Sylogist Q4 2025 Earnings Report

Sylogist EPS Results

• Actual EPS: -C$0.04
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Sylogist Revenue Results

• Actual Revenue: $14.38 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Sylogist Announcement Details

• Quarter: Q4 2025
• Date: 3/19/2026
• Time: After Market Closes
• Conference Call Date: Thursday, March 19, 2026
• Conference Call Time: 8:30AM ET

Sylogist (TSE:SYZ) provides mission-critical SaaS solutions to over 2,000 public sector customers across the government, nonprofit, and education market segments. The Company's stock is traded on the Toronto Stock Exchange under the symbol SYZ. Information about Sylogist, inclusive of full financial statements together with Management's Discussion and Analysis, can be found at sedarplus.ca or at sylogist.com.

Sylogist Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: SaaS transition showing traction: SaaS made up 73% of recurring revenue in Q4, SaaS ARR grew 9% year‑over‑year to CAD 33.8M and recurring revenue reached 81% of total revenue in Q4, indicating improved revenue quality.
• Positive Sentiment: Visible ARR pipeline lift: FY2025 ARR bookings were CAD 4.3M and management highlighted an additional ~CAD 1.7M ARR step‑up from the Texas OAG contract to be recognized in Q3 FY2026, which should boost upcoming ARR.
• Negative Sentiment: Project services collapse weighed on margins: Project services revenue plunged 44% in Q4 (‑23% for the year), driving gross margin compression as the company continues to carry implementation costs while shifting to partner‑led delivery.
• Negative Sentiment: Accounting and R&D impacts hit adjusted EBITDA: Capitalized development fell by CAD 3.1M (no R&D capitalized in Q4), a prospective useful‑life change added CAD 1.3M of amortization, and management said this reduced adjusted EBITDA margins by ~5% year‑over‑year.
• Neutral Sentiment: Leadership and execution outlook uncertain but focused: An interim CEO is executing a targeted plan (partner channel tweaks, prioritized R&D/AI investments, selective go‑to‑market focus) while the board searches for a permanent CEO and declines to provide guidance; management expects progress within 12–18 months but timing remains unclear.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the Sylogist Ltd. fourth quarter 2025 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. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Jennifer Smith with LodeRock Advisors. Please go ahead.

[Jennifer Smith, Capital Markets Communication at LodeRock Advisors Inc.]

Thank you, Michael, and good morning. Joining me to discuss Sylogist's fourth quarter and full year 2025 results are Craig O'Neill, Sylogist's Interim Chief Executive Officer, along with Sujeet Kini, the company's Chief Financial Officer. The call is being recorded live at 8:30 A.M. Eastern Time on March 19, 2026. I'd like to remind everybody that our Q4 2025 press release, MD&A financial statements and accompanying notes have been issued and are available for download on SEDAR+. Please note that some of the statements made on today's call may be forward-looking. Actual events or results may differ materially from those expressed or implied, and Sylogist disclaims any intent or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

[Jennifer Smith, Capital Markets Communication at LodeRock Advisors Inc.]

A complete safe harbor statement is available in both the MD&A press release as well as sylogist.com. We encourage all of 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 refer to and discuss non-IFRS performance measures, which should be viewed as supplemental. We have included in our MD&A the definition of certain non-IFRS performance measures used by the company. Furthermore, all the dollar figures expressed on this call are in Canadian dollars unless otherwise stated. Now, I will be turning the call over to Craig for his opening remarks. Following that, Sujeet will provide an overview of our Q4 and full year financial performance, with Craig returning to conclude with closing remarks. After which, we will open the line for Q&A.

[Jennifer Smith, Capital Markets Communication at LodeRock Advisors Inc.]

With that, I'll hand the call over to Craig.

[Craig O'Neill, Interim CEO at Sylogist]

Great. Thanks, Jen, and good morning, everybody. Thank you for joining us today. Before we get into today's results, I wanna emphasize that the focus of this call is on our operating results and the go-forward plan for the business. The ongoing process regarding board matters and the proxy contest is being overseen by a special committee of the board. The board has also been actively engaged in the search for a permanent CEO. The job spec was finalized in February, and under the leadership of the CEO search subcommittee, comprised of Kim Fennell, Errol Olson, and Tracy Edkins, the board has been actively interviewing candidates. You'll have seen the company's press release on Monday, and in these circumstances, management does not intend to discuss that topic further or take specific questions about the situation on this call.

[Craig O'Neill, Interim CEO at Sylogist]

With that in mind, I'd like to turn to the business itself and share some reflections from my first few weeks as interim CEO. It's actually been approximately six weeks since I joined the Sylogist’s team, and since then, I've invested significant time and energy to better understand the business and our products, the markets that we serve, and our teams across the company. What I've learned is really encouraging. We have a committed and a highly skilled group of people here. We have a portfolio of ERP, CRM, and other mission-critical software solutions that are highly effective at addressing the needs of our customers. We built a strong presence and reputation in our target markets. Our fiscal 2025 and Q4 2025 results are reflective of the journey the company has been on over the past few years.

[Craig O'Neill, Interim CEO at Sylogist]

That journey has been a transformation, and transformation really is not too strong a word to describe the changes that have been underway. Sylogist has moved from being what I would characterize as a legacy player, a software vendor with older products that followed old school or old style model of perpetual licenses and maintenance with a high degree of one-time professional services revenue. Whereas today, we are a modern SaaS business with modern products that customers license through subscriptions and that are implemented via a partner ecosystem, a major transformation. We believe these changes will create sustainable long-term value for our stakeholders going forward. While the journey isn't complete, I'm pleased to report that in Q4, Sylogist continued its forward progress, and our results are showing early signs of improving revenue quality and operational efficiency.

