Good day, ladies and gentlemen, and welcome to Calian's second quarter 2022 earnings conference call. At this time, all participants have been placed on a listen- only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Kevin Ford, CEO of Calian Group. Sir, the floor is yours.
Thank you, Paul, and good morning, everyone. I welcome you to Calian's Q2 fiscal year 2022 earnings call from Calian's office here in Saskatoon, where the local time is just after 6:30 A.M. With me in Saskatoon is Patrick Houston, our Chief Financial Officer. Please note that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different than actual results. I am pleased to report another strong quarter for Calian across many key performance metrics. Not only was this our highest quarterly revenue figure in company history, we also achieved record highs in gross margins and EBITDA. Revenues for the second fiscal quarter was CAD 142 million, a 3% increase compared to the same quarter last year.
This time last year, we saw tremendous demand in our Health segment as we helped Canada respond to COVID-19. As that work has now ended, our ability to replace that revenue with contributions from multiple different parts of our business speaks to our diversified growth agenda. Our long-term effort to expand gross margins was up again this quarter. Gross margins were 28%, which is a 4% increase over last year, and 6% from two years ago. We continued to see strong momentum this quarter on new contract signings. This quarter came in at CAD 160 million, giving the company a backlog of CAD 1.3 billion, and our first month of Q3 has seen this momentum continue with some key wins.
This quarter, we achieved significant milestones across our four-pillar growth strategy that I believe will result in long-term value for Calian. Our customer retention efforts are the foundation of our business, and our ability to re-win mandates with existing customers was very strong. CAD 75 million of our CAD 160 million signed this quarter was with long-term customers. We diversified our IT segment into the United States with the acquisition of Computex, which closed in mid-March. Computex brings us 1,100 new logos in the U.S., along with a very talented team in a fast-growing market segment. I welcome the entire Computex team to the Calian family. You've heard me speak frequently about our goal to introduce technology across everything we do.
This quarter, we launched our Calian Nexi Digital Health platform, and although it's still early, I'm excited to see where we can take this with Calian's trusted brand in the healthcare sector. You have also heard me speak about our goal to be a CAD 1 billion company. This has meant we have had to invest in our technology so we can scale Calian in an efficient manner. We also reached an important milestone this quarter in our ERP and technology monetization project, going live in our east and west locations. Our four-piston engine showed the strength of its diversity, with two of our four segments posting impressive growth. I'd like to now share an update on each of our segments.
The IT and Cyber S olutions segment saw the largest increase in revenue growth this quarter by posting impressive growth of 47% and 55% increase for the six-month period. Key to the significant growth has been our investments to grow our cyber practice in Canada and now in the United States, with almost 300 people offering a full suite of services from security and network operation centers, consulting, incident response, product resale, and integration. The need for a full suite of IT services has become even more crucial in today's environment. Our customer profile now includes commercial banks, hospitals, large-scale retail stores, and restaurants. The revenue growth was coupled with strong growth in margins and EBITDA. Gross margins increased from 21% in the previous year to 33%. EBITDA grew almost threefold from 6% in the previous year to 17% in our most recent quarter.
We continue to invest in our managed service platform, which offers customers reliable 24/7 services on a recurring revenue basis. This quarter, we have onboarded 20 new customers valued at just under CAD 500,000 of annual recurring revenue. These are exciting times for Calian in our IT segment, and we expect to see further growth next quarter with a full quarter of the contribution from our acquisition of Computex. Our Health segment saw a decline in revenue of 14%, mostly due to the end of our COVID response engagements. I'm very proud of our team for the effort and rapid response demonstrated over the last two years as they helped Canadians respond to the pandemic.
As our customers have begun to adjust their post-pandemic realities and began to evaluate new initiatives, excuse me, our health team is engaged to build a pipeline of opportunities that can generate growth for the coming fiscal year. The team was successful in signing CAD 26 million in new contracts that will contribute some revenue in the second half of this year and the next fiscal year as well. New contracts included paramedic services with large metropolitan cities and new pharmaceutical initiatives. Revenue for the quarter was CAD 45 million. Despite the revenue reduction, we were able to maintain our gross margins and EBITDA margins at 25% and 18% respectively. These are similar levels to the same quarter of the previous year and significantly higher levels than our 2020 levels of 21% and 14% respectively.
