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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Before we begin, Pivotree would like to remind listeners that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the risks, uncertainties and assumptions related to the forward-looking statements, please refer to Pivotree's public filings, which are available on SEDAR. During the call, we will reference certain non-IFRS financial measures. Although we believe those measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures, including for reconciliations to the nearest IFRS measures. Now I'd like to turn the call over to Pivotree's CEO, Bill Di Nardo.
Thank you, Dennis. Good morning, everyone. Thanks for joining us on our second quarter 2022 conference call. With me today is Moataz Ashoor, our Chief Financial Officer. I want to start today by thanking and acknowledging the pivots we do on delivering our third consecutive record quarter in what's been an increasingly volatile macroeconomic backdrop where we beat consensus on virtually every measure. We've made significant progress over the past 9 months to drive broader frictionless commerce strategy. And the hard organizational work we've done to integrate the acquisitions we've made last year has been completed in lockstep with this tremendous execution. And particularly, when I look at the organic growth that occurred on top of everything else that went on it, I think this was a terrific quarter. So let's jump right into some of these results. So in the second quarter, we reported record revenue, $26 million, representing an 8% sequential growth for Q1 and a growth of 84% year-over-year. We're very pleased with the revenue synergies across all 3 of our main business units, and that's what we talk about regularly commerce, data management, supply chain. Organic growth was 29% over the prior year and this builds on solid organic growth in the last quarter of 12%.
So I think it's going from strength to strength. The record bookings activity we had over the past few quarters has really translated into the strong growth and a higher mix of projected base revenue -- or project-based revenue. But the recurring revenue made a significant part of our base at 40% of total revenue. And we were really pleased to see our recurring revenue grow again 6% year-over-year. Not even though project revenues become a larger percent of our revenue mix, and this is not something that we weren't consciously doing. We know during the pandemic, our PS revenue dropped off. We said the first one that was going to come back was our project revenue and that has obviously come back significantly. Our gross margin profile continues to differentiate us as you can tell from the latest results again, we hit about 45% in this quarter. And it really does differentiate us from the pure-play IT service providers and peers and it reflects that blend that makes us comparable to some other application service providers, real a blend of the types of projects, the types of work and the type of managed services we do for our customers. But to be honest, one of the things that I'm most impressed with our team is their ability to adapt and having delivered an aggressive growth quarter, a couple of these significant aggressive growth quarters and on top of doing the integration work and really driving our inhibitory message. We asked the teams last quarter to start shifting gears towards a more profit-oriented posture for the second half of the year.
I want to be really clear because this question has come back to me already from a number of folks. Does that mean we're going to stop growing? The answer is no. This is about balanced growth. Really, it's time to take control of our destiny and that means control of our bottom line and not rely on the capital markets for future sources of cash. So we ask the team to start really looking at how we drive that aggressive bottom line the way we've been driving the aggressive top line. And that's a lot for a group of folks who have been spending a lot this time growing, focused on growth. But again, the team impresses me in their ability to adapt to change, and that's even within the year. It's not easy to shift from celebrating significant revenue growth every quarter to talking about that bottom line and focusing on it. We've making tough decisions around how to achieve higher levels of EBITDA. But at the same time, in the face of some of the economic challenges we keep hearing about and one of the things we're very thankful for, so far, our business hasn't seen the effects. It doesn't mean we're not going to like everybody else, if we do, in fact, hit the recession folks are predicting. But more importantly, it's going to affect some of our customers.
And one of the questions that we've been asking ourselves and the team has been asking, what can Pivotree do in our environment -- in this environment to help our customers. And again, we don't know the length or the depth of some of these changes that may occur. But we know there's going to be some challenges in the near term. As everyone is expecting price increases, and I see it written everywhere, it's kind of a self-fulfilling prophesy, prices are going to go up and then the inflation is going to go up. But how do we deliver more value to our customers. If high interest rates are going to make capital projects more challenging, how do we help our customers continue to drive their digital transformation with capital efficiency? And again, the teams are coming up with innovative pricing models, innovative products and services in anticipation of some of these changes. I'm really proud of this team and the tireless work they're doing on behalf of our customers. But we're also really delivering on behalf of our shareholders as well. And I think it's been a great quarter. Look, I think bookings have been a great leading indicator of how things are going to go. And as everybody is well aware, we had a record quarter. And the way I've articulated kind of our average billing pace and booking pace -- last year, the last quarter was an outstanding quarter. It was well above the quarterly average that we're expecting and banking on.
