Earnings Call: H1 2024

Feb 29, 2024

Good afternoon, ladies and gentlemen, and welcome to the PCI Pal results presentation. To start with, if we could cover a couple of housekeeping items. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen-only mode. However, questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen, or if anyone has dialed in, via pcipal@walbrookpr.com. The company may not be in a position to answer every question it receives today. However, the company will review all questions submitted and publish responses where appropriate. These will be available via your Investor Meet Company dashboard. Finally, we would like to remind you that this presentation is being recorded. I would now like to hand you over to Chief Executive, James Barham, and Chief Financial Officer, William Good. Gentlemen. Thank you, Tom. Hello, everybody, and welcome to the half year update for PCI Pal for this FY24. Good half year for the business. Some key financial milestones that we are aiming for this year, that William and I are very, very focused on. Full year cash flow positive this year is the aim and full year group profitability adjusted PBT level. We are well on track for achieving that. Not overly focusing on those, away from the other key areas of the business. In the period, we are growing sales incrementally year on year, expanding our routes to market. Very excited about what we are doing on the partner ecosystem side of the business. I am going to spend a bit of time talking about that today. Growing our product capabilities as well, so an update on the roadmap progress that we have made, and I know many of you are eagerly waiting to see what that looks like coming through in the second half of the year. We also had a very successful outcome from the initial trial in the rather unfortunate patent case that we are having to be involved in. But a bit more of an update on that shortly. But we are in as good a place as we can be. Let us just start off with some of the key highlights. I think all in all, what I tried to get across in the interims in my CEO section of the interims report was that we are really building a strong business here at PCI Pal. We have got a very strong core to this business. Not only have we built a foundation, but I think there's a strong core to the business when you look at the metrics and you look at the performance, which I think means we can enter a new phase of growth in the organization now that we are hitting those financial milestones of cash flow positive and profitability near term. ACV in the. Sorry, ACV. Revenue in the period was up 20%, that was in line with our own expectations inside the business. ARR exit run rate up more than that, 23% to GBP 14.7 million. That was really encouraging. When I talk about a strong core in the business, I feel that we're definitely operating very well from the operational standpoint as well. So operational performance in the business. We had a record amount of projects in deployment getting to revenue recognition, so moving out of our deployment phase into ARR. We moved GBP 2.5 million into ARR, contributing to that uplift to the GBP 14.7. That compared to just GBP 1 million in the similar period for the prior year, so 150% increase, which is great to see. Of the revenue, 90% of it is recurring, up from 85%. That shows you the health of the revenue that's coming through. We are a software business. Highly sticky recurring revenues is what we want from our license fees. To see that moving up from 85% to 90% is very good. And combined with that, supporting that high quality revenue message is gross margins up from 87% to 89%. And that's reflective of the fact that we proportionally have more licenses in our revenue, than we do transaction base. We do carry some minutes, we do carry some transactions, but clearly we're looking for the licenses which are at much higher margins, hence that's now tracking up. This revenue performance is driving our route to profitability, which is evidenced very clearly by the first reporting period of a positive EBITDA for the business since we set out on this journey. The sort of growth trajectory and investment path that we've been on since late 2016. So very much in line with our plans, getting to EBITDA profit for the half year and sets us up for the full bottom-line profitability for the full year. And if it hadn't been for the patent case costs in the period, operational cash flow is positive in the year so far as well. So all good to see and as expected. Moving to the right-hand side of the slide there, new business. TACV is the total annual contract value, total recurring revenue value of all the contracts we have signed to date. So whether they're at revenue recognition or not, that was up 18% to GBP 17.5 million. That tends to be a really good indicator of future recurring revenues in the next 12 months. Contributing to that TACV was the new business in license fees that we signed in the period, and that's reflected in ACV, annual contract value. And that increased 9% year-on-year. We did want to be a little bit further ahead than that in the year, but we specifically updated investors in the current trading that we've had a strong start to January and February, and we're actually more than 20% up year-on-year as we stand today. So really just timing challenges there as the half year closed in December. Some of that is a result of some slowness in procurement cycles. We reported this at the full year. I do not think it is uncommon in the B2B tech sector at the moment. It is much more common in the enterprise space. Contract negotiations are definitely a bit slower than they were. But