Good morning, everyone. Thank you for making it to the ActiveOps briefing. In the course of the next 20 minutes, we'll take you through the update on the H1 results. Just to kick off, we had some feedback last time that it's good to recap on the company. Quick recap on the business and the business proposition. We're a global enterprise software company, extending our software to banks, insurance companies, BPOs across the world, enabling them to orchestrate and manage their resources in a more efficient fashion by giving them consistency of metrics and so on through. We're a primarily a SaaS revenue business, about GBP 22 million in ARR and distributed. We got sites across the world, but particularly around South Africa, Australia, the U.S., Canada, and the U.K.
In terms of the outcomes our customers enjoy, some of those are on the screen here. Fundamentally, what we give is precision of control, and that comes out in terms of the type of things you're seeing on the screen. We do our work more quickly, we deliver our SLAs more consistently, we reduce our costs, and so on through. I imagine anybody reading that in the context of current sort of hybrid working and the pressure on costs, can immediately see the value of ActiveOps software. Because it essentially enables people to really deliver on many of the things that are worrying them in terms of growth or cost reduction, or indeed, overtime control, and increasingly regulatory risk as well.
The ability to be assured over your teams and your departments delivering what they need to in terms of your money laundering obligations to the regulator and so on through. It's very much a product of the moment in terms of that need for visibility and control in what is, at the end of the day, a very complicated world. We deliver that through essentially enterprise SaaS-based software. We have our core program, which is ControliQ. It's a control system, and our customers have that as a generic control software across their teams across the world. We've recently deployed, and many people may know, an extension to the capability of that to include more caseworkers and knowledge workers, so that's CaseworkiQ, and I'll talk more, but that extends our addressable market.
Then we have a very interesting desktop analytics platform, which provides much more visibility over what's actually happening at the desktop level, which again, in relevance to current world, it means things like employee well-being. We have visibility of the applications we're working on, how long people are working, and so on through. The key thing about the USP of ActiveOps is we have a very well-defined use case of how you use that software. Anywhere in the world that's using our software, the team leaders can be accredited and trained in the same way. That really is the thing that turns us into an instrument of standardization and assurance across very large enterprises. That supports our benchmarking and our global standards, awards, and so on through.
Moving to the year, we're enjoying a very strong year. There's a lot of things to be talked about and very positive about. At the heart of it, of course, is the products, and I want to call out when we IPO'd last year, we did an analysis of our target addressable market with customers with whom we already had a contract. In other words, what was our expansion footprint, notwithstanding new business? And at the time, we assessed the addressable market within just our existing customers was at least four times the community we already had with them, was about GBP 70 million. What the slide here shows is the impact of CaseworkiQ in terms of expansion, controlling WorkiQ, and indeed upselling ControliQ to our existing other user.
The WorkiQ is only expanding that. Running the sums again, we can see now at least GBP 90 million of directly addressable customer ARR with customers we already have contracts with. That just speaks to the sort of expansion potential of the business itself. It was underneath that, you've got a wider business contract context of hybrid working. The complexity of running operations, the pressure from the regulators across the world is only increasing the sensitivity organizations to how well they are in control, and therefore, the underlying sort of need for our kind of software. There's a stat around the bottom there about the commensurate increase in the total target addressable market. This is very much something which organizations are feeling they need at the moment.
In terms of the quick summary of the half year, in terms of financial results, as the figures on the screen there, and Paddy will go through in more detail about that shortly. Fundamentally, you can see that 14% growth in our underlying SaaS revenue has been very, very strong. We're helped by multicurrency and, but in terms of the sort of relative strengths of the dollar versus the pound. Again, I just think that speaks to the strength of the business. I mean, we take revenues in dollars, U.S. dollars, Australian dollars, South African rand, Euros, as well as GBP. Again, and with our cost base being quite regionally based as well, that means essentially it's just the margin on those sales coming back to the U.K.
The business itself has got a lot of underlying resilience in terms of its currency flows, and that speaks to the sort of strength of business, as I say. T&I this year, the first half was lower. We've spoken before about how sort of our projects tend to be quite chunky and pulsed, and our sort of blend of training and implementation support in the first half was a little bit lower than the year before. Again, if you look at how it's actually come through in already in the trading, I'll talk about it in the trading update, but it's certainly our expectations are on the full year to be at least as in line with previous years in that respect.