I'd also like to congratulate our team on the launch of the Calian Nexi Digital Health platform. Nexi transforms healthcare delivery using automation, analytics, and machine learning, and Nexi represents a key innovation released under the company's cloud initiative to support all health business lines. The Advanced Technologies segment saw revenue decrease 7% year-over-year. They ended the quarter with revenue of CAD 39 million. We've seen timing delay in the award of ground system projects in the first half of 2022. This was the result of multiple factors, which we anticipate will be resolved in the balance of this year. We have also seen supply chain shortages affect both us and our customers, and we expect those to continue in the second half of the year, and this is reflected in our estimates.
Gross margins and EBITDA margins were both above levels from this time last year, finishing at 28% and 14% respectively. The Advanced Technologies segment signed CAD 16.6 million in new business, including sales to Inmarsat, Sirius XM, and others, which included approximately CAD 8.1 million in software development. Our entry into the GNSS antenna sector continues to be a highlight. The demand we have seen continues to be very strong. Continued supply chain issues have limited this impressive growth, and customers who integrate our antennas have dealt with delays from the worldwide supply chain delays as well. That being said, our GNSS antenna sales are up 35% year-over-year despite these challenges. I'm also proud to announce that Calian became a founding member of the new space industry group named Space Canada. The national group will raise awareness for and help commercialize Canada's growing space sector.
Our Learning segment showed considerable revenue and margin expansion in the quarter. Revenue was up 19% when compared to last year. This was the result of two initiatives. The first being the strong returns from our technology offerings from our recent acquisition of SimFront and SimWave. These technology assets and synthetic learning environments, as well as virtual reality and augmented reality, have allowed us to expand our Canadian presence with the Navy, as well as several commercial customers. The second initiative was our investment in the last two years to grow our presence in Europe. My recent trip to Norway and London reinforced that Calian is successful in supporting NATO and European nations as they deal with this tragic and unprecedented war in Ukraine.
All nations have had to reevaluate their defense priorities and are looking at companies that have a track record of delivery and are nimble enough to construct solutions to address their ever-evolving needs. I believe Calian fits those criteria. This was evidenced by our announcement in April of a new contract to support the NATO Joint Warfare Centre located in Stavanger, Norway. Pictured is our core team who delivered this key contract. Now, our Chief Financial Officer, Patrick Houston, will discuss results and key performance indicators. Patrick.
Thank you, Kevin. During the past three months, our diversity and multiple growth initiatives proved to be key to deliver another record quarter. As COVID response contracts came to an end, we were able to replace this with new revenue at significantly higher gross margins. Our 28% gross margins this quarter represents an all-time high for the company. EBITDA margins were also a highlight, coming in at 11.8%, representing a new high for Calian. On a trailing 12-month basis, we've been able to achieve consolidated revenue growth of 11% and new contract signings of CAD 546 million has outpaced revenue. Cash flow performance in the quarter was strong. We spent a combined CAD 48 million on our M&A agenda. This includes the acquisition of Computex, which closed in mid-March, as well as payment of contingent consideration.
A number of our acquisitions have continued to perform above our initial expectations. This quarter, we paid earn-outs in full for Tallysman, CTS, and Cadence. This was offset by the release of the earn-out provisions and associated intangibles for InterTronic due to delays in project signings. This cash flow on M&A was offset by operating cash flows of CAD 14 million in the quarter and working capital recapture of CAD 4 million. This leaves us with a net cash balance of CAD 34 million, as well as access to our debt facility of up to CAD 120 million. This will serve as a key differentiator going forward on our M&A agenda. We've seen valuations take a significant decrease so far in 2022, and liquidity and access to capital is at a premium. Our efforts to diversify internationally continue to be positive.
