Calian Group Ltd

TSX:CGY

Earnings Call Transcript 2022-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to Calian's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Kevin Ford, CEO of Calian Group. Sir, the floor is yours.

[Kevin Ford, executive]

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 in the morning. 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 $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 help 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 [indiscernible] effort to expand gross margins was [ ebbing ] against this quarter. Gross margins were 28%, which is a 4% increase over last year and 6% from 2 years ago.

We continue to see strong momentum this quarter on new contract signings. This quarter came in at $160 million, giving the company a backlog of $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 4-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 for the existing customers was very strong. $75 million of our $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 the very talented team in the fast-growing market segments. I welcome the entire Computex team to the Calian family.

You have 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 health care sector.

You have also heard me speak about our goal to be a $1 billion company. This has meant we have had to invest in our technology so that we can scale Calian in an efficient manner. We also reached an important milestone this quarter in our ERP and technology modernization projects going live in our East and West locations.

Our forecasting engine showed the strength of its diversity with 2 of our 4 segments posting impressive growth. I'd like to now share an update on each of our segments.

The IT & Cyber Solutions segment saw the largest increase in revenue growth this quarter by posting impressive growth of 47% and 55% increase for the 6-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 retailer 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 services platform, which offers to customers reliable 24/7 services on a recurring revenue basis. This quarter, we have onboarded 20 new customers valued at just under $0.5 million 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 efforts and rapid response demonstrated over the last 2 years as they help Canadians respond to the pandemic.

As our customers have begun to adjust their post-pandemic realities, and began to evaluate new initiatives, 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 $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 [indiscernible] and cities and new pharmaceutical initiatives.

Revenue for the quarter was $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 health care 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 of 7% year-over-year. They ended the quarter with revenue of $39 million. We've seen timing delay in the award of ground system projects in the first half of '22. 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 $16.6 million in new business, including sales to Inmarsat, Sirius XM and others, which included approximately $8.1 million in software development.

Our entry into the GNSS antennas 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 antennas 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 2 initiatives. The first being the strong returns from our technology offerings from a recent acquisition of SimFront 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 2 years to grow our presence in Europe. My recent trip to Norway and London reinforce that Calian is successful in supporting NATO and European nations as they deal with this tragic and unpredicted 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. And 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?

[Patrick Houston, executive]

Thank you, Kevin. During the past 3 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 margin 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 $546 million has outpaced revenue. Cash flow performance in the quarter was strong. We spent a combined $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 earnouts in full for Tallysman, CTS and Cadence. This was offset by the release of the earnout provision and associated intangibles for InterTronic due to delays in project signings.

This cash flow on M&A was offset by operating cash flows of $14 million in the quarter and working capital recapture of $4 million. This leaves us with a net cash balance of $34 million as well as access to our debt facility of up to $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 the 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 $13.3 million. This is an indication of our ability to generate real cash flow. Free cash flow, including capital expenditures, was $12.5 million this quarter. This compares to $10.2 million last year and $5.1 million from 2 years ago. That's an increase of 145% in free cash flows in the last 2 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 from our -- that we released following the Computex acquisition. Our guidance for the fiscal year ended September 30, expects revenues in the range of $580 million to $625 million, adjusted EBITDA in the range of $61 million to $65.5 million, and adjusted net income in the range of $41.5 million to $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.

[Kevin Ford, executive]

Thank you, Patrick. I want to once again thank our staff for the amazing efforts over the last 2 years of COVID-19. The challenges of the last 2 years have made us stronger, and I want to recognize the amazing team at Calian for their dedication and commitments as we execute and deliver another record year for Calian.

At our Board meeting here in Saskatoon, we updated the Board on our 3-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 is 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 counting supported Canada's response to the crisis by making a donation to the Canadian Red Cross, Ukraine Humanitarian Crisis Appeal.

And with that, Paul, I'd like to now open the call to questions.

[Operator]

[Operator Instructions] And your first question is coming from Amr Ezzat from Echelon Partners.

[Amr Ezzat, analyst]

Kevin, Patrick, congrats on a very strong quarter again. 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?

