Welcome to the Netcall full year 2024 Results Presentation. I now hand over to James Ormrod, CEO, and Richard Hughes, CFO. James, over to you.
Thank you, Tamzin, and a warm welcome to everyone attending today's results presentation. And we're delighted to report another year of strong performance, driven by the high demand for our cloud solutions. And we've also made significant progress in embedding generative AI into our products, launching several new innovations, and advancing our acquisition strategy. For those who may not know us, Netcall is a U.K.-based enterprise software company focusing on helping organizations achieve digital transformation. Our Liberty platform automates workflow and manages customer interactions, delivering substantial cost savings and improved customer experience. Our customers often operate in complex, highly regulated sectors with large numbers of customers and employees. This results in numerous interactions and bespoke processes, which are often labor-intensive and hindered by outdated and inflexible IT systems, and we help them address that.
We serve key sectors such as healthcare, the public sector, financial services, which together account for 90% of our operation. Our clients include well-known brands such as Santander, which uses our solutions for mortgage approvals, and Legal & General, for example, for claims management. We also have a growing network of technology and solution partners, providing both routes to market and complementary services for our customers. In the UK alone, we estimate there are around 3,000 organizations in our target market segments, of which we have about a 15% market share, which gives us significant potential to expand our footprint and cross-sell our solutions. Financially, we've seen positive growth across the board, and Richard will give a lot of color on that later. But we've achieved revenues of more than GBP 39 million, with 82% of that from recurring sources, such as subscription and support contracts.
At the end of the financial year, we've had over 32 million in recurring contract revenue, with now more than two-thirds of that from cloud subscriptions. We've maintained healthy profitability and excellent free cash flow, with a net cash balance of 34 million GBP before post-year-end acquisition payments. Before we turn to the highlights of the year, just wanted to touch on Netcall's culture, which is fantastic. We have a dedicated team of 350 people who care deeply about their customers, and that's reflected in our employee engagement Skore of 83%, placing us in the top quartile of global tech businesses. And I'd like to thank them, as that high engagement isn't just a number, it's a real advantage in delivering excellent customer service, with more than nine in ten of our customers asked saying they would recommend Netcall to others.
So turning to the highlights, we've had another good year. We saw a 9% increase in revenue to GBP 39.1 million, and our adjusted EBITDA came in slightly ahead of expectations at GBP 8.4 million. The main driver of this growth is strong uptake of cloud subscriptions by both new and existing customers. Subscription revenue is up by 19% to GBP 19.8 million, with cloud subscriptions now making up 90% of new sales. Throughout the year, we saw robust demand from new customers, very eager to modernize their outdated contact center infrastructure and customer service applications to take advantage of our latest technology and industry-specific offerings. In particular, in the healthcare sector, our solutions have been highly sought after. They help trusts manage their patient engagement effectively, resulting in several new customer wins.
For instance, the University Hospitals Sussex recently adopted Patient Hub and our waiting list solutions, and that implementation led to an 80% patient response rate, helped reduce their waiting list by over 13%, and saved more than 14,000 hours of administrative time per year. We also continued to build momentum in the transport sector. In April, we announced a new GBP 7.6 million, five-year contract renewal with a leading transport company, which is a GBP 400,000 annual uplift over the original contract. And additionally, we partnered with Transport for London to deploy a solution for managing certification of equipment and vehicles on the underground network. And more on-premise customers are moving into our cloud platform, and that's reflected in the growth of our customer engagement revenue, which included a 50% increase in its subscription revenue.
We expect this demand to continue as more customers switch to cloud contact centers to take advantage of more communication channels and conversational AI. With a higher proportion of revenue from recurring sources, we've enhanced our cash generation and provided more predictable cash flow. Using this strong position, we continue to invest in innovation with regular product enhancements to open new growth opportunities. For example, to cater to the increasing demand for cloud contact solutions, we've started the previously announced investment program into this area, and Richard will provide more detail on that later. The more workflow and interactions we automate over time for our customers, the more value we create for them and for ourselves. We've identified several adjacent technology areas that can enhance our offering and increase usage. This is why we've used our balance sheet strength to acquire Score, Govtech, and Parble.
These acquisitions help us provide even better value for our customers and expand our market opportunities. The positive momentum has continued into the new financial year. With growing contract revenues and a healthy pipeline of opportunities, the board is confident in meeting its expectations and completing another successful year. So our Liberty platform, it's a software solution that's powerful. It can quickly analyze business process, streamline document workflow, automate repetitive tasks, manage interactions across multiple channels, and develop applications with minimal coding. All powered by AI, these capabilities help simplify workflow and enhance operational efficiency. ... While other platforms may offer process automation or customer engagement, ours, we believe, uniquely combines both. This powerful blend helps clients easily embed interaction into their workflow and vice versa, significantly improving the overall customer experience.
