Earnings Call: H2 2022

Sep 8, 2022

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. We will endeavor to answer all questions today. However, failing that, the company will review all questions submitted today and publish responses where appropriate. These will be available via the Investor Meet Company 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. Lovely. Thanks, Tom. Welcome everyone to our full year results presentation for FY2022. We finished in June. It has been another strong year of growth here at PCI-PAL. It has been a very busy year, delivering that growth, driving new strategic initiatives following the fundraise that we made in April last year. We have got plenty to update you on today. We are going to get on with that in a moment. As always, thank you for joining on the IMC platform. It is a great way for us to access a wider audience and a way for us to keep many of our retail investors updated with the business, in one go. Yeah, appreciate you joining us on this. As I usually say, we have now built up a fairly good back catalog of updates on the IMC portal as well. Videos, collateral, and stuff that you can look at. Some of these things go into much more in-depth view of the background of the business too, and the full background story. But for today, we need to focus on FY2022 and the look ahead because there is a lot to cover. But if you do need to, please refer back to that portal. And of course, please submit some questions as well, because we will try to leave time at the end for questions. To kick us off, I am going to start with an overview of our strategy, and then we are going to dive into numbers and results. For those of you that do not know us, PCI-PAL is a fast-growing true SaaS business, highly recurring revenue, SaaS subscription model. What we do is we secure payments, we facilitate payments, in fact, a lot of the time, but securing payments for organizations across business communications environments. What I mean by business communications environments are the typical mix that you find within call centers or contact centers. So voice or phone, chat, web chat bots, social, email, SMS, that whole mix that goes into a contact center. Effectively, if it is not on a website, and it is not in a store, and it is a payment, then we are generally interested to get involved in that. Not only do we secure the data, but we also enable compliance as well. In particular, that is compliance with a global standard for securing consumer credit and debit card data, which is known as PCI compliance, Payment Card Industry Compliance. PCI is a set of rules that govern how companies handle and protect cardholder data, and any merchants or companies handling consumer data should adhere to these rules. It typically acts as quite a strong foundation to achieving other data security standards as well. Regulatory standards such as GDPR, other regional data protection regulations in regions that we operate in, such as the U.S., where there's state level regulation, Australia, Canada, et cetera. We do all of this from our cloud-only product suite, which means we can deliver our products and services to customers anywhere in the world. We've got three core products today, though I'm going to talk to you about the evolving product vision that we've got today, but fairly simplistic as we are right now, in terms of the product suite to understand. We've got Agent Assist, which effectively covers live call center interactions between a customer and a call center agent where there's a phone call. These are payments handled via phone through our Agent Assist solution. We then have Digital, which is, again, live agents interacting with customers, but they're doing that across digital methods such as web chat, social media, email, SMS, all these things that go into the contact center mix. We can secure payments in that environment too. Then also across IVR, which is the industry standard term for automated telephony. So where you phone into a system and there's no person on the other end of the line, just an auto attendant. So press one for this, press two for that. We actually have speech recognition capabilities for IVR, and also speech recognition capabilities for Agent Assist as well, should we need those. Across those three solutions, we generally have pretty tight integrations to many of the world's leading business communications vendors, such as some of these examples shown on the slide here. Our go-to-market model is very much partner first. We're a channel-led business selling primarily through resellers. 85% of our business in FY22 came through reseller channels. We live and breathe channel. It's been a key strategic pillar of ours, in our first five-year plan that we've completed recently. As a result of that, we've really built a market leading ecosystem in our space. There's some examples of our partners on screen there. Majority of those are in the business communications or CCaaS, Contact Center as a Service, and BPO, so big contact center outsourcers. Bunch of awards. We're trying to build a quality business here. I'll only point out on there the people awards that we've won. We're highly focused on our people, which I'll talk a bit more about shortly in the summary. After that background, it has been an excellent year for results for this business. Strong increase in revenue, 62% up to GBP 11.9 million year on year. That was ahead of market expectations, which we upgraded a number of times through the year. Particularly pleasing for me to see the strong revenue visibility coming through at the end of FY22. It's quite easy to track where our revenue is going to get to in the next 12 months. TACV, which is our total annual contract value, total annual recurring contract value of every contract we have signed today, whether it is recognizing revenue or not, that is a key indicator of future recurring revenues, and that is up 40% to GBP 13.4 