encouragingly for us, our pipelines are up. As I say, our partner ecosystem is performing very well for us. Our sales pipelines across the last 12 months are up 20%. You have a counterbalancing factor going on there, which is meaning we can continue our sustained momentum of new business coming through. One of the highlights I will talk about was actually a highlight continued from the full year, which is the momentum we are seeing in U.S. and U.S. sales. Excellent breakout year for the U.S. for us last year, where it is kind of becoming the big brother of the group from a sales perspective, but given the size of the market opportunity there, we always expected to get to that point since we launched there in our first full financial year there in FY 2020. But up 35% year on year. Signed a number of new Fortune 500 customers, so very large organizations in the U.S. One of those is a Fortune 50 as well. We have had a number of competitor displacements in the period as well. Also, we signed Zoom, a new strategic reseller partnership, which I will update you more on when I get to the partners update. Now, talking about winning customers, we are also consistently good at keeping our customers as well. Really strong retention in this business that we have tracked at between 95% and 97% for the last three or four years. So for the half year to date, we are 96% gross revenue retention. When I talk about a great platform for growth, this is another aspect to it. So the retention that we have of our customers means we have got a captive audience. We have got customers that like us, and even though we sell most of our deals through partners, we also manage to market to those customers and build relationships directly to, and indirectly through our partners. So I think there is a big opportunity for this business longer term, as we become more capable to upsell and cross-sell. That is really in line with what we are trying to achieve with the product roadmap that we have and the new enhancements that are really now starting to come through. What ultimately that will drive is an increase in NRR, which is the net revenue retention you can see there in the second bullet point, the second point to the second bullet there, NRR. Now, I look forward next two, three years, I would really like to see this business getting to a significantly increased NRR, and wouldn't that drive some real additional value into the PCI Pal business. So, product roadmap, final point there, as I have mentioned, all in line with where we expect it to be. So all in all, half year on track with our financial targets. I have definitely got one eye on FY 2025 and 2026 onwards as we move into profitability, after the drain on cash that we have had the last few years. I feel like we are coming out the back of that, and we are in a very strong position to push on. Before I carry on with the update, I am just going to move on to a little bit of background, less than we usually do here. If there is anyone new to our story, there is plenty of other presentations you can watch, going back over the last couple of years, and we give much more in terms of background to the business. Please feel free to watch those. We just want to make sure we give everybody plenty of time for questions at the end, because we know that our investors seem to value that the most. PCI-PAL itself, we are a fast-growing SaaS business. What do we do? We facilitate secure payments for organizations across business communications environments. What we mean when we say business communications environments is we mean any number of the omni-channel mix going into contact centers or call centers as some know them as. Traditional phone calls or voice as we know it, chat, web chat, chatbots, social media, email, all these interactions go into contact centers generally today. We deal with securing payments across those environments. The vast majority of our customers use our technology in their contact centers. We do have a growing number of customers that use our technology in other areas of their businesses too, that are handling payments. The main one is finance departments, but there are also some other back office functions that although they are not called a contact center, they have a need for our type of technology. Our value proposition is security around payments, and it is about doing that in a very integrated way with the tech stack within a contact center. By using our solutions, also customers are able to achieve various compliance standards. The main one that is associated to our solution is PCI DSS, the Payment Card Industry Data Security Standard. As I say, in previous presentations, we have gone more into the background on that, so please feel free to watch those. News in the last 12 months is that we are a participating organization of the PCI Security Standards Council, and importantly, our CISO, our Chief Information Security Officer, is on the advisory board, and we are the only one in our market with that position. We are very involved in the industry. Our core markets today are U.K., North America, and ANZ, so Australia, New Zealand. Three core products as you can see at the bottom left of the slide there, Agent Assist and Digital, which effectively deal with live call center agent interactions with customers, so either by phone or any kind of digital interaction like web chat as I mentioned earlier. Then also IVR, which is the industry term for auto attendant, no agent involved, fully automated process. Press one for this, press two for that. We have got speech recognition capabilities across Agent Assist and IVR, and a bit more on that later because we have some enhancements there as well. For those that know us, you will know that we are building towards an evolution in our product set, and broadening value proposition that we have got. We are well on our way to doing that. Looking forward to talking a bit more about that later. How do we sell? The vast majority of our contracts come through partners. 