Sylogist Ltd. (SYZ-T)

Revenue was up 3% to $16.3 mln for the quarter. SaaS ARR was up 15% and total ARR was up 6%. Net revenue retention was 108%. Bookings looks positive as well. Overall it looked like a solid quarter as the company begins to execute on their software strategy.
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Stock's started to recover under the new CEO. Now focused more on faster growth. Margins have pulled back because expenses have increased, but still a high-margin business long term.

Pretty much wholesale company restructuring. Met with new management within last 6 months, made an investment this past December. Rates management quite highly -- investing in product and sales. Educational and non-profit space. Quite likes the business at this valuation.

EPS of 1c missed estimates of 3.5c; revenue of $16.17M missed estimates of $16.46M. EBITDA of $4.75M beat estimates of 11%. Total sales rose 4.5%. Subscription sales rose 16.6%. SYZ bought back 85,700 shares. Canaccord raised its target by 50c to $12.50. Despite the 'miss' the results remain in line with the company's forecast, and high bookings and confidence talk from management are encouraging. 
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Is watching it. Great, little SAAS company that suffered when the market shunned small caps in 2022-3. They're doing all the right things, valuation is fine and ROE margins are great. Their customers are governments, starting in western Canada. They buy companies that add-on to their existing products.

We would view SYZ as a possible take out, if the stock cannot regain some of its former valuation mutliples. Its transition from 'income' to 'growth' was not easy, but investors are supporting it now. It is trading very close to recent highs and is up 26% YTD so short term momentum is good. But it may still take awhile to get to the old highs. Even not considering its high dividend from before, earnings per share, even with high growth, is expected at 26c next year. That is still well below its range of 45c to 50c in the 2018 to 2020 period. But if SYZ can string together a few years of strong growth it will have a chance to get north of $10 or $11 down the road. 
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The latest reported results for the fiscal year that ended September 30, 2022, were announced on November 14th. 
Revenues at $14.2 million were up 32% over the prior comparable period; gross profit margin was down almost 12 percentage points; profit before income tax at $611,000 was down 68%. 
Closing cash on hand was $19.4 million and $4.5 million was used on December 20th to reduce debt. 
SYZ announced at that time it was revising its capital allocation strategy and reduced its dividend from $0.50 to $0.01 per quarter. 
Two significant private investments in December diluted existing shareholders.
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We think it still has some potential. 
It was dropped from our income portfolio because of the dividend cut, and really only for that reason. 
The company cut also because it wanted to conserve capital for growth. 
EPS is expected to double over the next two years. 
We would say it is a 'reasonable' buy.  
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Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Good growth potential. Earnings are expected to rise 80% next year. They have a lot of cash on hand and the lowering valuations in tech could create interesting buying opportunities. Facing a lot of selling pressure in the market. Would recommend to wait until the share price settles. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Has good growth potential from here. Has good cash levels for acquisitions. Valuations have been compressed, presenting interesting opportunities for management. Wait until shares settle and sentiment reverses. Facing selling pressure right now. Dividend is sustainable at 75% of cash flow. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. It hasn’t had a good year so far, but it is up 6-fold in the last decade. EPS should nearly double in 2023. The company is net debt-free. A fairly volatile stock. Some acquisitions are expected this year. Has a history of delivering longer term value to shareholders. Unlock Premium - Try 5i Free