[Craig O'Neill, Interim CEO at Sylogist]

SaaS revenue stayed strong, reaching 73% of recurring revenue in Q4, compared to 70% of our recurring revenue during the same period last year, while our SaaS ARR increased 9% year-over-year. Additionally, recurring revenue as a percentage of total revenue reached a high of 81% for Q4, compared to 72% during the same time last year. In addition, our partner-led sales and delivery strategy gained traction in Q4, with 43% of ARR bookings being partner-driven. While total revenue declined slightly, this was driven by the company's strategic decision to transition professional services work to our partners. Our SaaS ARR, recurring revenue mix, and our platform depth grew significantly during the reporting period as we moved away from lower quality revenue streams.

[Craig O'Neill, Interim CEO at Sylogist]

With that, I will turn it over to Sujeet to walk you through the detailed financials for the quarter and the year. Sujeet?

[Sujeet Kini, CFO at Sylogist]

Thank you, Craig O'Neill, and good morning, everybody. Our Q4 and full year 2025 results reflect the growth of our SaaS revenue base and the near-term offsetting impact of a decline in project services revenue. From a revenue perspective, revenue was CAD 14.4 million in Q4 and CAD 62.2 million for the full year 2025. The growth in the SaaS revenue base was a key driver, with SaaS subscription revenue increasing by 12% year-over-year in Q4 and 13% for the full year. This growth reflected strong growth in the SylogistGov segment, with additional contribution from Sylogist Solutions and Sylogist Stat. Maintenance and support revenue declined by 7% in Q4 and 11% for the year, attributed partly to DOJ-related cutbacks and customer transitions from our legacy solutions to our cloud platforms.

[Sujeet Kini, CFO at Sylogist]

Project services revenue experienced a significant decline, falling 44% in Q4 to CAD 2.4 million, and declined 23% to CAD 15.6 million for the year. This decline was primarily within the Mission segment and largely associated with our shift to partner-led implementations. Our revenue mix showed marked improvement, with recurring revenue representing 72% of total revenue for the year, up from 66% in fiscal 2024. For Q4, recurring revenue accounted for 81% of total revenue, up from 72% in the previous year. Additionally, SaaS revenue made up 73% of recurring revenue in Q4 and 72% for the full year, reflecting expansion in our SaaS base.

[Sujeet Kini, CFO at Sylogist]

ARR at the end of fiscal 2025 was CAD 45.7 million, with SaaS ARR growing 9% to CAD 33.8 million, driven mainly by SylogistGov and supported by growth in Sylogist Stat and Sylogist Solutions. SaaS net revenue retention, or NRR, declined slightly to 101%, mainly due to customer budget issues within the Mission segment. Our ARR bookings for the year were CAD 4.3 million, slightly up from CAD 4.2 million in fiscal 2024. Note, however, that this does not include the impact of an additional approximate CAD 1.7 million ARR step up from the Texas OAG contract that will be recognized in Q3 of fiscal 2026. Moving on to margins and profitability.

[Sujeet Kini, CFO at Sylogist]

Gross profit for Q4 was CAD 8.1 million, with a 56% gross margin, down from CAD 9 million and a 59% gross margin in the same quarter last year. For the full year, gross profit was CAD 36.3 million, with a 58% gross margin, down from CAD 38.6 million and 60% in fiscal 2024. This margin compression was primarily due to declines in project services revenue, along with us continuing to carry costs, carry associated costs in order to support the build-out of our partner delivery model. Separating recurring revenue and project services, recurring revenue gross margins improved approximately to 73% in Q4, up from 71% last year, and were 72% for the full year, slightly higher than 71% in fiscal 2024.

[Sujeet Kini, CFO at Sylogist]

From an operating expense perspective, G&A remained stable at about 18% of revenue for both Q4 and the full year, compared to 17% last year. Sales and marketing expenses in Q4 were CAD 1.7 million or 12% of revenue, flat compared to the prior year. For the full year, sales and marketing expenses increased to CAD 7.7 million from CAD 7 million in the prior year. This reflecting increased investments in our partner enablement and marketing programs. R&D spend at the gross level, that is inclusive of cap dev costs, was CAD 2.8 million in Q4 at 19% of revenue, up from 16% last year, mainly due to higher third-party costs. On a net basis, R&D expenses increased by CAD 1.5 million year-over-year.

[Sujeet Kini, CFO at Sylogist]

This driven by lower levels of capitalized development revenue in the current year, and especially in Q4 of the current year, we capitalized no R&D expenses. We would also like to note that this practice is expected to continue into fiscal 2026 as our platforms near technical readiness. Year-over-year capitalized development costs declined by CAD 3.1 million and this negatively affected our adjusted EBITDA margins by about 5%. Absent this reduction, i.e., on an apples-to-apples basis, adjusted EBITDA for fiscal 2025 would have been approximately CAD 12.3 million or 19.6% of revenue.

[Sujeet Kini, CFO at Sylogist]

As part of our assessment of capitalized development costs, we also reassessed the useful life of our intangible assets, which was then revised to four years on a prospective basis. This prospective change in accounting estimate results in increase below the line amortization of CAD 1.3 million in Q4 of fiscal 2025. Finally, moving on to our cash position. We ended with CAD 8.3 million in cash, consistent with seasonal expectations for this time of the year. Additionally, our cash balance also reflects the payment of CAD 2.5 million related to the final earn-out payment for our MissionCRM acquisition during the early part of this year. In February 2026, we announced the reinstatement of our normal course issuer bid program to enable share purchases alongside other capital allocation priorities aimed at enhancing shareholder returns.