80% to 90% of our contracts every year come through our reseller community, our partner ecosystem. There are just some of the logos of some of the top partners that we work with. We live and breathe channel at PCI Pal. We have done. It has been a key part of our strategy since day one. We hire specifically to bring in people who understand how channel businesses work, and are networked to our partners and the sorts of organizations that we want to work with, and this is an area of the business where we really are very strong. Most of those partners that we have are resellers. Of the 80%, 90% that goes through our partner ecosystem, the vast majority of that is resold. It is organizations selling us on their own paper. More on the ecosystem to come. Then just on the logo side, as you can see there, some really strong logos. We have got more than 600 customers across our platform. This year we are expecting to add probably about 250 to that across the full year. Net new logo count is accelerating by 15% to 20% every year. It is not all just big logos either. We access and cater for the breadth of the contact center market. That has been a key strength of ours, is that we are able to deal with small to mid-size as well as the very largest contact centers, which is important because the contact center market predominantly, or by majority, is the small to mid-size end of the market. It is an important area to be able to serve to maximize the addressable market opportunity. Just a little more on that strategy, just to keep it really simple in terms of we talk about three pillars to our strategic growth. These have been consistent for the last five years plus. We obviously evolved things around that, but this is very much at the core of what we do. We have always been in the cloud. We have got the most mature public cloud platform in our market. We are hosted in Amazon Web Services. Our 600 customers plus are all across that platform. Cloud gives us the ability to access a global market opportunity, the contact center market. What we do may be a little bit specialist, but it is a global market opportunity. We have the capabilities through our cloud platform to be able to access that market and do it in a cost-effective manner. Then further to being able to access that global opportunity, we align ourselves with channel partners, as I have just talked about, to be able to do that from a cost-efficient perspective and drive scale, leveraging our partners, who by vast majority are significantly larger organizations than us. Large technology companies. A bit more about the lay of the land for PCI Pal. We have various locations in the main, that is U.K., U.S., and Australia. The majority of our people are in the U.K., and that is because most of our engineering and back office functions are in the U.K. as well. We have got 85 in the U.K., 30 in the U.S., and then we have got a couple in Canada and a small team in Australia, which is hotting up for us right now. We launched there about 18 months ago, something like that. There's more information on the background from previous presentations that we've done, but where I wanted to draw attention here was the global cloud platform that we've got. The orange padlocks represent availability zones in AWS. That's a single platform for us that's joined by these availability zones. We can scale the platform very quickly, so if we move into a new territory, then we can easily add a new availability zone literally within hours, and it's ready to use under the same compliance approvals and everything else that goes with it. At the beginning, I was talking to you about the strong core that we have in this business and the strong foundations we've built in this business. Uptime is another piece of that, evidence towards that and my feeling there. In the first half of the year, we had 100% uptime across our global cloud platform. That shows the maturity of that platform. As I said, we were first to launch by a number of years. It's got some really high volume customers on it as well. So 100% uptime is absolutely fantastic. When you're a company that provides a specialist solution right in the mix of quite a complex environment, it's critical that it works. That's the first rule of retention in technology, make sure it works. So 100% uptime. We talked about some competitor displacements in the interim writeup. Some of those did relate to service issues that those customers were having, and so they were able to move to us, and now they can have a bit more trust in the platform that they're using. The green rosettes on the slide here show you where our key patents are. Our main patents relate to the innovation that we came up with, mainly in terms of how we integrate to third-party cloud environments, and the light touch ways that we do that. We do ensure that we promote those patents to our partners and customers that use those integrations so that they're aware that they're protected by those patents that we have, and that's been quite important to us. Now, moving on. Partner ecosystem. It's just really pleased to report to investors all week. This is actually our last session after a really busy week, since the results went out. Really pleased to report to our investors that the partner ecosystem continues to go from strength to