And as a result, again, you saw the kind of revenue quarter we had, there is definitely some strong connections between those 2. Now I do see us being able to maintain our current bookings rate near our average. It's important again to point out. I've been reasonably open about what I think our average is directionally and I think we're going to stay on pace for that. Now Q2 looks like it came in at $4.2 million. The only thing I'm going to qualify with that is 12 hours after we close the other $1.6 million, we were expecting to close in the quarter came in. So again, we're going to be very, very factually correct in the way we report this quarter Q2. But I do want everyone to understand, we're starting the quarter of Q3 with $15.8 million contracted, which again, is right around the expected run rate per quarter. We also continue to book new ARR contracts, and we had success in extending and renewing MRR contracts. Now those extensions and renewals don't show up in our bookings. We only talk particularly around ARR and MRR, if it's an existing contract and/or a renewal about the incremental, if we're just renewing it doesn't count in our bookings. So again, to some degree, it's not easy to do the math on bookings to billings, particularly when it comes to ARR. But again, we had a good quarter, we've extended 2 contracts. This is also some of what we've been talking about around expectations this year. We know there's going to be a continued decline in some of our MRR around particularly our Oracle business. But despite those headwinds, we're still growing in this area. Again, on the project side of the business, the pipeline is extremely healthy. Our -- the recurring nonrecurring book-to-bill is over 100%. It is looking like, again, a really strong Q3 bookings based on pipeline.
The only challenge again I'm going to flag for folks, there's every possibility it becomes another record quarter, but there's also a possibility through the way signatures are taking a little longer going through tougher processes internally with business cases, you could start to see some shift. But what I will tell you is the backlog of opportunity, the stuff that's in contract negotiations, the signals we're getting for our customers, we're going to finish the year fairly strong with contracts moving into 2023. And obviously, we're being very cautious about giving any sort of guidance. All I can tell you is we'll pay some exactly where we've been articulating and we've got some potential for upside. One of the things we've been talking about, certainly with our analysts, we've been increasing the narrative around the different business units. One of the commitments we're making is in fiscal 2023, we will be starting to talk even in our MD&A, more specifically about business unit performance. So for right now, we're going to give you color on some of the things that are happening here. By this time next year, we expect to be talking more specifically with the numbers about how the business units are performing. So let me start with the piece that we've been very excited about over the last 5, 6 months is our data business. It's tracking ahead of the plan that we had, and it's having a great year.
It's clear more of our clients are understanding the importance of solid data necessary to drive any effective digital transformation. We're seeing more dollars being allocated to this category even from our existing customer base, which is why data is really leading our revenue growth success. During the second quarter, we had a number of new logos and great new logos in the mix. Our customer expansion and renewal wins, both B2C and with branded manufacturers is really again driving this buoyant performance. Our Commerce business continues to bring in renewal and extension MRR contracts. This more than the category that would have had some of the headwinds, particularly around our commerce. There's been some positive surprises this year around what we thought would want to be planned departures that have extended -- we stayed with us. That's also led to, I think, that's beating some of the forecasts than forecast so far as just some of those changes haven't occurred as quickly as we originally expected. We also are seeing evidence that folks are streamlined some of the costs in their current environment. They don't want to disrupt operations of the revenue-generating assets, but we're also seeing the move or the shift not happening as fast as we would like to see.
So on the new logo front, we've seen some delays in shifts in spending by some of our clients and as a result of its slower growth. Now the pipeline remains strong. And again, what I'll call out is the work that Joseph and his team have been doing, particularly on the new destination technologies. You've heard us talk about Stryker. You've heard us talk about commerce tools, and we're continuing to double down on detect. A lot of those investments you're seeing, again, a bench building, it's a little bit of a drag on our margins in the Commerce business unit as we get ahead. But the evidence really is in the pipeline, and we've got the strongest commerce pipeline in that year. So again, we expect to see the benefits of that into Q4 and into 2023. But we look at kind of commerce is it's just in a bit of a pivot right now, and we're confident in the leading indicators that we're seeing. Really, the evidence, again, of transformation for our customers, the digital -- the data is driving the start, and we expect to start seeing the renewal of our commerce in the new year. Supply Chain is a business that's tracking to target. It's going to continue to grow. It's contributed solid growth as expected, albeit on a smaller scale. It's the smaller of the 3 categories, 3 business units. But it really is the platform that we were building. It's got good organic growth, and we expect this to really be this growth platform next year, and we're continuing to look for acquisitions to help accelerate the scale in that category.
So a great year in supply chain, great year in data and a bit of a turnaround in commerce that is really starting to get some traction. And the last group that we've been talking about is our digital solutions. Again, a number of products that have been getting built in here over time. We've shared a number of them with our analysts recently and the good news is many of them are generating revenue. We're going to start to see that next year as we break things out, but our software and our embedded software and tools that are driving efficiencies inside our project work are all starting to bear fruit now. So on the back of our strong Q2 performance, you can see all of our metrics really improve. I'm actually not going to spend a lot of time. I think this is probably one of the most compelling numerical results that we've brought to the market. And I think folks can read my letter, read the MD&A, but the metrics are really solid. Again, a couple of things that I would point out. We've seen that great consistent growth on annualized revenue per share. Yes, some of that has been driven by acquisition. But I think what's important to note, to go from $2.68 in Q4 2022, almost doubling that.
