is broken down as follows:
| Revenue by product type (in thousands of CAD) | Three months ended December 31, | Twelve months ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) | |
| SaaS subscriptions | $ 7,644 | $ 6,664 | $ 980 | 15% | $ 28,772 | $ 24,914 | $ 3,858 | 15% |
| Maintenance and support | 3,334 | 3,540 | (206) | (6)% | 13,943 | 14,096 | (153) | (1)% |
| Recurring revenue | $ 10,978 | $ 10,204 | $ 774 | 8% | $ 42,715 | $ 39,010 | $ 3,705 | 10% |
| Project services | 4,260 | 4,645 | (385) | (8)% | 20,377 | 21,445 | (1,068) | (5)% |
| Hardware and other | 93 | 678 | (585) | (86)% | 1,403 | 2,781 | (1,378) | (50)% |
| Total revenue | $ 15,331 | $ 15,527 | $ (196) | (1)% | $ 64,495 | $ 63,236 | $ 1,259 | 2% |
| SaaS as a percentage of recurring revenue | 70 % | 65 % | 67 % | 64 % | ||||
| Recurring revenue as a percentage of total revenue | 72 % | 66 % | 66 % | 62 % |
Revenue by product type as a percentage of total revenue, excluding the Managed IT Services division, for the three months ended December 31, 2024 is as follows:
Revenue by product type as a percentage of total revenue, excluding the Managed IT Services division, for the twelve months ended December 31, 2024 is as follows:
Revenue by operating segment for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively, is as follows:
| Revenue by operating segment | Three months ended December 31, | Twelve months ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| SylogistMission | $ 5,553 | $ 6,212 | $(659) | (11)% | $ 26,831 | $ 24,116 | $ 2,715 | 11% |
| SylogistEd | 4,763 | 4,088 | 675 | 17% | 17,555 | 16,103 | 1,452 | 9% |
| SylogistGov | 1,774 | 1,795 | (21) | (1)% | 6,993 | 7,341 | (348) | (5)% |
| SylogistSolutions | 3,241 | 4,075 | (834) | (20)% | 14,220 | 17,954 | (3,734) | (21)% |
| Total revenue | $ 15,331 | $ 16,170 | $(839) | (5)% | $ 65,599 | $ 65,514 | $ 85 | —% |
Revenue by operating segment, excluding the Managed IT Services division, for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively, is as follows:
| Revenue by operating segment | Three months ended December 31, | Twelve months ended December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| SylogistMission | $ 5,553 | $ 6,212 | $(659) | (11)% | $ 26,831 | $ 24,116 | $ 2,715 | 11% |
| SylogistEd | 4,763 | 4,088 | 675 | 17% | 17,555 | 16,103 | 1,452 | 9% |
| SylogistGov | 1,774 | 1,795 | (21) | (1)% | 6,993 | 7,341 | (348) | (5)% |
| SylogistSolutions | 3,241 | 3,432 | (191) | (6)% | 13,116 | 15,676 | (2,560) | (16)% |
| Total revenue | $ 15,331 | $ 15,527 | $(196) | (1)% | $ 64,495 | $ 63,236 | $ 1,259 | 2% |
Revenue by operating segment as a percentage of total revenue, excluding the Managed IT Services division, for the three months ended December 31, 2024 is as follows:
SylogistMission
SylogistEd
SylogistGov
SylogistSolutions
Revenue by operating segment as a percentage of total revenue, excluding the Managed IT Services division, for the twelve months ended December 31, 2024 is as follows:
SylogistMission
SylogistEd
SylogistGov
SylogistSolutions
20
SaaS subscription revenue
SaaS subscription revenue is derived from multi-year subscription agreements for access to the Company's SaaS solutions. These agreements range from three to five years and typically include a maximum 5% annual price increase.
SaaS revenue, excluding the Managed IT Services division, for the three and twelve-months ended December 31, 2024, was $7.6 million and $28.8 million, respectively, up $1.0 million or 15% and $3.9 million or 15%, respectively, compared to the same periods of Fiscal 2023. This increase is primarily due to revenue growth in the SylogistMission and SylogistEd operating segments.
SaaS revenue as a percentage of total recurring revenue increased to 70% for the fourth quarter of Fiscal 2024 compared to 65% in the same period of Fiscal 2023. For Fiscal 2024, SaaS revenue as a percentage of total recurring revenue increased to 67% from 64% in the same period of Fiscal 2023.
Maintenance and support revenue
Maintenance and support revenue is derived from annual maintenance and support contracts related to legacy on-premise customers.