strength. It's always been a key strategic focus for us. We're just very focused on building deeper, more productive relationships with that ecosystem. I've said to investors for a number of years now, as we were adding new partners quarter after quarter, I said, "That will start to slow down because we have to get deeper into these large organizations that will build the better long-term sustainable business with those organizations." We're really doing that. Actually our first focus is not signing new partners, it's working better and being better enabled with those partners that we've already got. So we're achieving that, and that's evidenced by the 87% of new ACV value that came through partners. In the top right-hand corner there, that's gradually tracked up over time. That's really a result of the combination of run rate SMB business, which we've traditionally got from our partner ecosystem, so the small to mid-size stuff, plus layering on all the enterprise business that we now see much more commonly through the partner ecosystem. Even if we receive a direct enterprise opportunity, whilst we know we'll earn less from it if it goes through our ecosystem, we'll almost always try to fulfill it through an ecosystem partner because we've got a much better chance of winning it, and it also feeds productivity of that relationship long term. This is an area of the business that is really tracking well. Just finally on here, I will update on Zoom. In the full year, we announced actually in the first half that we'd signed a reseller relationship with Zoom. Many of you will know Zoom from video conferencing, particularly in the pandemic. Zoom are a very substantial business communications vendor. They're a Gartner Magic Quadrant leader for unified communications, so back office phone systems effectively. They entered the contact center market, I think, at the end of 2022 or early 2023, and they're going hard at that. They had an earnings call just this week actually, and they were talking about the importance and value they see in their contact center business globally. They selected PCI Pal. We signed that and announced it in the first half, and we're looking forward to getting to full availability across their phone and contact center products globally in the next couple of months. Really excited about that partner, and I really believe that that can be a top five partner for us really very, very quickly. We have more in the pipeline, and we do expect to bring on more partners as we go. We'll do it in a balanced way given our resources. Before I hand over to William for financials, I'm going to give a quick update on the patent case. Obviously, we're a little bit limited in terms of what we can share here, but try to just give you the update rather than the backstory. You can get the backstory if you read the accounts. As expected, really strong victory for us, resounding victory. We won on everything from the original trial. We don't infringe on anything. We also won our counterclaims to invalidate the patents. The trial judge awarded us GBP 1.1 million in an interim cost payment. However, that cost payment is being held in escrow by our lawyers pending any appeal. The other side did go to the Court of Appeal to ask for permission and were given permission to appeal. We believe it's a low bar, is what we were always advised. That's now been scheduled for the 21st and 22nd of May. Actually really pleased that that's not that far away. We want this dealt with as quickly as possible, so we're looking forward to that hearing coming round in May, and we're looking forward to being successful in that. We continue to believe that this is a competitor that's just doing this to try to disrupt our business. We'll get through that, and then we expect to get our costs back as well as the cost for the Court of Appeal as well. We strongly believe, given where we've got to to date, that the downside risk to this for investors is substantially reduced. And we continue to believe that the worst case scenario for PCI Pal is certainly manageable given where we have got to to date. It has been a long two and a half years. We have wasted GBP 3.5 million on it, defending this business. We had to do that, but we have done the right things. And I am very proud by the fact we have actually continued to build the business in the way that we have. The U.S. trial continues, so that just rattles on. We have got a date for that, which is February 25. So another year of the U.S. side. William is going to talk a bit about the remaining costs. The only other bit I will add is that a mediation is required by both the Court of Appeal and the U.S. courts as well. I would expect there will be some kind of mediation probably between now and May, as that is a requirement. Happy to take any questions I can and respond to the ones I can at the end, and I will have a look in the chat in a moment when I hand over to William. The other bit of news you will have seen is that William is moving on from PCI Pal later this year, so he and I are going to be going through a process with the board to find a successor. William has been with the business with me for seven years. It has been an excellent seven years. He has been a great support for me. It has been a tough two to three years the last two or three years, and I am thankful he sort of stuck by us during that time because well aware he has some other interests as well. So we have got a great relationship, and we are going to be working through that process over the next four or five months. And hopefully I can get a replacement in place. My plan is sort of the back end of the spring to have a