million. We really know what we need to do to hit the GBP 14.5 million forecast number for FY23. Contributing to that strong revenue and sales performance were upsells in the year as well, which has driven our net revenue retention, NRR, up to 118%, which is just fantastic. Supporting that as well is very low customer churn rates. We ended the year with an average of 3% customer churn. Exceptional service contributed to by things like strong NPS scores. All in all, very happy with the operational performance and health of this business. We have a great foundation to capitalize further with this business, and we really do intend to do that. To that extent, this year, we have had really strong execution against the new strategic initiatives that we put in place following the fundraise that we did in April last year, in April 2021. They were, first of those was to expand our geographic reach and expand our addressable market by establishing businesses in Canada and in Australia, and we have achieved both of those things, majority of those new hires coming in in the second half of the year. We now have small teams of people in Canada and Australia. We have pipelines building there now, and most of the benefit we will see coming through from them in this next 12-month period. New regional partnerships being signed. We announced one of those in the current trading. Also engaging with our existing global partners teams that are in those countries. We are certainly starting to benefit from this more perceived global capability that we have with our partners. As well as investment into new regions, that fundraise back in April, we also stated that we were going to invest further into engineering and product to really future-proof the business and take another big step forward in a new three to five-year plan that we had ahead of us in terms of product and evolving product vision, and also some investment into customer success. By majority that involved hiring new headcount. We took our headcount up 45%, which whilst we are a small business finishing the year with 103 people, we have added a few more since then as well. That was a big effort, a huge effort from the hiring managers within the business. We have been successful and brought some fantastic people into the business. I will reassure existing investors that as per the plan, hiring is now slowing, the hiring rate is slowing. We only expect to bring in about a quarter of that over the next financial year. That is critical to operational gearing within the business as we are driving in this new FY23 towards first cash flow break even in H2, and then followed by our first months of group profitability in that same period of trading. I touched on employee retention, but during this really busy period for us, we also maintained employee retention at 94%, which is just fantastic. I have talked about the importance of culture within any fast-growing business since day one that I took over as CEO here. We have a fantastic culture at PCI-PAL. We really do prioritize our people. We prioritize their development for their careers, not just their time with us, and we really obsess about when we hire new people as well. All of those things really contribute to strong retention, producing a strong culture across the business, which is critical. It's our largest investment. People are our biggest investment that this business makes. All in all, I think it's a year that my team can be very proud of. We have delivered on our plans, but we've been ahead of that. And we're very pleased with the year that we've delivered. Just a bit more on the background strategy. We talk about three key strategic pillars of growth within this business. Those that we laid out some years ago now, but they were cloud, global, and channel. We want to lead our market in cloud. We want to use cloud technology to open up a global market opportunity for us. It's a fairly specialist space that we're in, so we want to maximize that opportunity on a global basis. And we want to leverage partners to enable us to really scale our customer base internationally. And I think we've executed very well against those three pillars. More on that to come. And the global presence is really key for us now. It's key today, and it will be key in the future. Like many of our partners, in terms of our platform that we run and our cloud services we host within Amazon Web Services, so AWS, it's the world's leading virtualized hosting provider, and we're completely agnostic to who and where we integrate as well. We were the first in our market to launch globally available cloud offerings in our market by quite some way. We very much were pioneers in cloud-to-cloud integrations with third-party cloud companies, many of whom are now very close partners of ours in our ecosystem. And it is a key reason why we've been able to work with those organizations. And in fact, today, the majority of the Gartner Magic Quadrant for CCaaS, contact center as a service, work with PCI-PAL in some way, shape, or form. But two-thirds of them actually resell PCI-PAL. So it's a great place for us to have got to. Cloud is also why we can cost effectively serve the entire breadth of our market. It's not just about serving the market globally, it's also about serving every size contact center in the market. The vast majority of contact centers across the world are small to mid-size contact centers, so less than 250 seats. For example, in the U.S., over 90% of contact centers are less than 250 seats. And cloud gives us that capability to have a light touch, cost-effective approach through our partner model, to be able to service that very lucrative end of the market between the small to mid-size end, and really look to scale and take advantage of the opportunity. So today, in terms of our platform, we've got the most mature cloud offering in our market. We've built a very strong foundation for this business, and we intend fully to evolve our product offering as a result of that foundation. And off the back of that, we're also able to support what we've called in the accounts, our globally hungry partners. A lot of our partners are a lot bigger than us, and they are truly global organizations. Just a bit on our partners now. Channel is key to this business growth, as I have already highlighted. We are purposely a pure play business in the eyes of our partners, and that is to ensure that we do not tread on their toes product-wise. That was an important part of our strategy. How did we do with channel partners this year? Strong performance with our partners. 