Underneath that is a very healthy growth, not only in the SaaS revenue, but this continuing land and expand strategy. Our growth in our existing footprint continues to be fantastic. Equally, new business logos, 2 in the U.S. and 1 in the Asia Pac region, speaks to the sort of global nature. Both of the U.S. ones are sizable expansion opportunities, and the U.S., the Asia Pac one is a subsidiary of one of the major, or, well, probably the only Australian bank that we don't enjoy as a customer already. Again, that's a useful expansion opportunity. An awful lot that I think as a team, we're very pleased about.
I can talk more about the sort of particular, but I think the key thing for me as we go into the second half this year is that kind of both deal momentum, but just deal pressure, transactions happening, people coming in bound to make things and to push deals forward. Overall, you know, a steady good year. I think the one other fast bit, and again, Paddy will give you more detail, is the underlying profitability of the business, which continues to be sort of better than projected. You know, in the current context for the type of market we're in terms of enterprise software, I think a very encouraging step forward. That's the quick overview.
I'll hand you over to Paddy, and perhaps you can pick up from here.
Thanks, Richard, good morning, everyone. I'll delve into the SaaS revenue to start with, and as Richard, I think, mentioned, the annual recurring revenue's grown by 12% year-over-year, constant currency movement of 7% as the strength of the dollar, obviously providing a good tailwind for us there. Net revenue retention at 109%, significantly ahead of the year end of 102%. We've seen very low churn so far this calendar year or this financial year, which is positive. As Richard mentioned, the land and expand strategy that we have continuing to pay dividends. The top 10 have grown by 16%, with nine of those top 10 all growing.
If you look at the top 40, they have all grown by 17% as a cohort, with 34 of those accounts all expanding as well. Continued very strong momentum across the customer base. At the bottom right there, you've got a good diversification, if you like, around our customer base, with the top 10 taking 61% of the total. We've got one customer over 10% now, which is a good little battle for the top three, four, five customers to have to see who's gonna get to the 10% mark and above. We expect that to decrease slightly as other customers grow and therefore dilute the top 10 customers. A strong, continued strong land and expand success in our ARR. I'll just move on to the P&L.
The SaaS revenue growth, 14%, a good strong growth, aided by the U.S. dollar, with constant currency at 9%. The T&I is slightly lower than the first half of last year, but really, as Richard said it, and as we've talked about previously, it is a volatile revenue stream. In this case, we've had a couple of our contracts that are signed and ready to go, just the timing of the implementations of those with our customers, asking us to delay a couple just to one side of the half or the other. We've got good momentum in the pipeline, and T&I revenues we expect to come back for the full year.
Gross margin, broadly stable, so a + 1%, which is really the impact of product mix, a very small reduction in the SaaS margins from 85% down to 84%. That's really just a continuation. We talked at the full year about investment in the help desk last year, a steps investment, and the CaseworkiQ product for, in the short term, has got slightly lower margins, very slightly lower margins that will, once we integrate that into ControliQ at the year end, they'll return to normal.
Then T&I margins, again, strong in the first half of 59%, which gives us an overall small uptick. I'll come back to the detail of the operating costs in the next slide, but we have benefited from a positive exchange impact.
We hold a lot of U.S. dollars in our accounts following the transaction we did a couple of years ago. That obviously has had a positive exchange impact with the strengthening of the dollar. We have converted some of that sterling to lock that in. We are expecting more U.S. dollars to come into the bank accounts between now and the year end.
We've also capitalized GBP 0.3 million of labor related to the product developments that we've done in the first half of the year, and that's following the year-end capitalization as well as we continue now to develop new features and product set. We expect that to be an ongoing position that we will have for the business. That gives us a profitably adjusted EBITDA of GBP 500,000 , and a good positive story there.
If I just delve into the detail of what's happened in the OpEx or the EBITDA walk across here. Obviously the SaaS revenue and T&I revenues dropping through to a GBP 0.8 million improvement in our gross margin. The sales and marketing investment is really a flow through from last year's investment in headcount, as well as you would have seen from the RNS, we have a new Chief Marketing Officer who's joined us, and he'll be driving the marketing strategy going forwards.
Customer delivery and relationship management, that's really around investment in our Customer Relationship Directors, and they've helped us grow and expand those existing customer bases, the top 40, so a key driver in that space.
The products and tech dev, again, that is a flow through of last year's investment that is now fully into our run rate for the first half of the year. I mentioned the Forex impact and the capitalization of development costs, and that gets us to a profitable adjusted EBITDA. Travel is obviously a cost for the business, given our geographic diversity. That's back up to where we were pre-pandemic levels.
A good position on the walk across. If I just move on to cash flow, you'll remember from previous sessions that our first half cash flow is just below positive EBITDA position, and that's really a function or is entirely a function of our seasonal billing cycle.