Maintenance and support revenue, excluding the Managed IT Services division, decreased for the fourth quarter of Fiscal 2024, revenue was $3.3 million, down $0.2 million or 6%, compared to the same periods of Fiscal 2023. For Fiscal 2024, maintenance and support revenue decreased, on account of some slight attrition of customers as well as conversion of maintenance and support customers to our SaaS platform, to $13.9 million, down $0.2 million or 1%, compared to the same period of Fiscal 2023.
Project services revenue
Project services revenue consists of non-recurring services related to implementation, configuration, and upgrades. These services are typically charged on a time and materials basis.
Project services revenue for the three and twelve-months ended December 31, 2024, was $4.3 million and $20.4 million, respectively, down $0.4 million or 8% and $1.1 million or 5% compared to the same periods of Fiscal 2023. This year to date expected decrease is primarily related to the Company's purposeful strategy to channel project services delivery through its certified partner community.
Hardware and other revenue
Hardware and other revenue include revenue generated from hardware, ad hoc on-premise license sales and other ancillary revenue. Hardware and other revenue, excluding the Managed IT Services division, decreased by $0.6 million and $1.4 million, respectively, for the three and twelve-months ended December 31, 2024, compared to the same periods of Fiscal 2023. The decrease is mainly due to a large one-time sale in SylogistSolutions in the prior fiscal year.
Cost of Revenue and Gross Profit
The following table presents a breakdown of cost of revenue and gross profits for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively:
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| Cost of revenue | ||||||||
| Recurring revenue | $ 3,196 | $ 2,874 | $ 322 | 11% | $ 13,202 | $ 10,902 | $ 2,300 | 21% |
| Project services | 2,999 | 3,226 | (227) | (7)% | 13,252 | 13,392 | (140) | (1)% |
| Hardware and other | 107 | 430 | (323) | (75)% | 599 | 1,689 | (1,090) | (65)% |
| Total cost of revenue | $ 6,302 | $ 6,530 | $ (228) | (3)% | $ 27,053 | $ 25,983 | $ 1,070 | 4% |
| Gross profit & gross profit margin: | ||||||||
| Recurring revenue gross profit | $ 7,782 | $ 7,643 | $ 139 | 2% | $ 30,151 | $ 29,321 | $ 830 | 3% |
| Recurring revenue gross profit margin | 71 % | 73 % | 70 % | 73 % | ||||
| Project services gross profit | $ 1,261 | $ 1,567 | $ (306) | (20)% | $ 7,467 | $ 8,659 | $ (1,192) | (14)% |
| Project services gross profit margin | 30 % | 33 % | 36 % | 39 % | ||||
| Hardware and other gross profit | $ (14) | $ 430 | $ (444) | (103)% | $ 928 | $ 1,551 | $ (623) | (40)% |
| Hardware and other gross profit margin | (15)% | 50 % | 61 % | 48 % | ||||
| Total gross profit | $ 9,029 | $ 9,640 | $ (611) | (6)% | $ 38,546 | $ 39,531 | $ (985) | (2)% |
| Total gross profit margin | 59 % | 60 % | 59 % | 60 % |
21
The following table presents a breakdown of cost of revenue and gross profits, excluding the Managed IT Services division for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively:
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| Cost of revenue | ||||||||
| Recurring revenue | $ 3,196 | $ 2,537 | $ 659 | 26% | $ 12,421 | $ 9,661 | $ 2,760 | 29% |
| Project services | 2,999 | 3,109 | (110) | (4)% | 12,982 | 12,892 | 90 | 1% |
| Hardware and other | 107 | 293 | (186) | (63)% | 486 | 1,353 | (867) | (64)% |
| Total cost of revenue | $ 6,302 | $ 5,939 | $ 363 | 6% | $ 25,889 | $ 23,906 | $ 1,983 | 8% |
| Gross profit & gross profit margin: | ||||||||
| Recurring revenue gross profit | $ 7,782 | $ 7,667 | $ 115 | 2% | $ 30,294 | $ 29,349 | $ 945 | 3% |
| Recurring revenue gross profit margin | 71% | 75% | 71% | 75% | ||||
| Project services gross profit | $ 1,261 | $ 1,536 | $ (275) | (18)% | $ 7,395 | $ 8,553 | $ (1,158) | (14)% |
| Project services gross profit margin | 30% | 33% | 36% | 40% | ||||
| Hardware and other gross profit | $ (14) | $ 385 | $ (399) | (104)% | $ 917 | $ 1,428 | $ (511) | (36)% |
| Hardware and other gross profit margin | (15)% | 57% | 65% | 51% | ||||
| Total gross profit | $ 9,029 | $ 9,588 | $ (559) | (6)% | $ 38,606 | $ 39,330 | $ (724) | (2)% |
| Total gross profit margin | 59% | 62% | 60% | 62% |
Total cost of revenue for the three and twelve-months ended December 31, 2024, increased to $6.3 million and $25.9 million, respectively, an increase of $0.4 million or 6% and $2.0 million or 8%, respectively, compared to the same periods of Fiscal 2023. This increase is driven primarily by higher SaaS support costs related to increased SaaS Revenues. As a result, gross profit was $9.0 million or 59% and $38.6 million or 60% of revenue, respectively, down from $9.6 million or 62% and $39.3 million or 62% of revenue, respectively.
