Release Date: June 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Annual revenues exceeded $0.5 billion for the second consecutive year, with $501.6 million reported.
- Revenues in the US and Canada region increased by 10.8% from the prior year.
- Recurring software services and other software revenues increased by 17.8% year over year.
- Gross margin improved to 59.5% on an annual basis, with a quarterly margin of 61.7%.
- Strong cash position with $111.7 million in cash and cash equivalents, up from $86.3 million the previous year.
Negative Points
- Overall annual revenue decreased by 2.5% compared to the prior year.
- International revenues declined by 28% year over year, impacted by regional unrest.
- Hardware revenue decreased from $325.7 million last year to $279.1 million this year.
- Foreign exchange loss of $4.4 million in the fourth quarter due to a weakening US dollar.
- Increased selling and administrative expenses, up by $3.6 million from the previous year.
Q & A Highlights
Q: Can you provide an overview of the demand environment in North America and internationally, and any changes in sales cycles or decision-making processes?
A: Brian Campbell, Executive Vice President of Business Development, stated that the demand environment is robust, with a strong backlog reflecting this. There has been an increase in quoting activity over the last few months.
Q: With cash now above $100 million, how are you planning to allocate this capital?
A: Douglas Moore, Chief Financial Officer, mentioned that they have an active NCIB with a limited number of shares they can buy daily. They declared a regular quarterly dividend of $0.20 and are reviewing opportunities for shareholder-accretive acquisitions, leveraging their strong cash position and balance sheet.
Q: What are your expectations for backlog conversion over the next 12 months?
A: Douglas Moore explained that they expect approximately 40% of the backlog to convert more than a year out. He noted that a significant portion of the backlog is US dollar-based, and the lower conversion rate impacts the overall backlog.
Q: Can you provide more color on the uptick in quoting activity and what might be driving it?
A: Brian Campbell highlighted strong demand for Evertz's products and solutions, particularly in the US and Canada region, which saw significant growth this year. Douglas Moore added that improvements have been seen over the past couple of months despite some macroeconomic uncertainties.
Q: Given the mix shift towards software, is it reasonable to expect gross margins to sustain at 60%?
A: Douglas Moore noted that while there is variability, the long-term trend is positive, with margins skewing higher over the past few quarters. However, they have not changed their target, acknowledging the mix change each quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