We'll continue to see our non-Canadian revenue grow in the coming quarters as our momentum in the European learning sector continues, as well as our new U.S. presence in the IT segment increases in size. In addition to strong performance on gross margins and EBITDA this quarter, our adjusted net income grew considerably. We were able to increase this key metric by 41% to CAD 13.3 million. This is an indication of our ability to generate real cash flow. Free cash flow, including capital expenditures, was CAD 12.5 million this quarter. This compares to CAD 10.2 million last year and CAD 5.1 million from two years ago. That's an increase of 145% in free cash flows in the last two years.
Having posted new highs this quarter for both gross margins and EBITDA margins, we expect the increase in the second half to be less significant than the first, as some of our improvement initiatives will be offset by some macro cost pressures. On guidance, I must caution the revenues realized are ultimately dependent on the extent and timing of future contract awards, customer realization of existing contract vehicles, and any impact due to COVID-19 and the conflict in Ukraine. Based on currently available information on contract backlog, sales opportunities, and our assessment of the marketplace, we expect to continue our growth posture in the coming year. Our guidance does not incorporate any additional M&A activity, and should we close any new opportunities, their contribution would be incremental. At this time, we reiterate the guidance that we released following the Computex acquisition.
Our guidance for the fiscal year ending September 30th expects revenues in a range of CAD 580 million-CAD 625 million, adjusted EBITDA in the range of CAD 61 million-CAD 65.5 million, and adjusted net income in the range of CAD 41.5 million-CAD 45.5 million. Please see our press release and MD&A for a detailed reconciliation of our guidance. I'll now turn the call back over to Kevin.
Thank you, Patrick. I want to once again thank our staff for the amazing efforts over the last two years of COVID-19. The challenges of the last two years have made us stronger, and I want to recognize the amazing team at Calian for their dedication and commitment as we execute and deliver another record year for Calian. At our Board meeting here in Saskatoon, we updated the Board on our three-year strategic plan, Imagine 2023. I'm happy to report great progress across all of our growth pillars of customer retention, customer diversification, innovation, and continuous improvement. We will continue to invest in organic and M&A growth in support of our growth objectives. I believe we are a stronger company than before this pandemic.
The financial results are a clear indicator, but beyond the numbers, we now have more technology assets, talented employees, and footprint in new global markets that didn't exist for Calian in 2019. I also want to recognize that the ongoing crisis in Ukraine has repercussions all around the world, including in Canada, where almost 1.4 million Ukrainians live. Canada and Ukraine have had a long history of cooperation, and Calian supported Canada's response to the crisis by making a donation to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal. With that, Paul, I'd like to now open the call to questions.
Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Once again, please press star one if you have a question at this time. Please hold while we poll for questions. Your first question is coming from Amr Ezzat from Echelon Partners. Amr, your line is live.
Kevin, Patrick, good morning and congrats on a very strong quarter again.
Morning, Amr.
Morning, Amr. Thank you.
I've got a couple of segment-specific questions. Maybe we could start with Advanced Tech. What is driving that strong demand in GNSS antennas? Was it a case of being supply constrained and pent-up demand kicking in?
I think the team's done a great job of getting integrated with some large companies. You know, part of our solution is often getting integrated into a final product. They've done a great job getting into automotive, robotics, marine. That's been great. I think what we've seen, and Kevin spoke to it, is some of our customers are seeing supply chain issues as they try to ramp up demand and that gets an effect on us. I think that's just building up demand for future quarters. I think we're still pretty excited about our growth in GNSS.
Yeah, Amr, and Patrick's bang on there. You know, the requirement for precision location services across, you think of all the different platforms out there, is only gonna continue to increase. Even despite, as Patrick said, the supply chain, you know, impressive growth in GNSS, and I think it's gonna continue to just because of the reality of the world right now looking for those precision location services.
Are we at CAD 20-ish million in sales for Tallysman?
We should be getting close to that this year. We would have been, you know, certainly without supply chain and should certainly cross that next year for sure.
Great. Margins are still 50%? Is that still a good number?