Again, post-IPO, I think we've demonstrated we're doing what we said we were going to do. We haven't taken on a lot of additional dilution to get that growth. Again, I think this is really demonstrating good capital allocation on some great deals. A couple of things that I don't generally record, but we're going to start looking at for 2023. One of the key metrics we talk about internally. We've shared it with you guys as a lead of indicators is our revenue per employee. We were a little over $135,000 of revenue per employee at the end of 2021. We've climbed that number just above 155 now, $155,000 per year per employee. To me, this is a leading indicator of efficiency. Yes, and you're going to hear more about that, you'll read more about it in some of my letter. We can improve margins with increasing amounts of offshore. We've got some very talented people around the world. They do help blend their cost. They're a better fit to our customer. Obviously, if we can get a blended rate, improve our margins and maintain costs for them. But for me, the key leading indicator of are we being efficient? Are we using our smart scale people in the most intelligent way possible, removing them from the commodity mundane and tasks that can be automated. That really is going to get reflected in that revenue per employee number.
And we always see the evidence of it in our managed services business, when the public we did show you that number was well over $300,000 of revenue per employee. Our operational specific numbers, even in our project-based work is upwards of a $170 million so we're going to get above that $200 million, I think, in the mid of next year term. But our goal really is obviously to drive that up. The only thing that could get in the way of that, again, with full disclosures, we're looking at some acquisitions that have great margins have great scale, great value, but they are in geographies where labor rates are lower. So as we add more folks around the world, there is some of that drag on that number, but we are really pushing the team to work carefully and closely at how those acquisitions will affect that number. We're looking for companies who run their businesses efficiently as well. In terms of M&A, just again to hit on that, nothing's changed in the way that we think. We continue to look for growth companies, companies that our customers are saying we value services. They've got to have good margins north of 40% and positive EBITDA. We have looked at a couple of software businesses because one of the things we are noticing now private valuations are starting to come more in line with the re-ratings that have gone on in the public. So we have a really deep, healthy pipeline. We started to see more of the software that would enable our frictionless future. They're coming down into more realistic price levels. But the caveat is many of them are still subscale.
When you're sub $10 million software businesses, you don't find a lot of profitable ones of that size. And so even though they're generating sometimes 70%, 80% gross margins, they're burning cash. And right now, the mandate to the M&A corp-dev team is, let's be very, very careful to acquiring anything that's burning cash. I would say the order of priority is going to be acquiring the EBITDA positive and profitable businesses first. And I think there's going to be a little bit more time to continue to look at some of these software businesses. Based on our ambitious vision and mission, we'll continue to leverage acquisitions as a key part of achieving that vision. As a result, we'll continue to balance the various sources of capital to help support that. Under current conditions, our stock price, we believe, is undervalued. And as a result, I don't expect us to go raise a lot of money at these prices, which means we're going to have to rely on our ability to generate cash if we want to stay aggressive on our acquisitions. What's important to note, I think, in combination with this message based on the way we feel about our stock price, we also recently announced the initiation of an NCIB. Now we're going to carefully monitor the situation. I don't expect us to be out aggressively acquiring our own stock. But when we sit down and run the math on the rates of return, and we compare the price of acquiring our own stock with what we believe it's going to do over the next few years versus acquiring another company and their stock -- it's become a new benchmark for us.
We can't beat the expected IRR we would get on by your own stock. We really have to question why we rebuy another company's stock. And that has caused us to pause in a couple of instances on some deals where they looked good, but they weren't better than our stock. So really, this is setting a benchmark for us. It will be a tool and frankly, again, if there's approach out there that are really happy to sell our stock at $3, I think most of our long-term shareholders would be happy for us to buy that stock back. So it will be a balance, a careful balance. We don't take lightly the amount of capital we've got available and to drive our strategy admittedly, again, our NCIB is not going to accelerate the frictionless. What it will over time is help accelerate our earnings per share and will benefit long-term shareholders, which is really the path we want to be on. So with that, I'm going to turn it over to Moataz to talk more about the financials. And obviously, we'll be on after for questions.
Great. Thanks, Bill. So as Bill noted, we saw a strong year-over-year growth in Q2 and included significant organic growth components that increased 29% over the prior year period. Within this, our professional services grew 66% organically. Managed Services grew 6% organically. Each of our 3 business units contributed positively to this growth in Q2. With the strong bookings that Bill was highlighting, leading into Q2, we saw that convert to revenues and leading to the revenue growth that we reported, a strong contribution within the data management business. We've also been able to expand some of our professional services wins into managed services recurring revenue. On a sequential basis, you do see recurring revenue decline by approximately $270,000 from the first quarter of this year of 2022, and it was really primarily due to some of our committed recurring professional services contracts that came off in the second quarter. On the other hand, managed services revenue, our largest portion of our recurring mostly recurring, which is not reflected on this chart, increased by approximately $120,000 from the first quarter of this year. We go to the next slide, Bill. So moving down the financial statement.