[Sujeet Kini, CFO at Sylogist]

With that, I will hand it back to you, Craig. Craig?

[Craig O'Neill, Interim CEO at Sylogist]

Thank you very much, Sujeet. As we look ahead, we have a high degree of conviction that the transition we've been on will drive further improved outcomes in the upcoming quarters. Although we're not quite done yet, the lion's share of the effort has been completed, and we expect to see the positive impact of all that work in increasing measure in the near future. Working together with our board of directors, we're locked in on delivering on a number of core priorities over the next 12-18 months. One, we plan to expedite our transition to SaaS ARR-driven business. We believe that growing our recurring revenue mix, our SaaS subscription revenue and ARR will be a core value driver for Sylogist.

[Craig O'Neill, Interim CEO at Sylogist]

Two, we will continue to expand our partner channel, go-to-market, and partner-led delivery, but we intend to balance this with focused direct sales and services capabilities. We remain confident that increasing our partner attached bookings through higher partner win rates and then scaling delivery through partners is essential to our growth. However, we believe that augmenting this initiative by leveraging our internal expertise will further strengthen our results. Three, we're going to align our R&D investments around our best growth opportunities so that we can accelerate product innovation, meet the integration needs of customers and our partners, and deliver meaningful AI capabilities that will further differentiate Sylogist and our markets of choice. Four, we will continue to focus on providing superior customer service with a strong emphasis on improving our already impressive Net Promoter Score.

[Craig O'Neill, Interim CEO at Sylogist]

This combination of excellent customer service and compelling product roadmaps will drive strong net revenue retention, low customer churn, and heightened customer loyalty. Overall, we remain focused on delivering value for all of our shareholders by improving our financial discipline, expanding margins and free cash flow, and maintaining peer-level growth, all while operating with transparency and accountability. While this transformational journey has taken time, we're beginning to see the positive impact, and there's much more to come. We're excited about our future and about our ability to create value for our customers and our partners and our shareholders. With that, let's open it up for questions.

[Operator]

Thank you. We will now begin the question-and-answer session. To join the question queue, you may press Star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Your first question today comes from Amr Ezzat with Ventum Capital. Please go ahead.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Good morning. Thanks for taking my questions. My first one is on the project services margins turn negative this quarter, which is obviously a sharp change from prior trends. Can you help us bridge what changed operationally, and how much of this is timing versus something more structural, i.e., less implementation work for your guys to do, so we should expect that to stay negative going forward?

[Sujeet Kini, CFO at Sylogist]

Yeah. Good morning, Amr. I'll quickly address that. On the revenue side, what we saw in Q4 was a reduction in project services revenue, primarily on the Mission side and also on the education side. This caused the compression from the point of view of the revenues. Then, like we said in our prepared remarks, there were associated costs that continued, which did not go away. From a timing perspective, we do see this as being more specific in particular to this quarter because of a series of factors that coalesced in Q4 around our education segment and Mission. We do not expect to see this level of compressed gross margins going forward on the project services side.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

I understand the revenue part of the equation and the margin compression that would create, but can you sort of unpack the other part of it, which is the Texas project? How are you guys like done the implementation there, or is there like more implementation to be had, i.e., even if you go to positive territory in Q1, is it still like extremely compressed?

[Sujeet Kini, CFO at Sylogist]

Yeah, on the Texas side, what we can share is, in terms of kind of overall completion, we're approximately in that 70% range, in terms of completion on the implementation side of things. In terms of continuing project services revenue for Texas OAG, going out into fiscal 2026, we do expect to see an additional pickup in revenue in Q2 and into some part of in Q1 and in some part of Q2. By and large, the implementation for Texas OAG should be done by the end of the first half of next year.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Thanks. The SaaS ARR bookings were relatively soft this quarter, and I think modest for the full year. How should we be thinking about the underlying pipeline health today versus what you were seeing a few quarters ago? Has anything changed, in terms of demands or conversion?

[Sujeet Kini, CFO at Sylogist]

Yeah, I would say generally speaking, the pipeline remains, the strength of the pipeline remains very meaningful across all our segments. What we are seeing, Amr, here is essentially there are timing related issues from a pipeline perspective, and therefore one sees softness in bookings in one quarter that essentially moves a deal that potentially will close in Q1 into Q2, that sort of thing. We see that pattern a little more exacerbated on the government side because these deals take longer to close. And quite often the government buying process itself is, I'm gonna use the word bureaucratic, but that essentially creates a long gestation period for the bookings to come to fruition. Fundamentally, the pipeline remains meaningful, and it's strong across segments.

[Sujeet Kini, CFO at Sylogist]

What we did see was just timing related issues which caused a slippage of deals from the current year into fiscal 2026.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Fantastic. On the, I guess, like, the SaaS NRR coming in at 101, can you unpack what's driving that level in terms of churn versus expectations? I believe you said in your prepared remarks it's related to one client.

[Sujeet Kini, CFO at Sylogist]

No, I don't believe I said it's related to one client. I did say it was more specific to the Mission segment, I believe.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Understood. Can you unpack what's happening though, like on that 101 number?

[Sujeet Kini, CFO at Sylogist]

Yeah. What we did see in the Mission segment was essentially because of customer budget issues within the Mission segment that impacted us from an NRR perspective year over year. Secondly, from an overall mix perspective in terms of our bookings, in the current year, that is in 2025, we've seen a very positive inflection towards a larger number of new bookings versus expansion bookings. Essentially there is more coming by way of new, less, and in an overall percentage sense, a lesser amount coming via expansion. Effectively that does cause a little bit of a shrinkage impact from an NRR perspective. Those were really the two main drivers.