replacement in place by then with a good transitionary period with William. So William, I will hand over to you now. Thank you, James. Good afternoon, everyone. Just looking at the financials for H1. It is a continued story of growth and delivery and movement towards profitability. Our total revenue for the half year is up 20%. Our gross margins are improving. You can see the EBITDA has hit positive, but as James indicated, it is not a measure we use internally. We tend to focus on EBIT or adjusted PBT. Why is that? The amortization bit relates mainly to people and our investment in our platform, which are people, right? And that is something that is not easily switched off. So it is not a true measure of this business. New ACV continues to move forward well, and as expected, our TACV, which is the future indication of our recurring revenue, is continuing to grow strongly. Our exit ARR was strong at 14.6 million, and we finished the period with net cash balances of £545,000, having paid out £1 million in cash for the patent case. Just looking forward. Do you like these graphs? They just show the progression and delivery. It is something that James and I are very proud of from 2018 when we launched this new cloud AWS platform and the growth that has come through and the momentum as we have driven sales, invested in the business. I was the 12th person in. There is now 120 people in. We have driven gross margins forward. Why is that? Because we actually own the AWS platform, whereas the original platform that we inherited in 2017 and 2018 was a revenue share model. As you can see on the top left-hand side, EBITDA has continued to step down. We have purposely been loss-making, backed by our shareholders. But every year we have made the commitment to drive down our losses. We said when we last raised money in 2021 that FY 2024 would be the year we turn to profitability, and we are well on track for achieving that. Just picking up a couple of particular points on the bullets below. Note the growth in North America. North America is growing very fast. Why is that? The average contract side there is much bigger, the market is much bigger, and we are getting much more momentum through there, which is very, very pleasing to see. Our margins continue to, as we say, progress towards 90%. We think they will probably top out about 92%. Our cost of sales mainly relates to telephony channels and transactions, which is a methodology we have to use for some of our customers to connect them to our platform. But that is declining as we move towards more integrated partners. Again, on the top there, you can see how our ACV growth has improved over the years. Just a reminder, H1 is traditionally slower than H2. Why is that? Our year end is June, and we are Northern Hemisphere based, and so July and August always tend to be a little bit slower, and then we pick up momentum. Hence we reported in the accounts, in the written accounts that come the end of February, we are now at £2.2 million, and that is 25% ahead of where we were last year. The other point to note on that second bullet point down is that TACV grew 18% to 7.44 million. As I said, that is the indication of future ARR, but more importantly, the sub bullet there, the transactional revenues are falling. Why are they falling? That is because we are selling more and more through our integrated partners. Those integrated partners, just in their very nature, do not need telephony type transactions to connect to us, and so we are having less and less transactions. I am very pleased about that because license income is far more sticky and visible and better quality income than transactions. Just moving forward, this slide here is just to remind people that actually we are a people business. 75%, 76%, 77% of our business relates to the cost of employing people. You can see on the top bullet point, we've grown from the end of FY 2021, so June 2021, we were 71 people. We had just raised some money for growth. We've invested very heavily in engineering, product, customer success during that time, and current headcount numbers have reached 121. We've expanded across Canada and Australia, and as James will fill you in, he'll give you a bit more update on the products that we've developed, which give us a new uplift for the future. The middle bullet point is the sort of unwelcome financial distraction. That's probably the kindest words I can find about the patent case. It has been a cash drain on the business. We have had to fund the patent defense out of our business, and that's led to some limitations on our plans. Even though we've continued to deliver on what we said we would do, it has slowed us down a bit. To date, since the case was brought in September 2021, we've spent £3.4 million on defending it. That's it. That's invoice amounts. As at the end of December, we had paid about £3.1 million of it. My new estimate is it's going to cost us between £4.5 million and £4.7 million to take us through the Court of Appeal hearing costs and then through to February 2025 in the U.S. when the court case happens, the trial happens in the U.S. We are, of course, hoping to recover costs from that, believing we're going to win the appeal. Spent £1 million on paying patent fees in the first half. Why is it so high? The U.K. trial that James talked about was May, June. We had all those bills sitting, waiting to be paid, and they got paid in July, August, September. So if you strip that out of our underlying movement in cash, the underlying operating business generated £380,000, £390,000 in the period, which is a further step forward from where we were in the last half. I'm expecting that