Earnings call transcript: Sylogist Q1 2025 revenue up 3%, SaaS growth strong

Sylogist Ltd. reported a 3% year-over-year increase in revenue to $16.3 million for the first quarter of 2025, driven by a significant rise in SaaS subscription revenue. Currently trading at $2.64, InvestingPro analysis suggests the stock is slightly undervalued. The company’s stock saw a modest uptick of 0.5% following the earnings announcement, reflecting investor confidence in its recurring revenue model and strategic initiatives. The company also provided forward guidance, projecting accelerated growth in the latter half of 2025.

Key Takeaways

• Sylogist’s revenue increased by 3% year-over-year, reaching $16.3 million.
• SaaS subscription revenue grew by 15%, contributing to a 6% increase in total ARR.
• The company’s gross margin improved to 59%, with an adjusted EBITDA of $2.6 million.
• Sylogist is targeting SaaS ARR growth in the low to mid-20% range for the year.
• The stock rose 0.5% post-earnings, reflecting positive market sentiment.

Company Performance

Sylogist Ltd. demonstrated solid performance in Q1 2025, with revenue growth driven by a robust increase in SaaS subscription revenue. The company’s strategic focus on recurring revenue streams paid off, with 67% of total revenue now recurring. The SaaS ARR, which grew by 15%, underscores the company’s successful transition towards a subscription-based model. This growth is further supported by a strong net revenue retention rate of 108%.

Financial Highlights

• Revenue: $16.3 million, up 3% year-over-year
• SaaS Subscription Revenue: Increased by 15%
• Total ARR: Grew 6% to $40.443 million
• Gross Margin: Improved to 59%
• Adjusted EBITDA: $2.6 million, representing a 16.1% margin
• Cash Position: $10.5 million

Outlook & Guidance

Looking ahead, Sylogist is targeting SaaS ARR growth in the low to mid-20% range, with a projected gross margin of approximately 60%. According to InvestingPro analysis, analysts expect the company to return to profitability this year, with a forecasted EPS of $0.26. The company anticipates an increase in operating leverage in the second half of 2025, which is expected to drive accelerated growth. Get access to 7 more exclusive InvestingPro Tips and comprehensive financial analysis with an InvestingPro subscription. Sylogist’s strategic initiatives include expanding its partner ecosystem and enhancing its ERP platform’s interconnectivity, positioning the company for continued success in its target markets.

Executive Commentary

"Our results clearly reflect the continued success of our transition to an ARR-driven enterprise," stated Bill Wood, CEO of Sylogist. He emphasized the company’s focus on increasing operating leverage in the latter half of the year, noting, "We see operating leverage increasing in the back half of twenty twenty-five." Wood also highlighted the importance of leadership in driving business success, stating, "People lead businesses, people make decisions."

Risks and Challenges

• Market competition: Sylogist faces competition from established providers in the government sector.
• Dependence on recurring revenue: Any disruptions in recurring revenue streams could impact financial stability.
• Economic conditions: Macroeconomic pressures could affect customer budgets and spending.
• Technological advancements: Rapid changes in technology require continuous innovation to stay competitive.
• Regulatory changes: Shifts in government regulations could impact operations and market access.

Sylogist’s strategic focus on SaaS and recurring revenue, coupled with its robust financial performance, positions it well for future growth. However, the company must navigate competitive pressures and economic uncertainties to maintain its upward trajectory.

Full transcript - Sylogist Ltd. (SYZ) Q1 2025:

Conference Operator, Conference Moderator: Thank you for standing by. This is the conference operator. Welcome to the Syllogis Limited First Quarter twenty twenty five Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

I would like now to turn the conference over to Alex Falca, Corporate Development with Syllogist. Please go ahead.

Alex Falca, Corporate Development, Syllogis Limited: Thank you, Alan, and good morning. Joining me to discuss ZILGER’s first quarter twenty twenty five results are Bill Wood, ZILGER’s President and Chief Executive Officer alongside Suji Kini, Chief Financial Officer. This call is being recorded live at 08:30 a. M. Eastern Time on 05/15/2025.