[Sujeet Kini, CFO at Sylogist]

It is a combination of the churn that we saw in the Mission segment, and then the other part was the percentage mix between our new bookings and the expansion bookings. We had a larger bias to the new bookings.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Understood. Maybe one last one and I'll pass the line and I appreciate, like, Craig's still like on an interim basis, but I guess as an outsider, given the combination of softer bookings, the NRR at 101, and like the absence of guidance, you know, like, which you guys sometimes provide, how should we think about the level of visibility you have into growth and margin progression over the next few quarters?

[Craig O'Neill, Interim CEO at Sylogist]

Yeah, good question. Hey, nice to meet you. You're right, it's been a fairly short period. I've been here six weeks, but I've dived in pretty deep very quickly. I think I can answer this with a bit of confidence. Although I keep saying I know just enough to be dangerous, but it's getting better. You know, when I look at this year, sometimes I have these pictures in my mind, and I've got this picture of, you know, Sylogist has been on this transformational journey and changing in a new direction, which I fully believe is the right direction. I think about, you know, a sailboat on the sea and it's tacking and sort of turning into the wind and getting into a headwind.

[Craig O'Neill, Interim CEO at Sylogist]

Likely to turn and change, there's a period where things slow a little bit, and I feel like there's been some of that this year. In particular, you know, we've introduced two new replacement products, modern SaaS products, to replace legacy products. Introducing brand new products, there's always unexpected wrinkles and challenges that slow things down in terms of, you know, onboarding new customers. There's a challenge of getting existing customers to move when the old products actually still work. There's been some of those sorts of things going on. In the midst of all that, there's been the transition to being more partner-led and, you know, essentially giving away project work to partners so they can focus on it. It's the core of their business, what they do, and we want to focus on software. It was, I think, wise.

[Craig O'Neill, Interim CEO at Sylogist]

The company said, "We need to keep our consulting people involved to help the partners be successful." We've got costs and less revenue to match against those costs. That's all transition stuff. The transition's not done, but we're kind of close to the goal line now. What I'm really focused on in terms of the forward plan is, to use the football analogy, we're in the red zone. How do we get across the goal line as quickly as possible? 'Cause when we do, I think there's good line of sight, good visibility on seeing growth rates and margins pick up nicely. That's kind of what we're focused on. Is there kind of a light at the end of the tunnel here?

[Craig O'Neill, Interim CEO at Sylogist]

Is there visibility on better margins and better growth? There is. It's really about finishing the transition, and really focusing to get to end of job there. That's certainly gonna be my core focus in this interim period.

[Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets]

Thanks, Craig. Appreciate it. That's helpful.

[Craig O'Neill, Interim CEO at Sylogist]

That's no worry.

[Operator]

Your next question comes from Gavin Fairweather with ATB Cormark. Please go ahead.

[Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark]

Oh, hey, good morning. Thanks for taking my questions. Maybe, Craig, you've been going through your initial assessments of the business. Curious how active you plan to be on making changes in this interim period ahead of finding a full-time CEO. Should we expect things to be pretty steady, or are you actively, you know, executing on some of the priorities which you outlined in your prepared remarks?

[Craig O'Neill, Interim CEO at Sylogist]

Yeah, great question. It's still a little bit of a question. My mandate when I came in was to assess and to you know, kind of tee up priorities and plans for the new person. We've certainly had really engaged discussions. By me, I mean we, I mean myself, the executive team, and the board on kind of what I'm learning and my thoughts on the go-forward plan. You know, I haven't fully got the mandate to start making changes yet, but it's under discussion, and it's definitely going to be considered. At the same time, I should say that you know, this direction the company has been on is the right direction, I believe. I think it's you know, everybody would agree it's taken a little bit longer. It's been a bit harder than expected.

[Craig O'Neill, Interim CEO at Sylogist]

It's not a change in direction that I'm contemplating, but some real focused energy and a few areas where we're not just gonna focus more, but adjust or tweak slightly the way we're going about things. Things like we mentioned or I mentioned in my remarks, you know, when it comes to going to partner-led, the tweak that I've suggested, you know, we're still working out the details, but we've largely agreed to is we're gonna be partner-led, but we're still going to keep, you know, a very selective portion of services work and leverage our expertise, both in terms of earning really good high margin professional services revenue and better enabling our partners to be successful. That's an example of one tweak.

[Craig O'Neill, Interim CEO at Sylogist]

I can't say for sure how much change I'm going to actually institute while I'm here, but we're in that active discussion, and I think there's a lot of good opportunities ahead of us.

[Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark]

Appreciate that. Then maybe just, you know, on the channel, you know, it feels like we're not, you know, fully there in terms of partner effectiveness of kinda, you know, getting deals across the line and managing all of the implementation. You know, I'm curious what you think might need to be tweaked in terms of the partner channel to kind of bring them up to, you know, expected productivity here in 2026.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. Yeah. Well, you know, maybe hindsight is 20/20, but I remember saying while I was still on the board, you know, kind of 2.5 years ago, when the partner channel work was just getting underway, from my own experience in companies that I've run, I'd caution the team, getting partner channels working is really hard. It takes time, and it's really hard. I think now in retrospect, that's been the case. It's taken some time, and it's really hard to do. There's been a lot of progress made, and there's a lot of interest on the part of partners.