Margins are strong. I think, you know, depending again on the end customer. But overall, we've been able to sustain that.
Fantastic. I'm having trouble wrapping my head around both the sales growth and the margin uptick in your IT and Cyber business. Maybe we could tackle sales first. If I exclude like CAD 3 million or CAD 4 million contribution from Computex, your sales in IT are up CAD 10 million from last quarter.
Yeah.
This is all organic. It's 20%-25%. What is driving that? Are there any unusuals that I should be thinking about?
I think if you think last quarter, we acquired Dapasoft at, I believe, in midway through the quarter last year. You kinda got this split between, you know, half of it was, you know, we had a full quarter of this quarter versus half of one last year.
I'm talking about quarter-over-quarter, Patrick.
Oh, quarter-over-quarter.
Yeah. Just from last quarter-
Yeah.
... you guys are up like CAD 9 million-CAD 10 million organically.
Correct. I mean, IT security and our Cyber business is, you know, running red hot right now. That's, you know, we did the acquisition. We have a huge backlog of customers right now. We've got significant amount that we need to onboard onto our current platform. Right now our biggest issue is getting the people to supply it. I think it's a good problem to have, but we're working hard to try to build up our capacity to meet that. Our on-demand was strong, and it was government year-end. We did see, you know, significant uptick in volume in the month of March as some of the federal customers deployed their budgets.
Okay. There is some one-off, but not so much like you've used-
Yeah, there's some one-off. I think those will come off next quarter, but then we're gonna have Computex obviously to your point. They-
Obviously.
... about CAD 4 million this quarter, which is gonna be a big contributor next quarter. I think you're gonna see, you know, again, a record quarter for IT next quarter.
I think to Amr's, it is Kevin. I think for me, you know, that balance of the recurring revenue as well as we start to have that baseline, and Sacha and the team are doing a great job on repositioning our revenue streams there. Clearly with iSecurity, our Dapasoft acquisition and cloud migration, our Corolar Virtual Care platform, and now with Computex, you know, I think there's lots of tailwinds coming into our IT group. I expect this is gonna continue definitely for the foreseeable future, that type of growth.
Great. I mean, you spoke to the margin uptick as well, like in IT. Let's like put Computex aside because that's gonna create volatility next quarter. Was there anything, again, like a one-off that sort of sparked your margin uptick this quarter in IT? Is it like sustainable?
No, I don't.
Outside of Computex, obviously.
You're gonna see improvements here quarter-over-quarter. I think Computex is gonna help pull it up. It certainly helped it slightly this quarter. I think these margins are, you know, we're able to maintain these and hopefully improve them in the coming quarters. I'd say that this is just the beginning.
Okay, maybe one last one. Your stock price has held up well in the face of, let's call it, very weak-ish markets. How do you think about M&A going forward with that stronger currency in hands? Is it fair for us to assume that you guys would deploy more capital, say in the next 12 months, than you did in the last 12 months?
That's a good question. I think, you know, our valuations have held up, which has been good. I think it's spoken to the performance. I think valuations are coming back towards us. I think that's another proof point, and we've got the liquidity and balance sheet to go. I think, you know, the combination of those things puts us in a good position. The M&A agenda is one of the main priorities we have, so we're gonna continue to execute on that. I think we also stick to, you know, doing disciplined transactions that are good value that generate long-term growth for us. I think things are, you know, coming into our range here, and we're just gonna keep doing what we're doing.
Great. Thanks. Congrats again. I'll pass the line.
Thanks, Amr. Appreciate the questions.
Thank you. The next question is coming from Deepak Kaushal from BMO Capital. Deepak, your line is live.
Thank you. Good morning, guys. It's nice to be back. What did I miss?
Morning, Deepak.
Yeah, we have a few minutes, Deepak. We'll fill you in.
Yeah. Well, thanks for the time again this morning, the questions. I wanted to circle back on the question, the sustainability of gross margin. Patrick, I think in your prepared remarks, you said not to expect, you know, the same jump that you saw in Q, you know, in the first half to sustain in the second half. Sounds like there's some tempering effects and some cost increases coming. Can you talk about where those costs are coming from? Are they on the supply chain side? Are they in the internal people side, the wage side? What's going on there in terms of costs?
