The TSX/S&P 500 Composite Index ended 2024 at 24,727.90, representing an 18% overall gain. Canada’s primary stock index beat the +8.12% return in 2023. Information technology was the top-performing sector for the second consecutive year.
While tech stocks collectively delivered solid gains, some were oversold and underperformed. Sylogist (TSX: SYZ) delivered lower-than-expected returns but is poised to stage a comeback in 2025. Market analysts’ 12-month average price target for this TSX stock is $13.33 (a +53.4% upside). The potential return is slightly higher, including the 0.46% dividend yield.
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Business overview
Sylogist is a $203.4 million Software-as-a-Service (SaaS) company focused on the public sector. With Microsoft Cloud as a partner, this Canadian firm provides technology and solutions to help tribal governments, non-profits, and research institutes improve governance and service delivery.
The partnership with Microsoft aims to leverage technology to streamline operations in today’s digital transformation era. For tribal governments, safeguarding sensitive data is a top priority. According to management, the opportunity covering non-profits/NGOs, K-12 education, and governments is worth around $14 billion.
Ahead of the plan
Sylogist’s growth prospects are bright following the 15% SaaS subscription growth in the third quarter (Q3) of 2024 versus Q3 2023 and a clear path to annual recurring revenue (ARR) growth. Other tailwinds include strong market demand and an expanding pipeline with increasing rates.
Its chief executive officer (CEO), Bill Wood, said, “Our Q3 performance further validates our successful transition to a SaaS-driven enterprise. We are ahead of our plan in terms of the contribution from our partner community, as evidenced by 47% of Bookings in the quarter being partner-attached.”
In the three months ending September 30, 2024, total ARR rose 8.6% year over year to $43.6 million. Wood also notes the accelerating hand-off of project services relating to new implementations and customer upgrades to partners. These positive developments indicate Sylogist’s focus on high-value SaaS ARR growth
“We’re well positioned to scale the business, generate higher margins, create operating leverage, and drive increasing free cash flows,” Wood added. The balanced pipeline and bookings assure expanded long-term value creation.
Seamless integration
SylogistGov, the company’s solution for governments, was built on Microsoft’s Dynamics 365 and has been integrated into Microsoft’s ecosystem. This collaboration ensures tribal governments have a dependable foundation for managing essential operations.
According to Sylogist, the alliance is powerful because it equips tribal governments with the technology, security, and support needed to thrive. They gain access to Microsoft’s ecosystem and innovation to meet current and future challenges.
Meanwhile, SylogistEd offers integrated Enterprise Resource Planning (ERP) and Student Information System (SIS) solutions to streamline education administration. SylogistMission centres on fundraising using ERP and Customer Relationship Management (CRP) solutions.
The offerings include multi-entity accounting, fund accounting, donor and campaign management, and advanced reporting and data analysis.
Primary mission and objective
Sylogist aims to be the most trusted provider of ERP, CRM, and complementary SaaS solutions to non-profit and public sector organizations. The SaaS company is on the road to profitability. Its visible revenue and software earnings growth runway in the government sector should propel the stock higher in 2025.
