Morning, everyone. Thank you for joining for this half year update. Alongside me today, I have Ken, who's been with us for the last half year presentation, but just as importantly, Emma Salthouse. I'd like to welcome Emma. She's in fact, coming back to the organization, having done a brief stint as FD at Forensic Access, but the great thing from our point of view is Emma has knows ActiveOps inside out, having supported us for many years, up to and including the IPO. Emma will speak a bit more later on. This morning, I will kick off with a quick overview of the business. For those of you who haven't come across us before, and then I'll kick into our results, and Ken will give more detail on the finances, before we then just...
I'll also complete with a, with a sense of the sort of current outlook and strategy. ActiveOps is an enterprise software company delivering productivity-related products, supporting decision intelligence for financial services and their related industries. We sort of operate globally. You can see the split on the screen there, and really the great thing about ActiveOps' offering is essentially enabling people to do more with what they already have, which speaks very much, as you can imagine, to the current climate. The business is a SaaS model, supported by some training and implementation revenues, and it's because of our annual in advance contracting model, it also generates cash with sales, which means we don't have any debt and we're very cash generative. It's in the context of current climate, we're finding a very appealing offer for our customers.
In terms of the outcome of using our stuff, what you see on the screen in front of you is a number of examples of that. Essentially, people make better use of those resources that they already employ, and that can translate into outcomes, obviously, in terms of needing less people, so it might just be a cost reduction, but just as often, in fact, more often, it's about making better use, so greater improvement to customer service, a decrease in the complaints, in reduction in overtime, and the sort of things, again, that you see on the screen. Again, the great thing about that in the context of customers is their strategic imperative does change and vary, ActiveOps effectively offer a greater control, gives that kind of choice around how they better exploit the assets they're having.
That can be when they just need to do more with what they already got, or as increased in the case, you're under regulatory pressure or on some kind of transformation pressure to reduce the operational risk, so you need greater control. ActiveOps' products is very relevant to a lot of the issues at the moment. In terms of our customer base, again, many of you will know these already if you've been on the call, but you can see the brand labels there. It's essentially financial services, but in principle, it across any type of process. You've got some of the types of work our products help manage on the left there. You can see it's essentially to do with the management of work and time, which is a perennial and ongoing challenge to so many of those organizations. It's very global.
We operate primarily out of the Anglo, I would say, regions. In principle, we have lots of opportunity and have been taken by our customers to different regions within the world. Just as a case study of the kind of outcomes that are notable and underpin, if you like, the results we'll be talking about in a minute. Nedbank is a customer in South Africa, who've been with us for many years, have really taken on a number of challenges recently, which means ActiveOps is a huge addition to help them accelerate some of their goals. In this case, you can see in 2022, they had 300 people on our system. In 2023, now they have over 2,000 people using ActiveOps' software. That relates to a number of business challenges around impairment, around productivity improvement, and interestingly, staff well-being.
Because one of the challenges in recessionary times is not just how do you manage your labor force, but for the people that are there, you need to make sure that they're clearly positively managed, and you don't losing critical people, with the sort of, and, you know, maintaining the sort of sense of identity in organizations. ActiveOps very much speaks to that solution or that problem, which is great. Some of you may have been to our conference, and there's stuff on the website which you might see relating to the specific executive sponsor and in fact, several members of the team leaders from Nedbank, who spoke to this particular point, which does make really good watching. Onto the headline results, which you may have read in the RNS. Very solid half.
I think, particularly underpinned by, if you like, on a year-on-year comparison, the pound has appreciated strongly since this time last year when we had the Liz Truss government. That actually does therefore, we've taken quite an exchange rate hit because our, for example, you know, the pound against the rand or the pound against the Aussie dollar, means that our revenues in Australia and our revenues from South Africa are worth less in today's money. Which means that in pound terms, our actual revenues are up 8%, but on a like-for-like constant currency, that's up at 13% growth.
The other side of the equation is in terms of how we're getting that operational leverage we've been talking about, and I think again, very encouragingly, now we're actually at the point where we've had consistent EBITDA profit month-on-month, and Ken will talk more about that, but probably just as importantly, we're actually now at a profit before tax level. I think taken together, that does mean the business is very much in a position to both execute against its strategy, but is also secure against the sort of vagaries of the usual sort of, you know, market challenges that some organizations are facing at the moment. I think as an organization, we're feeling very pleased with the outturn, particularly on that year-on-year basis, and it speaks to the underlying growth that I think is in the business.