Yeah, good morning, Deepak. Yeah, I think obviously we've seen some good increases in Q1, Q2. I think that's gonna flatten out here. Obviously, the second half is gonna be bigger than the first half, so I think it's gonna be strong. I think where we're seeing the pressures obviously on the labor side and some of the inputs have been going up. So I think we still have lots of margin improvement things that we're doing. Hopefully those are gonna offset. So I think that's a positive point for Calian that we've got both pressures on cost, but we've also got things that we're doing to increase our gross margins. We are investing continuing on the sales and marketing. We spoke about, you know, backlog in some of our customers.
We've got growth in Cyber, Gvirtual realityNSS that are getting constrained right now, so we're gonna continue to invest in those because they're gonna drive growth for next year. I think it's the right thing to do now to put those things in place, so that the long-term growth is there.
Got it. When we think about EBITDA margin, I mean, you're for the quarter, you're tracking ahead of, you know, the implied margin from the midpoint of your guidance. You know, when you take, you know, various numbers in your guidance, you can get various ranges in the EBITDA margin. Are you managing to a certain target for that? You know, obviously you have some control on your spending, so how should we think about margins on the EBITDA upside?
Yeah. I think about it for the year tracking back towards that 11%. I think this quarter obviously the performance was very strong. Like we said, we're gonna be investing here in the second half, and it is just the pace of how quickly we can do those things could generate, you know, a bit of variance there. But I think 11% is a good target to track to here for the year.
Okay, great. I've got another question for Kevin. You know, we've seen some major changes in the macro environment and certainly sentiment regarding inflation, you know, at least hitting the stock market. Are you seeing any incremental changes or recent changes in your customer decision-making and spending plans? Like I know you mentioned, you know, a delay in something in a project in Advanced Technology on the satellite side. What are the customers saying? Any changes there? Any changes in the way you think internally around managing your business strategically given the environment?
Yeah. Thanks, Deepak. Great question. You know, from my viewpoint, I think I've said this before and right through COVID, you know, what it's demonstrated to me as CEO of the company that, you know, the four segments operate in what I call, you know, can customers trust us when they can't fail? The work we're seeing and any delays are not because of in, you know, for inflation in some ways. It's just reality of either just getting, you know, procurement to the streets or challenges they're having on their side with supply chain.
Right now, I would say that, you know, even in Norway when I visited with the Joint Warfare Centre, the discussion wasn't around, you know, cost issues or pace of investment. It was about giving us a heads-up in capacity and requirements. We're seeing that right across everything that we're doing, frankly. I'm not expecting, you know, while we have some delays, I don't really see a long-term effect here. I think our customers are anxious to get going on a bunch of key initiatives.
I think frankly, longer term, it's just reiterating to me that what we do is important and will not be constrained, you know, in a major way by any kind of external factors, at least for the foreseeable future. I'm still pretty excited by where we are, and while there are some delays in certain areas, Deepak, I expect that these things will land at some point and will continue to support our growth objectives for sure.
That's really helpful. Just if I can throw in a follow-up, I want to limit it to two questions. On the Norway side and the NATO side, you know, you've won that kind of good contract. It's a good indicator of the market of the opportunity there. How do you size that? Or how should we think about the pipeline of opportunity in the context of your overall, you know, learning business or your training business?
Yeah, great question. You know, I came back. Number one, it's just been great to travel again. You know, I've gone from no travel over two years to being littered between Houston, Norway, London, and Saskatoon right now. Number one, I know for everyone on this phone call, that travel's back on, and it's great to see everyone, and it was great to see the team. You know, from a defense perspective, between Europe, Canada, and even now as we look at potentially Asia Pacific, I would say that the message we're getting from our customers is twofold. Number one, there will be increased investment in defense.