Recurring revenue margins for the fourth quarter of Fiscal 2024 have been impacted by increased levels of third-party costs. For the Fiscal 2024, both recurring revenue and project services gross profit margins were compressed largely due to an atypical multiyear project service "wrap up" related to a single customer implementation that was recognized to revenue along with the recognition of accumulated costs relating to the implementation as well as costs relating to customer designated contractor support.
Operating Expenses
The following table presents a breakdown of operating expenses for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively:
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| General and administrative | $ 2,654 | $ 2,387 | $ 267 | 11% | $ 11,124 | $ 12,036 | $ (912) | (8)% |
| Percentage of revenue | 17% | 15% | 17% | 18% | ||||
| Sales and marketing | 1,858 | 1,625 | 233 | 14% | 6,956 | 6,040 | 916 | 15% |
| Percentage of revenue | 12% | 10% | 11% | 9% | ||||
| Research and development, gross | 2,422 | 2,300 | 122 | 5% | 9,758 | 8,968 | 790 | 9% |
| Percentage of revenue | 16% | 14% | 15% | 14% | ||||
| Capitalized development | 1,145 | 1,432 | (287) | (20)% | 5,456 | 4,774 | 682 | 14% |
| Research and development | 1,277 | 868 | 409 | 47% | 4,302 | 4,194 | 108 | 3% |
| Percentage of revenue | 8% | 5% | 7% | 6% | ||||
| Total operating expenses | $ 5,789 | $ 4,880 | $ 909 | 19% | $ 22,382 | $ 22,270 | $ 112 | 1% |
| Percentage of revenue | 38% | 30% | 34% | 34% |
The following table presents a breakdown of operating expenses, excluding the Managed IT Services division, for the three and twelve-months ended December 31, 2024 and December 31, 2023, respectively:
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| General and administrative | $ 2,654 | $ 2,337 | $ 317 | 14% | $ 11,029 | $ 11,785 | $ (756) | (6)% |
| Percentage of revenue | 17% | 15% | 17% | 19% | ||||
| Sales and marketing | 1,858 | 1,577 | 281 | 18% | 6,893 | 5,830 | 1,063 | 18% |
| Percentage of revenue | 12% | 10% | 11% | 9% | ||||
| Research and development, gross | 2,422 | 2,300 | 122 | 5% | 9,758 | 8,968 | 790 | 9% |
| Percentage of revenue | 16% | 15% | 15% | 14% | ||||
| Capitalized development | 1,145 | 1,432 | (287) | (20)% | 5,456 | 4,774 | 682 | 14% |
| Research and development | 1,277 | 868 | 409 | 47% | 4,302 | 4,194 | 108 | 3% |
| Percentage of revenue | 8% | 6% | 7% | 7% | ||||
| Total operating expenses | $ 5,789 | $ 4,782 | $ 1,007 | 21% | $ 22,224 | $ 21,809 | $ 415 | 2% |
| Percentage of revenue | 38% | 31% | 34% | 34% |
Total operating expenses for the three and twelve-months ended December 31, 2024, were $5.8 million and $22.2 million, respectively, up 1.0 million or 21% and $0.4 million or 2%, respectively, compared to the same periods of Fiscal 2023.
The increase for the fourth quarter of Fiscal 2024 was primarily due to increased sales and marketing, lower levels of capitalized research and development, and higher general and administrative costs, compared to the same period of Fiscal 2023. For Fiscal 2024, the increase was primarily due to increased sales and marketing, and slightly higher net research and development costs offset by lower levels of general and administrative expenses compared to Fiscal 2023.
General and administrative expenses
General and administrative expenses for the three and twelve-months ended December 31, 2024, were $2.7 million and $11.0 million, respectively, an increase of $0.3 million and decrease of $0.8 million, respectively, compared to the same periods in Fiscal 2023. The increase for the fourth quarter of Fiscal 2024 was primarily due to the impact of annual accruals related to the company wide employee bonus plan. For Fiscal 2024, the decrease was a result of lower levels of professional fees, lower recruitment expenses on account of the hiring of an internal recruiter, and other miscellaneous savings.