I'll talk more about the product set in a minute, but I think the key point for me is it is very much about a foundation for accelerating growth in the future. I think that does make for some interesting times ahead. Call out 2 particular things around both product and marketing, because those are the 2 strategic pillars in the business we've been working on for a couple of years now. Firstly, that replatforming of our code base to create ControliQ, but with that comes then the opportunity to create these series of product functionalities, which just represents different levels of value for customers. Crucially, that then enables us to charge differently, and that is really starting to move through now, and I'll talk more about that. The ability to directly link the series is to actual productivity gain.
We've launched the first generation of really AI-enhanced products, and that is, I think, potentially quite transformational for a number of our customers. Alongside that, we also have the expansion of the Casework platform, and that is certainly getting a lot of traction with our customers. I've talked about that, but we're now up to probably 20 deployments in various sizes, and so that is a real step forward. Alongside that is then how we take our message to market. Again, for those of you who've been tracking us for a while, one of our perennial challenges is making clients and potential customers aware of just the power of ActiveOps.
One particular notable thing is our relationship with Microsoft is turning up all the time, and in fact, we've transacted a first major deal through the marketplace this year, which is notable both for the customer, because it meant they benefited from some of the Microsoft bulk purchase agreements, and also from our perspective, it does reduce a lot of the complexity of contracting, which in, again, in a, in a time when contracting is not getting any easier, that's a huge thing for us. I think more profoundly, and I'll come back to this, is also how we effectively position ourselves to our customers around the decision intelligence idea, and I'll come back about that. What that does mean is we're seeing a much higher quality of lead come in.
When customers aren't quite clear what you do, the sort of noise you have to cope with in terms of then qualifying and then testing sales opportunities is very expensive. What we've seen is a notable sharpening of the inbound inquiries towards essentially what we do, genuinely do. I think the value of that will play through not just sort of in, not. You know, it's not in the next six months, but it's much more in terms of the prospect for next year. Both sides of product marketing and sales and the product are supporting us in a very particular way. You see that, particularly now in the distribution of our sales across the regions. The nice thing is, to be honest, there's not much difference in the regional sort of profile.
The problems are essentially generic, whether it's recessionary pressures, wellbeing, or the need for just sort of end-to-end digitization of a lot of the transaction of these customers. This is just some pie charts to show the distribution of the different activities, but it is encouraging because all the regions now are seeing expansions. Notable one in North America is we've had a lot of customers on our WorkiQ product in the American healthcare market, and we've always felt since we acquired the OpenConnect company, that was the cross-selling opportunity to really scale the business. We now have material numbers of pilots running in those customers, which I think leads to ControliQ scale for the coming year. We've had one project complete very successfully.
We're now into the scale-up discussion, two or three others running concurrently, setting us up for a strong year next year in the U.S. EMEA is very well balanced with lots of things happening across the region. That encompasses South Africa and India as well, there's a pretty broad church in there. Australia. Australia has been a steady source of revenue and growth for the business for many years. The great thing is, with new products, particularly the CaseworkiQ, we're now having our customers migrate onto the new code base, that is turning up opportunities for a further expansion to a greater set of customers in there. Again, it's about the balance book.
We suffer, in that sense, a bit of exchange rate volatility this year in terms of the actual return to pounds. In truth, that masks what is much more a success and a strength to the business, which is the ability to operate in different markets consistently and solving the same business problem. A lot of good things in there. I'll return to some of those themes in the next bit. In interest of changing voice, I'll hand over to Ken.
Good morning, everybody. Yes, indeed. I think, financial bits, I think most of you are fairly familiar with the business, but for those of you who aren't, Richard mentioned the company is based on our own SaaS model, Software as a Service. That means that nearly all of our customers pay annually in advance, which is great, it's great for cash flow. It's also great for predictability because it means that this month, the revenue will be pretty much the same as last month, but hopefully a bit more, and next month you can see very clearly as well. It does make running the financial side of the business extremely comfortable. You don't lose sleep about where your next kills will come from.
Growing, obviously, as you have your existing customer base moving into the next month, every month, you've also got some new business, you should have a very steady growing revenue stream. For some time, though, profitability, certainly every month for the first 6 months of the current H1, we have been in profit on an EBITDA level, and that was based upon an exit profitability last year, too. We've been consistently profitable. Because it's a SaaS model, it's very cash generative, and that's particularly the case in the H2 of the year. When we come to have a look at the cash side, you'll see that it does go down in the H1, but it goes up strongly in the H2 as customers renew and pay for their service.