You've seen announcements obviously right across NATO, and all countries are now rallying behind the Ukrainian conflict to say that they need to continue to invest in tempo, invest in equipment. I expect that that's not gonna be a short-term effect. That's gonna be long-term. I think the increase in defense spending is gonna happen. Number two is that as we talk again to our customers, it's generally around two areas, capacity and making sure we're ready to support training initiatives, IT, cyber, space, as well as equipment, either upgrades or new equipment. I think for the industry in general, we have to be ready and be ready to support our key customer. Right now, I don't see any slowdowns in that defense spending.
I think it's gonna be positive for us, Deepak. That being said, you know, we have to see how these increased budgets parlay into the actual spending. We're ready to go. And again, with Joint Warfare Centre in Stavanger, Norway, I walked out of there just so impressed not only what we're doing, but how important what we're doing is to the mission of NATO.
Okay, great. Well, I appreciate the extra color on that, Kevin and Patrick, and I'm glad to be back on these calls.
Oh, it's great to have you back, Deepak. Missed you. Great to have you back, and we appreciate the overall launch coverage. Thank you for that.
Cheers.
Thank you. The next question is coming from Benoît Poirier from Desjardins Bank. Benoît, your line is live.
Yeah, thanks. Good morning, Patrick and Kevin. Congrats for the good quarter.
Thanks, Benoît.
Thanks, Benoît.
Yeah. Just to come back on Advanced Technology. Obviously, you provide great color about the precision antenna, GNSS, the outlook, the strong outlook for this division. Obviously, when we look at the revenue still down 7% as you ramp down the large ground system contract, I would be curious to get a little bit more color about the ramp up of the other ground system contract that is currently ongoing and maybe the ability to replenish the one that just ramped down.
Yeah. We've been continuing to deliver on that one. The one that we won last year in Europe, so that one's going well and things are progressing. That's been delivering. Obviously, smaller size than the one that's ramped down. We've got a few important opportunities that we're right towards the end here. We're hoping, if we get selected here in the next quarter, those projects would kick in towards the end of the year, next year, and then continue to kind of keep the funnel going on our ground system business. You know, as Kevin said, even though there's been delays, I don't think this continues for too long, and then some of them should get resolved here in the second half.
Benoît, you know, it's been great to be here in Saskatoon, and we have our Board here, and we're able to take a tour of our facilities and talk to the team directly about the future. You've known us for a long time in the context of, you know, the ground system in, ground system out type thing. I think the other element of Advanced Technologies is the assets we have in the truck continue to expand between the large ground system projects, the GNSS antennas. We look at our software development, which has grown significantly in the space, our new communication products.
You know, I think again, it's while there's some ups and downs generally, I'm still very excited about it because we just have so many moving parts right now that I believe will kick back into growth posture very soon in the short term here.
Okay. With respect to InterTronic, obviously, there's been a change of estimate regarding the contingent consideration to be paid. Does it impact the outlook somewhat for Advanced Tech or not much material, given the change of estimates?
I think AT overall, no, I don't think it's a material change. Obviously, we had some of those were based on contract signings and because of the delays we, you know, those timed out, and we don't have to pay those, so we've adjusted things accordingly. I think, you know, to Kevin's point, AT as a whole is still positive and got good momentum.
Again, Benoît, what's interesting is as you look at AT in our ground segment now, so with our acquisition of SatService in Germany, which continues to do very, very well, InterTronic in Montreal, our legacy Saskatchewan-based facility, there's a lot of coordination between those entities now on going after other opportunities and dividing and conquering certain manufacturing and engineering solutions. So I'm very impressed by that. Pat's doing a great job in running that on ensuring we're getting synergies from those and not just independently bidding, but now collectively bidding global opportunities. So InterTronic will continue to be a strong part of our solution going forward. I don't think the delays just short-term should be reflected as a negative.
I think it's just a reality of how we structure our acquisitions to make sure we're paying for value in the short term. Again, I'm still very excited to have them part of the family.