Our gross margins improved both year-over-year and also sequentially to 45%. There were some timing issues that we highlighted last quarter, and it resulted in costs that landed in Q1 where the revenues could only be booked in Q2. So in other words, Q2 was a good quarter, part of it also contributed by some of the timing benefits, and that will normalize in Q3. Overall, you look at our normalized margin with that benefit, it's closer to 44% and more aligned with some of the recent averages we've been recording. Costs associated with the Oracle business and some of the MRR growth and the heavier reliance on our cloud infrastructure, it's constrained our managed services margins, and we've seen that continue and part of what we've reported in prior quarters as well. Our G&A increased as a percentage of revenue to 16.3% versus 13.5% for the prior year. Increase is primarily from, obviously, the addition of the acquired companies, Bridge and codified and also the inclusion of a quarterly bonus that we brought into Q2 where we didn't have an accrual last year. Sales and marketing also increased to 10% of sales or revenues from 9.5% from the prior year, driven by the investment in sales and marketing, and obviously, the growth in dollars is from the acquisitions as well. Adjusted EBITDA was slightly negative.
Although included in this, I'll highlight, there's $287,000 of benefit from foreign exchange that you see there in the financials and adjusted free cash flow was a negative $627,000. Both EBITDA and adjusted free cash flow improved by just about $1.5 million from the prior year period. So as Bill said earlier, we've asked the team to shift gears to a more profit-oriented posture for second half of the year. And we still intend to exit the year with Q4 delivering positive EBITDA. The last 2 quarters showed evidence of why that is possible, but it is important to put our current EBITDA and run rate in context and set appropriate expectations for Q3. We brought on more operating expenses at the end of Q1 and you could see that if you look at the Q1 to Q2 sequential increase there. What is it obvious in these expenses was offset by the Q2 timing benefit on gross profit and the foreign exchange benefit that we just mentioned and highlighted in the financial statements. So combined with the timing and the foreign exchange, the benefit added up to about $900,000 to the positive EBITDA impact in Q2. So this quarter, I look at this quarter on a normalized basis really being between negative $800 million to negative $1 million when you normalize it just for the quarter's performance.
We still have to do some work in some key areas of the business to create what we have convinced will be sustainable positive EBITDA run rate, and we have active programs in place to refine and optimize our profit through pricing programs and third-party spend. This will take a bit of time, but we expect we are confident, and we will find the right balance for profitable growth as we head into Q4 and into 2023. We go to the next slide. So turning on to the balance sheet. You'll see the primary use of cash in the quarter was really driven by the earn-outs that were related to the codified and bridge acquisitions. We have a -- estimated $1.6 million in earn-out payable on the balance sheet that will likely be in 2023 of next year in either Q1 or Q2 and 50% of that would be in cash. Aside from these pay-outs, our cash use is tracking close to the EBITDA performance in Q2. Cash at the end of the second quarter was $16.5 million, and we still have a $25 million undrawn credit facility from BMO from Bank of Montreal. So managing our growth investments and producing positive cash flow is our priority, and we have sufficient capital to take advantage of investment opportunities that we see in the market. I'll turn it back to Bill for a closing summary.
Overall, Q2 was a great quarter. We're a better company now than we were 24 months ago and will be even better next year. We have used the benefits of that IPO to acquire some great businesses with great leadership teams. We've built organic growth on the back of them. Again, the thing that inspired me most for our go forward is just the quality of team. The business units are running their businesses, serving our customers well, and that's being reflected in the pace and rate of growing our pipeline and the bookings. So we have 3 strong business units that help balance risk as clients spend shift between these different categories. We're doing many of the right things with people, products and services and our digital team is really helping build those tools and those products that differentiate us in the market. And now we're going to shift our focus to the bottom line. So when you look at what this team has been capable of doing when provided the direction, they've delivered and in a lot of cases, overdelivered.
And that's one of the reasons Mo and I are extremely confident as we ask them now to balance that phenomenal growth that great client servicing to shift a bit more of that attention to the bottom line, this team is very capable of doing that. So all of that combined with our strong balance sheet, some great deals in the pipeline and leases in control of our destiny to continue pursuing that ambitious vision and mission, which ultimately, I think, is our greatest differentiator. We are inspired by doing something bigger and changing the way people shop in the world. And I think we're continuing on that trajectory. So very excited about the quarter, very excited about this year and next year. And at this point, we're going to leave it at that. I hope you enjoy reading all the wonderful volumes of work we've written on the results. and I'll open it up to the analysts for questions.
Thank you, Bill. We'll now take questions from the analysts. [Operator Instructions] Our first question comes from Daniel Rosenberg at Paradigm Capital Inc.
My first question was just around the current macro environment. You spent to -- you're still winning new mill goes, but the customer dialogue might be shifting a bit given concerns around recessionary features and whatnot. So my question to you is just what are the risks that you see around bookings? Are there any -- or are the growth engines really overshadowing any slowdowns that you're seeing on the periphery?