I’d like to remind everyone that our Q1 twenty twenty five press release, MD and A, financial statements and accompanying notes have been issued and are available for download on SEDAR plus Please note that some of the statements made on the call today may be forward looking. Actual events or results may differ materially from those expressed or implied, and Soldiers disclaims any intent or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The complete Safe Harbor statement is available in both our MD and A press release as well as on zilgius.com. We encourage our investors to read it in its entirety. Additionally, we are reporting our financial results in accordance with IFRS accounting standards or IFRS.

Today, we may also make reference to and discuss non IFRS performance measures, which should be viewed as supplemental. We have included in our MD and A the definitions of non IFRS performance measures, and more. All results on this call are in Canadian dollars. Following that, Sujit will provide a detailed review of our Q1 financial performance. Bill will then return to conclude with closing comments, at which time we’ll open the line for Q and A.

With that, Bill?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Thank you, Alex. Good morning or good afternoon, everyone, thank you for joining us. We’re pleased to share that Q1 twenty twenty five was strong in terms of value creation aspects of the business we’re hyper focused on. Our results clearly reflect the continued success of our transition to an ARR driven enterprise as nearly 67% of our total revenue is recurring, marking a significant milestone. Our strategy and execution is delivering results.

We have an engaged and expanded partner channel, three best in class fully SaaS platforms in market, a loyal customer community driving strong net revenue retention, and increasing traction in our strategic markets. This quarter’s performance further validates our long term value creation strategy. Let me take a minute to walk you through a few key highlights from the quarter. Bookings grew over 150% year over year, fueled by new logo wins and strong upsell and cross sell performance. Notably, 79% of our total contract value or TCV bookings came from our Syllages gov sector and the Texas Office of the Attorney General Award for our SyllogisGov Victim Services Suite solution is the largest contract in the company’s history and further confirms the opportunity we see ahead in the Syllogis gov sector at the state, provincial and local level.

Our competitive position is also strengthening. Our overall win rate exceeded 50%, reflecting the power of our targeted displacement strategy and the strength of our vertically specialized fully SaaS offerings. In partner attached deals, our win rate was over 70%, which confirms the success we’re seeing with our partner community leading deal sourcing, RFP responses and closing, with our internal team supporting their sales motions and empowering their project delivery teams in our Syllogis Gov and Syllogis Mission market segments. We’re also seeing material, more balanced pipeline growth across our three core segments, Syllogis, Mission Ed and Gov. Our bookings pipeline is up 42% year over year, setting the stage for continued SaaS ARR growth as we move through 2025 and beyond.

We did see some turbulence and impact in the quarter due to the new U. S. Administration’s policies, specifically in our existing customer non governmental organizations or NGO segment. Due to those cutbacks, we lost approximately $1,000,000 in ARR from legacy customers that lost their funding. However, other than the narrow NGO segment, we have not seen any material impact to the segments of the nonprofit, sectors we target, except for an initial slowdown in new logo deal decision making early in the quarter, which we now see returning to normal cadence.

Overall, we see the administration shift of dollars and decision making from the federal level to the state and local level as potentially having a beneficial impact to us. And we do not expect the announced tariffs will have any direct impact on us whatsoever. As we shared for several quarters now, a central pillar of our go forward strategy is our partner network, which enables scalable growth and faster market penetration. We’ve made significant progress in partner activation over the last year in Syllogis Gov and Syllogis Mission. Again, we don’t yet engage partners in Syllogis Ed or the Syllogis Gov VSS subsector.

Those are direct in terms of sales delivery. With those sector exclusions in mind and combining the primary Syllogis Gov sector with Syllogis Mission, nearly 45% of the bookings were partner attached in the quarter, which bodes well for future margin expansion and leverage. It’s important for us to remind everyone that to ensure the success of our partner community, we’ve continued to maintain our internal delivery team and have expanded our partner enablement team. While this temporarily compresses gross margins, given we’re still absorbing costs, but handing off the project service revenue to partners, this is a planned and a strategic investment phase. And as partners ramp and take on project delivery themselves, we expect to see a natural shift in our cost structure.

This will allow us to focus even more on high margin SaaS growth with increasing scalability It’s important to share that we see operating leverage increasing in the back half of twenty twenty five and continuing to strengthen going forward as we planned. We continue to drive healthy SaaS metrics. SaaS ARR grew 15% year over year to $31,400,000 SaaS net revenue retention remained strong at 108%, demonstrating customer satisfaction, advocacy and wallet expansion. Both are solid indicators of durable growth and long term customer value. With that, I’ll turn it over to Sujit to walk you through our financial results for the quarter in a little more detail.