Most of our renewals happen in the second half of the year, and we've already seen some of those come through with cash come through since the period end in September, as such. We've got GBP 13 million in the bank as of yesterday, and we fully expect that cash position to become positive in the second half of the year and return to where it was or, and above, the full year impact.
No concerns on the cash flow at all. It is just a seasonal billing cycle. I think just to end off, really, in terms of, you know, we're obviously in a difficult period economically, and the business is very strong. We've got a very strong balance sheet. We've got plenty of cash in the bank.
Our billing model, with the commercial structure around our accounts, gives us great revenue visibility going forwards and cash in advance, as well as that geographic diversity Richard talk about in terms of exchange rate mitigation. Having our cost base more or less aligned with our revenue income in different currencies, so a real strength for the business. With that, I'll hand back to Richard for the strategy.
Thanks, Paddy. If we just talk a bit about the progress we've made in the last year, I think, you know, the core of it is clearly business growth, in all regions, and we've talked a bit about the regional sort of new business sales, but also just the expansion.
Our Australian customer base continues, particularly around the continuing need for refresh and development of new managers coming into their organizations, which has been a healthy stream of work and continues. I think EMEA, in particular, is absolutely fly-flying, lots of things happening, lots of different customers. Even since I'll talk about the trading update, but sort of continuing progress, let's say, since the half year end.
Then Paddy spoken about the underlying expansion to our customer accounts. I think, some of you may have been to the ActiveOps Capacity 22 conference in the Science Museum, or possibly even in Melbourne. These were just, I think, a showcase for the level of technology innovation we've been able to produce. When I think back to the business four years ago, to where it is today, our rate of introduction of new technology on our new platform has just added this, you know, this profoundly different.
What that means is we're able to sort of bring to market much, much more clearly defined requirements to meet particular market needs, which increases the efficacy of the sales team, but also just the rate at which we're able to innovate and really help our customers deal with some of the challenges that they're facing, and I'll talk about that.
CaseworkiQ being an example in point, where that world of complexity still needs to, you know, the world of knowledge workers, the demands of regulators is creating new challenges for our customers, and we've been able to respond to that. I think the final element of sort of the strategic progress, I think we've.
There's been a step change in terms of our relationship with a couple of key support, you know, sort of partners, in particular, Microsoft. We've gone up a tier to their top tier of so-called ISVs, which is a sort of the intermediaries that they deal with. That means from a sales incentive perspective, and this doesn't impact on our figures at all, but the sales support teams inside Microsoft relation to the major accounts now gets a, you know, a much greater bonus, which gives them much greater incentive to promote and support our sales.
We're seeing a real impact on that in terms of our relationship with some of those strategic targets of the organization. An awful lot of things happening, and I think it. Most encouraging it all, we're also seeing that in our reduced churn.
You know, we've talked before about how our sort of churn rate is very low, but even around the sort of normal, most, you know, basically, customers are expanding our usage, and our underlying NRR is just growing all the time. A lot to be pleased with there. I think if we look now a little bit more forward, fundamentally, the context for our work is just getting more, you know, more positive, that the world of work is not getting any simpler.
If you think about operational risk, that sort of sense of pressure organizations are under, skills development, and the need to actually support people in a new way of working so that we can develop the skills we need in our businesses to orchestrate and use them and to work together effectively.
Productivity management, massive issue, where organizations are worrying the impact of hybrid working, both short term, are people effective at home? Also long term, how do we make sure we build the right type of capability, capabilities in the right place in the context of hybrid working?
These are all really worrisome issues for a lot of organizations, and the ability of our software to take that and simplify how you resolve it, give organizations options to manage it, is a huge thing. Of all, you know, of the time, we're getting that kind of engagement with our customers in a way that perhaps we haven't seen for the last couple of years as they've been dealing with the impact of COVID.
An interesting chart for everyone is how ActiveOps performed in the last recession. This is our FTE growth back in from 2008 through to 2011 there. Now, you know, correlational causality, you have to be careful. But what I think that does speak to is, in a time of recession, when people were really cutting back, we enjoyed, you know, a huge period of growth. And because, again, the need for this type of control was very clear, and I think it gave us that kind of market relevance that really drove our growth at that time. And we see echoes of that in terms of the market opportunity in front of us today.
Looking at the actual specifics, I've touched a lot on case management, but the other aspect, I think we've really taken a step change with is data connectivity. You know, we work in an ecosystem involving other players, you know, whether it's the workflow tools, the Pega and so on, or it's the orchestration and telephony systems, it's the Appians and the low-code sort of developers.
