Good morning, everyone. Welcome to Tecsys Third Quarter Fiscal Year 2025 Results Conference Call. Please note that the complete third quarter report, including MD&A and financial statements, was filed on SEDAR Plus after market close yesterday. All dollar amounts are expressed in CAD currency and are prepared in accordance with International Financial Reporting Standards. The company has added a companion presentation to today's call, which is available on their website at www.tecsys.com/investors. Some of the statements in this conference call, including the question-and-answer period, may include forward-looking statements that are based on management's beliefs and assumptions. Actual results may differ materially from such statements. I would like to remind everyone that this call is being recorded on Thursday, March 6, 2025, at 8:30 A.M. Eastern Time. I would now like to turn the conference over to Mr. Peter Brereton, Chief Executive Officer at Tecsys. Please go ahead, sir.
Thank you, and good morning, everyone. Joining me today is Mark Bentler, our Chief Financial Officer. We appreciate you joining us for today's call. We continue to see strong SaaS revenue growth, up 29% year-to-date and up 22% for the quarter, which, together with other revenue streams, including professional services, contributed to a record revenue quarter of over CAD 45 million. Meanwhile, SaaS bookings were diversified across markets and geographies, and we saw continued positive growth in our RPO, now sitting at CAD 210 million. Between new logos, renewing and expanding base accounts, and continued migration momentum, we are seeing sustained indicators of business health, reflecting steady progress toward our long-term value creation goals. I'd like to take a moment to summarize the key events of Q3 for Fiscal 2025.
Mark will then walk us through the financial results in more detail, and finally, I'll comment on our outlook, followed by a Q&A session. If you're following along on our companion presentation, I'll be speaking to slide three. Our third quarter builds on solid fiscal performance to date. We're looking at record quarter and year-to-date total revenue and SaaS revenue, solid bookings at CAD 4 million for the quarter, which, while down compared to Q3 last year, is up 31% on a last 12-month basis, and a strong adjusted EBITDA, up 34% compared to last year. Our performance this quarter reflects strong business activity with notable momentum in healthcare. This includes two new health system wins, one in the U.S. and one in Canada. We also added another U.S. health system a few days after quarter end.
We signed two major migration deals across healthcare distribution and health systems, as well as various expansion deals, as we continue to show value once we are into an account. We continue to see growing demand for our pharmacy solutions, with healthy pipeline activity driven by general market appetite, DSCSA regulatory pressures, and a growing Rolodex of Tecsys customers who are looking at their pharmacy operations as a next strategic focus. Over the past few quarters, I've mentioned our focus on expanding user groups and industry workshops. This effort is showing excellent momentum in the pharmacy market, particularly where we're currently promoting our upcoming Pharmacy Supply Chain Leadership Summit in Philadelphia, with five customer speakers and a good mix of customers and prospects registered. We are actively engaged with our customers in finding ways to highlight the impact of Tecsys within their organizations.
Since our last call, recent collaborations have included a webinar with Mayo Clinic and promotion of a ProMat session with Texas Children's Hospital, reinforcing our standing as a trusted partner in the healthcare supply chain and cementing our position as the supply chain software provider for the healthcare market. We continue to see some notable activities in the general distribution market. Last month, we announced new customers, Schaedler Yesco and Kirby Risk, have joined a growing list of electrical distributors selecting Tecsys. They join Werner Electric and others in adopting a WMS that is purpose-built with specialized functionality like wire cutting. I'd like to highlight as well how our growing partner ecosystem continues to drive impact, with Avalon playing a role in both of these new accounts.
More broadly, partners are influencing a significant portion of our pipeline, wins, and rollouts, with approximately a quarter of our deals involving partner collaboration. On the technology front, our partner engagements are also developing. In January, we announced the Order Dynamics Connector for Shopify to help Shopify merchants streamline their order management and fulfillment processes, enhancing inventory visibility, improving order routing, and increasing fulfillment efficiency. Across the board, our work with partners like KPI Digital, Avalon CSC, Shopify, and others are helping to create our market, accelerate our market access, and grow our reach in the market. Regarding market conditions, we're keeping a close eye on the international trade tensions landscape on both sides of the border. Right now, we don't anticipate any material impact on our business. We continue to gain traction across geographies, and we'll continue to monitor the situation.