Sujit?

Sujit Kini, Chief Financial Officer, Syllogis Limited: Thank you, Bill, and good morning and good afternoon, everybody. Before diving into the numbers and like I had done last quarter, I’d like to quickly remind you that we divested of our managed IT services division in Q2 twenty twenty four. Therefore, to provide a clearer comparison, all year over year financial comparisons exclude the impact of that divestiture. Our Q1 results reinforce our successful transition to a SaaS driven enterprise with a strong focus on high margin SaaS revenue and ARR growth. Q1 revenue was $16,300,000 up 3% year over year and SaaS subscription revenue grew at 15%.

This offset by declines in maintenance and support related to the DOGE related cut cutbacks that Bill alluded to earlier. SaaS revenue now represents 71% of recurring revenue, up from 65% last year. ARR, total ARR rather grew up grew 6% year over year to $4,044,300,000.0 with SaaS ARR up 15% to thirty one point four million. SaaS NRR continues to remain strong at 108%. On the gross margin front, Q1 gross margins grew at sorry, on the gross margin front, Q1 gross margin at 59% improved compared to Q1 fiscal twenty twenty four at 59.

This primarily due to higher levels of SaaS recurring revenue. On the expenses front, G and A increased $500,000 in Q1 to $3,100,000 at 19% of revenue versus 16% last year. The increases here primarily due to third party expenses, including professional fees and slightly higher payroll compensation costs. Sales and marketing expenses in Q1 rose to $2,100,000 or 13%, that is 13% of revenues versus 9% last year. This reflecting an anticipated increase in spending on quota bearing sales headcount with our sales and marketing headcount growing to 30, that’s three zero from 26, as well as increased programmatic marketing spend.

Gross R and D spend for Q1 was $2,800,000 at 17% of revenue versus 15% last year. This increase primarily related to higher third party costs. At a net R and D spend level, R and D spend was $1,800,000 an increase of $800,000 of which approximately $500,000 was due to lower levels of eligible capitalized development spend in the current quarter. And this in turn being attributable to the maturing of all of our three SaaS platforms. I will state that we expect this trend to continue.

On the adjusted EBITDA front, Q1 adjusted EBITDA was $2,600,000 at 16.1% margin versus 27.4 last year. Our adjusted EBITDA margin was primarily impacted by the lower levels of capitalized development costs that I just mentioned earlier and higher sales and marketing expenditures in the current quarter. And finally, we ended Q1 with $10,500,000 in cash, this being consistent with our expectations. With that, I’ll hand it back to you, Bill. Bill?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Thanks, Ujeet. With all three of our leading SaaS platforms now in market, a growing and productive partner ecosystem, strong customer advocacy, and real traction from our targeted competitor displacement strategy, we’re in a strong position to deliver increasingly scalable, profitable and repeatable growth. Thanks to our exceptional team, fully SaaS best in class solutions and a customer first mindset. Our investments are delivering. We’ve laid a strong foundation for increasing recurring revenue, growing free cash flow and expanding margins.

Momentum we expect to accelerate in the second half of twenty twenty five and beyond. For fiscal year twenty twenty five, the company aims to achieve SaaS ARR year over year growth in the low to mid-twenty percent range, a gross margin of approximately 60% and an adjusted EBITDA margin in the mid-twenty percent range. With that, thank you again for your continued support and confidence. We’re looking forward to what’s ahead for Sylogis in 2025 and beyond. With that, let’s take some

Conference Operator, Conference Moderator: We will now begin the question and answer session. Our first question today comes from Daniel Rosenberg of Paradigm. Please go ahead.

Daniel Rosenberg, Analyst, Paradigm: Good morning, Bill and Sujit. My first question was around the channel partner strategy. It was nice to see SaaS growth kind of accelerating this quarter over the last. I was wondering what are the kind of key learnings that you’re seeing as you’re working with your channel partners to increasingly leverage that sales function?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Hey, good morning, Daniel. Yes, I appreciate the question because it is important. As I’ve signaled over the last few quarters, we are seeing our partner community having unique sight lines to cohorts of customers that they are or opportunities that they have that we may not have. They may have installed prior systems for them. They may have an existing relationship with them.

