Tecsys (TSX: TCS) is a supply chain management software company whose services are used by over 600 companies, including Canon, CAT Speedo, and Columbia. The company announced its results for the fourth quarter and full year of the fiscal year 2020, ended April 30, 2020, and reported record revenues.
When the company released its statement for its results, these lines stood out: “Based on current activity and considering the corporation’s significant project backlog, Tecsys believes that this outbreak is not having any material adverse impact on its operating results. Moreover, Tecsys is not currently experiencing or anticipating any material credit losses as a result of the pandemic. In short, we are weathering these unprecedented challenges very well indeed.”
Revenue for Q4 of 2020 was a record $27.7 million, 20% higher than $23.2 million for Q4 of 2019. Revenue for fiscal 2020 was $104.9 million, up 37% from $76.4 million in 2019. Total gross profit was $50.3 million, up $12.9 million from fiscal 2019. Net profit was $2.3 million compared to a loss of $0.7 million in 2019. Adjusted EBITDA was up 267% at $10.3 million compared to $2.8 million for fiscal 2019.
Total contract bookings for the year were $112.7 million, up 78% from $63.2 million in fiscal 2019. Tecsys signed 34 new accounts in fiscal 2020 with a total contract value of $52.7 million compared to $15.4 million in fiscal 2019, an increase of 242%.
Tecsys has a diversified revenue stream, and the numbers prove that it’s a good strategy that has worked for it. Its focus on business segments, like healthcare and digital commerce, has already started showing a strong payoff, as both segments have grown significantly as a result of the COVID-19 pandemic.
Focus on SaaS and healthcare
Tecsys made a strategic call to migrate to SaaS in early fiscal 2019 and accelerated that process in fiscal 2020. The results of that move surprised the company. SaaS subscription bookings were $8.8 million in fiscal 2020, up 486% compared to $1.5 million in fiscal 2019.
Peter Brereton, Tecsys CEO, president, & director, said, “Little did we anticipate that the SaaS offering, combined with exceptional professional services performance, would actually begin to drive our growth so quickly. We have learned that not only the SaaS improved the quality of our revenue streams, it has also made it easier for both new and existing clients to buy our software solutions.”
In fiscal 2020, SaaS subscription bookings were around 77% of the company’s software product bookings compared to 33% in fiscal 2019.
Tecsys added six new hospital networks in 2020. Its SaaS approach and cloud-based solutions seem to be a hit with hospitals and healthcare systems. Out of six, two hospital networks were added in the fourth quarter, and the company booked a record $40.9 million worth of contracts, an increase of 113% compared to the prior-year period. Around 58% of Tecsys bookings in Q4 2020 came from its healthcare business.
Tecsys is a stock that has largely remained under the radar for most investors. The company’s organic growth is very strong and with clear visibility on higher revenues in the future, this is an easy buy. Tecsys stock is up 230% in the last five years and is well poised to crush broader markets in the upcoming decade as well, despite its sky-high valuation.