General and administrative expense related head count was stable during the year at 25 at both December 31, 2023 and December 31, 2024.
Sales and marketing expenses
Sales and marketing expenses for the three and twelve-months ended December 31, 2024, were $1.9 million and $6.9 million, respectively, an increase of $0.3 million or 18% and $1.1 million or 18%, respectively, compared to the same periods in Fiscal 2023. Both increases were driven by an increase in head count related to targeted hiring of sales executives within each of the Company's market segments, and programmatic marketing spend related to trade events and consultants.
Sales and marketing related total headcount increased from 22 employees at December 31, 2023, to 26 employees at December 31, 2024.
The Company expects to continue to strategically increase its sales and marketing spend in 2025. This increase will be primarily driven by the hiring of additional quota-bearing sales staff, investments in partner-related training activities, additional strategic spending to drive sales pipeline growth, and increased expenditure on marketing events to increase Sylogist brand awareness and generate leads across its SylogistMission, SylogistGov, and SylogistEd sectors.
Research and Development expenses
Gross R&D expenses for the three months ended December 31, 2024, were stable at $2.4 million compared to $2.3 million for the same period in Fiscal 2023. Gross R&D expenses for the twelve months ended December 31, 2024, were $9.8 million, compared to $9.0 million an increase of $0.8 million or 9% over the same in Fiscal 2023. The increase for Fiscal 2024 was driven by higher levels of spend in relation to R&D activities connected to continued innovation and primarily associated with readying the Company's SylogistEd and SylogistGov platforms for market. As a percentage of revenue, gross R&D expenses were 16% and 15%, respectively, of revenue for the three and twelve-months ended December 31, 2024, compared to 15% and 14%, respectively, for the same periods in Fiscal 2023, which is relatively consistent.
Net R&D expenses for the three and twelve-months ended December 31, 2024, were $1.3 million and $4.3 million, respectively, an increase of $0.4 million or 47% and $0.1 million or 3%, respectively, compared to the same period in Fiscal 2023. As a percentage, of revenue net R&D expenses were 8% and 7% of revenue for the three and twelve-months ended December 31, 2024, compared to 6% and 7%, respectively, for the same periods in Fiscal 2023. The increase for the three months ended December 31, 2024, compared to the same period in the last year is primarily on account of a decrease in eligible capitalizable expenses relating to R&D activities.
24
Other Costs (Income) and Income Tax Expense
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| Amortization and depreciation | $ 2,574 | $ 2,550 | $ 24 | 1% | $ 10,606 | $ 10,144 | $ 462 | 5% |
| Equity based compensation | (350) | 319 | (669) | (210)% | 2,295 | 1,435 | 860 | 60% |
| Interest expense, net | 317 | 439 | (122) | (28)% | 1,522 | 1,925 | (403) | (21)% |
| Foreign exchange loss | (45) | 19 | (64) | n/m | 14 | 99 | (85) | (86)% |
| Acquisition and restructuring costs | 115 | 950 | (835) | (88)% | 2,930 | 2,114 | 816 | 39% |
| Total other expenses | $ 2,611 | $ 4,277 | $ (1,666) | (39)% | $ 17,367 | $ 15,717 | $ 1,650 | 11% |
| Income taxes | $ (107) | $ 259 | $ (366) | (141)% | $ (346) | $ 444 | $ (790) | (178)% |
| Income tax as a percentage of profit (loss) before income taxes | (17)% | 54 % | 32 % | 29 % |
Other costs for the three and twelve-months ended December 31, 2024, were $2.6 million and $17.4 million, respectively, compared to $4.3 million and $15.7 million, respectively, for the same periods in Fiscal 2023. The decrease of $1.7 million, or 39% for the three months ended December 31, 2024, consists primarily of decreased equity based compensation of $0.7 million primarily due to the revaluation of share-based payments and payment of DSUs, and a decrease in acquisition and restructuring costs of $0.8 million primarily related to the completion of earn out accrual for the acquisition of Mission CRM Ltd. ("Mission CRM") in the third quarter of 2024. The increase of $1.7 million or 11% for the twelve months ended December 31, 2024, consists primarily of increased stock-based compensation of $0.9 million primarily due to the issuance and revaluation of share-based payments, slightly offset by the payment of DSUs, an increase in acquisition and restructuring costs of $0.8 million related to an increase in the earnout accrual for the Mission CRM acquisition, and restructuring and integration costs related to the acquisition of Time Clock Now and the divestiture of the Managed IT Services division.
