OneSoft Solutions Inc.

All figures are in Canadian dollars. Q2 2024 revenue increased C$609,000, or 24%, versus Q2 2023; gross profit increased 25%; gross margin was 76%, unchanged from last year; and net loss was C$615,000 versus C$558,000 in Q2 2023. For the first six months of 2024, revenue increased C$1.307 million, or 28%; gross margin improved 2.2 percentage points to 75.6%; net loss increased by C$133,000; adjusted EBITDA loss was C$17,000 in Q2 and C$261,000 for the six-month period; and the company generated C$942,000 of cash, ending the period with C$5.750 million in cash. Management said revenue guidance remains unchanged, as do net loss and adjusted EBITDA guidance, and reiterated that the company expects to sign new customers in the second half of 2024 if delayed deals close as expected. They also said IM operations revenue should recover later this year and could be at least equal to last year.

Dwayne Kushniruk framed the sale to irth as the result of a year-long strategic review that considered staying standalone, raising capital, doing M&A, and pursuing an uplisting. His tone was pragmatic and supportive of the deal: he emphasized the premium to market, the fairness opinion, and reduced execution risk for shareholders, employees, and customers. He also said the process was designed to maximize stakeholder outcomes and that the board would still consider a superior offer if one emerged.

Paul Johnston highlighted the quarter’s operating leverage and cash generation. He pointed to Q2 revenue growth of C$609,000, gross margin of 76%, and a net loss of C$615,000, then said first-half revenue rose C$1.307 million, gross margin improved to 75.6%, and adjusted EBITDA losses improved to C$261,000 for the six-month period. He also noted C$1.204 million of non-cash expense, C$1.289 million from working-capital changes driven mainly by C$1.813 million in deferred revenue, C$942,000 in cash generation, and C$5.750 million of cash at June 30. On guidance, he said the company still expects profitability in the second half if the sales forecast materializes.

Analysts focused on why sell now if the business is growing, whether a capital raise was really necessary, and why management did not use an investment banker. Management said the choice was between raising capital at a discount to market to accelerate growth or accepting a premium sale price with certainty, and that a banker was not necessary because discussions and valuation work already showed the transaction was above typical median and average multiples. They also addressed pricing power, saying broad 50% price increases would likely trigger severe pushback and could risk customer retention. On shareholder approval, management said major holders have been overwhelmingly supportive, the board must consider superior offers, and irth has a right of first refusal on any bona fide bid.