To further differentiate, we prioritize making Liberty intuitive and user-friendly, enabling both business users and professional developers to quickly automate processes. This broadens the available pool of talent and accelerates delivery times for our clients. Liberty is widely adopted in four areas, as you can see on this slide: operational efficiency, customer experience, as well as tailored industry and service provider solutions. For instance, in the financial service and insurance industry, Liberty powers portals for client onboarding, quotations, and claims management. West Brom Building Society, for example, reduced their account opening times by about 30%, with a further 35% reduction expected with further enhancements, allowing them to scale and bring new products to market quickly. At Netcall, we work with industry leaders to create solutions specific for their needs. Our tailored offerings, built on Liberty platform, are called Hubs, and they help customers achieve value quickly.
By sharing cross-industry content through AppShare and our community of now more than 8,000 members, we foster a lot of collaboration and innovation. This creates a strong network effect. The more customers use and contribute to our platform, the more valuable it becomes. In healthcare, our Patient Hub improves patient engagement with features like appointment notifications and NHS app integration. Today, it's being used by more than 2 million patients and has saved healthcare providers an estimated GBP 60 million by reducing no-shows and cost. In the public sector, our Citizen and Tenant Hubs offer comprehensive low-code solutions for council and housing providers. An example of our impact is at Lancashire County Council, which serves over 1 million people. During our interim presentation, we highlighted how they used our platform to help with their welfare rights case processing, boosting their capacity by more than a quarter.
Building on that success, they've now developed over 20 applications for over 100 citizen services, replacing around 300 web applications and forms. That's unlocked cost savings and also reduced their future maintenance time. And there's more to come, as they tell us their digital service team is engaged in over 300 further projects where Liberty can play a role. We've sold over 80 hubs to date, and we see a significant market potential for many more. We're also bringing a number of hub extensions to market each year to create new revenue streams. And not only that, but Liberty helps service providers create their own software solutions and recurring revenue streams, adding income for Netcall and other verticals. For example, CGI, a global IT and consulting firm, has launched Energy Commissioning Suite for B2B energy suppliers.
That SaaS solution, built on Liberty with a comprehensive set of APIs, has already secured three major customers, and they have more in the pipeline. The market for digital process automation and contact centers is vast and rapidly growing. Industry analysts estimate that its current global value is about $33 billion, with an annual growth rate of more than 20%. While we can't verify these figures, it's clear the market holds substantial potential, and here in the UK, our target markets probably represent several hundred million dollars. This growth is fueled by the adoption of cloud and AI technology and the increasing need for automation to improve customer experience. You know, many businesses still have a lot of work to do to fully automate their processes.
For instance, it's reported that 80% of businesses still rely in part on paper, Excel, or email routing of tasks, and we see that within our own business. This reliance is a major challenge for achieving end-to-end automation. There's a lot of speculation about the impact of generative AI on work hours, potentially automating up to 30% by 2030, it's claimed. Even if partially achieved, the transformative potential of this kind of AI opens a major opportunity for tech providers like Netcall to support the way businesses operate. In customer service and support functions, which are a major buying group for Netcall, improving customer experience and worker productivity are top priorities. Generative AI is driving momentum for self-service investments, as interfaces powered by Gen AI can manage more complex interactions than traditional tech.
However, many businesses report that self-service is a big challenge due to disorganized data and a lack of process automation, and that leads to over 80% of customer service and support issues today not being fully resolved through self-service. Compounding this is a shortage of digital and process experts. So to overcome this, businesses, when asked, say they need to involve their staff more and expect that three-quarters of future automation work will be done by business users. Therefore, buying tools that are easy to use is absolutely crucial, which is why we put user experience at the heart of everything we do. We target this market with a four-part growth strategy: acquiring new customers, expanding with the existing customer base, growing our partner network, and product innovation, and we're making great progress.
We add about 20-30 new customers annually across various sectors, and in this year, insurance, local government, transport, energy, and health. New customers often start small, with a single workflow or business challenge, with one or more parts of the Liberty platform, and then expand their usage over time, supported by our customer success teams. For example, the leading transport company I mentioned earlier began with a single app with a subscription of around GBP 100K per annum in 2018. Now they have over 40 processes built and spend GBP 1.5 million per year with us, a 15-fold increase. They've also established a digital factory department to deliver more digital products and services over the new five-year contract period.