For the twelve months ended December 31, 2024 the Company has recorded an amount of $2.5 million for the third and final year of the earn out, bringing the total cumulative purchase price consideration paid for Mission CRM to $7.8 million.
Income tax expense for the three and twelve-months ended December 31, 2024, decreased by $0.4 million and $0.8 million, respectively, compared to the same periods in Fiscal 2023. This increase in the fourth quarter of Fiscal 2024 was primarily due to a slight increase in U.S. taxable income. For Fiscal 2024, the decrease was primarily due to increased losses in Canada, partially offset by an increase in U.S. taxable income.
Net Profit
| Three months ended December 31, | Twelve months ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD, except earnings per share) | 2024 | 2023 | Change ($) | Change (%) | 2024 | 2023 | Change ($) | Change (%) |
| Net (loss) profit | $ 736 | $ 224 | $ 512 | 229% | $ (727) | $ 1,100 | $ (1,827) | (166)% |
| Adjusted EBITDA(1) | $ 3,240 | $ 4,760 | $ (1,520) | (32)% | $ 16,164 | $ 17,261 | $ (1,097) | (6)% |
| Adjusted EBITDA(1) as a percentage of total revenue | 21 % | 29 % | 25 % | 26 % | ||||
| Basic and diluted (loss) earnings per common share | $ 0.030 | $ 0.010 | $ (0.030) | $ 0.050 |
(1) See reconciliation of EBITDA and Adjusted EBITDA under the "Non-IFRS Performance Measures" section of this MD&A for the most directly comparable IFRS measure.
Quarterly Selected Financial Data
The figures presented in the remaining sections reflect performance of the company inclusive of the Managed IT Services division. As such, prior period comparisons and year-to-date figures align to the corresponding reported period.
The following table summarizes selected results for the eight most recently completed quarters to December 31, 2024:
| FY 2024 | FY 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD, except earnings per share) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Revenue | $ 15,331 | $ 16,564 | $ 17,398 | $ 16,306 | $ 16,170 | $ 16,769 | $ 16,650 | $ 15,925 |
| Net (loss) profit | 736 | (619) | (332) | (512) | 224 | 845 | (72) | 103 |
| Comprehensive income (loss) | 2,487 | (1,008) | 33 | 136 | (279) | 1,483 | (858) | 109 |
| Adjusted EBITDA(1) | 3,240 | 4,186 | 4,521 | 4,217 | 4,760 | 4,371 | 4,289 | 3,841 |
| Basic and diluted (loss) earnings per common share | 0.031 | (0.026) | (0.014) | (0.022) | 0.009 | 0.040 | (0.003) | 0.004 |
(1) See reconciliation of EBITDA and Adjusted EBITDA under the "Non-IFRS Performance Measures" section of this MD&A for the most directly comparable IFRS measure.
Liquidity and Capital Resources
On December 31, 2024, current assets totaled $27.7 million compared to $26.3 million at the end of Fiscal 2023. Current liabilities on December 31, 2024, totaled $34.3 million compared to $46.0 million at the end of Fiscal 2023. Cash and cash equivalents increased $1.6 million to $13.3 million compared to $11.6 million at the end of Fiscal 2023. The increase results primarily from operating activities offset by investing and financing activities, as described below.
Cash from Operating Activities
Operating activities provided $1.4 million of cash in the fourth quarter of Fiscal 2024 in comparison to $0.8 million in the same period in Fiscal 2023. Net cash provided by operating activities provided $12.2 million of cash in Fiscal 2024 which is consistent with Fiscal 2023.
Cash from operating activities before changes in non-cash working capital items stayed consistent at $1.4 million in the fourth quarter of Fiscal 2024 compared to the same period of Fiscal 2023. For Fiscal 2024, cash from operating activities before changes in non-cash working capital items stayed consistent at $8.5 million compared to $8.6 million for the same period of Fiscal 2023.
Cash from Investing Activities
During the fourth quarter of Fiscal 2024, cash used in investing activities was $1.1 million compared to $1.4 million in the same period in Fiscal 2023. This was driven by a decrease in intangible assets, and property and equipment.
For Fiscal 2024, cash used in investing activities increased to $8.9 million compared to $5.6 million in the same period in Fiscal 2023. This was driven by primarily by the acquisition of Time Clock Now, the payment of the earn out for the Mission CRM acquisition, and the increase in additions to intangible assets, offset by cash received for the sale of a building.