[Craig O'Neill, Interim CEO at Sylogist]

In fact, I've got a kind of a personal connection with a large potential partner, and when they saw the press release that I was interim CEO, that personal connection, they connected the dots, and this person was inundated with interest from within his firm to get to me to talk about how we could partner together. So there's lots and lots of interest in our space, lots of interest in great partners working with Sylogist. So that's fantastic. It's still hard getting them trained so that they really know the product. Because here's the thing, you know, implementing our product like an ERP or a CRM, it's not good enough to sort of know it.

[Craig O'Neill, Interim CEO at Sylogist]

You have to develop a real expertise 'cause implementations, I'm sure you've all heard, IT implementations of any kind, they're challenging, and you've probably experienced it in your own companies. The implementer needs to be expert in the product. Well, you don't get to be expert overnight. They're getting better. They're learning. We're learning more about how to support them and how to provide the materials and the playbooks and the product knowledge that they need. That's been a growing, you know, a learning experience. Lots of learning has been done. I think we're gonna really analyze where are the gaps now. We're gonna listen to our partners, what are their frustrations. We're gonna listen to some of our customers that partners are serving to understand their frustrations. We'll

[Craig O'Neill, Interim CEO at Sylogist]

It's an area we're really gonna focus and solve those problems. You know, not just leave it to the partners to figure that out. To me, not really a surprise. That's a hard thing to succeed at, and it's been hard for Sylogist, kind of not shocking. Back to my earlier analogy, we're kind of in those sort of doldrums as we turn the boat. I don't think we're too far away from kind of catching the wind with partners and then helping them really get some momentum. There's more partners to come. There's more that want to be involved. The only nice thing about that is we're gonna be more explicitly judicious about which partners we work with. You know, what are the requirements of a partner? What do we need to see from them?

[Craig O'Neill, Interim CEO at Sylogist]

What kind of commitments in terms of certifying their personnel and so on, will it take to qualify to be on our partner program? Which is hard to do that when you start out, but when you start to get lots of interest in partners, you can start to be more selective. We'll be able to do that going forward.

[Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark]

Thanks for that. Then I think I caught in your prepared remarks that you're planning on increasing sales investment. I think your go-to-market team was around 25 previously. Maybe you can just help us understand, you know, how you're tweaking the internal go-to-market motions and what type of quantum of additional personnel or investment we should be thinking about.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. On a net basis, we may not increase the overall sales and marketing investment, but we're certainly gonna focus the beam, if you will. We have a lot of products for the size of company that we are, and we're investing in all of those products. As we look at the business and where our best market opportunities are, and we look at where the most likely activity is in different markets. You know, are there drivers that would cause customers to change in the short term? Because remember, things like ERPs and CRM systems, companies don't, or nonprofits or whoever, they don't think about changing those out every year.

[Craig O'Neill, Interim CEO at Sylogist]

They take a long time deciding so that the dynamic is long sales cycles and, you know, they stay put, but they become a player for a long time. We're looking at what are the drivers for change in different markets. On this holistic view, as we evaluate what are our kind of target markets that are most likely to change and grow in the short to medium term, we're gonna focus our sales and marketing energy in those areas so that we're matching our efforts with where the opportunity is versus sort of looking at all the different things we do. Now, that necessarily means that our lower growing products and probably less strategic products, they'll get less effort, maybe even no effort. We'll pick up the phone when somebody calls us.

[Craig O'Neill, Interim CEO at Sylogist]

In the areas where we see there's opportunity, we're gonna put a lot more effort. It's more that, Gavin, than actually overall increase. We think that can really, you know, give us a great return on our sales and marketing investments.

[Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark]

That's helpful. Maybe lastly, we can just discuss Mission. It feels like there's a few different factors going on here. I mean, you've got your ERP and CRM kind of cross-sell play. You've got, you know, a nice new partner that's gonna be, you know, active for you in the Mission segment. It does feel like the end market is, you know, still dealing with, you know, some pressures, and you called that out in terms of Q4 dollar churn. Maybe you can just discuss, you know, how all of that kind of nets out in 2026 and whether you see, you know, improving gross bookings and how to think about, you know, churn over the course of 2026, given that end market dynamic.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah, that's a great question. I'll start by saying this is one of the areas that I'm digging into. I intend to dig into more deeply than I have to date. I've looked at it and discussed it a fair bit, but it's still not totally clear to me. What I would say I'm clear on is the CRM market and the spaces that we play in around nonprofits is very competitive, and I know that up close and personal. I ran a company called Kindsight for a period of time, and we had a CRM product, and there's a lot of competition in the space.

[Craig O'Neill, Interim CEO at Sylogist]

One of the things I'm convinced we need to do is, and we will be doing, because this has been agreed to, is we're gonna really focus in on specific segments within the overall nonprofit space where we can win, where we have won, and where we have stronger product market fit. We're gonna segment the market further and then really be laser focused on which segments we go after. You know, again, it's kind of like focusing the beam, and we think we can get better results that way. We're gonna be very, very picky.

[Craig O'Neill, Interim CEO at Sylogist]

If we have an inbound opportunity that's not in one of our target segments, not in a target ICP, we'll take a very hard look at, do we spend any time on this or not, or do we just say, "Thanks, but no thanks"? It's hard to do that, by the way, when you get an inbound opportunity. We're really gonna focus on where we play in CRM. Now, one of the targets will be, like you said earlier, the cross-sell, the ability to combine our CRM or add it to our ERP customers, we think is an exciting opportunity.