[Patrick Houston, executive]

I think the team has done a great job of getting integrated with some large companies. So part of our solution [indiscernible] getting integrated into a final product. So they've done a great job getting into automotive, robotics, marine. So 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 that they try to ramp up demand and that gets an effect on us, but I think that's just building up demand for future quarters. So I think we're still pretty excited about our growth in the GNSS.

[Kevin Ford, executive]

Yes. Amr, and Patrick sort of bang on there. The requirement for precision location services across -- you think of all the different platforms out there is only going to continue to increase and even despite, as Patrick said, the supply chain, impressive growth in GNSS. And I think it's going to continue just because of the reality of the world right now looking for those precision location services.

[Amr Ezzat, analyst]

Are we a $20-ish million in sales for Tallysman?

[Patrick Houston, executive]

We should be getting close to that this year. We would have been certainly without supply chain and then we should certainly cross that next year, for sure.

[Amr Ezzat, analyst]

Great. And margins are still 50%? Is that still a good number?

[Patrick Houston, executive]

Margins are strong. I think depending again on the end customer, but overall, we've been able to sustain that.

[Amr Ezzat, analyst]

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 $3 million or $4 million contribution from Computex, your sales in IT are up $10 million from last quarter. So this is all organic. It's 20% to 25%. What is driving that? Are there any unusuals that I should be thinking about?

[Patrick Houston, executive]

I think if you think last quarter, we acquired Dapasoft, I believe, in midway through the quarter last year. So you kind of got the split between half of it was -- we had a full quarter and this quarter versus half or one last year.

[Amr Ezzat, analyst]

I'm talking about quarter-over-quarter, Patrick. Yes, last -- just from last quarter, you guys are up like $9 million, $10 million organically.

[Patrick Houston, executive]

Correct. So I mean iSecurity and our Cyber business is running red hot right now. That's -- we did that acquisition. We have a huge backlog of customers. Right now, we've got significant amount that we need to onboard onto our [indiscernible] platform. So right now, our biggest issue is getting the people to supply it. So I think it's a 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. So we did see a significant uptick in volume in the month of March as some of the federal customers deploy their budgets.

[Amr Ezzat, analyst]

Okay. So there is some one-off, but not so much like...

[Patrick Houston, executive]

Yes, there is some one-off, I think those will come off next quarter, but we're going to have Computex, obviously, to your point [indiscernible] about $4 million this quarter, which is going to be a big contributor next quarter. So I think you're going to see, again, a record quarter for IT next quarter.

[Kevin Ford, executive]

And I think to -- Amr, this is Kevin, I think for me, that balance of the recurring revenue as well as we start to have that baseline, Sacha and the team are doing a great job on repositioning our revenue streams there, clearly, with iSecurity, our Dapasoft acquisition in cloud migration, our Corolar Virtual Care platform, and now with Computex, I think there's lots of tailwinds coming into our IT group. So I expect this is going to continue definitely for the foreseeable future, that type of growth.

[Amr Ezzat, analyst]

Great. Then I mean you spoke to the margin uptick as well like in IT, and let's like put Computex aside because that's going to create volatility next quarter. But was there anything, again, like a one-off that sort of sparks your margin uptick this quarter in IT? Is it like sustainable? Out of Computex, obviously.

[Patrick Houston, executive]

You're going to see improvements here quarter-over-quarter. I think Computex is going to help pull it up. It certainly helped it slightly this quarter. So I think these margins, we're able to maintain these and hopefully improve them in the coming quarters. So I'd say that this is just the beginning.

[Amr Ezzat, analyst]

Okay. Maybe one last one. Your stock price has held up well in the face of, let's call it, very weakish markets. How do you think about M&A going forward with that stronger currency enhance? 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?

[Patrick Houston, executive]

That's a good question. I think 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. So I think the combination of those things puts us in a good position.

M&A agenda is one of the main priorities we have. So we're going to continue to execute on that. But I think we also stick to doing disciplined transactions that are good value that generate long-term growth for us. So I think things are coming into our range here, and we're just going to keep doing what we're doing.

[Operator]

And the next question is coming from Deepak Kaushal from BMO Capital.

[Deepak Kaushal, analyst]

It's nice to be back. And what did I miss?

[Kevin Ford, executive]

Yes, we have few minutes, Deepak, we'll fill you in.