Cash from Financing Activities
Cash used in financing activities was $0.5 million for the fourth quarter of Fiscal 2024 compared to $1.5 million in the same period in Fiscal 2023. This reduction was primarily related to the reduction in interest paid on financing, the exercise of options in the fourth quarter of 2024, and fewer shares repurchased in the fourth quarter of Fiscal 2024.
For Fiscal 2024, cash used in financing activities was $1.7 million in comparison to $9.3 million for the same period in Fiscal 2023. This reduction was primarily related to the repayment of the Company's credit facility in the amount of $4 million in Q3 2023, compared to the draw of funds of the Company's credit facility in the amount of $1.8 million in Q1 2024 and lower levels of share purchases in Fiscal 2024 compared to Fiscal 2023.
The Company believes that funds on hand at December 31, 2024, together with cash flows from operations will be sufficient to meet its needs for working capital, R&D, capital expenditures and dividend policy, as well as to invest in long-term growth.
Commitments and Contractual Obligations
| Contractual obligations
(in thousands of CAD) | | Total | Fiscal 2025 | Fiscal 2026-2028 |
| --- | --- | --- | --- | --- |
| Lease obligations | $ | 369 | $ 172 | $ 197 |
| Other obligations | | 1,334 | 1,309 | 25 |
| Total contractual obligations | $ | 1,703 | $ 1,481 | $ 222 |
Dividend Policy
The Company maintains a quarterly dividend policy. The declaration and payment of dividends is at the discretion of the Board of Directors, which will consider earnings, capital requirements, financial conditions, and other such factors as the Board of Directors, in its sole discretion, deems relevant.
Refer to discussion under the "Subsequent Events" section of this MD&A for further discussion on dividends.
Contingencies
In the normal course of operations, the Company may be exposed to lawsuits, claims and contingencies. Provisions are recognized as liabilities in instances when there are present obligations, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and where such liabilities can be reliably estimated. Although it is possible that liabilities may be incurred in instances where no provision has been made, the Company has no reason to believe that the ultimate resolution of such matters will have a material impact on its financial position.
Subsequent Events
On February 6, 2025, the Company's Board of Directors declared a quarterly dividend of $0.01 per share to be paid on March 12, 2025, to shareholders of record on February 28, 2025.
On February 12, 2025, the Company's Board of Directors announced that Mr. J. Kim Fennell joined the Company's Board of Directors. Mr. Fennell has over 35 years of experience working as an executive at several prominent US-based software companies. He has served as CEO at several companies, and currently works as a board director, angel investor, advisor, and as a venture partner at True North Fund – a growth stage venture capital fund in Canada. Additionally, on February 28, 2025, Mr. Taylor Gray retired from the Board.
Off-Balance Sheet Agreements
The Company was not involved in any off-balance sheet arrangements as at December 31, 2024, with the exception of variable payments related to operating leases and operating leases with terms of 12 months or less.
Current and Anticipated Impacts of Current Economic Conditions
Current overall economic conditions together with market uncertainty and volatility may have an adverse impact on the demand for the Company's products and services as the industry may adjust quickly to exercise caution on capital spending. The evolving political landscapes in both Canada and the U.S. continue to generate considerable uncertainty. Recent threats of tariffs on Canadian imports into the U.S., and the potential associated retaliatory Canadian tariffs on U.S. imports into Canada, have created uncertainty in the markets. This uncertainty may impact the Company's revenue.
The exchange rate of the U.S. dollar in comparison to the Canadian dollar continues to be an important factor affecting revenues and profitability as the Company currently derives approximately two thirds⁹ of its business from U.S. customers.
The Company will continue to adjust its business model to ensure that costs are aligned to its revenue expectations and economic reality to the extent possible.
Financial Instruments and Financial Risk Management
The Company has determined that the carrying values of its short-term financial assets and liabilities, including cash and cash equivalents, accounts receivable, other accounts receivable, short-term investments, and accounts payable and accrued liabilities approximate their fair value because of the relatively short period to maturity of the instruments. The fair value of the long-term debt was determined to be not significantly different from its carrying value.
Financial instruments, which potentially subject the Company to credit risk, consist principally of cash and cash equivalents, accounts receivable, other receivables, and accounts payable and accrued liabilities. The Company's cash and cash equivalents are maintained at major financial institutions. The Company manages its credit risk on investments, when applicable, by dealing only with major Canadian banks and investing only in instruments that management believes have high credit ratings.
As at December 31, 2024, no customers individually accounted for greater than 10% of total accounts receivable, consistent with Fiscal 2023. There is no specific concentration of credit risk related to accounts receivable due to the distribution of customers and procedures for the management of commercial risks. The Company performs ongoing credit reviews of all its customers and establishes an allowance for expected credit loss when accounts are determined to be uncollectible. Customers do not provide collateral in exchange for credit.