Additionally, we've continued to buy back shares under our normal course issuer bid, spending CAD 1.7 million on share buybacks in Q3. As we continue to invest in the products we sell and in our go-to-market strategy, Tecsys is proving to be among the best cloud-based solutions available in the markets we serve. The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our third quarter and year-to-date financial results, as well as some financial guidance on key metrics.
Thank you, Peter. I'll start with slide four and focus first on SaaS. SaaS revenue growth was 22%, reaching CAD 17.3 million. Recall last year in Q3, we had a one-time revenue recognition of approximately CAD 700,000 due to the completion of a product performance obligation. Normalizing for that, growth in Q3 would have been about 28%. As Peter mentioned, Q3 was a record total revenue quarter at CAD 45.2 million. That's up 3% from the same quarter last year, but if you exclude hardware, that growth was 9%. Professional services revenue for the third quarter was CAD 13.9 million. That was up 7% from last year. We anticipate that professional services revenue will remain variable, influenced by the timing of project deliveries and the level of involvement from integration partners. That said, Q3 was also a record quarter for professional services bookings, which came in at CAD 24.4 million.
That was up 170% from the same quarter last year. Our professional services pipeline is now at a record level. For the third quarter of Fiscal 2025, gross margin was 47% compared to 45% in the same period last year. The key drivers here are increasing SaaS margins, as well as strengthened professional services margins in the quarter. Net profit in the quarter was $1.2 million compared to $759,000 in the same quarter last year. Basic and fully diluted earnings per share were $0.08 in the current quarter compared to $0.05 in the prior year quarter. Adjusted EBITDA was $3.5 million in Q3 Fiscal 2025 compared to $2.6 million the same quarter last year. Turning briefly to our year-to-date highlights, and that is slide five in the companion deck. SaaS revenue for the first nine months of Fiscal 2025 was $48.7 million. That is up 29% from the same period last year.
Our total revenue reached $129 million, a 2% increase from last year. Excluding hardware, revenue grew by 10%. For the first nine months of Fiscal 2025, our adjusted EBITDA increased to $9.1 million. That's up from $6.8 million in the same period last year, and that's a 33% year-on-year increase. Fully diluted earnings per share for the first nine months of this year were $0.18 compared to $0.11 in the same period last year. We ended Q3 with a solid balance sheet. We had cash and short-term investments and no debt. As Peter mentioned, we used about $1.7 million of cash in the quarter to buy back shares under our NCIB. Additionally, the board yesterday approved a quarterly dividend of $0.08 a share.
Turning to financial guidance on slide six, we're maintaining our Fiscal 2025 guidance for SaaS revenue growth of 30%-32% and adjusted EBITDA margins of 8%-9%. For Fiscal 2026, we're maintaining guidance for adjusted EBITDA of 10%-11%. We saw strong Q3 2025 professional services bookings and year-to-date growth in SaaS bookings. However, the timing of these bookings is expected to result in full-year Fiscal 2025 EBITDA margins and SaaS revenue being at the lower end of our guidance range. Based on actual third-quarter hardware shipments and visibility into overall fourth-quarter revenue, we're raising Fiscal 2025 total revenue growth guidance from flat to 1%-3% growth. We expect to provide Fiscal 2026 guidance with our Q4 and full-year Fiscal 2025 earnings release. I'll now turn the call back to Peter to provide some outlook comments.
Thanks, Mark. Tecsys third-quarter results reflect the consistent execution and momentum that we've built. Our solid footprint in key markets reinforces our confidence that we are well-positioned to upsell and cross-sell within healthcare. Our value proposition in pharmacy is compelling. There is heightened interest in this area, and we believe we are uniquely positioned to capitalize on this opportunity. We continue to see this as an important growth engine for us. Our converging and general distribution business also represents a substantial market opportunity. We are pursuing new marketplaces and geographies within this space. We are pleased that our pipeline is robust, and we continue to see strong buyer intent across our verticals.