[Craig O'Neill, Interim CEO at Sylogist]

As a vendor that has the two products, we have the inherent advantage that we can build some really close integrations between the two that are difficult to achieve for customers that get an ERP from one vendor and a CRM from another. So that cross-sell will definitely be an important part of what we focus on. But that's how I think we can win in the CRM space. Although I've got more work to do, we have more work to do as a team to finalize which kind of target segments are we gonna focus on. In terms of the. Yeah, go ahead, Sujeet.

[Sujeet Kini, CFO at Sylogist]

Sorry, go ahead. Go ahead, Craig. I was just gonna follow on with a comment. You finish.

[Craig O'Neill, Interim CEO at Sylogist]

No, that's fine. You go ahead. I've said a lot already.

[Sujeet Kini, CFO at Sylogist]

Yeah. Gavin, the one thing I'd just like to kind of point out more from a numbers perspective, the reduction in Mission, which as you will see on the financial statements is significant. Couple of comments there. One is the reductions from a revenue perspective and a product perspective are entirely driven by project services in the main, and then additionally a smaller portion because of the Dodge related impact that happened, and that went through kind of primarily the maintenance and support line. From an overall SaaS subscription perspective, the Mission business overall continues to show, I will say, consistent growth, and it does show growth in the 7% range year-over-year from a SaaS subscriptions perspective.

[Sujeet Kini, CFO at Sylogist]

When one looks ahead to next year, essentially one could strip away the impacts of the project services decline as well as the more than significant churn that we saw in 2025, which was Dodge related. We do believe that there is a good level of runway going into 2026 from a Mission perspective when one looks at it from a SaaS subscriptions perspective mainly.

[Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark]

Thanks. Thanks a lot. Pass the line.

[Sujeet Kini, CFO at Sylogist]

Sorry, say that again, Gavin. Oh, yeah, sorry. Got it.

[Operator]

The next question comes from Suthan Sukumar with Stifel. Please go ahead.

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

Hey, good morning, guys. This is Nigel, speaking on behalf of Suthan Sukumar. I just wanted to follow up on pipeline activity. I know you mentioned the Texas OAG VSS deal. I was wondering how that's affecting your pipeline and, overall, what are some biggest drivers of the total pipeline today?

[Craig O'Neill, Interim CEO at Sylogist]

It was tough to hear you, but I think I got that. VSS and how it's affecting the pipeline and the biggest drivers in the pipeline overall. Is that correct? Did I hear that right?

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

Yep, that's correct. Thank you.

[Craig O'Neill, Interim CEO at Sylogist]

Okay. Yeah, very good. First of all, VSS. We think there's a really exciting growth opportunity with VSS. You know, we've had some really successful, some really exciting wins. There are many more opportunities out in the market, you know, as you look across the U.S. state by state, and we know we've got a great solution, we've got a great product for that marketplace. We're really excited about the VSS opportunity. The reality of VSS opportunities is kind of good news, bad news. They're big. It's elephant hunting, and it's great to hunt elephants, but if it takes a little longer than you think and it's sitting in your pipeline, that elephant can have a material impact on your results, you know, in a quarter. That's just the nature of elephant hunting. We love that opportunity.

[Craig O'Neill, Interim CEO at Sylogist]

We love that there's a lot of elephants to go hunt out there. We think we're really well positioned that, you know, once we get an elephant in our sights, that we can win that one, that we can hunt that one successfully. You know, It's not like we can generate demand. It's not like that's pipeline building where we're convincing states to make a change. We're really reacting to them deciding to make a change that it's time. The good news is that most of them are on very old software, and they know they need to make changes, so it's more about their own budgeting and so on. Once they decide to make the change, we think we have very, very high probability to win those states.

[Craig O'Neill, Interim CEO at Sylogist]

We're excited about that, but it will cause a bit of lumpiness in our pipeline because, you know, they're, they are elephants. Most of our other products, we are not. In fact, really our other products, we're not elephant hunting. It creates this dynamic where there's a bit of a lumpy pipeline around VSS. But we're excited about that. We're really excited about that product. It's definitely going to be one that we're putting even more focus on. Generally speaking, in terms of pipeline drivers, you know, it's interesting when I look at this, the various markets that we work in, you know, we just confessing the reality of it, we've got a couple of pretty old products that need replacing, and we've taken the initiative to build new modern versions to replace them.

[Craig O'Neill, Interim CEO at Sylogist]

The reality is, a lot of our potential customers are on really old products from competitors, so there's lots of replacement opportunity across our various target markets. Now, they're not big projects like the VSS projects, but they're good-sized projects, and there's lots of them. What's similar to VSS, though, is, there's not that many cases where we can drive or generate the demand. Just the nature of these organizations, they're going to act when they choose to act and when they can get budget. We wanna make sure we've got, you know, high degree of awareness, that there's great, customer reference ability, there's great word of mouth, "Gee, that product from Sylogist is great," so that, you know, when they do come to the place where they're going to act, they're thinking about us at the top of the list.

[Craig O'Neill, Interim CEO at Sylogist]

As part of our sales and marketing, we wanna focus and build awareness and a good sort of word of mouth kind of vibe in our most focused markets. It's really about reacting and responding extremely well. The minute there's an opportunity that comes up, being right there, answering potential customers' questions, working with the partners that are close to that customer, and to evaluate the best road and so on and so forth. That's not really different than what it's been for Sylogist, but it's gonna be more focused on our biggest growth opportunities.

[Craig O'Neill, Interim CEO at Sylogist]

We think because of that, we'll have, you know, more customers that come to us in those markets, and that we'll be at the top of the list and that we'll do a better and better job in terms of RFP responses and sales cycles so that we're the winner at the end of their sales process.