85% of our contracts coming through our partners, as I said earlier. That represents 62% of the new business ACV that we signed. Both of those have increased year on year. I would anticipate in the years to come that the percentage of contracts would probably remain about the same, but we would expect the value to continue to uptick. That is as we start to see and get visibility of more larger deals coming through partners as our ecosystem becomes stronger and our relationships become deeper with some of those partners who operate in the enterprise space. We have got a very targeted approach to partners and signing new partners, and we have made very good progress against plans that we set ourselves going into the year and bringing on new partnerships. Those have included Amazon Connect, which is Amazon's cloud contact center platform. We issued an RNS for that in the second half of the year, actually, where we were fairly cautious actually, as we often are with these large partners because they are massive organizations and it takes time to get really into those. But actually had some great traction with Amazon Connect. We have seen a variety of deals coming through the procurement vehicle in AWS Marketplace that we have set up with them. We are the only company today with a truly global integration with that Amazon Connect platform in our space. We have also been signing relationships with more CCaaS vendors. We signed Odigo, which is a very strong CCaaS vendor across Europe, French headquartered, but strong business in the U.K., and also an early-stage relationship with Five9 in the U.S. And also further progress in our BPO initiative. We started talking to investors a couple of years ago that we were really targeting the big contact center outsource market. I think, again, we have been very successful with that initiative that we put in place two years ago. Some of the highlights that came through, we signed Teleperformance, one of the largest in the world. We signed them in a reseller arrangement in the second half of the year. Actually where we sit today is around one-third of the top 20 BPOs in the world are now engaged with PCI-PAL. So takes time to get working with those big organizations, but the strategy is working well. On the right-hand side, really this is for those that are not as familiar with our business, but we do break out our partners into categories. If you want more info on this, please look at one of our previous, some of our earlier presentations. But top two categories are integrated and solution providers, and these are effectively our resellers. So this is where the 85% of our contracts have come from. The third partner type is referral, and we tend to treat referral more as a stepping stone to reseller deals effectively. We don't do a huge amount of referral business. Mainly, it's coming through our reseller partners. Please look back at previous presentations if you'd like a bit more information on that. I'm going to hand over to William now for the financial review, and then coming back to me for a bit more of a look ahead before we get to questions. Over to you, William. I'll control the slides. Thank you, James. Good afternoon, everybody. Summary FY 2022 has been a very strong year for PCI-PAL. We finished the year well ahead of original expectations going into it on the back of strong trading, and that has allowed us to continue to invest in the business, as James has outlined, but has also allowed us to deal with the unwarranted costs of the patent case that are coming through and has put us in a good position to finance that through into the future. I'll talk more about that in a minute. Just some highlights here. We set out on this journey effectively in 2018 when we launched our AWS platform. I joined the business previously in mid-2017. At that time, we had a Gen One platform, which was a revenue share U.K.-only business. The Amazon platform was launched in 2018, and you can see on the top left-hand graph there how the revenue has grown. It's increased virtually sixfold in the following four years and finished this year at GBP 11.94 million. That's 62% up year on year. More importantly to us, we've also worked on the gross margin. That's doubled. Why has that doubled? Well, actually, we own the AWS platform, and we don't sell the old platform, the old Gen One platform. We get to keep the vast majority of the revenue that has come through. I see there's a question already coming on that margin. The gross margins have increased to 84%, and they are higher in the U.S. because they've got a slightly different sales mix and different connectivity. I do expect the margins to continue to improve, and we should get between 85% and 89%-90% margins across the group over the next few years as we continue to develop the product range. Finally, on the bottom left-hand side, although we've been growing fast, we've been a loss-making business deliberately so as we've expanded from 12 people in the beginning, which is including myself, to the 103 James talked about. We've always had an eye on the future, and at some point, we want to hit profitability. FY 2023, we're expecting to hit cash breakeven in the second half, and we're expecting to hit profitability shortly thereafter on a monthly basis. FY 