In the coming months, in addition to hosting that Pharmacy Supply Chain Leadership Summit in Philadelphia, we are making a big showing at ProMat in Chicago and gearing up for what looks to be our largest user conference yet this June in Nashville. Our lineup there ranges from longtime Texas customers like LK Packaging, AMG Medical, and Trinity Health, alongside newer customers like Nissan and Accuristix. With strong market momentum behind us, we have an exciting opportunity ahead. As mentioned earlier, we are monitoring current international trade tensions and will adjust course should those impacts become material. For now, we'll continue to invest to drive growth in a market that is changing, changes that are spurred by aging legacy systems, digital adoption, and a shifting geopolitical landscape.
We often see change acting as an accelerant for supply chain transformation, so we will find those opportunities and capitalize on them as they emerge. In summary, I want to remind analysts and investors of our key themes for Fiscal 2025. First, an emphasis on continuing to refine our SaaS software so that it is easy to use and upgrade, and even easier to recommend to peers. Second, a continued strategic partnership approach allowing us to tap into new opportunities and fuel our scalability around the world. Third, we are committed to harnessing the full potential of data to drive value and innovation across our solutions. A final point I'd like to stress: across our markets, we'll continue to prioritize customer satisfaction and success. We have long stood by the philosophy of customers for life.
A big part of that formula is to deliver value quickly, stay connected, and then expand on the value delivered. With that, we will open the call up for questions. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number one on your touchscreen phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for our first question. Our first question comes from Amir Ezzat of Ventum Capital Markets. Please go ahead.
Good morning, Peter and Mark. Thanks for taking my question. Can you give us a bit more color on the growth this quarter? First, you mentioned two IDN wins. I wonder, are these pharmacy-focused clients? Then secondly, I'm trying to get a sense of how large these new logos are. Is your $650,000 average deal size a good assumption to make?
Sure. I think, first of all, I'll comment on the types of accounts. Right now, I will tell you, and this is absolutely typical for every time we've expanded into a new area of hospitals, the pharmacy pipeline is—I think there's many accounts in the pharmacy pipeline that are waiting to see how this next wave of go-lives goes. We have a wave of go-lives that are just sort of getting near the finish line now. We have one that went live in January, a couple that are supposed to go live in March or April, and we know we have a number in the pipeline that are waiting to see how those go. These were not pharmacy deals. In terms of deal size, these would have been, I think, Mark, a little below average, right? If you average those two?
Yeah. Very slightly.
Yeah. Yeah. Very slightly below average. I mean, the overall average that Amr is holding, if you look through the year and if I look through our Q4 pipeline and so on, that overall average is holding quite well. I think these two deals would have been a little bit below average.
Okay. That's helpful. On the pharma, I think it was last quarter when you said a third of your pipeline is pharmacy. I just wonder, is there a way to quantify how much pharmacy contributes to SaaS revenues today or total revenues today, and how do you sort of see that evolving in three or four years given how large this pipeline is? Do you expect it to go to a third of your revenues or a third of your SaaS revenues eventually?
Yeah. I mean, as it reaches a more mature run rate over the next few years, I think you're spot on. It should logically reach about a third of our total hospital revenue. If you look at where it's at today, it would be—I’m sort of shooting off the top of my head here—but I would put it at less than maybe 5%, 6%. I mean, it's just getting more, right? We do agree, Mark. It's in that range, right?
Yeah. Yeah. Definitely less than 10%.
Yeah.
Okay. That's quite helpful. Maybe a conceptual one. Of the IDNs that came to you specifically for pharmacy, so exclusively, I guess, for pharmacy, have any expanded or, I guess, in discussions to expand into other solutions, or do you expect these to remain pharmacy-only clients? I'm just trying to get a sense of how the expansion roadmap for pharma customers compares to those who start with your core healthcare offering.