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

Thank you. That's great. Last question for you. Let's touch on what's happening on your end from an AI perspective. What are you hearing from customers in terms of priorities for that and, how is that guiding your AI roadmap?

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. I'm glad you asked that because I think it's such an important question. I'm a computer scientist by education. I've been in software my whole career. I'm sure you've all heard this from others like me, other computer geeks like me, that there's never been as disruptive a time in software and computer technology as there is right now because of AI. Any company, any software company, no matter how good, that doesn't fully embrace AI, both in terms of how it builds software and maintains software and tests software, and also how the features, the runtime features actually work within the software. Any company that doesn't embrace that fully probably won't be around in five to 10 years. I believe that 100%.

[Craig O'Neill, Interim CEO at Sylogist]

I've spent time with our product and development people, and we all believe that, and we're taking action now. We're starting a project, I believe it'll be next week, if not the week after, to look at every aspect of how we build software and how we embrace AI tools, LLMs that are, you know, Claude Code and others that are so good at designing and architecting software and writing code and building test cases, et cetera, et cetera. We're gonna be examining every part of the process and I think we're gonna achieve really significant productivity gains in our product and development groups. Along with that, as we put more focus. We talked about sort of focusing the beam of our sales and marketing investment.

[Craig O'Neill, Interim CEO at Sylogist]

We're doing the same with our R&D investment, focusing on those same products where we think the biggest opportunities are. That's gonna increase some bandwidth. The combination of using AI to be more productive and then focusing more resource on our products with the biggest opportunities gives us more bandwidth to expand our product roadmaps. AI will be a big part of that. The new compelling features that we add, some of those will be exciting AI-based features, agents and LLM sort of supported functionality and decision-making and so on in the UI and whatnot. You'll start to see AI both in how we do things and what we're delivering to customers.

[Craig O'Neill, Interim CEO at Sylogist]

We think that's gonna make a big difference for the company, both in terms of win rates with customers and in terms of just our productivity and efficiency.

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

Got it. Just lastly from me, on margin, I appreciate there's still more investments to come, but I wanted to check in on what the near-term outlook for, I guess generally OpEx investments and how we should think about a recovery in margin, and potential margin expansion here. Is there a time in the near term where we return to historical levels if achievable? If so, is it just a matter of managing investments? Just curious on that. Thank you.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. Yeah. That, that's an excellent question. Sujeet, if you have some thoughts, you can weigh in. I'll just give the first thought, which is we're still working that out. You know, we wanna get through this transition. That's gonna take some effort to do that. We know that once we get through it and we hit our stride, we're gonna see higher growth and higher margins. It's this interim period. How much left is there to do to complete the transition, to get focused on the right products and so on? We haven't figured out yet, although we're actively working it. We haven't figured out, you know, exactly what that remaining transition period is and exactly what are the investments we need to make. The jury is kind of out.

[Craig O'Neill, Interim CEO at Sylogist]

Looking down the road a little bit, certainly call it kinda three-quarters down the road. I'm confident you're gonna see a very different picture. It's the interim period. How's that gonna change month by month, quarter by quarter? We're not quite sure yet. I'm gonna kind of plead the fifth on that. Sujeet, feel free. Sujeet's done a lot more financial modeling than I have at this point. If you've got other things to add, by all means, go ahead.

[Sujeet Kini, CFO at Sylogist]

No, I mean, Craig, the summary there was excellent. I mean, that's exactly where we are in terms of how we're thinking about next year. From a modeling perspective, the only additional comment I would make is that we are modeling it out by product, essentially using a Rule of 40 lens, so to speak. What we are doing, Craig and the management team, we're essentially working through all of our business units, stack ranking them in terms of where we want to invest, where we want to slow down, and so on and so forth. It, you know, as Craig said, the jury is still out in terms of the, you know, our exact decisions in terms of spend for next year.

[Sujeet Kini, CFO at Sylogist]

We would not like to at the moment comment on timing, but safe to say, the one thing that we are doing is we're really looking at the business from a unit metrics granular level to decide upon, you know, what the best essentially putting our dollar to the highest and best use sort of thing. That's what we are doing.

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

Got it.

[Daniel Rosenberg, Equity Research Analyst at Paradigm Capital]

Thanks, Nigel.

[Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research]

I'll pass it on.

[Operator]

Once again, if you have a question, please press star then one. Your next question comes from Daniel Rosenberg with Paradigm Capital. Please go ahead.

[Daniel Rosenberg, Equity Research Analyst at Paradigm Capital]

Hi, good morning. Thanks for taking my questions. Apologies if they've already been asked. I joined the call a bit late. My first one goes to Craig. I was wondering, I mean, you have past history with the company, but have, you know, also had a period where you were away. So I'm curious, you know, given your first few weeks, what things have changed since you had parted ways? If you could speak to some of the positives and some of the opportunities you see, albeit, understanding it is early days that you've been in the seat.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. Yeah, for sure. I think I'd probably say that, you know, when I left, when I stepped down from the board a couple of years ago, the company had started this transformational journey that I mentioned in my opening remarks. Actually, I'm sorry you probably didn't hear those remarks. But I spoke to this transformational journey that started a few years ago, so I was part of that beginning. We knew, I certainly recognized that it was a very challenging journey. You know, moving from some very legacy products to new modern SaaS products, converting a sizable customer base from the old products to the new products. I'm sure you've seen many stories with different software vendors that have addressed that challenge, and it is really a challenge. It's hard to do.