So they are very in tune with the needs of particular customer perspective customer sets, as well as how our software fits into those. We’re also seeing scenarios where, in certain instances, we have, maybe two, sometimes three partners that are bidding our platform as the solution. So, both results are leading to a really high win rate in terms of the relationships that they have and the alignment of our platform to something that the communities that we’re targeting anxious for.

Daniel Rosenberg, Analyst, Paradigm: Okay. Thanks for that. Appreciate the color. Secondly, on the margin profile, so there was a bit of investment in the OpEx side of the equation. I was just wondering how you think about further investment in resources and kind of is this a baseline for us or how we should think about the year ahead?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yes, at a macro level, Daniel, I think that we don’t see additional building now. As we’ve said, we have leaned in on our project service bench as well as our partner enablement team, we’ve added resources in there. So to that end, we do feel like our overall count in terms of what we need to do and as well as adding new partners as we go forward is in a good position. We don’t see a lot of additional build out there. And we did want to make sure that as Sujit highlighted, that we’d really increased our sales and marketing muscle on that front.

And we feel that now with the strengthening of our partner execution in terms of sales efficacy, do see our existing quota carrying team being built out to we think will drive good value creation as we expect going forward.

Daniel Rosenberg, Analyst, Paradigm: Thanks for that. Lastly for me, you guys secured a large contract win recently, which was great to see. I was wondering if you could speak to the pipeline and is there anything to say about the size of opportunities that you’re going after that you’re seeing in market as you look at your sales function?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yes. On a macro level, we as I mentioned in my comments, we do see an acceleration and an expansion and a balanced expansion across our three market segments in our pipeline. That’s a really good signal in terms of what bodes for us going ahead when you combine that with our win rate. On the large award that we received, that subsector of Solihdiskov, the VSS suite is by nature larger deals because they’re statewide agreements. And so to that end, we are very pleased with the three wins that we had in the quarter, Texas, Massachusetts and Nevada, and do see continued opportunity for expansion and displacement with our competitor displacement strategy in that segment.

So the lift of our average deal size is skewed because of that VSS deal magnitude. But overall, we see good cadence and consistency in the deals that we are landing. And we generally see the SaaS platforms and the usability of those platforms also with our land and expand with customer wallet share expansion, where we see customers adding subscriptions as they become acclimated to software and mono empower more users. So that’s a good signal to us as well.

Daniel Rosenberg, Analyst, Paradigm: Great. Thanks for taking my questions. I’ll pass the line.

Conference Operator, Conference Moderator: Our next question comes from Gavin Fairweather of Cormark. Please go ahead.

Gavin Fairweather, Analyst, Cormark: Hey, good morning. Thanks for taking my questions. Maybe just to follow on that Texas Texas contract. Can you provide a bit more detail in terms of the implementation revenue that we should be expecting and how we should be thinking about the timelines towards getting it live and starting recognize the ARR?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Tajik, do you want to share that? Good morning, Gavin.

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes, absolutely. Good morning, Gavin. So from an overall contract perspective, Gavin, basically, the overall position from a revenue is it is an integrated contract. Essentially, what one might call from a revenue recognition perspective, a bundled arrangement. We’re working through kind of the machinations of the contract with our auditors.

And essentially, our best view on this is that it is primarily ARR revenue that will be recognized through the term of the contract. And that is the position. We will keep you posted on the accounting for this, and you will see this in our Q2 results. But essentially, the contract is an integrated project with the bulk of the revenue being recognized essentially largely as ARR.

Gavin Fairweather, Analyst, Cormark: Okay. That’s helpful. And then maybe you could just discuss kind of your view on the VSS TAM and to what extent there is further RFPs that you’re seeing in the market. I mean, great to hear that it wasn’t just Texas, there’s another kind of couple of wins in the quarter. So it seems like there’s building momentum.