Yeah. It's a great question. We just don't have enough history to answer that question yet. The first two that we did, one of them has remained pharmacy, but we expected them to. They're a small sort of university hospital network. The second one we did was already a general supplies and CSC and point-of-use client. They added pharmacy. The ones that have come on since that have come to us just for pharmacy, as I say, they're just going live now. If it follows a typical pattern, they'll want to be live and stable. Typically, they end up wanting to be live and stable for sort of a year or so before they're ready to cycle back and look at starting out on other areas of the hospital.
I am assuming that they will expand into other areas as most hospital networks seem to, but we will really only know that probably about a year from now.
Okay. I'll ask you again in a year, I guess. I'll pass the line. Thank you.
Thanks.
Thanks, Amir.
Thank you. Our next question comes from Gavin Fairweather of Corm ark Securities. Please go ahead.
Oh, hey. Good morning. Thanks for taking my questions. Appreciate the intro comments in terms of the healthcare momentum that you're seeing in the pipeline. Maybe just in terms of the political environment. I remember during the first administration, all the threats around the Affordable Care Act led to some deals pushing, and we've seen some headlines around potential Medicaid cuts here recently. Curious what you're hearing from your healthcare customers on that front and how you're planning to maybe adapt your go-to-market motions in case there is some disruption there.
Yeah. We're having to really just sort of watch it along with all the rest of you and trying to figure out where this is going. I mean, so far, there is very, very strong political support in Congress for not touching Medicaid. That's probably the one area of sort of potential risk. I mean, a lot of hospitals have a fair number of Medicaid customers and Medicaid-funded customers. They would be sensitive to a revenue hit if Medicaid were to get substantially slashed. It seems that that is highly unlikely at this point. That's really the one thing we're keeping an eye on. I mean, the tariffs don't seem to be affecting us at all. We don't even, in many ways, we don't really ship software across the border.
I mean, the software resides in U.S. public cloud infrastructure, and we simply open up access to it from there. We do not expect any issues on the tariff side. It would really come down to the impact on Medicaid. As I say, so far, that has been treated as sacrosanct. That is the one we are keeping an eye on. I mean, the beauty, of course, to SaaS and the whole SaaS world is that it is recurring revenue. If we did hit a slowdown with a sudden adjustment to a lower Medicaid payout rate or whatever, there is no question it would hit new bookings. It really would not hit existing revenue. We would have to just adjust our investment in sales and marketing and decide what to do based on what the actual booking rate looked like. At this point, we do not anticipate any.
Certainly, the feedback from our healthcare clients right now is full speed ahead.
That's great to hear. That dovetails well into my next question. Just in terms of the healthcare pipeline, I mean, how does that look? I think in the intro comments, you talked about a strong pipeline, but specifically in healthcare, how does that look? How does it kind of break down between expansions versus kind of new IDNs?
Yeah. It's rough numbers right now. Mark can correct me here. We were just looking at those numbers yesterday. The overall pipeline in healthcare is up about 20% from last year. The breakdown right now, if I remember rightly, is what, Mark? 2/3 new, 1/3 base?
Yep. That's right.
Yeah. It's fairly heavily dominated to the new or skewed to the new side right now. The challenge always with pipeline, as you may be aware, is you not only have to measure pipeline size, but also you have to measure pipeline velocity. Coming out of calendar 2023, when they were all losing money, or most of them were losing money, pipeline velocity was quite slow in calendar 2024. They've now been making money for over a year. Most of them are cash flow positive. As they are, the pipeline velocity seems to be accelerating. Right now, we're trying to sort of figure out what the bookings are going to look like for next year. There's obviously a lot of moving parts to that. I mean, we've already talked about the political landscape. There's the growing pharmacy side of things.
is the excitement around some of the early successes there, as well as the regular existing areas of focus. We will see. It seems like the velocity is moving in the right direction, as well as the size of the pipeline.