operating cash flow to continue to grow as we develop and deliver more business. The only problem is that operating cash flow is currently being used to pay the ongoing patent fees, which limits what James and I can invest in for the future. So, that's what we've been focusing on. So we finished the period with cash of £800,000. I had £250,000 drawn down on our HSBC facility at the time. That's now been fully repaid. That £250,000 was used to pay patent fee costs. There are several questions about what is our facility. Our gross facility is £3 million, and as I said, it's currently undrawn. However, the availability of that facility fluctuates based on a complex calculation against the level of assets and liabilities we have at the time of drawing. So the effect is it can actually limit the facility down to as low as £1 million. However, that £1 million is more than what I need to fund this business going forward. So that's it from me. We'll try and answer any questions later on, but in the meantime, I'll hand back to James. Okay. Thanks, William. Okay, product update from me. So, sustained investment into the business over the last 18 months to 2 years off the back of the last fundraise we did, which was 2021, but we had a delay before we started investing that. A lot of that was about investment into product and engineering. We are really getting to the point now where this is probably the last time I am just going to be giving you verbal updates on these things because the roadmap progress is really where we wanted it to be. We are very much going down this path of an evolution from pure play security and compliance solution to a much more broadened payments type business with strong revenue generation, cost control type messaging to go along with what we already do to date. Update for you in terms of how we progressed in the first half. Actually, I have seen a question come in on the chat with regards to speech recognition, so I think this will answer that. At the back end of FY 2023, we announced that we had launched a significant enhancement to our speech recognition capabilities. We are seeing very high success rates across this new offering that we now have in place. Across H1, we were really successful in moving all of our existing speech customers across to the new enhanced service. We moved 20 to 30 customers across to that in H1. Then we have also signed a number of new customers as well, and those new customers are therefore now paying for the uplifted license fee that goes with having speech. We have actually got an incremental increase to the license that we are able to achieve. You have got the core underlying license from the Agent Assist or the IVR solution that they are using, but then we have got some overlay license uplift that we can put in place because of the speech recognition enhancement, plus some additional usage as well that goes in there. That is just a good example of how the product enhancements we are working on are going to complement our existing pricing models and our existing revenue model as well. They will give us the opportunity to expand the amount of value and sales that we are making through our existing customer base and to new customers that are coming our way. In terms of that speech recognition solution, we are seeing a trend continue that I mentioned 3 or 4 months ago when we saw you at the full year, that we are seeing more customers, particularly in North America, who are opting to take speech recognition as the primary data capture method, when they are either using IVR or our live agent-assisted solution. That was not really possible before when speech recognition success rates were down in 70%-80%. Speech recognition is an industry that has been significantly helped and benefited from AI capabilities. We have been pretty smart in going out there to get some of the best available speech recognition tools, which we have then integrated to our products, and are now out there being used by customers. It is really quite interesting to watch that happen and see that customers are opting to use the solution as the primary rather than the secondary, with keypad entry going to the secondary. In terms of roadmap progress that I have got to report. It is not just roadmap progress. We actually have a minimum viable product, or MVP is the terminology, MVP stage for a number of these new product features. We have got a full version 2 basically of our agent interface and particularly the consumer view that they see as well for Agent Assist and Digital. We have got a number of customers live with that, using it with live customers of theirs, which have gone through our MVP process. Within that new UI, we incorporate a range of different digital payment capabilities, such as Apple Pay and Google Pay, pay by bank, so bank-to-bank transfers. They are both things that we have had to date, but when we deploy those, it is a little bit more custom or a bit bespoke. Whereas with the new user interface and the new version of the product that we have brought to market, we are able to very quickly deploy these. Customers can pick and choose what payment methods they want to add or not to what they are using. In addition to that, we are adding the capabilities for buy now, pay later as well. We have got a lot of retail customers. Some of our largest customers are retail customers, and they use buy now, pay later quite prevalently across their e-commerce environment. Some of them use them in their stores, particularly in the U.S. So actually, having their buy now, pay later service available to them through their contact center as well across all channels is really quite compelling. Then