So our success is deeply intertwined with the success of our customers, and that synergy is seen in our high cloud net retention rate of 117%. It's driven by cross-selling, hubs or hub extensions, migration of our on-premise clients into the cloud, upselling for new features or usage growth, and our very high retention rates, supported by excellent customer satisfaction. We also continue to build on our partner network of advisory firms and specialist technology companies. Sales via indirect channels account for 20% of all the bookings, and we aim to increase this. In the year, we signed up nine new partners, bringing the total to around 50. The introduction of our new product, Converse CX, has generated a lot of interest in this space, with several partners already commencing their accreditation and a number selecting it as their preferred contact solution.
Innovation is in our DNA. We continuously expand our platform capabilities with frequent new releases to add value for clients and support our growth strategies. It's been a productive year and a busy year for our development teams, with platform expansion focused on three core areas: embedding generative AI, maintaining our innovation pace, and addressing industry needs. We're embedding generative AI throughout the Liberty platform to make it more accessible and safer for our clients to adopt. This year, we've added features such as translation and tone of voice support for agents, easy-to-set-up chatbots and virtual agents that can be trained on customer data, and tools for summarizing conversations and analyzing sentiment to streamline interactions. Looking ahead, we're really excited about upcoming Copilot features for app creation, builder assistance, and agent guidance. These will enhance our platform's capabilities even more.
For instance, by making low-code development even easier with natural language authoring and app creation from business process maps, we potentially shift the build versus buy balance towards us and allow faster digitization of customer processes. In today's fast-paced world, and just the phenomenal amount of activity in the AI space, we need to keep up our innovation velocity. In this year, the launch of Converse CX, our new contact center as a service or CCaaS solution, has been very well received. It looks great. It includes our new generative AI features and is super quick to deploy with one click from the Liberty Controller, and it's our most partner-friendly contact center offer ever. We've also successfully integrated the acquired Score solution into the Liberty platform in only three months and included over 150 community ideas into our releases, highlighting our agility and commitment to user feedback.
Focusing on industry needs is key. This year, in collaboration with our customers, we've relaunched three new chargeable hub extensions, which increase our potential revenue per customer, including Diagnostic Booking for automated scan, scheduling, and RentI Q for proactive rent arrears management. We have four more in product development, including a really cool AI-driven clinic utilization product and patient relationship management. We've also recently expanded our health and social care team with appointments from industry to better understand and help develop solutions for this sector. These developments are driving incremental value and expanding the pipeline of our opportunities. We've been active on the M&A front this year. Our M&A strategy is designed to enhance our platform's capabilities and introduce industry-specific solutions that embed Netcall even more firmly within its markets, with the aim of broadening our product suite for both existing and new customers to drive significant cross-sale synergies.
We have several qualification criteria for our acquisitions, focusing on potentially transformative technology with a proven track record, and which, in our view, will become essential capabilities for our core markets over time. We prioritize our M&A pipeline on businesses with established customer bases, cloud-based products, good margin structures, and a shared ethos of easy-to-use and simplicity. This year, we successfully closed three deals: Score in January, and GovTech and Parble post-year-end in August and September. The initial consideration for these acquisitions totals around GBP 15 million, net of cash acquired, with a potential earn-outs on top of up to GBP 11 million, bringing the maximum consideration to around GBP 26 million. The total recurring revenue acquired was GBP 5.3 million, with the earn-out contingent on achieving an aggregate ARR of GBP 10 million over three years.
That makes the initial enterprise value to ARR multiple paid in aggregate, approximately 2.8 and 2.6 on a full earn-out payment. And if we now just look at the three acquisitions in a little bit more depth. Score, which is now rebranded as Spark, is a collaborative platform for capturing, visualizing, and analyzing business process. It's been used to map over 20,000 processes for approximately 120 customers, and in our view, Spark is foundational for business process automation. It allows us to engage with customers at a far earlier stage of their transformation journey and provides tools to help build business cases for automation. It's already integrated into Liberty and available for Netcall customers. We've made our first cross-sales with more customers in pilot stages. GovTech specializes in digital process automation for local government revenue and benefits functions.
It handles around 30 million transactions annually for about 50 local authorities. With automation rates of up to 80%, it provides significant productivity savings with a very strong ROI. The acquisition expands our customer base from one in four to one in three U.K. councils and provides an entry for us into that revenue and benefits function, complementing our existing applications across citizen service and housing. Finally, Parble, based in Brussels, a provider of generative AI, intelligent document processing solutions. It has processed over 58 million documents to date, helping business digitize processes like claims handling and email routing, providing approximately 97% time savings for its customers. Parble increases our exposure to the financial service sector, expands our footprint beyond the U.K., and provides significant cross-selling opportunity. Initial customer interest has been high, with several requests already received for pricing and demonstrations.
