Converge Solutions (CTS) Canaccord Genuity 44th Annual Growth Conference & Private Company Showcase 2024 summary

Strategic focus and business performance

• Shifted from aggressive M&A to integration, organic growth, and cash generation since late 2022.

• Achieved double-digit gross revenue growth year-to-date, with ongoing focus on EBITDA growth.

• ERP system rollout scheduled for October, expected to enhance reporting, integration, and future M&A readiness.

• Cross-sell strategy, new solution development, and experienced seller recruitment are key organic growth drivers.

• End-to-end solution capability across hardware, software, and services differentiates the business.

Financial outlook and guidance

• Moderated full-year outlook due to deconsolidation of a subsidiary, delayed end-user device refresh, and cautious market sentiment.

• North America remains resilient, but Germany faces ongoing macroeconomic and political headwinds, impacting government and education sector spending.

• Cautious guidance approach adopted, with a large AI/high-performance compute deal as potential upside not included in forecasts.

• U.K. operations affected by election-related spending delays; overall market cautiousness persists.

Services and operational strategy

• Intentional divestiture of non-core and low-margin services to focus on high-growth areas like AI, analytics, cybersecurity, cloud, and application modernization.

• Double-digit growth in strategic practice areas despite overall services decline.

• Professional services (advisory, implementation) and managed services (recurring contracts) both prioritized, with healthy margins in each.

• New ERP system expected to improve resource utilization and margin structure, with benefits anticipated in the second half of next year.