As Richard said, the currency side of things has been quite interesting over the last 12 months. The pound has grown steadily against the Aussie dollar, the US dollar, Canadian dollar, and the South African rand, in some cases, double-digit growth. That has had an effect on the revenues reported, but when you look at them on constant currency levels, ARR has actually gone up 15%, which in the current climate, I think is pretty powerful. NRR, although it's reported as 104%, is 111 if you look at constant currency. For the first time in a very long time, and in practical terms, realistically, we've moved into PBT positive territory, that's been a very big milestone for the business.
GBP 12 million in the bank at the end of October, so, yeah plenty of comfort in the financial side. Moving into the detail, the SaaS revenues, as we said, up 8% in absolute terms, but 13% in constant currency. You can see the profit and loss before tax moving into positive territory at 0.1 in there. To get there, we obviously had, as I say, good revenue growth, TNI revenues, training and implementation, that is, has been kind of steady. That very much reflects the rollouts and implementations that are undergoing any one time. Typically, they come through more strongly in the second half. In terms of gross margins, very pleased to see that growing by 3 percentage points.
That, again, reflects the SaaS content of the revenue side. In terms of OpEx, it appears our OpEx has gone up, but actually when you strip out the currency effect of last year, it's actually slightly gone down. We had quite a large currency gain, realized gain in the first half of last year, which had the effect of making the OpEx look lower. In fact, it's been fairly steady across the two half years. We capitalize labor as we are required to do under the accounting standards. This time, we've capitalized about half a million GBP. That compares with GBP 300,000 this time last year. Slightly up, and that's probably a fairly consistent level of capitalization now going forward each six-month period.
The EBITDA, obviously, pleasing to see that going up from GBP 0.3 - GBP 0.8. As I mentioned, one of the big blocks, you'll see the GBP 0.9 million towards the right, is the Forex effect. Last year's GBP 0.3 million EBITDA positive actually was after a very nice contribution from Forex, so it would have been a small loss otherwise. The SaaS growth in the year has been just a good, healthy growth in EBITDA. Sales marketing has further improved that. That is an effect of cutbacks made in the North American markets in the first half of the previous year, where the organization was right sized to make sure it was effective in the marketplace.
Management and admin, it's largely around provisions, holiday provisions, and we're actually building some internal technology as well to help our accounting and operational systems. Yes, GBP 0.8 million adjusted EBITDA, very pleasing place to be, and as we said, it should be sustainable now going forward, and that should be in the PBT side of things. In summary, we have a very healthy balance sheet, and most of that reflects the change from the full year end to the half year end, and that's the effect of customer renewals, so that does have quite a material effect on cash, debtors, deferred income, and the like. Before I say any more about these, I'll just introduce Emma, who's newly back into the business. Has had a whole week to get back into the seat.
I'm sure she'll have some comments and thoughts on the financial condition of the business.
Perfect. Thanks, Ken. Just to finish up the financials, I just wanted to provide some initial observations since returning back to the business. As Ken said, in summary, you know, the business has got a healthy balance sheet. The cash position remains very strong. The H1 cash position typically is impacted by the renewal cycle. Two-thirds of our renewals take place in H2. We will start to see that continue to climb as we go into H2, which is obviously a really positive place to be. I think for me, the real star on this slide is the high levels of recurring revenues that we have. This really brings to life, for me, the exciting return on investment stories for our customers, which you can really see come through the NLR metrics that we have, and we discuss later on.
Ultimately, as Ken just mentioned, the transition into a positive profit before tax position, which we are at sustainable levels as well, which is obviously really exciting to see. For me, overall, I think we've got some really strong foundations here as a business, and I'm really looking forward to supporting Richard and the wider business take these forward into the next stage.
What could possibly go wrong then? Absolutely. No, it's great to have you back, and it's, you know, so it's the familiarity with the underlying sort of systems of the business make it so great. Turning our mind then a little bit to the sort of the strategy and the opportunity, and I've touched on a lot of this, but I think it's worthy of a bit more time to explain. I think one of the things that ActiveOps has always wrestled with is positioning ourselves relative to, if you like, market categorization and the Gartners of this world. I think because that gives people entry point to where and how we operate. One of the things that's really coming through the advent of the large language models and AI, is this whole area of decision intelligence.
That very much fits with ActiveOps, because what we've always been doing is providing technology to support better decision-making. More data, more precision, more rigor around choices that otherwise people frankly make it up, and they wing it, and they judge on their experience, which in a large organization is a catastrophe for sort of carrying efficient use of time and labor. We've got a situation where, with AI, we have the capability now to leverage our own internal data. The unique to ActiveOps is effectively 15 years of processing data. That's what our cloud system contains.