Appreciate that. Good to hear. Maybe, I do not know who should take this, either Mark or Peter, but on the professional services, very impressive bookings this quarter. I think you previously said you were planning to keep the size of the team roughly flat. I guess I am wondering if that is still the case, and you are just going to run kind of PS utilization at 90% for a few quarters. What would that kind of imply for quarterly billings and the PS gross margins?
Yeah. I think that was the quarter.
I mean, yeah. Yeah.
We've said before at the current staffing levels, we sort of feel like CAD 14 million to CAD 15 million pushing up the CAD 15 million PS revenue quarters kind of taps us out. We are actually looking at this pretty carefully to figure out when it's time to start adding new talent there. It takes a little while to get people up to speed there. We also have to be sensitive to the fact that we do have this ecosystem that's developed quite nicely over time. We want to make sure that there's professional services work that we could, yeah, that we could pass around in the right circumstances to some of our partners. As that PS revenue number starts to creep up over CAD 14 million and then pushes up towards CAD 15 million a quarter, we're going to need to start adding heads.
Okay. Appreciate that. Lastly, for me, probably for Mark, what effects are to be assumed in your fiscal 2026 margin guidance that you've provided? Maybe you can remind us how the hedges are rolling over the next few quarters.
Yeah. We're pretty hedged out there. The comp, on a comp basis, you can see in our notes to our financial statements, we've got $119 million US dollars' worth of hedges that cover out into fiscal 2026 and fiscal 2027. Our net exposure on US dollar currency is substantially hedged in 2026 and 2027. Those hedges are in the 135-136 range, which is kind of where we've been the last two years on hedged value. We kind of expect that the, I mean, what we've tried to do is take the FX noise out of that trend. Like I said, we're very hedged on that exposure. That's what we expect to be happening.
Okay. I'll pass the line. Thanks so much.
Thanks, Gavin.
Thank you. We also have another question from John Shao of National Bank. Please go ahead.
Hey. Good morning, guys. Thanks for taking my question. I just want to dig into a little bit into the PS booking this quarter. Could you give us a bit more colors on the nature of those professional services? What is the primary driver of year-over-year growth in the bookings? Is it just one large deal or multiple smaller ones? Most importantly, do you think this is going to be a leading indicator of your future SaaS growth?
I mean, overall, John, there was one deal in the quarter which was definitely quite large. It was actually an existing long-term client of ours that signed to migrate from the old on-prem perpetual license to a new SaaS or a new SaaS infrastructure. That came with a fairly substantial pro-services engagement. The rest of them were pretty normal. The funny thing is, even if I knock out that, it was still a home run from a PS booking. Even if I take that one right out, it was still a very strong PS booking quarter. The rest of the bookings were, as I say, pretty normal. They were PS bookings for expansions and add-ons and, in some cases, upgrades and so on. Again, some of this, I think, is just a delayed effect from what I mentioned earlier.
The hospital networks had run for a period of time cash flow negative, and they were ratcheting back all their spend on consulting services. I mean, they were cutting back wherever they could. They're through that. They're out the other side. They're trying to accelerate their transformation. There's a lot of pressure around data as well, cleaning up data to make sure that, I mean, everyone's trying to figure out how to truly harness AI. What they're all finding is that if your data is poor, AI is useless. There's a lot of focus on sort of cleaning up the data. Some of our latest releases have a lot of AI capability in them for cleaning up the item master file and related files. That's driving some movement forward.
There is sort of a lot of tailwinds in there, but there was one fairly substantial deal that definitely skewed it even higher.
You got it. That's great colors.
There's always lumpiness in there too. There's always lumpiness in there too, right, John? Whether it closes in one quarter or the next quarter. In Q2, we had professional services that were actually down compared to the same period last year. Some of this is just like the timing of how that happens. Even if you saw for that, it was, as Peter said, it was a home run quarter.