2023, we will be still reporting an overall EBITDA loss, but much reduced. Then in FY 2024, we're expecting to turn into that full profitability. That is in line with what we laid out in April 2021 when we did the last fundraise. We said we wanted to go and grab more market, develop our products more. As a result, we are going to push out our breakeven by 18 months to 2 years. We are still on track to deliver that target. Why is our business growing? We focus purely on ACV, annual contract value. That is the recurring value of every contract we sign. We go out, we want to win customers, we want to upsell customers, we sign those. Those are then deployed, which normally takes around 5 months. After that, we can start recognizing revenue. We have 2 metrics we follow. New ACV, which is the annual amount we have done, and that is up 11%. TACV, which as James said earlier, is the cumulative value of all the contracts we have got, either live or in deployment. I talk a bit more about that in coming slides. That is up a strong 41%. More importantly, it gives a good indication of what we can achieve in FY22 revenue terms. The other key thing for us in the bottom left-hand side is that our revenue is primarily recurring. We deliberately set out on that path right back in 2018 when we licensed. We want to license our contracts over the long term, so we do not charge much up front in professional services. We charge GBP 1.5 million, by the way, in total, because we are quite a big organization. In scale of things, that is small. As we go through deployment, that means we have high recurring revenue, high recurring visibility. One final thing on the cash balances. We finished the year at GBP 4.8 million, GBP 4.9 million. That was significantly ahead of where we were expecting coming into the year. Why have we achieved that? We have had the strong trading, we have had the higher revenues. We have also managed to sign more contracts who pay annually in advance, which is our standard process. That is slightly up year-on-year. As a result, our cash balances are significantly ahead of where we are expected to be. That has then helped us to allow us to continue our expansion plans as we laid out, but also to finance the patent case cost, which I will talk about in a little while. TACV. This is just the story of the year-on-year growth in the contracts we are signing. Back from 2018, all of those GBP 2.2 million was on a Gen One platform. Now come to the end of FY22, we have got GBP 13.4 million worth of contracts in the building, as we say. That then allows us to give good confidence to hit next year, this year's FY23's revenue target. finnCap currently have got GBP 14.5 million penciled in for our sales and revenue in FY23. Out of interest, I always lay out what I think the TACV will finish at for FY23 against our sales plans, which will then help underpin the FY24 number that finnCap have penciled in of GBP 20 million revenue. Why is that growing so strongly? We are successfully selling, as James has pointed out, but we are also very good at keeping those customers. Our churn is actually down at 3%, which is right in the top quartile performance for SaaS companies. We have been successful in selling not only to new logos, we brought in 150 plus new logos this year, but we have also upsold to a number of our existing clients, and that is an important metric for us. Just moving on. The left-hand side of this graph just actually splits the growth between the regions. The charcoal bar there is EMEA, which has grown strongly. It has grown strongly on the sale of new, pardon me, new ACV growth, but also from a strong performance in our transactional revenues in this market. EMEA is the more mature of our businesses. It has been around the longest. It is the original business. That is very pleasing. The orange bar at the top represents the growth we have come from North America, and that was from a standing start in February 2018 when we launched. That is beginning to pick up momentum, and eventually that orange bar will overtake the charcoal bar because the U.S. market is six times bigger than the U.K. and Europe. Then right at the top, you cannot really see on that graph, there is a little sliver for ANZ. We are expecting that to start growing and picking up now we have got feet on the ground in that region. On the right-hand side, I just break down the TACV into the important numbers. So of that GBP 13.4 million, just over GBP 11 million are live and fully deployed. So my MRR is running at just over GBP 900,000 per month. That will continue through the year. We will then add new contracts, we will add in our PS, and you can see how we can step up to our GBP 14.5 million target. That growth in ARR is up 44% and is a very pleasing number. The other two numbers, we obviously have contracts constantly in deployment going through our processes, and as I say, it normally takes about five months to deploy. Then we have what we call internally on hold. Those in on hold is probably a slightly incorrect definition. It is actually partner delayed deployments. Because we use our partners as a primary selling tool, they often have to sell their systems in first, and we are sold in parallel with them. But we cannot deploy our services until they are fully up and functioning in the contact center they have sold to or the customer they have sold to. So we get sales through, which come through, but we cannot start deploying for six, nine, 12 months sometimes as they get their first phases through. So we just keep those on hold. Otherwise, everything is going well. Just over the page is, we talk about recognized revenue. The charcoal bar there represents the amount of revenue that has been released from our recurring contracts in the year. We can only recognize revenues once they have gone live, and then we can only recognize it on a monthly basis under IFRS 15. The orange bar at the top represents our