[Craig O'Neill, Interim CEO at Sylogist]

Moving to a partner ecosystem that is very involved in both channel sales and delivery of projects. All really hard things to do. Company knew that it was going to be hard to do, so no surprise there. Coming back and looking at it a couple of years later, you know, part of my reaction was, "Yep, it was hard." The other is it's taken longer than we thought back at the time and probably that anybody thought. Much of the hard work has been done, so that's the good news. I was saying earlier, a lot of my focus now is really getting tight, really getting clear on product by product, what's left to be done to really complete the journey.

[Craig O'Neill, Interim CEO at Sylogist]

We're not looking at it wholesale en masse everywhere, just, like, sort of blended together, but product by product, what's left to be done. We're also looking at where are the best market opportunities and drivers for change, and then really focusing in our effort to complete the journey where our best opportunities are because we think that's how we then turn into higher quality revenue, higher recurring revenue, higher margins, higher growth rates, et cetera, et cetera. It's really kind of, in some ways, we're in the red zone now, and we're gonna be changing tactics somewhat to make sure that we get to the goal line as quickly as possible. No huge surprises per se, just probably a characterization of, yeah, it was hard and maybe even a little harder than we thought.

[Craig O'Neill, Interim CEO at Sylogist]

It's taken a little longer than we thought, but the goal line is in sight.

[Daniel Rosenberg, Equity Research Analyst at Paradigm Capital]

Appreciate those comments, Craig. You know, in what you said, you mentioned change there, and obviously there's a lot of change that has happened at the product level, leadership level, board level. I guess my question to you is, as you kind of look towards resolving and getting clarity on the strategy of the business, are there any timelines or goalposts you could give that, you know, expectations of when you hope to have a permanent CEO in position, when you hope to have, you know, what would be, if you can put out some soft timeline of a year from now, two years from now, we wanna be, you know, firing on all engines?

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. As long as you're okay with a very soft timeline because I can't get too specific here. What I will say is the search committee of the board is active right now. They're interviewing candidates. They're developing a shortlist, so they've made progress, and clearly they're gonna be very, you know, thorough and careful. It won't happen overnight, but that's underway and I can't tell. I'm not sure if they have a line of sight on when they think they'll be done. They've just not told me this. It's, you know, within a relatively short period that they'll be done that. Call it kind of inside of two quarters certainly that they'll be done that in terms of a soft timeline there.

[Craig O'Neill, Interim CEO at Sylogist]

In terms of, you know, when do we get to the goal line product by product? It depends on the product, of course, but some are close, some are, I would say, you know, a quarter from now, we're probably where we want to be. Maybe it's slightly longer than that or slightly less, but you know, plus or minus, it's quite short term and some are a little bit longer than that. Certainly I would say within, if we talk a soft timeline, within a year, I think we're where we want to be with each one of the products where we believe we have the best opportunities.

[Craig O'Neill, Interim CEO at Sylogist]

For the products where we think, "You know what, this is in a market or just the nature of the product where it's gonna stay healthy, but we don't see it as a big grower, so we're just gonna change how we think about that product, and we're moving more into a support maintenance mode of those products and keep those customers healthy and happy." But where we think there's big growth opportunities, it'll certainly be inside of a year that we're really pursuing those full steam ahead, well-positioned to win.

[Daniel Rosenberg, Equity Research Analyst at Paradigm Capital]

Okay. Appreciate that. You know, what I'm hearing is, albeit, again, understanding that it's early days and you guys are taking a targeted approach, in terms of where investments should occur, or where it should be, kind of just maintained, let's say. On net, how should we think about that, for the company? You know, does it require incremental additional expenses, to get the products across that goal line? Obviously, it's, you know, we think about things long term, but just trying to get a sense of, you know, that investment versus, you know, those end goals towards growth.

[Craig O'Neill, Interim CEO at Sylogist]

Yeah. Short answer there is the jury is still out. We're still working that out. You know, we know that the top areas of focus, the top products of focus will get incremental investment, but that will be shifted from other areas. On balance, whether there's any incremental investment, i.e., will our overall spending go up? The goal is for that not to happen. The goal is that we'll actually find some synergies and some areas of improvement. For instance, like with the use of AI, that we can do a lot more with the team that we've got. We don't need to add expense. The goal is not to raise expenses at all. The goal is to actually, you know, drive some efficiencies. We're still working on that. It's too early to tell.

[Daniel Rosenberg, Equity Research Analyst at Paradigm Capital]

Okay, great.

[Operator]

This concludes our question and answer session. I would now like to turn the conference back over to Craig O'Neill for any closing remarks.

[Craig O'Neill, Interim CEO at Sylogist]

Okay, thank you so much. I'll keep it brief because we've had a good long call here and excellent questions. Thank you so much for the questions. Thank you for your continued focus and support of the company. We're looking forward to the road ahead. As I said, we're optimistic about the future. We see the goal line in sight. We're looking forward to showing that this transformational journey was worth it. Took some time, but was well worth it, and really puts the company on a great growth trajectory for a sustained period for the long term. Thanks for joining us today. We appreciate your support. Take care.

[Operator]

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Craig O'Neill, Interim CEO
• Sujeet Kini, CFO

Analysts

• Amr Ezzat, Managing Director and Deputy Head of Research at Ventum Capital Markets
• Daniel Rosenberg, Equity Research Analyst at Paradigm Capital
• Gavin Fairweather, Co-Head of Research and Technology Analyst at ATB Cormark
• Jennifer Smith, Capital Markets Communication at LodeRock Advisors Inc.
• Nigel D'Souza, Senior Investment Analyst at Veritas Investment Research