finally in FY 2023, we announced a new partnership with Stripe, and we are actually leveraging that partnership to be processing payments too. In a number of those MVP customers that are using our new versions, they are also using PCI Pal to process the payments as well, and we are doing that leveraging a strategic supplier relationship that we have with Stripe. Again, that is creating a new revenue stream opportunity for us as we are earning from the transactions that are going through. Longer term, this direction of travel for us more towards payments is very much in view. We look forward to seeing that evolve over the next one to three years, because some of those things will be quite far off in terms of opening up the payments opportunity. But near term, we will be adding in these enhancements and features that we think will grow our addressable market across our existing base, and existing target market that we have. Just on the right-hand side there, more longer term back out into the next financial year. We are busy working through the early stages. I say early stages, we are busy working through our AI roadmap. We have got some way to go in terms of how we are going to be using that in our own products to improve data analytics capabilities, to drive more intelligence around customer experiences, better data insights that we can make available to our customers and also use ourselves to drive more revenue through customer interactions. What payment options to present to a customer doing that autonomously, doing that in an automated fashion to try to maximize revenue when there's a payment opportunity with the customer or maximize customer experience. Majority of the use that we have of AI today is actually inside the business in engineering. We are intending, and we are currently developing our own AI capabilities. Being realistic, we're looking at FY 2025 for the release of those things. It's really exciting what the scaled engineering and product function of PCI Pal is now able to do for us. We've really grown up a lot over the last two to three years with that investment following the support of our investors at the last fundraise, and that's exciting to see. There is a question in the chat about operational gearing and, will our cost base continue increasing at the same rate as our revenue? The answer to that is no. That operational gearing is going to start coming through from now, hence we're now starting to hit profitability. I think proportionately, the cost base doesn't have to increase at anywhere near the rate that revenue can because of the strength of the products, because of the strength of engineering and the state of the public cloud platform that we've got. Just to wrap up before we do move to questions. In terms of the outlook, what am I focused on right now? Accelerating our revenue growth into the second half. We're not there yet. We need to work on getting revenue to where we need it to. There's less that can impact our revenue this year now as a result of how the revenue model works and revenue recognition rules work. Getting deployments through is very important. To see our customers going live, that will drive us through to profitability at adjusted PBT level. Full-year cash flow positive, so close eye on those things. I will continue to obsess about our partners and the importance of our partners, the importance of getting deeper and building stronger relationships with our partners. As I've mentioned there, it's time to get our new products and enhancements to a revenue state. We are starting to see new revenue coming through as a result of that through the MVP process. We are H2. There's a big focus on the rollout of the V2 of the core products to our top five partners. I'm hopeful that we can get most of those rolled out by the end of the financial year, and they will simply switch to using the new version rather than the current one. Then, hopefully, that will give them more opportunity for more success for their own business. I have certainly got one eye on longer term investment. As I said earlier, we are moving into a profitable stage. I very much believe this is a growth company, and I don't want to change that. I think it suits the business. The addressable market is there. We have the opportunity to do that. I think what we want to do now that we've got to profitability, or certainly very soon, we want to be able to do that from a profitable base. But we do need to think about what we are doing with those profits, and certainly my mind is on continued growth because I think that is where the value opportunity comes for this business and for our shareholders. Then just finally, looking forward to getting the U.K. side of the patent case behind us one way or another, come July. But certainly, expecting to be successful and get some cash coming our way as a result of that. So that finishes the slides, so we can move to some questions. Yeah. Okay. So, James, you have obviously had a quick look through those. Yeah. I do not know whether you want to pick those straight up or whether we can- I did. Yeah. William, I will kind of push one of these over to you. So just taking them in order in the chat, the one at the top, William, from Tim K. There is a question there which is really about operational gearing of the business and the costs to date, tracking, increasing in line with revenues and asking about, when is the timing of that going to change and you are going to move into more sort of profitability. I thought you might like to talk about the ratios we have been looking at, William, from G&A perspective to revenue. Yes. James and I have kind of an unwritten