Q2 2026 Sylogist Ltd Earnings Call Transcript
Key Points
- SaaS subscription revenue grew 5% year-over-year, with SaaS ARR up 6%.
- Adjusted EBITDA margin improved sequentially from 7.9% in Q1 to 10.8% in Q2.
- Recurring revenue mix increased to 76% of total revenue, up from 70% a year ago.
- SaaS revenue grew 17% in the Solution segment and 14% in the Gov segment.
- Management is taking direct action to improve project services execution and delivery, with a clear focus on accountability.
- The company has a strong base of mission-critical cloud products and is seeing positive feedback from customers and partners on product quality.
- Cash balance has improved to approximately CAD9 million as of the call date, entering the higher cash generation period.
- The company is leveraging AI both in its products (e.g., Microsoft Copilot) and internally for efficiencies.
- Management is confident in the growth potential of the Gov ERP and Victim Services segments, with building pipelines.
- The company has a strong partner network, including major ERP and accounting firms, committed to investing in Sylogist products.
- Total revenue declined 6% year-over-year, driven by lower project services and hardware revenue.
- Project services revenue fell 20% and gross margin dropped to 8%, indicating significant underperformance.
- SaaS net revenue retention declined to 99% from 107% a year ago, due to churn in legacy customer base in Gov and Ed segments.
- Adjusted EBITDA margin fell to 10.8% from 15.3% in the same quarter last year (though comparable on a like-for-like basis).
- GAAP net loss was adversely impacted by CAD0.7 million in shareholder engagement costs and CAD0.2 million in severance accruals.
- Cash balance at end of Q2 was only CAD2.5 million, adversely impacted by shareholder engagement costs.
- G&A expenses increased to CAD2.8 million from CAD2.5 million due to higher professional fees and legal expenses.
- The company is still in the process of improving product portfolio and execution, with more work ahead.
- Legacy customer churn remains a concern, though management says it has been contained.
- The company has discontinued capitalizing R&D, which may pressure reported profitability.
Thank you for standing by. This is the conference operator. Welcome to the Sylogist Ltd second quarter 2026 results conference call and webcast. (Operator Instructions)
I would now like to turn the conference over to Alex Balca. Please go ahead.
Thank you, Nick, and good morning. Joining me to discuss Sylogist's second quarter 2026 results are Joel Leetzow, Sylogist's Chief Executive Officer; along with Sujeet Kini, the company's Chief Financial Officer. This call is being recorded live at 8:30 AM Eastern Time on Wednesday, August 12, 2026. I'd like to remind everyone that Sylogist's second quarter 2026 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 the call today 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
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