Okay. Moving to the Health segment, you were quite vocal about the benefits that were brought by the pandemic. Looking at the quarter, no big surprise obviously, to see a rundown. How should we be thinking going forward, in terms of the benefits from the COVID? I thought that there would still be a tough compare in Q3. Although Q4, this is where you're gonna be benefiting from an easy compare versus Q4 of 2021. Am I right to say that CAD 45 million is kind of a good base going forward for the Health segment?
Yeah. If I think Q3 will probably still be down year-over-year, but I think, yeah, to your point, Q4, yeah, it was starting to ramp down last year, so you'll see that effect less.
Exactly. Okay.
Like we said, building up pipelines here for and w e did win, you know, CAD +20 million in new business this quarter, so that should start contributing towards the end of the year and next year.
Yeah, perfect. Last one, just for learning, obviously very strong EBITDA margin performance, 21.6%. I'm just wondering what drove the big increase we saw in the quarter and also how sustainable it is going forward?
Yeah, thanks, Benoît. It's Kevin. I think to me, you know, our strategy, our growth strategy specifically around innovation. That segment's always been about trying to increase our differentiation, more technology assets, with the goal of increased margins. Don, who runs that group for us and his team have been, you know, on a charge here over the last couple of years of harvesting a lot of the intellectual capital that we've been doing in learning and creating intellectual property products. Then we've acquired SimFront SimWave. A few things are happening. Number one, as our brand gets stronger in this domain, we can demand higher value from customers 'cause they want Calian. They want Calian in there. They wanna, t hey don't wanna trust anyone.
They wanna trust the companies that can do this. I think we've demonstrated now not only in Canada, but globally, our ability to ramp up and deliver effective training. Excuse me. The other element is the SimFront SimWave element. This team has just been knocking it out of the park, frankly, from the day we acquired them. From my viewpoint, it's exciting to see their innovations both in immersive learning, virtual reality. I think frankly, we continue to have lots of discussions, not only about Europe now, but as you mentioned, Asia Pacific with SimFront SimWave that have a presence there. Clearly the 1+1=3 is relevant for the SimFront SimWave elements.
For me, I expect you're gonna see continued exciting news coming from our learning group, just 'cause of the pace we're on here right now.
Okay, perfect. Would the 20%+ sustainable from, versus Q2, Patrick, is it kind of what we should be trying to modeling?
Yeah, I think this quarter was really strong. I'd say, you know, in this range, plus or minus, obviously depending on certain projects and mix. I think what you've seen is at SimFront, SimWave, we've gotten up to speed here. This is kind of a new level. I'd say, you know, plus or minus a couple percentages should be the range here for the next couple quarters.
Okay. Thank you very much for the time. Congrats again.
Thanks, Benoît.
Thank you, Benoît.
Thank you. Once again, ladies and gentlemen, you can still enter a Q&A queue by pressing star one on your phone anytime. The next question is coming from Nick Agostino from Laurentian Bank Securities. Nick, your line is live.
Yes, good morning. This is Salman Rana on behalf of Nick Agostino. First of all, thank you for taking my questions and for the really strong quarter. Congrats for that. Kevin, my first question is actually on something that we came across just recently. There was a report that came out, saying that the Canadian military needs to strengthen its cybersecurity capabilities over the next few years or in the short term. Eager to know your thoughts on that and what that opportunity means for your IT, CS business.
Yeah. Great question. What we're seeing with our military customers is, you know, the reality is the domain that they operate in and have operated in continues to evolve. Where we used to have a primarily terrestrial, you know, land, sea, air mindset, the two other domains that are coming in that are obviously very relevant are cyber and also now space. As you look going forward, I think and again, when I equate back to my trip in Norway when this was mentioned to me, what a great position are we in as Calian to say, "Well, we can talk about cyber, we can talk about capability in cyber, and we can also talk to the space element of this." I think what we'll see from military is your point is bang on.
We're gonna see continued increased demand in both the historic elements of land, sea, and air. We will continue to see now increased focus on the cyber and increased focus on space. I expect that that's gonna be good news from our ability to support our key customer. The other thing I'd say, as we've seen in the growth in our IT business, cyber's not slowing down, and we're gonna continue to invest in our cyber platform that we have today and again, with Sasha's visions of how he wants to see it grow both in innovation, revenue base and diversification. Both the military, and we think our commercial customers, this is gonna be a growth pillar for Calian definitely for the foreseeable future. We're pretty excited by that.