Yes. I think it's a great question, Daniel. And look, I think it's always difficult to be counter to prevailing trends, right? So I think we're hearing about the risks. I think we're logical human beings and have to believe there's got to be some impact for our clients on higher interest rates, capital constraints. We haven't seen it yet. It doesn't mean we're not preparing internally for that possible eventuality. But so far, the only thing I think we can say we've seen and you saw evidence in the bookings, what should have been a 15.8% reported was reported at 14.2% because it was getting harder to get the signatures on done. I think people are taking an extra 24 hours, an extra week. They're passing it through another layer in a couple of instances. And again, some of this affected our commerce results, some folks have their projects pulled until their business case was completed and approved. So it wasn't that companies are saying, "Hey, we don't need to digitally transform. It's just the care and thought that's going in to spend and the scrutiny, I think, is going up.
But I don't think the macro trend on digital transformation isn't changing and frankly, when you really kind of think through logically, again, most of our customers, when you look at the revenue they generate through their digital systems, it's probably their big and biggest source of revenue and potential margin and opportunity to improve. So you're going to continue to see the shift in spend. You're going to continue to see dollars going into digitization and automation because ultimately, it will be the most profitable for them. So I'm not worried about long term, but I do -- that's what I think we've been cautious about. It could be a record quarter. It could be a little light based on pipeline, it looks strong. But it's the signature, I think, right now that's becoming the question mark, the timing of getting the [Technical Difficulty]
And then just help us understand some of the potential impacts. Your flagship products seem kind of like core operations and not necessarily discretionary spending. These are kind of [indiscernible]. Could you help us? How would you characterize the overall business in terms of your service offering towards like core systems versus kind of discretionary, maybe front-end systems that sending budgets might be delayed that will add something to that extent.
Yes. Look, I think that, again, a great question, right, how essential are we to our customers. I think one of the easiest things we can point to is the -- how long the tail has extended on the Oracle services. It's essential to some of our customers. In fact, all of our customers who run it with us, it's generally big dollars. It's probably the largest amount of revenue in how they think of stores in their environment. And it's -- in this environment, where a big capital project, it would be required to move it those delays are also happening, which means they're extending the life. We're seeing some renewals and extensions that we thought might otherwise be migrations. And so again, on the MRR front, we might have expected -- in fact, we planned on a faster decline in it, and it hasn't happened for those reasons. I think equally, if you look at the stuff that's growing in particularly data and supply chain, anything that touches revenue or the cost of delivering that revenue will be critical to business. So most of the services that we deliver and work on are about getting products to market, time to market, time to margin and so a lot of our data business, the reason we're winning is those tools we're bringing to bear around, again, the automated process of productization. That stuff accelerates revenue per client, that stuff becomes core. We don't do a lot of discretionary spend type work. And I think, again, that's one of the reasons why our pipeline is strong. If folks are investing in our data services, it's likely to again, to drive faster revenue at a lower cost. I think that's why we're seeing the kind of pipeline and bookings that we're getting.
And lastly for me, on the M&A program, you mentioned wanting to prioritize based on kind of the current environment and financial constraints that you -- the financial objectives you committed to but I was curious to hear if you could provide some color on the size of things you're looking at or the categories that you're looking at? Just any details on that in the pipeline.
Yes. I mean, look, it hasn't changed materially from what we've shared with you guys in the past. You've seen kind of the biggest deal we do around a $50 million revenue impact. I would say there's probably a number of things that are bumping up against that at the upper end. We've seen some things at the lower end towards $1 million, $2 million of revenue, but good growth trajectory and good gross margins. But the themes remain the same. We need evidence of path to recurring impact to profit. Path to profit starts with great gross margin. We won't look at anything under 40% gross margins and frankly, most of what we're looking at would be generating positive EBITDA. Now there's a certain amount of normalization anytime you're dealing with smaller businesses, entrepreneurs don't take full salaries, but some of it acquired, they expect full salaries. So again, you've got to normalize some of the numbers we're looking at today, that takes some of the time as we do that thorough diligence around what is the business going to look like after we acquire it. And again, I wouldn't suggest that it's going to look much different than what you've seen us do. We're trying to put more emphasis on the recurring part of what we're buying, and we're probably putting far more emphasis now on a positive cash flow contributing after we've closed.
So up to $15 million, all above 40% gross margins, and we're seeing some that are even generating upwards of 20% EBITDA. I think the ones that are more interesting, Daniel, and the more challenging to quantify value are the software businesses. We're constantly evaluating, do we build it ourselves. We had a healthy discussion with the Board on the other day about how much do we build our way to frictionless and how much do we buy I can tell you that probably hasn't been a better time in 20 years to be able to buy if you've got a strong balance sheet or a strong stock price to do accretive deals. That's the only thing I think that's getting in the way of us really accelerating our vision. The software cash-burning companies that we've observed, really interesting products are now starting to hit inflection points where they have to do a financing or they need to be acquired. And so I think we're starting to see a buyer's market emerge. I'd like to be in a position to take a few more of those seriously, but I think we have to get our own house cash flow in order before we take some of those leaps of the buy versus build on the IP. We can build cheaper ourselves, it just takes longer.