Product integration is expected to be complete in early twenty twenty-five. These acquisitions share a common goal to enhance our platform's capability with a significant potential cross-selling market opportunity, and we continue to evaluate further bolt-on acquisitions which meet our criteria. And now over to Richard to take us through the financials.
Performance in the year was strong, and our growth continues to be driven by cloud subscriptions. Total revenue was 9% higher year on year, at GBP 39.1 million, driven by cloud services revenues, which grew 19% year on year to GBP 19.8 million. Strong demand for automation and engagement cloud subscriptions drove total ACV 15% higher year on year to GBP 32.2 million, and this momentum is also reflected in our remaining performance obligations, being contracted revenue that will be recognized in the future, which increased to GBP 63.8 million at the thirtieth of June, an increase of 17%. This figure increases further to GBP 68.9 million when including the impact of post-year-end acquisitions and provides great forward revenue visibility.
EBITDA margins were stable with the prior year-end position and in line with expectations at 22%. Absolute adjusted EBITDA was 5% higher year on year, at GBP 8.4 million. Adjusted EPS was 7% higher year on year, at 3.57 pence per share, benefiting from higher interest income than the prior year. And cash conversion remains strong, with free cash flows of GBP 12 million, representing 31% of revenues, which drove net cash to GBP 34 million, and has allowed us to fund payments for post-period end acquisitions out of existing cash reserves. The transition to a cloud business continues, with cloud subscriptions now being over 50% of the group's total revenue.
We met our net new ACV expectations, driven by robust net expansion, as more customers deploy an increased usage of automation products to make business processes more efficient or adopt our cloud contact center products. We also continue to see good year-on-year growth in ACV from new logos. The effect of this is a very healthy net retention rate. The percentage of ACV retained from existing customers, including expansion, downgrades, and cancellations, measured year over year of 117%, or 119%, excluding the effect of the large contract renewal in FY 2023 and the impact from the Score acquisition in the year. This underpinned 23% year on year growth in cloud ACV to GBP 22.3 million, or 25% year on year underlying growth, excluding the effect of the contract renewal and impact from acquisitions in the year.
This year's growth means that we have delivered a 31% four-year cumulative annual growth rate since FY 2020 across cloud subscriptions. Total ACV, including maintenance contracts, grew 15% year on year to GBP 32.2 million. Year on year underlying growth from ACV continues to be strong, also at 15% this year, from 10% in FY 2021, 13% in FY 2022, and 21% in FY 2023, as customers continue to adopt cloud solutions. Cloud ACV is now 69% of total ACV, with cloud deployments around 90% of new product bookings. As cloud products attract a higher growth rate, this supports our underlying growth trend after taking into account the levels of investment in the group's cloud customer engagement offering.
Support ACV was robust and 1% higher year on year at GBP 9.9 million, reflecting continuing license expansions and renewal indexation that offset the impact from cloud migrations and cancellations. In addition to the opportunity to drive ACV expansion from increased usage and new solutions, we continue to see significant opportunity in cross-selling automation and engagement cloud platforms into our existing customer base. When we cross-sell intelligent automation into customer engagement customers, we see approximately a three times uplift in their ACV. At the end of June, over 26% of customer engagement customers had purchased intelligent automation, up five percentage points year on year. If these metrics apply across all customers, this represents an annual opportunity of over GBP 20 million. Additionally, when we migrate our on-premise contact center customers to the cloud, we see more than a 50% uplift in ACV.
With over 9 million maintenance base for contact center customers, this represents a cloud subscription opportunity of over GBP 14 million or an annual GBP 5 million net opportunity. Total RPO at the year-end was GBP 63.8 million, an increase of GBP 9.3 million or 17% on last year. 92% of this relates to cloud and support contracts. Total RPO from post-year-end acquisitions adds an additional GBP 5.1 million, of which GBP 3.1 million is to be recognized in the next twelve months. Current RPO, which is contracted revenue that is expected to be recognized in the next twelve months, including M&A impacts, is therefore GBP 35.1 million on a pro forma basis, being a 12% increase on the previous year-end balance of GBP 31.4 million.