[Deepak Kaushal, analyst]

Well, thanks for the time again this morning for the question. 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 the same jump that you saw 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 on the internal people side or the wage side? What's going on there in terms of costs?

[Patrick Houston, executive]

Deepak, yes, I think, obviously, we've seen some good increases in Q1, Q2. I think that's going to flatten out here. Obviously, the second half is going to be bigger than the first half. So I think it's going to be strong. I think where we're seeing the pressure is obviously on the labor side and some of the inputs have been going up.

So I think -- we saw a lot of margin improvement things that we're doing. Hopefully, we're going to -- those are going to 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.

And we are investing continuing on the sales and marketing. We spoke about backlog in some of our customers. We've got growth in cyber, GNSS that are getting constrained right now. So we're going to continue to invest in those because they're going to drive growth for next year. So I think it's the right thing to do now to put those things in place so the long-term growth is there.

[Deepak Kaushal, analyst]

Got it. And so when we think about EBITDA margin, I mean, for the quarter, you're tracking ahead of the implied margin from the midpoint of your guidance, but when you take various numbers in your guidance, you can get [indiscernible] in EBITDA margin, are you managing to a certain target for that? Obviously, you have some control on your spending. So how should we think about margins on the EBITDA side?

[Patrick Houston, executive]

Yes. 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 going to be investing here in the second half and it is just the basis of how quickly we can do those things and could generate bit of variance there, but I think 11% is a good target to track to here for the year.

[Deepak Kaushal, analyst]

Okay. Okay. Great. And then I've got another question for Kevin. We've seen some major changes in the macro environment and certainly sentiment regarding inflation, 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 a delay in something in a project in Advanced Technologies 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?

[Kevin Ford, executive]

Yes. Thanks, Deepak. Great question. From my viewpoint, I think I've said this before and right through COVID, what is demonstrated to me as CEO of the company that the 4 segments operate in what I call customers trust us when they can't fail. And the work we're seeing and any delays are not because of inflation in some ways, it's just reality of either just getting procurement to the streets or challenges they're having on their side with supply chain.

So right now, I would say that the -- even in Norway, when I visited the Joint Warfare Centre, the discussion wasn't around cost issues or pace of investment, it was about giving us a heads up in capacity and requirements. So we're seeing that right across everything that we're doing, frankly. So I'm not expecting -- 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.

And I think, frankly, longer term, it's just reiterating to me that what we do is important and will not be constrained in a major way by any kind of external factors, at least for the foreseeable future. So I'm still pretty excited about where we are. And while there are some delays in certain areas, Deepak, I expect that these things will land at some point, and we'll continue to support our growth objectives for sure.

[Deepak Kaushal, analyst]

That's really helpful. And just if I can, throw in a follow-up. I want to limit it to 2 questions. On the Norway side and the NATO side, you've won that kind of good contract. It's a good indicator of the market and the opportunity there. How do you size that? Or how should we think about the pipeline of opportunity in the context of your overall Learning business or your Training business?

[Kevin Ford, executive]

Yes, great question. I came back -- number one, it's just been great to travel again. I've gone from no travel over 2 years to being littered between Houston, Norway, London, in Saskatoon right now. So number one, I know for everyone on this phone call that travels back on, and it's great to see everyone. It was great to see the team.

From a defense perspective, between Europe, Canada, and even now as we look at potential Asia Pacific, I would say that the message we're getting from our customers is a few fold. Number one, there will be increased investment in defense. You've seen announcements obviously right across NATO and all countries now are rallying behind the Ukrainian conflict to say that they need to continue to invest in tempo, invest in equipment. So I expect that, that's not going to be a short-term effect, that's going to be long term. So I think the increase in defense spending is going to happen.

Number two is that as we talk again to our customers, it's generally around 2 areas: capacity and making sure we're ready to support training initiatives, IT, cyberspace as well as equipment either upgrades or new equipment. So I think for the industry in general, we have to be ready and be ready to support our key customer. And right now, I don't see any slowdowns in that defense spending.

So I think it's going to be positive for us, Deepak. That being said, we have to see how these increased budgets partly into actual spending. But we're ready, and we're ready to go. And again, with Joint Warfare Centre in Stavanger, Norway, I walked out there just so impressed not only what we're doing but how important what we're doing is to the mission of NATO.