These are the players in the game we work within, and our plans and so on through. What our software now does is interface with those much, much more effectively, both receiving and providing information to our clients, so that essentially they can build their own compound, customized solution for their enterprise, with ActiveOps providing that critical interface layer, rather than perhaps being our own island.
Imminently, I mean, we're already piloting this. We've got the sort of beta program we're rolling out with our customers is Smart Planning. That, for anybody who's sort of close to this world, the terrible thing about with of the back office is its sheer variety, the sheer number of different things that people do. That has therefore meant, if you like, by contrast with the contact center, where you can centrally plan, ActiveOps has always been brilliant because it provides consistency to the planning process, even though it's done in a distributive way. Smart Planning takes that to a whole another level. It now means that the things, the intelligence that needed to be applied into that local situation, can now be built into the machine.
In other words, I don't have to worry as a senior leader that my team leaders are planning well, the software will plan for me. I can focus my leadership on executing against the plans that effectively do maximize the effectiveness of the whole organization. Without being too sort of off topic about it, that is transformational to the challenges of work operations management. It really is.
The ability to systematize that across large scale enterprise will be profound in its impact. Behind that, we've talked about skills, but skills development, so the ability to infer from what people are already doing, things they might yet be doing, and then bring that to bear into that Smart Planning.
Again, just takes away so much of the drudgery and frankly, the randomness of a lot of the collection of data, but also the inference and application of that data to better activities for people. Smart Skills, similarly, very, you know, in the process of being deployed, great, you know, high impact.
Behind that, another one is the whole employee experience, providing data to support visibility over well-being and how people are being managed is clearly very relevant to the time of the moment. Looking at a little bit more detail at one of those, the Smart Planning. We introduced this as one of our customers recently, and is absolutely applicable across the whole customer base. This is the pilot process down in South Africa.
What it delivered was pretty profound for them in terms of the application, but also just simply the straightforward ROI. The planning was done better, it translated into hugely you know, the savings, both in terms of the management time to do the planning, but also better planning.
Just to give you a simple number there, we reckon the, t his was, if you extrapolate from the time they had, it represents about a GBP 1 million saving for, per every 1,000 FTE. Which from our point of view, as a sales message, makes it absolutely crystal clear in the current times of sort of doing more with what you've got. That's a very powerful particular message. Looking forward, as a business, we really are looking to accelerate.
We're looking to accelerate the exploiting the opportunity of our technology, our AI and machine learning teams are growing the capacity to bring insights to complex data to help our senior leadership. We've got no shortage of target addressable market. Also we've got some really exciting products to take there. We really need to increase our sort of addressable, you know, convert that. We need to get the new tools out there, the Smart Planning and further the AI sort of exploitation.
Looking more at sort of the actual management of ActiveOps as a business, we will continue to be, let's say, judicious with where we spend our money. I think we've got plenty of, you know, operational leverage to capitalize on the investments we've already made.
Our underlying run rate profitability is absolutely on track, and I mean, I, you know, in line with the sort of yes, the improved position that we are at relative to where we were forecast or the analysts were forecasting before. I think, you know, that we remain confident, let's say, about that. Do we have opportunities for expansion and M&A?
Yes, we will continue to be looking at that. I think fundamentally, the essence with ActiveOps has always been the core business is very sound, and we have the capability and the means, I think, with the platform we've built, you're looking at here, to really drive a lot of growth, you know, organically. As I hope the tones come over, it will continue to be.
We like to think we do what we say, but more importantly, we think we've got lots of things we can, you know, we can say about and we'll be continuing to do. Translating that into specifically relating to H2 outlook, we've had a very positive first month or so of the half.
We've had a record training and implementation sale to one of our large customers, this is a great example of the sort of do more with what you've already got argument. They're an existing ActiveOps user base, it's worth it spending a very, you know, a large amount of time to lift up the capabilities to exploit the software better. That's a good one.
We've picked up another, very, you know, significant, financial services client with a customer base in the U.K., but also much more, much greater in the U.S. as well for future expansion. Our CaseworkiQ pipeline is growing strongly. We're, you know, there's a lot to be interested in. I think behind that the kind of the mood music in the context of deal pressure back of the conference was the best attended ever of any ActiveOps conference.
Same in Melbourne, a lot of people came out. I think that just speaks to the timing of the moment where people are perhaps moving away from the big ticket or perhaps they've made investments in things like robotics and so on, and now they need to cash that check, and that's part of the offer we can have. That's a kind of run-through of our current position. I hope, you know, only ever building on what we've already talked about before, but as I say, a lot to be excited about.