Non-current RPO, including M&A impacts, grew by 46% to GBP 33.8 million from the GBP 23.1 million balance in the prior year. This, combined with high contract renewal rates of 95%, provides great revenue visibility. The strong ACV growth from automation and engagement cloud subscriptions continues to be the major driver of the group, and as mentioned earlier, cloud revenues represented just over half of the GBP 39.1 million total revenue for the year. Total revenue growth year on year was 9%, and underlying growth rose two percentage points year on year to 11%. Recurring revenues were 13% higher year on year at around GBP 32 million, and now represent around 82% of total revenue, an increase of three percentage points from FY 2023.
Cloud revenues continue to grow strongly, following the same pattern in ACV, with revenue up by 19% year on year to GBP 19.8 million, being a 32% cumulative annual growth rate from the FY 2020 position of GBP 6.5 million. Revenue from support contracts increased by 5% year on year to GBP 9.9 million, reflecting the higher ACV achieved in the year. And communication services revenue was GBP 0.1 million lower at GBP 2.5 million, reflecting a decrease in callback volumes, partially offset by an increase in automation-driven messaging transactions.
Non-recurring revenue from product and services was GBP 6.9 million, comprising product revenue and software license sales, with supporting hardware of GBP 1.8 million, and professional service revenue of GBP 5.1 million, which was GBP 0.1 million, or 3% lower year on year, as customer demand for full application development versus support of their own development teams varies from period to period. The higher ACV and RPO indicate continued revenue growth in FY 2025, with opportunities to drive further expansion throughout the year. In addition to ACV growth, another KPI of the group is operating margins. Our financial strategy to date is to grow EBITDA margin sensibly over time. Over the last few years, targeting around a 30% flow through of revenue growth to the bottom line.
Adjusted EBITDA margin was 60 basis points lower year on year, but in aggregate, 18% higher on a four-year cumulative annual growth rate basis through a combination of operational leverage and efficiencies. The margin delivery in the year reflects increased contribution from cloud services and productivity gains, offset by the investment program into the group's cloud customer engagement offering, meaning revenue per head was slightly lower, around 2% year on year, but wage cost per head was also lower, around 3% year on year. Reflecting these impacts, adjusted EBITDA grew 5% to GBP 8.4 million, and after removing the impact from the group's investment program, incremental adjusted EBITDA growth in the year was over 30% and in line with our ongoing target.
Our business model is largely based on annually in advance contract billings, which, combined with a growing business, delivers excellent cash flow generation. Free cash flow, which is operating cash flow after capital investment, lease payments, and acquisition-related payments, was GBP 12 million, a free cash flow margin of 31% of revenue. Free cash flow reflects an 8% year-on-year growth in billings to GBP 45 million, and represents a billings to revenue ratio of 115%, which is consistent with the prior year. Over the last five financial years, the average free cash flow margin is 25% of revenue, a conversion of around 124% of adjusted EBITDA for the same period.
0.6 million pounds or 11% of higher adjusted profits in the year have led to a 7% increase in adjusted EPS to 3.57 pence per share. The higher percentage increase in adjusted EPS compared to EBITDA predominantly reflects 0.7 million pounds of higher net interest income from cash reserves, representing around 0.4 pence of adjusted EPS. In line with the company's dividend policy to pay out 25% of adjusted EPS as a final dividend, the board is proposing a final dividend this year of 0.89 pence for approval in the December AGM. The estimated amount payable is 1.47 million pounds. Adjusted net funds, which exclude lease liabilities and acquisition consideration as debt-like items, increased by around nine million pounds to 33.5 million pounds at the year-end.
The table on the left analyzes this year's movements, with Free Cash Flow of GBP 12 million increased by GBP 0.2 million from share option proceeds, and reduced by GBP 2.1 million relating to the acquisition of Skore Labs Limited and GBP 1.3 million for last year's final dividend. The year-end gross cash balance of GBP 34 million has allowed us to fund post-year-end acquisitions of GovTech and Parble out of existing cash resources. It's also worth mentioning that the positive momentum in revenue and Free Cash Flow margin has underpinned a substantial GBP 27 million increase in net funds over the last three years after dividend acquisition and financing outflows. I'll now hand back over to James.
Thank you, Richard. And so, in summary, I think it's been a terrific year. Really strong business performance, underpinned by that cloud subscription, and strong cross and upselling. We've got a fabulous differentiated offering, the blend of automation and engagement. There's a huge market opportunity with the tailwinds of cloud and AI, and excellent growth prospects, through our industry solutions, our cloud migration strategy, and of course, an expanded opportunity delivered through strategic mergers and acquisitions. The solid financial position we have, even after those acquisitions, we've got plenty of cash, significant profit margin, and high cash generation. And I think we've got a very clear strategy and vision, with four growth pillars and a differentiated product strategy, all of which gives us confidence for a continued success in the year ahead.