Shawn Boyd

Shawn Boyd asked why OCC's fourth quarter did not exhibit the historical positive seasonality of double-digit sequential growth, and if project delays contributed to this deviation.

Answer

Neil Wilkin, Chairman, President, and CEO, clarified that OCC's seasonality primarily impacts the first half versus the second half of the fiscal year. He noted that the sequential growth from Q2 to Q3 2025 was indeed double-digit. Tracy Smith, Senior Vice President, CFO, and Corporate Secretary, added that the sales split for fiscal year 2025 (46% in the first half, 54% in the second half) mirrored that of fiscal year 2024. Wilkin also stated that project delays were not significant enough to materially impact the fourth quarter, and OCC's diverse market presence helps mitigate such fluctuations.

Shawn Boyd questioned the absence of historical positive double-digit sequential seasonality in the October quarter (Q4) for the current fiscal year, asking if project delays contributed to this. He also followed up on the Lyttera collaboration, seeking clarity on when its impact on the top line would be visible in fiscal year 2026 and identifying any gating factors.

Answer

Neil Wilkin, Chairman, President, and CEO, clarified that OCC's seasonality typically impacts the first half versus the second half of the fiscal year, with Q2 to Q3 often showing double-digit increases. He stated that project delays were not a significant factor for Q4 and that OCC's diverse market presence helps offset fluctuations. Tracy Smith, Senior Vice President, CFO, and Corporate Secretary, confirmed that seasonality for FY24 and FY25 showed 46% of sales in the first half and 54% in the second half. Regarding the Lyttera collaboration, Wilkin reiterated expectations for a positive impact in fiscal year 2026, noting that significant, expeditious work is underway before sales contributions become visible.

Shawn Boyd asked for clarification on the revenue contribution from Red Violet's different market verticals and questioned the company's EBITDA margin trajectory, specifically asking if the long-term 40% target at $100 million in revenue is still valid and what to expect for 2025.

Answer

CFO Daniel MacLachlan stated that while specific breakdowns are not disclosed, revenue is distributed fairly consistently across the five key verticals. He emphasized that the company is in the 'early innings' in all markets, including financial services, collections, and government, with significant growth ahead. MacLachlan reaffirmed the long-term target of a 40% adjusted EBITDA margin at $100 million in revenue but guided that for 2025, margins would remain consistent with 2024 levels (around 31%) to support continued investment in strategic growth initiatives.