Refer to "Note 19 – Financial instruments" of the consolidated financial statements for the year ended December 31, 2024 for additional discussion of the Company's risk management policies, including currency risk, credit risk, liquidity risk, interest rate risk and market price risk.
Outstanding Share Data
As of December 31, 2024, the Company had 23,391,977 common shares outstanding.
Critical Accounting Policies and Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The Company's critical accounting policies are those that it believes are the most important in determining its financial condition and results.
The preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates, assumptions, and judgments that affect the application of accounting policies and the reported amounts of assets and liabilities, and revenue and expenses. Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and the anticipated measures that management intends to take. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.
Refer to the Company's annual financial statements for the year ended December 31, 2024 and the related notes thereto for a discussion of the accounting policies and critical accounting judgements and key sources of estimation uncertainty that are essential to the understanding of the business and results of operations.
⁹ On a trailing twelve-month basis ended December 31, 2024.
29
Risks and Uncertainties
The Company is exposed to risk and uncertainties, including the financial risk factors set forth below:
Profitability
As the Company grows, it expects operating expenses and capital expenditure to increase correspondingly, and as a result, will need to generate increased revenue to maintain profitability. The Company may not be able to sustain or to increase profitability or cash flows from operations on a quarterly or annual basis in the future and, in turn, could incur losses in future periods. If revenues decline, operating results could be seriously impaired because a portion of the Company's expenses are fixed and cannot be easily or quickly reduced.
Volatility in Operating Results
Quarterly operational results may be impacted by many factors, including revenue fluctuations based on demand, economic conditions, capital allocation and budgeting cycles, timing of sales, acquisitions and related costs, customer acceptance of product enhancements, variance in the size of license transactions, changes in customer purchasing or procurement processes, having to defer revenues under the Company's revenue recognition policies and IFRS, and seasonality variations in the markets. The Company considers fluctuations in its quarterly operations to have an impact on its future financial position. The Company's expense levels, operating costs and staffing levels are based in part on its expectations of future sales and projects, and the Company may not be able to adjust spending in a timely manner to compensate for any sales shortfall.
Additionally, revenues relating to subscription and maintenance services are generally recognized ratably over the contract term. As a result, a portion of the revenue the Company reports each quarter is generally attributable to arrangements entered into during previous quarters. Therefore, a decline in bookings as it relates to new customers, renewals by existing customers or general market acceptance of the Company's products in any given quarter may not necessarily be fully reflected in the revenues in that quarter and could have a negative impact on the Company's revenues and profitability in future quarters.
Pricing and Margins
The pricing of software and services is highly competitive, as is pricing for related hardware and components. There are competitors of all sizes with similar offerings to those of the Company, with some larger competitors offering mission critical systems and support services. These competitive offerings can put pressure on prices and, consequently, operating margins.
Another key element of Sylogist's corporate strategy is to dedicate resources to R&D, and related product and service opportunities, both through internal investments and the acquisition of intellectual property from external companies through acquisition initiatives. As the Company dedicates resources to R&D efforts in an effort to maintain its competitive advantage, these related expenditures could adversely affect the Company's operating margins.
Volatility in Stock Price
The market price of the Company's common shares can be highly volatile and subject to fluctuations. These fluctuations in common share market price may continue due to quarterly variations in operating results, announcements of technological innovations, developments with respect to patents, copyrights or other proprietary rights, changes in interest rates, general economic and market conditions, or new products by the Company or its competitors, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price fluctuations over the last few years, which have particularly affected the market price of equity securities of many technology companies. In many cases, such pressures have been unrelated to the operating performance of such companies or the failure of such companies to meet market expectations in a particular timeframe.
30
Foreign Currency Risk
Sylogist operates internationally and, accordingly, a portion of the Company's financial resources are held in currencies other than the Canadian dollar, which is the functional currency of the Company. Further, the Company generates revenues and incurs expenses in U.S. dollars, Euros, and Great British Pounds. The Company's exposure to the U.S. dollar, Euros, and the Great British Pound may change over time as the geographic mix of the business changes. Consequently, the Company's results have been affected, and it expects its future results could be adversely affected, by significant foreign exchange fluctuations.
Dividends
The Board of Directors approved the decision to pay a dividend to shareholders commencing in 2010, with such decision being reviewed quarterly. The Board of Directors will, at their discretion, determine the amount of any future dividends payable. Although the Company has paid quarterly dividends since 2010, there can be no assurance that the Board of Directors will declare further dividends. The actual dividends declared, if any, will depend on numerous factors, such as capital requirements to fund growth, working capital, and sufficient operating cash flow. The Company may adjust future dividends payable upward or downward or stop paying dividends entirely based on shareholder valuation creation and capital allocation opportunities available.