rule. We have always said from day one that however fast the revenue is growing and the amount of revenue we are getting in, we always want something to drop through to the bottom line to make sure that our shareholders reward and can see us heading back towards profitability cash generation. That has been shown in that EBITDA graph I showed earlier. Moving on to these current times. Currently we are looking at, we are trying to keep a ratio of around 2 to 1. It is quite hard to keep to that, but if revenue is growing at, let us say, 20%, James and I plan around keeping our cost base growing at 10%. Effectively 10% of the revenue will drop through to the bottom line, and I think that is a particularly valid ratio for us at the current time of our investment and our profile. Having said that, it could be the ratios, that is the opening target. It could be 12% to 20%. It all depends on the timings of new sales, deployments and everything coming through. One good thing about this business, we have high visibility of revenue. We can see it coming, so we can control those costs, especially bearing in mind that 75% of our cost base are people related. Okay. Yeah. Thanks, William. Just to add to that, by the way, just on one of William's slides earlier. Our headcount has gone from FY 2021, 71 people, 103 in FY 2022, 114 in FY 2023, and 121 in FY 2024, where we are now. So you can see there was a real acceleration in headcount from 2020 through to 2023. Across that three-year period, we really did invest, adding 50 or 60 people, and the vast majority of our cost base is people. Now, a lot of that went into functions such as engineering and product. Now in terms of next year and the year after, what are the things top of my list in terms of what we should be investing in for growth going forward? It is not engineering and product really. It is more the go-to-market effort. It is more support for our partner ecosystem. It is marketing, product marketing, these areas. But that does not mean anywhere near the kind of people investment that we have done over the last three years. So that is going to continue to run at that sort of slowed pace that we are seeing from FY 2023 to 2024. So hopefully that helps substantiate what William has just said. I think the next one is for me, William, which is an addressable market question. Where is it? What do you feel the marketplace for your services offers in terms of ultimate maximum turnover for your business? I am assuming there are only so many contact centers in operation. Yeah, that is quite right. When we look at our addressable market, if we look at the addressable market for our focus areas today, that would be effectively the North America, Europe and ANZ. Although we're not really pushing hard into mainland Europe, it's mainly U.K. at the moment. If we took a look at that, you've got about, I think there's about I'm looking at some data over here. Let's have a look. About 4 million agent positions, something like that, 3.5 million-4 million agent positions across those regions. We predict that there's an addressable market there of around GBP 350 million. The way that we get to that is we look at our average ARR per license that we can sell, and we apply that to the amount of seats that are taking payments. So there is data around the amount of agents that we think are taking payments. So we think it's something like 3.5 million agents across that addressable market that are doing that. I think you have to incorporate into the GBP 350 million revenues that we've already got, that our competitors have got. So you probably want to chop that by about another GBP 100 million, to give the kind of addressable market that you're running at. So if you said GBP 250 million as perhaps a serviceable addressable market is probably an appropriate way to look at it. Then where do we think we can get to? I'm very focused on growth in this business. We've got to profitability, so we don't want to move back from that, but we want to keep growing the business at 20%, 30% plus. If we can do that, then you can roll that forward over the next five years to see where we think we're going to be able to get to from GBP 20 million this year without me going into too many more specifics or setting any forecasts for myself. Moving on from that one. There is one question here. I can't answer everything on patent case, I'm afraid, because the legalities of things. I can't answer that one either. So actually there's no Unless Tom, you've had anything via email. No, none via email. The only point which was previously submitted, which in fact you've touched on a little bit, was around the broader economy and customer decision making. I don't know if you want to touch on that again or whether you think you've covered that thus far, but. I think I covered it in terms of the macroeconomic climate around decision making and the main point being that we are also driving more value to pipelines at the moment to counterbalance that. That just is the world right now, companies being more cautious and being more thorough when signing contracts, and we have just got to find ways around that and make sure we have got enough pipeline to deal with any sales velocity delays. Yeah. Super. Great. Okay. In which case then, could I ask investors not to close this session, as you will now automatically be redirected for the opportunity to provide your feedback. If anyone has further questions or would like additional information on PCI-PAL, please do get in contact via pcipal@walbrookpr.com. Many thanks for attending today's presentation, and we look forward to updating you again soon. Thank you everyone. Bye.