Yeah. Thanks. My understanding is the company has been delegating PS works to our partners. Any changes to that strategy given this quarter's strong bookings?
No, not really. I mean, we continue to work with our partners. I mean, and the partners get involved at all stages. I mean, we have partners where a lot of their work is done before we even get involved in the account. We have other partners that only come in sort of after we've landed an account. Some of them are really experts on our products and can do almost all of the work. Others are sort of, especially the larger SIs, more focused on the overall project management and integration work and testing and that kind of thing. We have the whole spectrum, but there's no real change to approach here. We do occasionally sub some work out to some of our partners if we get overloaded. Occasionally, they sub work out to us if they get overloaded.
It is quite a collaborative environment between us and our partners.
Good. Thanks for the colors. In terms of your complex distribution business, there has been a lot of noise on the adult supply chain in North America lately. Given your exposure to that market, what do you hear from your customers and any implications to your business at this point?
There's been no impact yet. I find it hard to believe that there won't be in some sectors. There's just so much uncertainty. I mean, how do you do any long-term planning in this kind of environment? It's fundamentally impossible if you're in a kind of business that is affected by tariffs. I expect there will be some impact. At the same time, if I look at the areas, the markets that have been performing well for us in the last year, they are virtually unaffected and still doing really well. We mentioned on the call a couple of electrical distributors we've just signed. Most electrical distributors buy local. They're buying product made in the U.S. They're holding it and selling it to customers that are in the U.S. for construction that's done in the U.S. In that case, they're completely unaffected.
Complex distribution has always been what I've sometimes described as a heat-seeking business. It's more of a horizontal than a vertical. Part of the trick is to constantly be analyzing the landscape and figuring out where the hotspots are and going after that hotspot. Some of the hotspots lately have been, I mentioned, electrical. Another one is drugs. We've done a lot of business in drugs in the general distribution business, which, of course, is somewhat related to our hospital healthcare business, but not entirely. You'll notice in the latest investor deck, actually, that we just put out, we've added some clarity around that in the slide that shows the mix of clients. We used to sort of define healthcare as just hospitals, but we've decided to more broadly define healthcare because they do interact. They both require, in some cases, DSCSA compliance.
They both require the same track and trace capability and so on. We have lumped together now sort of the full end-to-end healthcare supply chain from basically finished goods all the way through to patient bedside. We are defining it that way. On that basis, healthcare represents 76% of our SaaS revenue. You can see that the strength in that market, in the general distribution market, is also to a significant extent healthcare powered.
Okay. Maybe one last question from me. On your hardware business, it's a nice rebound from last quarter. Just wondering if that business will be subject to tariffs if you sell into your U.S. customers?
Some of that business will be, at least at this point. The proprietary technology that we actually manufacture or subcontract the manufacturing, that is currently done in Quebec. That would be subject to tariff. A lot of the rest of that business can be, it's hardware product that we buy and resell, and we can buy it in the U.S. and sell it in the U.S. I think that that will be less affected. Even some of that stuff, of course, is manufactured in China, for instance, and now there's 20% tariffs coming in on that. There are going to be some price adjustments right across the board in the area of hardware. At the same time, people still need hardware, so it may just keep right on moving. We're not sure.
Okay. Thanks for the color. I'll pass the line.
Great. Thanks.
Thanks, John.
Thank you. We also have a question from Suthan Sukumar of Stefel. Please go ahead.
Good morning, gents. For our first question, I want to ask, what percentage are you currently at in your customer base migration to SaaS? What incentives do you have here to expedite this? What's the typical revenue uplift on these migrations?
Yeah. I mean, I think, Suthan, thanks for the question. The way we look at that is between the two markets. In healthcare, we're quite far along in our migration to SaaS. The number of base customers left that are on-prem in that vertical is getting pretty small. On the complex side, the more traditional complex side, there's more. There's quite a bit more on-prem customers that are left that we still kind of work on. The tail on that, it'll be still multiple years long on that side. When we sell SaaS to those on-prem customers, we typically get about a two-and-a-half times uplift on revenue. A customer paying CAD 100 of maintenance is going to pay something like CAD 250 on SaaS. That's the general rule of thumb.