Financial Condition, Liquidity, and Requirements Outlook
The Company's cash balance and working capital position are expected to be adequate to sustain its existing operations. If the Company is unable to continue to grow revenue and cash flow from operations, its cash and working capital position could be adversely affected.
Potential Need for Future Financing
There can be no assurance that the Company will be able to obtain the financial resources that may be required to successfully compete in the markets on favorable commercial terms, or at all. Failure to obtain such financing could impact the Company's ability to successfully execute on M&A and other business opportunities that may arise from time to time.
Acquisition Related Liabilities
Although the Company conducts due diligence reviews of potential acquisition candidates, it may incur contingent liabilities through acquisitions which may be material, despite its best efforts to estimate risks associated with the contingencies and the likelihood of them materializing. The Company's estimates could differ materially from such liabilities actually incurred.
Additional Risks
The risks below are described in further detail in the section entitled "Risk Factors" in the most recently filed annual information form.
- Dependence on key personnel.
- Third party technology.
- Key partner relationships.
- Cyber security.
- AI.
- Fixed price contracts and delivery management.
- Market and competition.
- Potential acquisitions and investments.
- Management of growth and integration of acquisitions.
- Major contracts.
- Government contracts.
- Risk to reputation.
- Environment and market risk.
- IP Rights.
- Intrusion of the Company's computer systems.
- Legislative, Insurance, Compliance Costs, Regulatory Action, and Environment.
- Key supplier relationships.
- Management of future growth and expansion.
- Financial position of customers.
- Customer retention/attrition.
- Industry growth.
- Length and variable sales cycle.
- Economic slowdown.
- International markets.
- Impact of geopolitical events, such as the possibility of tariffs between Canada and the U.S.
- Litigation.
- Taxation.
- Product Liability.
Controls & Procedures
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that material information is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure. The Company's Chief Executive Officer ("CEO") and its Chief Financial Officer ("CFO") are responsible for establishing and maintaining disclosure controls and procedures regarding the communication of information. The Company's Executive Committee supports Sylogist's CEO and CFO with this responsibility, which is composed of members of senior management. Based on the evaluation of the Company's disclosure controls and procedures, the CEO and CFO have concluded that these disclosure controls and procedures were effective as of December 31, 2024.
Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of the Company's financial reporting and its compliance with IFRS in its consolidated financial statements.
An evaluation was carried out under the supervision of and with the participation of the Company's CEO and CFO to evaluate the design and operating effectiveness of the Company's ICFR as of March 31, 2024. Based on that evaluation, the Company's CEO and CFO concluded that the ICFR, as defined by National Instrument 52-109 – Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), was appropriately designed and operating effectively. The evaluations were conducted in accordance with the framework criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013), a recognized control model, and the requirements of NI 52-109.
No changes to ICFR have come to management's attention during the twelve months ended December 31, 2024, that have materially affected or are reasonably likely to materially affect ICFR.
Supplemental Information
Reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure
| FY 2024 | FY 2023 | |||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands of CAD) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Net (loss) profit | $ 736 | $ (619) | $ (332) | $ (512) | $ 224 | $ 845 | $ (72) | $ 103 |
| Adjusted for: | ||||||||
| Amortization and depreciation | 2,574 | 2,634 | 2,764 | 2,634 | 2,550 | 2,498 | 2,557 | 2,539 |
| Interest expense, net | 317 | 347 | 436 | 422 | 439 | 503 | 513 | 470 |
| Income taxes | (107) | (256) | 13 | 4 | 259 | (55) | 86 | 154 |
| EBITDA | $ 3,520 | $ 2,106 | $ 2,881 | $ 2,548 | $ 3,472 | $ 3,791 | $ 3,084 | $ 3,266 |
| Adjusted for: | ||||||||
| Equity based compensation | (350) | 859 | 919 | 867 | 319 | 276 | 715 | 125 |
| Foreign exchange loss (gain) | (45) | 26 | 17 | 16 | 19 | 48 | 25 | 8 |
| Acquisition and restructuring costs | 115 | 1,195 | 834 | 786 | 950 | 256 | 465 | 442 |
| Gain on sale of assets | — | — | (130) | — | — | — | — | — |
| Adjusted EBITDA | $ 3,240 | $ 4,186 | $ 4,521 | $ 4,217 | $ 4,760 | $ 4,371 | $ 4,289 | $ 3,841 |