[Operator]

The next question is coming from Benoit Poirier from Desjardins Bank.

[Benoit Poirier, analyst]

Yes. Patrick and Kevin, congrats for the good quarter.

[Kevin Ford, executive]

Thanks, Benoit.

[Patrick Houston, executive]

Thanks, Benoit.

[Benoit Poirier, analyst]

Just to come back on Advanced Technologies, obviously, you provide great color about the precision antenna GNSS, the outlook, the strong outlook for this division. But 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 ramp down.

[Patrick Houston, executive]

Yes. We've been continuing to deliver on that one. The one that we won last year in Europe. So that one is going well and things are progressing. So that's been delivering. Obviously smaller size than the one that's ramp down.

And we've got a few important opportunities that we're right towards the end here. So we're hoping 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. So as Kevin said, even though there's been delay, I don't think this continues for too long and then some of them should get resolved during the second half.

[Kevin Ford, executive]

And Benoit, 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 get -- and talk to the team directly about the future. And you've known us for a long time in the context of the ground system in, ground system out type thing. I think the 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.

I think, again, it's while there's some ups and downs generally, I'm still very excited about AT because we just have so many moving parts right now that I believe will kick back in into our growth posture very soon in the short term here.

[Benoit Poirier, analyst]

Okay. And with respect to Intertronics, 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.

[Patrick Houston, executive]

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 -- those timed out, and we don't have to pay those. So we've adjusted things accordingly, but I think, to Kevin's point, AT as a whole is still positive and got good momentum.

[Kevin Ford, executive]

And again, Benoit, what's interesting is as you look at AT and our ground segment now, so with our acquisition of SatService in Germany, which continues to do very, very well, Intertronics in Montreal, our [indiscernible] Saskatoon-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. And Pat is doing a great job. He is running that and ensuring we're getting synergies from those and not just independently bidding, but now collectively bidding global opportunities.

So Intertronics will continue to be a strong part of our solution going forward. And I don't think the delays to short term should be reflected as a negative. I think it's just the reality of how we structure our acquisitions to make sure we're paying for value in the short term. So again, I'm still very excited to have them part of the family.

[Benoit Poirier, analyst]

Okay. And 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 ramp down. 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 going to be benefiting from an easy compare versus Q4 2021. Am I right to say that $45 million is kind of a good base going forward for the Health segment?

[Patrick Houston, executive]

Yes. If I think Q3 will probably still be down year-over-year. But I think to your point, Q4, yes, it was starting to ramp down last year, so you'll see that effect less. And like we said, building up pipeline for -- and we did win plus $20 million in new business this quarter. So that should start contributing towards the end of the year and next year.

[Benoit Poirier, analyst]

Yes. Perfect. And 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?

[Kevin Ford, executive]

Yes. Thanks, Benoit. It's Kevin. I think to me, our strategy -- our growth strategy, specifically around innovation, that segment has always been about trying to increase our differentiation, more technology assets with the gold increased margins. And Don, who runs that group for us and his team have been on a charge here over the last couple of years, harvesting a lot of the intellectual capital that we've been doing in Learning and creating intellectual products.

And then we've acquired SimFront SimWave. So a few things are happening. Number one, as our brand gets stronger in this domain, we can demand higher value from customers because they want Calian. They want Calian in there. They don't want to trust anyone. They want to trust the companies that can do this. And I think we've demonstrated now not in Canada but globally, our ability to ramp up and deliver effective trends.

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. And I think, frankly, we continue to have lots of discussions not only about Europe now, but always to mention Asia Pacific with SimFront SimWave that have a presence there.

So clearly, the 1 plus 1 equals 3 is relevant for the SimFront SimWave elements, but for me, I expect you're going to see continued exciting news coming from our Learning group just because of the pace we're on here right now.

[Benoit Poirier, analyst]

Okay. Perfect. So would the 20% plus sustainable from -- versus Q2, Patrick, is it kind of what we should be trying to modeling?