Using ActiveOps, we're able to provide both the method to know what the right answer is, and of course, with our code base, we have the ability to access and tap into the latest software from the point of view of Azure and some of those amazing AI platforms there are. The critical thing there is that defensive moat. It's things that we can do that no one else can do because of the method, because of the data, and because of our particular code base. I wanted to just explain a little bit more about how that contributes to the difference. If you just consider for a second the type of decisions that people make every day.
On the box on the right there, you've got sort of examples of both the strategic, you know, the longer term stuff, how many sites do we need? What sort of relationships do we have with outsourcers or insourcers? Are we getting the right balance between sort of productivity and well-being? There's those big decisions, but then within an organization, if you think about the cascade of that reality down through, there's then the micro decisions, the tactical. Literally, you know, what do I give someone to do next week, tomorrow, today? Can I loan and borrow? So on and so on. Against that, if you look at the left-hand box there, that's sort of the reality for so many organizations is the information they use to make those kind of decisions is, at best, sort of dashboards and accumulated.
You still need to use your judgment to decide what the right answer is. Worst case, frankly, most of the middle managers in organizations spend their time collating data and assembling their information on which to make decisions, and the outcome of the decision is so effectively is the last stage of the process. There is such a massive opportunity to take that away. If we consider what ActiveOps starts to bring, we have a model which I won't labor too much, but it's the ability to consolidate myriad of different things your organizational activities get covered, and the people, into this data model with a single view of work and time. With that perspective, I know what work there is.
I know to a level of precision, what capacity I have, not just now, but tomorrow, the week after, and as an organization. That is extraordinarily powerful. We can apply our AI to that problem to say, given the circumstance you're in with the structure we have, here are the best possible outcomes, given the circumstance you're in. Suddenly you're not reliant on that management insight or indeed, frankly, the prejudice of the managers about the right answer in a given situation. You're actually able to leverage the best of your answers within your own organization. Increasingly, we will give customers the facility over best practice across our global capability.
The answers you're getting in terms of the situation, your customer, your team manager in, is based on the best possible outcome across the worldly practice, and then presenting that back to customers, to the consumers, to the managers in real time. You literally do have that ability to know what to do next. You don't have to wait and think and do. It's supporting that preemptive, prescriptive decision making. It is particularly, it is phenomenal. We've had a few examples of that at our conference recently, where we were showing people, if you like, a decision sequence, looking at data and then just asking the AI to do it for us and just come straight back up with, "This is possibly the best answer.
Would you like to execute that?" The decisions and the questions on the right there are the same, but the impact of that on how that can then be used is fantastic. I mean, the impact of that, just to sort of step back for a second, in a large operation, middle management is probably about 20%-30% of cost and OpEx. The impact of what we're talking about here is going to transform the need for that kind of role. They'll be more effective, and the need for spans and layers will reduce. The impact on something that's not really had a lot of automation attention, that kind of middle management area, but the cost base, I think, is in for quite a radical time over the coming few years.
ActiveOps, with the technology we have and the customer base we have, is absolutely placed to support organizations as they go through that journey. That's the sort of presentation of ActiveOps and our relevance to the challenges we face. I think, you know, that's quite a radical step up, and behind that, what we've invested in, and part of the cost base you've seen, is how we're going to market. I'm just fresh back from our conference season, which we ran a conference in London, Melbourne, and Nashville for the different regional activities. Again, the take up, the interest in coming to our conferences has grown year on year. I think more importantly, people go away with, frankly, a hugely different perspective on what the impact they as operations leaders can have on the transformation of their own enterprises.
We're really excited about that. More importantly, our own internal capability in terms of marketing is growing exponentially, a lot more impact. If you're tracking us, you'll see the change in our website, the visibility on LinkedIn, what we'll now go to is much more sort of rifle shot attention to the particular buying communities that this is relevant to. Particular thing there that's working very well already is our quarterly performance tracker for operations. We summarize our consolidated data now quarterly, and we write commentary on trends across the world and push that to COOs and senior leaders around the world so that they have some context. That's unique. No one else can really provide that kind of benchmarking data. Things like that, developing our authority, asserting our own leadership in this particular space.