We also take it seriously that we need to step up and make sure we're ready for when our customers need us most.
Okay, that's great color . Sounds like a really good opportunity. Talking to IT, CS again, just keen to know your thoughts on Computex. It really operates in a competitive market down in the U.S., especially in the mid-market where there are a lot of players involved already. How will Computex specifically differentiate itself from the other providers and, you know, continue to gain market share there?
Yeah, great question. You know, the exciting part for Computex for us was, you know, this is a company that's been in business over 30 years and has excellent reputation, excellent relationships with their customers. I mentioned the 1,100 logos. That's not made up. Now, that is an actual number, and I'm getting win announcements almost weekly from that team that are all new customers, non-government, basically commercial customers across a whole bunch of different sectors. Number one, I think you've got to look at their track record of delivery. We also just got briefed by their customer success team, and it is brilliant. It is brilliant how they look at customers, how they treat customers right from the first day they have that contact and ensure that customer sat is at the forefront of all that they do.
I think, frankly, as Calian, we're gonna learn from all of that. We have great customer success today, but how they formalize that process is something I was just so amazed by. The third piece is, you know, I think we all forget sometimes that the reality of a lot of customers are in right now. Small- medium business don't have, you know, massive IT groups. They don't have massive investment capability to continue to modernize. What they're looking for is companies like Computex and now Calian to become their partner, to do that for them, basically outsource it to us, 'cause both on the demand for talent, capacity, it's impossible to do that as a small- medium enterprise. I think we're just tipping the iceberg here.
The combination of innovation in our platforms, the track record, the customer success experience, as well as just the reality in the U.S. marketplace, I think is gonna do well. Again, I think you can see continued investment from Calian in the space, both in our platforms, but also looking for other companies to diversify our presence in the U.S. Lots of tailwinds there, and I know that team's ready to take on that charge, and we're excited to have them, as I mentioned, as part of our team because of that.
Okay, that's great color . Thank you. My last question is on the public-private split. If I remember correctly, in your last quarter, you mentioned somewhere in the MD&A that the public-private customer split was around 50% each, pretty much even in last quarter. Any color into how it was this quarter?
Yeah, this quarter came in similar. It's still in that close to 50/50. I think it was 52/48. I think yeah, we're seeing growth in both, right? We've spoken about continued spending with Canadian military, so that's gonna increase our government. Our non-government business is also gonna grow with the acquisition of Computex. I think you know, right now we wanna grow both of them, and the diversity is you know, it's a huge asset for us.
Okay, thank you so much. That's all the questions I have, and congrats again for the quarter.
No, great questions. Thanks, again, appreciate that. Thank you so much.
Thank you. That's all the questions we had. I would like to hand the call back to Kevin Ford for some closing remarks.
Okay, great. Thanks, Paul, for moderating. Much appreciated. Listen, I just wanna thank everyone who attended and continues to attend. I am still just very thrilled to see that our business model, the four operating segments, is working as we envisioned. Our long-term strategic investments in cyber and global defense are clearly showing returns, but that's not something we did yesterday. That's something we did years ago. It's something that I believe, again, as you look across all of our segments, we will continue to do in the context of long-term growth. I do believe Calian, and in the context of our core purpose of helping the world move forward, communicate, innovate, learn, stay safe, and lead healthy lives, has never been more relevant in a world in turmoil.
I wanna thank our team again for rising to the challenge over the last two years. Coming out of the Board meeting, where we just updated our strategy, I am one super excited CEO right now with regard to all the activity you see across our segments, across our corporate services, and as well as our ability now to also cross-sell with our services in a global market. With that, thank you so much. Everyone stay safe. Have a great day. With that, Paul, we can close the call.
Thank you. Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines. Have a wonderful day. Thank you for your participation.