Our next question is from John Shao in National Bank.
So my first question is, could you give us some additional color on your road map to drive a positive EBITDA by the end of the year? I know Moataz mentioned something like a pricing program and third-party spending and any other consideration that we should be aware of...
I'm going to let Moataz take most of this. But the only thing, again, I'm going to flag for everyone is our plan was always to get there. That was in the budget. It was in our forecast. So I think we've been tracking to it. I think we over-delivered in the first 2 quarters, which should be pretty solid evidence we're capable of getting there. I think the only difference between the first 2 quarters is -- was a bunch of positive effects having an impact ahead of plan. I think what -- the right question that's being asked is how do we get to sustainable positive EBITDA. So we're flirting with it right now, which should give everybody confidence it's achievable. It's not a concerted effort to get it there. And I think Moataz can give you a bit more color on how we do that.
John's question, I think would be if you're going to go to look at the pricing side of things, we're always looking at pricing inflation and some of the natural things we could pull from our contractual relationships and our customers, especially on those recurring and continuing type revenues. It's a clear area and a starting point of every deal and I would say natural course of business that will expect it to generate some positive. We've also got a pipeline of opportunities in our cost of goods sold and specifically within our managed services where we can bring down our cost base in terms of the infrastructure and the support and the license that are actually there to support our managed services business. So -- and then on the professional services business, we've made investments. We have talent and skills that support some of the new areas of technology, and we expect utilization rates in professional services to also improve. So those 3 factors, looking for that to drive the gross margin improvement. And within our OpEx, we had some shorter-term contracts.
We had some third-party spend to drive some of our priorities that we're able to ratchet back, and we'll be looking at those some. We've already ratcheted back and they were intended short-term projects to help drive some of our corporate priorities and expect some of that spend to slow down and some of them have -- some of those projects have ended as well. So those are probably some of the big levers that we would look at. Obviously, we look across our business. And obviously, whenever there is an opportunity of natural attrition, how do we look at kind of the immediate -- the business priority at that point in time in a fast-changing market and confirm kind of what we need to do at every opportunity that we see natural attrition in the business.
The other question from me is more on the relationship with Spryker and commerce tools. So Bill, what opportunity do you see kind of arise from those new partners? And a separate one on this cockpit is looking out what are some of the areas that you're going to see like Pivotree to form the new partnership relationship?
I'll answer the first question. Let me ask you to repeat the second. So in response to the first question, first and foremost, they're great technology platforms. They are truly headless and microservices-oriented in their architecture, one, much more focused on B2C, the other much more focused on B2B. And those do have very different requirements. They are different sets of capabilities and so having both of those in our toolkit, particularly given the number of strong B2B relationships we've been building, particularly on our data side, having an effective front end to serve those clients, we think is really important. So again, starting just with the technology, it enables the conversation that we've been highlighting for a while. The drive to frictionless, we think, is going to be architected on our microservices architecture, headless connecting to many different end points. These 2 platforms really help enable that. A number of our customers, we've talked about this actually for years, are moving from the old monoliths.
Some of the ones that have been winning even in the last half decade have become monoliths themselves, and we're going to start to see this pattern now of migrating to this leaner microservices architecture. We now have the pathway to move those customers on to the right platforms and that is really the 3 that we've been investing in. VTEX, Commerce tools and Spryker. 2 of those really are a result of Joseph joining, bringing relationships there, building the team out to support it and also seeking some of the potential acquisitions to help accelerate those. But it's a foundational technology for us, right? It's the capability of moving our customers to something that has a much more modular approach and will allow a more elegant migration path from some of the bigger, more complex systems they're on today. So it really is promising given that a number of our customers -- existing customers have, in fact, selected these platforms. We're looking at some acquisitions in these categories of folks that are actually already working with some of our customers. So I think we're on the right technologies for the destination for many of our big clients, and we've got good relationships with both those partners that run deep. And again, thanks to our GM and Joseph, that has really initiated that. Does that answer your question around Spryker and Commerce tools, John?
Definitely. I just want to repeat my second question on the same topic. It just like understand the Taxitocommerce to all kind of like some sort of like filling the blind spot of the business. So looking out, like do you see any other like opportunities or any other areas or trend that you see Pivotree to have like new relationship with some new partners just to fill in more of the blind spot?