[Patrick Houston, executive]

Yes. I think this quarter was really strong. So I'd say, in this range, plus or minus, obviously, depending on certain projects and mix. But I think what you've seen is at SimFront SimWave, we've gotten up to speed here. This is kind of a new level. So I'd say, plus or minus a couple of percentages should be the range here for the next couple of quarters.

[Operator]

[Operator Instructions] The next question is coming from Nick Agostino from Laurentian Bank Securities.

[Salman Zia Rana, analyst]

Yes. This is Salman Rana on behalf of Nick Agostino. For the really strong quarter, congrats for that.

Kevin, my first question is actually on something that we came about just recently. So there was a report that came out saying that the Canadian military, it needs to strengthen its cybersecurity capabilities over the next few years or in the short term. So eager to know your thoughts over there and what that opportunity means for your ITCS business?

[Kevin Ford, executive]

Yes. Great question. So what we're seeing with our military customers is the reality is the domain that they operate in and have operated in continues to evolve where we used to have a primarily terrestrial land, sea, air mindset. The 2 other domains that are coming in that are obviously very relevant are cyber and also now space.

So as you look going forward, I think -- and again, when I go 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. So I think what we'll see from military is your point is bang on. We're going to 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. So I expect that that's going to be good news from our ability to support our key customers.

The other thing I'd say, as we've seen in the growth in our IT business, cyber is not slowing down. And we're going to continue to invest in our cyber platform that we have today, and again, with Sacha's vision of how we want to see it grow both in innovation, revenue base and diversification. So both the military and we think are commercial customers, this is going to be growth pillar for Calian definitely for the foreseeable future.

So we're pretty excited by that. But we also take it seriously that we need to step up and make sure we're ready for when our customers need us most.

[Salman Zia Rana, analyst]

Okay. That's great color. It sounds like a real good opportunity. And taking to ITCS again, just keen to know your thoughts on Computex. It really operates in a really, really competitive market down in the U.S., especially in the mid-market. There are a lot of players involved already. So how will Computex specifically differentiate itself from the other providers and continue to gain market share there?

[Kevin Ford, executive]

Yes, great question. The exciting part for Computex for us was -- this is a company that's been in business over 30 years and has excellent reputation, excellent relationships with their customers. And I mentioned the 1,100 logos. That's not a made-up. Now that is an actual number. And I'm getting win announcements almost weekly from that team. That are all new customers, nongovernment, basically, commercial customers across a whole bunch of different sectors.

So 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 side is at the forefront of all they do. And I think, frankly, as Calian, we're going to 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.

And the third piece is I think we all forget sometimes that the reality of a lot of customers are in right now. Small, medium business don't have massive IT groups. They don't have massive investment capability to continue to modernize. So 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 because both on the demand for talent capacity, it's impossible to do that as a small medium enterprise.

So I think we're just tipping the iceberg here. And 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 it's going to do well. And again, I think you can see continued investment from Calian in the space, both in our platforms, but also looking for companies to diversify our presence in the U.S.

So lots of tailwinds there, and I know that team is ready to take on that charge, and we're excited to have them, as I mentioned, as part of our team because of that.

[Salman Zia Rana, analyst]

Okay. That's great color. And my last question is on the public private split. So 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?

[Patrick Houston, executive]

Previous quarter came in similar, still in that close to 50-50, I think it was 52-48. So I think we're seeing growth in both. We've spoken about continued spending with Canadian military. So that's going to increase our government, but our nongovernment business is also going to grow with the acquisition of Computex. So I think -- right now, we want to grow both of them and the diversity is a huge asset for us.

[Operator]

Thank you. That's all the questions we had. I would like to hand the call back to Kevin Ford for some closing remarks.

[Kevin Ford, executive]

Okay. Great. Thanks, Paul, for moderating. Much appreciated.

So listen, I just want to thank everyone who attended and continues to attend. I am still just very thrilled to see that our business model of 4 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. And it's something that I believe, again, if 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 live healthy lives has never been more relevant in a world in turmoil.

I want to thank our team again for rising to the challenge over the last 2 years. And 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 activities 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.

So with that, thank you so much. Everyone, stay safe. Have a great day. And with that, Paul, we can close the call.

[Operator]

Thank you. Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines and have a wonderful day. Thank you for your participation.