So I think it would be helpful just to frame the opportunity for people.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yes, happy to. As we’ve mentioned, there is a current existing provider that has the majority of U. S. Market and has had for many, many years that we are having success in displacing with a more contemporary platform and a different approach to how we are treat customer data differently, which is we don’t touch it, we don’t use it in any manner and we certainly don’t aggregate it in terms of other products. And so that is something that is a differentiator for us in addition to the idea of our platform is far more contemporary.

So, because this is, these are public awards, they’re also public contracts through the state. We do have technology that’s enabled us to see what the expiry date of existing agreements with that particular provider. We have good sight line in terms of how we engage with them in advance to make sure that they are aware of us. And certainly now with our momentum, states are increasingly aware of us. Within each state, there’s oftentimes two, if not three opportunities for our platform to be utilized by different departments within that.

So it isn’t just a one state and done. For instance, Texas was an existing account for us in another facet of their criminal justice area. And ultimately, this is the second award in that state. So it isn’t just a one and done, so therefore 50 states, 50 opportunities. Interesting, we’re also seeing some early green shoots of interest in this area within Canada, as well as abroad, where they have had largely not nearly as sophisticated systems, but they still need in terms of notifications for victims and so on.

So that bodes well that we do believe that it goes beyond just The US as an opportunity as well downstream.

Gavin Fairweather, Analyst, Cormark: Yes, that’s super helpful. I appreciate that. And then maybe also seeing in the gov sector, you talked about the GP Great Plains Sunset in 2028. I’m curious like when you’re expecting to begin seeing RFPs, begin seeing kind of contracts being awarded. Do you think customers are going to wait until that sunset in 2028?

Or are you starting to see some movements in activity now?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: We’re starting to see some movement. And the partners, as I mentioned, they many of them have cohorts of customers that they implemented Great Plains at years back. And so I do not expect, and certainly, partner community and our marketing motions are helping people to realize waiting may not be in their best interest in terms of opportunity to do it in a smooth and thoughtful and organized manner. And our partners are beating that drum with us. So there’s an amplification of moving now.

It makes sense, why it makes sense. And we see continuing and expanding Great Plains RFPs coming to us and coming to our partners.

Daniel Rosenberg, Analyst, Paradigm: Great. And then just lastly for me, it

Gavin Fairweather, Analyst, Cormark: sounds like on the R and D spending side, there are some third party costs, which you’ve ramped up. Is there some specific projects that you call out? And do those have a fixed timeline where we might see R and D step back down afterwards? Maybe just help us model that line out and point at any projects that you’re maybe bringing some external help on?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yeah, and I’m glad you asked that, Gavin, because it’s important. I had we had stated Q4 last year we had had some learnings relative to our partner community in our ERP platform, where they were looking for kind of more out of the box interconnectivity capability that we had somewhat underestimated how anxious they were to be able to connect our solution to other things as part of a particular installation that our partners undertake. So, we actually went back in and it was time sensitive because we don’t want that to lag too long in terms of partner engagement and successful light up of opportunities. And so to that end, we did sort of resources that we see that project largely coming to completion in the summer timeframe. And we see that the bulk up that we had on the R and D and the people side of that has to turn back.

The other piece is that, as Sujit mentioned, we did move costs that were previously sitting in as capitalized back up above the line as part of the natural trend as well, which is which if you put those kind of in addition to what we had as a pro form a, it kind of puts us where I think many of you had us in terms of fitting from an adjusted EBITDA standpoint because we did move some costs back above the line that maybe you hadn’t seen before.

Gavin Fairweather, Analyst, Cormark: Thanks so much. I’ll pass the line.

Conference Operator, Conference Moderator: Thanks, Kevin. Our next question comes from Amr Ezzat from Ventum Capital. Please go ahead.

Amr Ezzat, Analyst, Ventum Capital: Hi, Bill. Hi, Sujit. Congrats to both of you and the team for the very strong bookings number. From what we can tell from the public documents, it seems like the implementation timeline is quite tight. You guys starting to recognize revenues in Q2?

Or is that a Q3 event? Then you also mentioned it’s being handled internally. Is that fully internally? Are you involving partners in any capacity to help train, I guess, for future scale deployments?

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes. Sorry. Go ahead, Bob.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Thank you for that.