We're just in the foothills, but it's throwing out some interesting results. Second thing is the technology. I said I'd come back on this. This is the ControliQ Series. With Series 3, you're seeing the introduction of the service level predictions. Again, it's hard to sort of overestimate the impact of this, but with our technology now, our customers are able to determine the likely outcome and therefore manage expectations or solve problems around service levels before they arrive, because the confidence level of the availability of work and the availability of resource can be modeled through. That is a challenge which every operation leader lives with every single day. To some extent, part of the reason that so many organizations carry contingent resource is precisely because they don't know what the outcome is, so they carry resources just in case.
Imagine if you've taken away that just in case. Suddenly, you're much more confident about what you can do. That reduces your cost, improves your response rates, you have less customer service failures. I could go on. Smart Planning. ActiveOps' method provides rigor around how managers think through what's going to happen. Has done that for many years, you're still in that loading meeting or that decision when you're mentally qualifying your colleague's plans because they may or may not have sandbagged it with different things. Smart Planning, like Google Maps on your journey planning, takes that away. It simply presents the likely outcomes based on confidence and, you know, testing it delivers a better result than most team leaders, certainly as good as the best, and the point is, it's consistently.
In terms of that management process, suddenly now we're dealing with effectively known knowns, and we deal with the outcomes. We're not mentally sandbagging it because somebody always overplans their productivity or vice versa. Testing in our beta test sites showed smart planning, improved utilization of the capacity, such that they delivered a 4% productivity improvement. If you've got customers with 20,000 people in it, 4% productivity improvement just from effectively better planning is a huge, huge number. That kind of stuff then delivers a direct ROI, which we translate into price point. We can then directly attribute the increase in pricing, which we're seeing in Series 3, to these type of features. Again, driving the revenue up. Series 4, coming in 2024, takes it to another level. skills mapping is a huge constraint for organizations. It's done very badly.
Skills change. We're gonna make it possible to auto determine what people are good at, and more importantly, show when people are falling off or need to go back as refresher because they haven't done it for a while. Learning curves, the rest of it. These are really, really fundamental challenges in large organizations, which we're just gonna take away the effort. virtual coach, another one where, back to my point about effectively, rather than just offering up a forecast, leaving you to decide what to do with that information, AUM virtual coach actually uses AI to prescribe and advise you on what the right answer might be. Each individual decision-making by an individual manager might be as good as that, but imagine when you've got 10,000 people with 1,000 managers, the impact of every single one of them making a better answer every single day.
It really is gonna be quite transformational. You can tell from my sort of tone, I'm very excited about this because it's the biggest leap forward I think we've been able to bring to our customers for many years, and the impact of this is gonna play through the business over the next three years. Speaking to that growth, what that does, we have CaseworkiQ, which is expanding the catchment of the type of work we manage. We are looking at it, therefore, with a combination of the WorkiQ and CaseworkiQ, much more of an enterprise structure. There's software solutions here, which appeal to the HR functions around attendance and a whole load of other things, which gives us some different sort of conversation about enterprise deployment.
There is this sort of progression as people's organization's sort of maturity evolves around this space for us to walk them from Series Two, which is really basic data capture and planning, through to Series Three, which is bringing in the AI, to Series Four, which is some of these enhanced features. Taken together, you know, we remain as confident as ever that we're really only just beginning to tap the market. I mean, we've spoken before, I don't think our general view has changed. There's at least GBP 90 million of ARR in our existing customer base, but much more importantly, with the ability of the new marketing and the new sharper proposition, I think our ability to expand to new customers and potentially even new markets... I mean, government is crying out for a lot of this stuff, the big processing areas.
You know, there's no shortage of target addressable for the market to go at. For me, right now, our focus is very much to demonstrate all of that by, I'm not saying speaking to our knitting, but focusing on the high value opportunities within our existing customer base and drive that acceleration. On the back of that, probably in the middle of next year, we'll then start to think about how we can really scale up and scale outwards to different areas. We've got, you know, a lot in the pipeline right now to execute and to drive up that underlying ARR growth, but I think the potential beyond that is very exciting indeed. Specifically, just since the half, I mean, I would just simply headline it in line with our expectations.
We've done a number of specific expansion deals with banking customers since the end of the half, and the pipeline is looking as strong as ever, which leads us overall to the headline that we're confident in our ARR growth. It is very interesting times in that context of organizations looking for ways to reduce costs, maybe, but certainly, you know, sweat their assets more. I think ActiveOps proposition is exactly in that spot where the message we can say is: Here's a very straightforward way you can get more from what you've got, but more importantly, not just sort of cut things, but you can actually execute better against your strategic plans, which is, as you can imagine, quite an appealing idea to a lot of our customers.