Yes. Look, I think it's an insightful question you're asking, John, and I think it's a great leading question for me around the future, which is given the state the perpetual change in tech, there are always going to be new technology providers coming out that maybe it wasn't a blind spot at the time, but by them arriving on the scene and solving problems in a newer different way, they create a new opportunity or a new gap. So -- our theme has always been we don't have to own everything. We don't have to build everything ourselves. We have to have a very adaptable, agile methodology with our customers, that framework on how all these interrelated applications will operate. And our ability to bring them together, operate them efficiently, reduce the drag on making changes when change is good when the next great technology presents itself, our ability to help our customers adopt it. That's, again, a big part of our function. So I can guarantee you there will be more in the future. I can't tell you today what they might be 12 months from now, 24 months from now. But our model and our thesis are there will be perpetual change and how we manage that change is where we're going to create value for our customer.
I would say today, John, quite often, we are leading with customers picked a technology. They've made a decision around the technology they want to use and we help them. Increasingly, we want to help them make the decision and then over time, that should become opaque as they start to buy a more complete solution from us. That solution will be compiled in many cases, and we hope our customers rely more on our choices of the technology rather than what they've picked today. So this is a transformation today, it's very outline open we co-sell and co-market with our partners. Our partners bring us in when they've been selected. My genuine goal and hope over the next 5 to 7 years are we're bringing the partners in underneath our platform and to some degree, the customer cares less what the brand name is on that software and more about how we've already integrated it with our other capabilities. But we're always going to be relying on the development and innovation that goes on out in the market, which means we'll always be relying on partners to contribute to that.
Our next question is from Rob Young at Canaccord Annuity.
So first place I'd like to start just to get a better understanding of the seasonality here in Q3 and Q4 last year, stepwise better in Q3 and then Q4, but it sounds like this year, Q3 might be a little bit of a -- I don't want to pause maybe, more of the benefit you're seeing in Q4. So if I understood what Mo said, it feels like there's gross margin expansion in Q3 and Q4, but then EBITDA, breakeven or positive that you don't really see until Q4 or maybe not confident until Q4. And then the revenue seasonality, should we expect it to grow in Q3 and Q4 stepwise like last year? Or should we expect a little bit weaker in Q3 because of the maybe a little slower booking.
Yes. Maybe I'll start with the growth over this year, Robert. I think we had a record booking of $19 million in Q1, that's kind of got us to the reported revenues that we've had here in 264 is really the kind of sentiment of those bookings. So that was an above expectation above normal booking level. So yes, the 264 is on the high end, also kind of supplemented by about $0.5 million from the onetime benefit. So you could normalize the Q2 revenues there. So Q3, yes, we're coming off of what kind of Bill had $14 million to $15 million depending on that last kind of minute booking that came in. So there's going to be the expected trend when booking goes from $19 million to $15 million range. there's going to be that impact as well. We do you expect to see the benefit -- seasonality benefit from Q3 to Q4, so that is expected to provide some upside for us that will help on the revenue and the margins as well. So that will continue not expecting the season to be materially different from what we've seen in the past.
Yes, let me just add to that too a bit, Robert. I think one of the challenges is prior to the pandemic, you could better and more easily and confidently predict the seasonality effect on the pandemic hit, and it was like the seasonality shifted, right? It was like we were having online Christmas sales in the middle of summer because all the stores were closed. So it's been a little while since we've had any sort of normal pattern to the seasonality. And I would say this one is no different. Last year same thing. I think we saw some early hits -- positive bits come into Q3. Normally, I would say, like all things being equal, if we weren't dealing with a pandemic, if there wasn't some other news coming up, Q4 would normally be quite strong. And I think we're starting to move back into Q4, it's going to be the seasonal. But again, the challenge is the recessions and other things, it's been a little harder to predict when the seasonality is going to have its biggest impact. I think we're starting to get back to more normal.
Good to me capture the EBITDA question. I think we gave you a normalized kind of stand-alone Q2 view, and you'll see that normalize in Q3. But I think what you're -- what you, kind of summarized is probably the right trajectory. I think we gave you a normalized Q2, expect some of that to continue to Q3 and then a positive EBITDA in Q4.
Second question, this longer tail that you're seeing with the legacy, I guess, the churn is draining out longer than you had expected. And so I'm curious, is there a pricing opportunity there for you or a way to lock those customers into next step contracts? Or I'm just trying to understand if this is dragging out longer than you expected, is there a way to benefit from that?
It's always an opportunity. I think the -- as contracts come up, we did see some -- Rob, I am not too long ago, we had customers extend for 3 years on Oracle, right? So it definitely opens up a discussion every time we come to a renewal and some of these slowed down as well. And Joseph coming in as our lead on in GM on commerce has been active with all those kind of large enterprise customers that will definitely need a plan and a road map, and its opportunity to discuss. So the pricing opportunity is there, it's always there as kind of contracts renew. And I think it's also time to kind of also open up the discussion around kind of what the -- where their destination is and how to -- kind of need to expand the technologies that we play in the categories that we play in, how we can support them in that transition. So I -- we're very active. Joseph, is out there meeting face-to-face with the customers to have these, either pricing discussions or just strategy discussion around where we could help progress their digital transformation.