Sujit Kini, Chief Financial Officer, Syllogis Limited: I’ll jump in after.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yeah, the revenue recognition is tilted toward the summertime in terms of the Q2 and starting more materially in Q3. So we have that’s kind of tied to the integrated approach that we’re in discussion with KPMG around. So we do see the momentum in the back half of the year really, really starting to blossom. And on the question with regard to the resourcing, not a partner per se. However, we’re pulling that is going in with their own team.

We’re actually pulling would be contractors from partner resources, if you will, and adding them to our team to be able to bulk up to push through. So it is largely direct, but we are also developing and expanding our playbook as we think about the future to be able to hand off the motions that lead to success and what’s involved. But it’s mostly through contractor resources that we’re bulking up on to be able to deliver in very specific areas that is complimentary and synergistic with our with our bench delivering ourselves

Amr Ezzat, Analyst, Ventum Capital: for the So the full approximately CAD15 million is your revenues and you’re not giving up any of

Bill Wood, President and Chief Executive Officer, Syllogis Limited: these revenues from my understanding? Generally, that’s correct. Yes, there’s no margin share or anything in terms of deal that’s traditional or that’s more common in the rest of our partner arrangements. So yes, that’s spot on. That’s fantastic.

Amr Ezzat, Analyst, Ventum Capital: Sorry, I’m

Sujit Kini, Chief Financial Officer, Syllogis Limited: just yes, sorry, Amar, I was just going to jump in for the benefit of everybody. The $15,000,000 you quoted is a total contract value. I just wanted that to be clear out there.

Amr Ezzat, Analyst, Ventum Capital: With the options and so on.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: No, I understand that.

Sujit Kini, Chief Financial Officer, Syllogis Limited: Exactly. Yes. Thank you.

Amr Ezzat, Analyst, Ventum Capital: No, no, I understand that. I appreciate that clarification. Then just to clarify, so from where you stand currently, we shouldn’t expect a lift in project services. I believe that’s that was what you were implying, Sajeet. It’s all like embedded in ARR and specifically probably SaaS as opposed to maintenance?

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes. That would be broadly accurate, Amar. And again, we will emphasize that we are in discussions in terms of I’m just going to throw out the word the complexity of this arrangement from the point of view of revenue recognition and but that is broadly an accurate assumption that, essentially, the way the agreement is structured from a business perspective is that it lends itself to essentially being a bundle arrangement and therefore a larger skewness towards ARR. So that would be accurate.

Amr Ezzat, Analyst, Ventum Capital: Fantastic. Then not to take away from all the good news, but I wanted to go back to your NGO related funding comments like the headwinds. I missed the number. Did you say $05,000,000 or $1,000,000 number one? Then are they now is that headwind like fully reflected in your maintenance and support revenue base for the quarter?

Or should we expect further erosion as contracts roll off?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: So it was a million, it was a million dollar. From the standpoint of the gross amount and Sujit, you want to take the last step? But yes, we don’t really see something that we see more of this going on. Feel and based on the customers, existing NGOs, we see them now with their getting their feet underneath us and understanding if they do still exist, that they’re able to go forward in a manner that they’ve now worked out. So we feel that this is not a wait to the next few drops kind of a scenario unless something changes with the administration that we’re not aware of.

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes. And I’ll quickly jump in after Bill on that comment. So, supplementally, Amir, what I will add is and thank you for actually asking the question. So, basically, $1,000,000 number that Bill quoted is effectively the ARR impact or is the ARR impact. From a timing perspective, what happened was a lot of these actions happened late February into March.

So effectively, one would not, from a numbers perspective, see the fullness of the impact on maintenance and support revenue in March. So the fuller the fulsiveness of the impact actually plays out in the latter in the remaining three quarters. So from a revenue perspective, that dipping of the revenue happens through essentially through the rest of the years. There was, I would say, a more diminished impact in Q1.

Amr Ezzat, Analyst, Ventum Capital: Understood. Just to clarify, this is maintenance and support revenues,

Sujit Kini, Chief Financial Officer, Syllogis Limited: right? Is it’s primarily maintenance and Yes, that is accurate.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: And I will add, and I’m sure you picked up on this, Amir, is we continue to have a sight line to what we had shared relative to the framework of where we see our flight path for 2025. We maintain that view, even with this unforeseen kind of turbulence in Q1 relative to what’s led to that those dose cuts affecting our NGO customers. So I think it speaks to the strength of our core areas and the NGO space is not an expanding area for us. It’s not one of our core markets relative to as we think about growth and material growth going forward. And so to that end, I think that speaks to the strength of the business as we see it in other areas.

