Canadian supply chain management software company Tecsys (Tecsys Stock Quote, Chart, News, Analysts, Financials TSX:TCS) delivered a sharp-looking quarter last week, but while Echelon Capital analyst Amr Ezzat is staying bullish on the stock, he lowered his target on TCS in an update to clients on June 30, saying increased opex spending and foreign exchange headwinds are to blame. Montreal-based Tecsys, which has a wide range of supply chain solutions including warehouse, distribution and transportation management, retail order and financial management and analytics, delivered its fourth quarter and full fiscal 2021 financials on June 29 for the period ended April 30, 2021. The company posted Q4 revenue up 17 per cent year-over-year to $32.4 million and adjusted EBITDA up 101 per cent year-over-year to $3.9 million. Tecsys\u2019 SaaS revenue was up 107 per cent to $5.5 million, while Cloud, Maintenance and Subscription revenue grew by 30 per cent overall to $13.8 billion. For the year, Tecsys hit $123.1 million in revenue compared to $104.9 million for fiscal 2020 and adjusted EBITDA came in at $16.2 million compared to $10.3 million a year earlier. President and CEO Peter Brereton said fiscal 2021 was an extraordinary year for the company. \u201cIt was humbling to watch our clients adapt their businesses with the help of our solutions in the midst of a pandemic,\u201d said Brereton in a press release. \u201cAs we report our ninth straight quarter of record revenue as well as several notable wins over the last year, we are ready to hit the ground running into FY22 with a very strong pipeline. Our strategy to transition to a SaaS model is proving to be a home run for Tecsys.\u201d By comparison, Tecsys\u2019 Q4 revenue of $32.4 million was about on par with the consensus call for $32.2 million and a hair below Ezzat\u2019s estimate of $33.0 million, while the company\u2019s adjusted EBITDA of $3.9 million was lower than the Street\u2019s call for $4.2 million and Ezzat\u2019s $4.7 million. Ezzat nonetheless called the quarter a strong one, reflecting continued aggressive adoption and deployment of the company\u2019s supply chain management software. \u201cWe expect continued momentum going forward as the Company on-boards new clients. Notably, SaaS ARR bookings stand at $9.5 million, up 9.0 per cent year-over-year, and SaaS backlog now stands at $65.7 million, up 26.0 per cent year-over-year,\u201d Ezzat wrote. \u201cThe Company cautioned on the conference call of increased opex spending to seize current organic opportunities. We remain bullish on TCS and believe there is more upside to be had from current levels,\u201d he said. On other numbers from the quarter and year-end, Ezzat noted TCS\u2019 annual recurring revenue as of April 30, 2021, which stood at $52.5 million, implying a 9.1-per-cent year-over-year growth rate, while gross margin for the fiscal year improved from 46.5 per cent in 2020 to 48.6 per cent. Operational expenses were up 6.4 per cent year-over-year while free cash flow excluding earnout payments were $7.9 million for the Q4 compared to $11.3 million for the previous quarter and $5.8 million a year earlier. Overall, Ezzat said the company\u2019s balance sheet is in great shape with $36.2 million in net cash compared to $29.7 million at the end of the previous quarter. \u201cWe are updating our short- and medium-term estimates to take into account the Company\u2019s increased pace of opex spending as well as FX headwinds,\u201d Ezzat wrote. The analyst is now calling for fiscal 2022 and 2023 revenue of $139.4 million and $163.5 million, respectively, and for fiscal 2022 and 2023 EBITDA of $15.9 million and $26.2 million, respectively. Tecsys\u2019 share price made huge strides over 2020, returning 133 per cent for the year. As for 2021, the stock has travelled much the same path as a number of tech stocks, rising higher in January and February before starting to slide. Currently, TCS is down about 15 per cent for the year. With the update, Ezzat has reaffirmed his \u201cBuy\u201d rating for Tecsys and dropped his target price from $65.00 to $60.00, which at the time of publication represented a projected one-year return of 46.1 per cent. In the fiscal fourth quarter conference call, Brereton said the company is still getting positive momentum from its transition to a SaaS-oriented model. \u201cThe appetite for SaaS continues to accelerate and we are very pleased with the progress we are seeing. Transitioning to SaaS has been a strategic initiative for Tecsys and continues to see strong results and stronger momentum. SaaS revenue growth was up 107 per cent in Q4, and up 113 per cent year-over-year,\u201d Brereton said. \u201cThe pace at which our SaaS business has expanded is a healthy blend of new customers or new accounts and existing accounts, choosing to renew their engagement with Tecsys and convert to a SaaS environment,\u201d he said.