With [indiscernible] Robert, there's any time you're in a long-tail category like Oracle. The number of available resources globally continues to shrink. And in theory, to your point, you should be able to start charging a premium and extracting incremental value. The risk of that, of course, is every single one of our customers that is buying that from us would be one of our target customers on all of our new services. Many of them are buying multiple categories and multiple services. And so one of the very cautious steps, one needs to take is we have to keep up with the incremental cost of running the business. And so, passing on reasonable increases is really part and parcel with maintaining a strong relationship with that customer going forward. I suspect if we wanted to be significantly more profitable, we could take dramatic price increases because we've got a captive audience, but it would probably impact and impair the long-term relationship that we want to have with all of these customers on the additional services that we do with them. So I think it's about being a good partner and a good vendor and building a long-term relationship, but also maintaining profitability all the way through that long tail.
Okay. Last question, just on some of your comments around M&A. I think you said that you prefer to limit it to cash on the balance sheet and so maybe realistically, how much of that cash is available for M&A? How much do you need to run the business? And then maybe a second question around how you're thinking of buybacks versus buying outside party companies doing M&A? Like what are you looking at as the decision? Are you looking at your revenue multiple? Or are you looking at a more normalized EBITDA multiple? Or maybe if you could just give a little bit of thought on how you think of NCIB versus acquisition, and then I'll pass the line.
Let me start with -- we won't touch the credit while we're burning cash. So it's not that we won't use the line loss gone back and had good conversations with our provider. They're motivated, they're obviously pleased with the results and how we're running the business, and they're motivated to work with us and have talked about various different products that could be available, particularly as it relates to M&A. But what we won't do is draw down a line of credit that we then have to service with the line of credit. So it's more around the timing. It's another reason why the push to profitability matters is because we won't tap the line until we are generating positive cash flow. Again, if I thought that was going to take 24 months to get there, I probably would have a little bit more heartburn because I do see great M&A opportunities that I want to be able to action. But the timing, I think, is such that we will have access to it, and we will be able to tap it in the new year, confidently. It's not that we can't tap it now. Again, this is more a self-imposed constraint, Rob. I just fundamentally don't agree with servicing debt with that. So that's just, again, a timing issue that is fully within our control to manage. What was the second part of that question?
I'm just trying to get a better understanding of how you think of buyback versus M&A? Like what are the metrics you look at trying to push you a little bit to give me a little more information there.
Yes, look, I think the challenge in an environment like this is it's actually a pretty complex model that we run internally. When we do our DCS on acquisitions, when we look at IRRs, terminal values, when we look at our own expectations around what our business is going to do over the next 3 to 5 years. and what kind of return one could get for invested. So we could probably show you the model and give you some comfort on how we do the calculation. And absolutely, of course, the EBITDA is ultimately a reflection of future cash flows, right? So you could say part of this is looking at positive EBITDA multiples, accretion on an EBITDA basis. I guess one could argue we've got an infinite valuation based on an infinite multiple of EBITDA because we haven't been producing it so far. But I think that would be an oversimplification. Arguably, that would mean any EBITDA positive business we're going to acquire should be accretive. So why wouldn't we do that over NCIB. I think it is a more complex model than that -- it is. It's the model we've created. I don't want anyone to think that we're going to run around and spend $1.6 million buying our shares back -- but I'll be honest with you, if folks are crazy enough out there to want to sell our stock at $3, I think it would be irresponsible of us to not acquire that stock on behalf of all of our shareholders. I think the return we would get on that kind of investment is sizable. So it's a balancing act. It's complicated, it's thoughtful and trust me when I say, look, we don't treat lightly using cash to buy back stock, especially as a recently IPO company, this is not a flipping discussion inside...
Bill, I don't think I see any further questions. So I'll turn it back to you to close.
Again, we're really pleased with the results. I think we've had just now a consistent set of quarters, year-over-year growth on virtually every metric. We've been doing what we said we were going to do from the start. I think we're giving more visibility into the products that we're building and the tools and how they're going to enable us to be successful. I think folks are getting more color in that understanding of the kind of product company we want to be. And they currently are already starting to extend our managed services and our professional services. Our corporate development team is finding new and create opportunities. And my job now is just to try and facilitate along with no our capacity to act on many of these really interesting and exciting acquisitions.
And lastly, we said last quarter and the quarter before, it's time the market has said it's time, but we know it's time. The $100 million business needs more evidence of profitability. And I can tell you, it's most daily conversations with the team, this focus on it. It will happen. I'm confident in this team's ability. We're going to exit 2022 as we described with positive EBITDA. And again, I want to reinforce, despite the fact we've been showing it, I'm going to call that positive sustainable recurring high confidence it's going to happen every quarter EBITDA. That's what we're driving for us. So thanks, everybody, for attending this morning. And for those from the team, just again, a big shout out and thank you for all your hard work this last quarter. You did an amazing job, and it's showing in the results. Have a great weekend.