Amr Ezzat, Analyst, Ventum Capital: Yes. No, I feel like your bookings like obviously trump what’s happening there, no pun intended there. Then just one last one, appreciate the color on OpEx, but I just want to step back again like on the R and D number. So I do appreciate that the capitalized number is a little lower, but that the gross number at $2,800,000 for the quarter, 17% of revs. Did I understand correctly when you were answering Gavin’s question that this probably stays at the same level through the summer?

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes. So, Amar, from a dollar perspective, getting away from the percentages, which is I think your question, yes, from a yes, exactly. From a dollar run rate perspective, yes, I would say broadly, we would stay in that range. We were expecting to see some lightning as we go through the year, but just from an overall dollar headline perspective, we kind of we’d like to think that it will kind of stay in that range.

Amr Ezzat, Analyst, Ventum Capital: Fantastic. Okay. Thank you and congrats again. I’ll pass the line.

Conference Operator, Conference Moderator: Our next question comes from Doug Taylor from Canaccord Genuity. Please go ahead.

Doug Taylor, Analyst, Canaccord Genuity: Thank you. Good morning. I’m going to impress a little more on Amir’s last line of questioning there. The jump in OpEx line this quarter, you’ve noted some temporary third party resources, but it did sound like a bunch of the expenses related to sales salaries, moving previously capitalized R and D above the line, sound fairly permanent. So I guess my question is, more broadly, would you reconfirming the objective of mid-20s EBITDA margins from the 16% you reported here in Q1?

I mean, you help us just reconcile that? Is that going to be purely a function of more top line absorbing this cost base and you’ve got the SaaS ramp ahead of you to support that? Is that a fair characterization?

Sujit Kini, Chief Financial Officer, Syllogis Limited: So I would say broadly, yes, Doug. That would be a fairly accurate characterization. Essentially, ramp up towards stronger margins would be a combination of higher SaaS revenues going into the latter part of the year. And then essentially from a gross margins perspective as well, we do see potential for the gross margins improving, again, as a result of the higher SaaS revenues in the latter part of the year. So I would say, yes, overall, that premise is broadly accurate.

Doug Taylor, Analyst, Canaccord Genuity: And then maybe a similar line of questioning. Bill, you just reiterated your flight path. I think you characterized it objectives for the year being to get SaaS revenue sorry, SaaS ARR growth also into that 20% plus range. I mean, it fair to say with the Texas win being in your bookings not yet in your ARR, is it fair to say you’ve now got pretty strong visibility to that ramp back into that territory based on what you’ve got now in your bookings?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: We do. I think all of you at this point understand that it isn’t an immediate rollover of bookings to ARR. So given the cadence, largely are comfortable with projects we have in hand, bookings we have in hand and the sight line for the SaaS ARR acceleration to achieve what we’ve outlined. So I would say, yes, we feel quite good about our posture as we sit right now or early into Q2 or Q1 as we sit about it.

Doug Taylor, Analyst, Canaccord Genuity: Okay. Well, thank you for those clarifications. I’ll pass one.

Conference Operator, Conference Moderator: The next question comes from Suthan Sukumar from Stifel Canada. Please go ahead.

Suthan Sukumar, Analyst, Stifel Canada: Good morning, gents. So my first question, I wanted to touch on the Texas VSS deal. Can you speak a little bit more about what the initial scope and revenue basis for the initial deployment and what expansions may look like over the duration of the agreement?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Good morning, Suzanne. We’ll speak too much publicly out there, which is kind of what we just don’t parse deals typically more than that. But because this is a public contract, it does speak to what the annual ARR in the contract award represents based on how it’s published and how it was drafted by Texas OAG and Us. And that’s over $20,000,023,000,000 dollars in U. S, so it’s almost 2,900,000.0 of ARR on a Canadian basis.

Sujit, please verify that those are generally correct.

Sujit Kini, Chief Financial Officer, Syllogis Limited: Yes. And Sultan, good morning. Yes. As Bill says, are publicly available numbers. Essentially, what Bill quoted out there was the ARR equivalent of the $15,000,000 that Amar referred to.