It varies quite a bit because quite oftentimes when they're going to migrate up to the next generation of, quite oftentimes, there's other things motivating that, which could mean expansion of functionality, etc. That would have a positive impact on that multiple. We typically think about that as a two-and-a-half times.
Okay. Okay. Great. On the distribution business specifically, you guys mentioned you're moving into new markets. Can you speak a little bit about that strategy? Is that pushing into new end markets or geographies? From a roadmap perspective, product roadmap perspective, what are you guys prioritizing today?
Yeah. First question, I mean, from a geography standpoint, it's really an effort to sort of continue to crack open more of the European market. I mean, the European market is slower right now. The funny thing is, Denmark, where our office is, the overall GDP growth is quite strong, but most of that is powered by Ozempic and Wegovy drug home runs that are that company is headquartered there. Aside from that, GDP growth across Europe is fairly low right now. We're still seeing some interest and some opportunity, particularly, again, in the end-to-end healthcare supply chain market. Global healthcare distributors, global drug distributors, etc., that need a good supply chain platform. We're putting a lot of focus and effort around that right now to try to expand more of the global footprint there.
From the standpoint of our roadmap, a couple of different areas we're focused on. I mean, we continue to invest heavily in pharmacy. There's still a lot of work to be done there. Every time we sort of work with a new client, we end up learning a few more things about pharmacy. And we've got a whole team that's sort of a rapid response team designed to sort of figure that out and get it into the next release. That continues. I mentioned AI earlier. Our innovation lab continues to focus on real-world practical ways to deploy AI. There's a lot of frustration in the business community right now around money that's been spent on AI with very little tangible benefit. We are focused on sort of actually delivering true sustainable value off of AI.
We're building out the whole sort of, well, it'll basically be our own LLM that'll be based on Amazon technology that'll allow our clients to query not only how to do things, but to literally sort of chat to get answers. What are my trends? What do I need to be worried about today? What's going on in my Atlanta warehouse, etc.? We've got some interesting things coming out there. Overall, it's pharmacy, data, and AI-powered capabilities off of that data. I mean, those are the big areas. If you drop down to the next level, I mean, I'm sure if my product managers were listening to this call, they'd be saying, "Well, you're forgetting the nine other things we're also working on." Big picture level, those are the priorities right now.
Okay. Okay. Great. That's helpful. The last one for me, just on the bookings and backlog conversion to revenue and the timing around that, can you speak to some of the moving factors here that's underlying your guide now that's moving to the lower end of the range?
Yeah. I mean, in terms of SaaS revenue, you see where we're at year to date. We're at 29%. I think some people, I think it was easy to forget about what happened last year when we had that kind of oddity in Q3 of last year, which kind of slowed down the comp growth this quarter to 22%. If you take that out, it would have been 28%. All that said, we're at 29% year to date right now. If you kind of do the math on the bookings we just closed, $4 million, the revenue on that tends to start pretty quickly. It's pretty easy to do the math on the impact of that. We take a forward look on what we think is going to book in Q4.
The timing of those bookings are going to drive some incremental revenue into that Q4. A lot of what we book in Q4 won't have a massive impact on SaaS revenue in the quarter. At this stage, it's pretty easy to sort of read the tea leaves and see kind of where we're going to fall in there. That's what motivated the guidance on the lower end of the range.
Okay. Okay. Great. Thank you for taking my questions. I'll pass the line.
Thanks, Suthan.
Thanks.
There are no further questions at this time. I would now like to turn the call back over to Mr. Peter Brereton for his closing remarks. Please go ahead, sir.
Great. Thank you, everyone, for your time. As always, if you have additional questions, please do not hesitate to reach out to Mark or I. We look forward to talking to you sometime right around the end of June or first week of July as we release our fourth quarter results. Thanks, everyone. Bye for now. Have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.