I mean, don’t know that we want to talk about sort of anything that’s not out there in the public domain, but essentially, the way the contract is structured is it’s a USD 10,600,000.0 arrangement or around a CAD 15,000,000 arrangement, effectively approximately around CAD 3,000,000 of recurring revenue happening from a Canadian dollar perspective on an annualized basis.

Suthan Sukumar, Analyst, Stifel Canada: Okay. Okay, great. That’s helpful. For my second question, I just wanted to touch on revenue mix. Could you touch can you provide a little bit more color on recent revenue trends in Mission?

This was up slightly quarter to quarter, but down year over year. Is that largely reflective of the NGO impact that you guys talked about or are there other factors you to kind of think about?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: I will say generally, we are seeing an expanding posture of our bookings within that segment attributable to more users being securing more subscriptions for more users at implementation. The other thing is we’re starting to see a build of the thesis, which was we have a better mousetrap when we have an integrated CRM and ERP. And so in our pipeline, and what we’ve seen in certain deals where we do see opportunities where we are actually getting IP in both areas, which previously we would not have had that in our arsenal, because we now have the fully integrated offering once the acquisition was completed of the Mission CRM solution. So overall, I would say the deal size on the Mission side, it’s hard to peg it quarter to quarter, Susan. I know you appreciate that because it’s just it can be lumpy and one deal can skew it one way or another.

But I would say on a trend basis, we see the deal sizes to be expanding. Okay.

Suthan Sukumar, Analyst, Stifel Canada: Great. No, that’s helpful. And Bill, could you remind us on sort of what progress is with respect to migration of your existing customer base to SaaS? Roughly what percentage are you at now? And is there really a focus push here to migrate this remaining base?

You just at this point, is it more about just leaving it to sort of a natural evolution in that customer’s life cycle?

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yes, I think that for the most part, we have not disclosed what that shift is. And but it is gone as or ahead of plan in terms of what we anticipated on legacy to SaaS posture. There’s an appetite to move customers. We prefer to have one set of IP out there. We prefer to have the same support to be able to deliver our knowledge base kind of tied to one, our AI that we’re building in tied to a platform SaaS versus legacy.

However,

Suthan Sukumar, Analyst, Stifel Canada: when

Bill Wood, President and Chief Executive Officer, Syllogis Limited: we get into the 80 plus percent range and so on, there are some portions of that that are maybe going to need to fit to what the customer flight path is for that. I’ll also remind that there’s portions of that that isn’t we do not have an upgrade path platform. Now we have legacy customers in our epic community and other user communities, which we will see and will continue to maintain those platforms in their current posture. They’re typically got good margin. They’re typically profitable entities for us and sectors of our business.

So one should not assume that if we’re going to have a segment of that maintenance and support that likely stays as maintenance and support. But ultimately, the rest of the community will continue to march forward in thoughtful way.

Conference Operator, Conference Moderator: This concludes our question and answer session. I would like to turn the conference back over to Mr. Bill Wood for closing remarks.

Bill Wood, President and Chief Executive Officer, Syllogis Limited: Yes. I want to thank you all again for the questions as well as the continued support of Silvagist. I will say that the work that’s gone on since I joined has been monumental. And I do now see much more clearly the results as we do across the organization, the results of that starting to turn into value creation and real clear value creation as we think about the back half of 2025 and beyond. I’ve highlighted the pillars for that around our partner thesis, now having three SaaS platforms.

But I also want to restate that the Syllogis team and management team and the colleagues I work with every day are the best I’ve ever had the pleasure of working with. And in the end, people lead businesses, people make decisions. And to that end, I’m very, very proud and humbled by the work that’s gone on at Selwidge just to create the opportunity for our customers and our investors as we think about the go forward. I’m very, very humbled by the work that’s gone on and ultimately now where we sit in terms of opportunity going forward. So a true tip of the cap to the Syllogis team in terms of the go forward and a sincere thanks to our investor community who has really stayed close to our story and now really see the excitement that I feel lies ahead for Solar just more fulsomely.

So thank you for your time and thank you for your continued support. I appreciate it.

Conference Operator, Conference Moderator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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