professional services release. So we sell professional services. As I said, we sold about GBP 1.5 million this year. That is a useful cash benefit to us. We charge that on signature and collect that money. But I am not allowed to release it to the P&L immediately. I have to release it over the economic length of the contract, which is on average four years, and that can only start when the contract's gone live. So that GBP 1 million is the element we released in this year. Next year, there will be a 1.2, 1.3 release under my expectations. Just a reminder, we started the year with a forecast of GBP 10.4 million. We finished the year with 11.9 and did three increases in our forecast during the year. So that 11.9 was a very strong performance, driven by the early deployment of ACVs, plus also our growth in transactional revenues, which were exceptionally strong this year. Then just a reminder at the bottom is that we have retained more of it, and our gross margin is 84%. Moving on, just the income statement. I have already talked about revenue. I have already talked about gross profit. The key thing to point out there is the sixth line down, the staff costs. Staff costs have gone up 51% on the back of our increased headcount from 71 people to 103 people. Staff costs also include our travel, and travel was really low in FY 2021. It's back to an increased level in FY 2022, but definitely not as high as it was pre-pandemic. Those staff costs represent the biggest investment in the business, as James Barham said. 75% of my costs are staff. The run rate people have asked me previously for going into the year is about GBP 1 million a month. So our underlying cost for FY 2023 and staff costs before any new joiners started the year at about GBP 1 million, and that's been taken into account in our forecasts. Those numbers you're seeing there, though, are from the statutory accounts, and there are three items that are kind of exceptional or unusual that don't bear any relationship to the actual running of the business. The first one is the exchange gains and losses. So in FY 2021, the dollar moved against us from 120 to 135, and so we had to revalue the intercompany loans, which are in sterling from PLC to the US Inc, and lost GBP 550,000. Conversely, this year, it's gone back from 135 and finished about 120 for the year, and it's lower than that now. So that released a gain of GBP 832,000. It's nothing to do with the running of the business, and conversely, in the balance sheet, there's an equal and opposite movement in the reserve. So for comparison purposes, we split that out from our internal reporting. The exceptional costs in there of GBP 797,000 relate to the patent, the claim against us by Sycurio. We've spent that in legal fees in the U.K. and U.S. Clearly, that's an exceptional cost to us, but is clearly a cash cost to us. So I'll talk a bit more about that in a minute. Then we have the expenses arising from share options. So if you adjust the statutory operating losses, we have an adjusted operating loss of GBP 2.8 million in the year against GBP 3.3 million the previous year. Now, coming into the financial year, it was actually expected to go the other way. We were expected to report an increase in adjusted operating loss, and so we are very pleased with that performance. Cash. Cash is obviously a single point of focus for myself because we are a loss-making business. But we have a very strong business model. We are funded by advanced invoices, so our deferred income. We are funded by our cash reserves, and we are funded by any debt and equity raises that we make. We made three in the past. Pardon me. The last one was April 2021. Looking at the numbers, right in the middle there, cash used in business before finance was GBP 2.6 million. We used GBP 2.6 million worth of cash in the business during the year. That 2.6 included the GBP 800,000 on the patent case. The underlying cash used in the business was GBP 1.7 million. Yes, that is GBP 1 million up on the previous year from GBP 700,000, but remember, this year was a year of investment following the fund raise. Going forward into FY23, as I have already said, we are expecting to reach cash break even in the second half of this financial year and then monthly break even a few months following that. I am expecting our cash burn in the business from the underlying business to drop considerably. We finish the year with 4.9. If we halve our underlying cost, for instance, we will leave us with GBP 4 million. That GBP 4 million is more than enough to cover any expenses we have got coming through on the patent case. In FY23, I am expecting to turn to cash positive, and so I am not expecting to have to raise any more money or raise any bank borrowing facilities, even though that is an option to us. Finally, just on the balance sheet, we have a very simple balance sheet. The fixed assets there are primarily the capitalization of the platform development we have done over the last five years, GBP 2.6 million worth of it. That I see as a very good investment against the now ARR of GBP 11 million and growing. Other receivables reflect the capitalization of costs, primarily commission costs, which we are expected to do under IFRS 15, and so those will continue to grow. Conversely, so will our deferred revenue because of our business model billing up front and not being able to release it all immediately. We have a simple business model, no bank borrowing, and a very strong performance this year. I will take questions later, but I will hand back to James now. Thanks, William. I am going to focus in on some of the key operating highlights just in summary. Regionally, excellent performance from what we call our EMEA business, though that is primarily our U.K.-based team. We do make sales into mainland Europe, and we do intend to do that in the long-term future. Right now, the majority of that business is in the U.K. It is the more mature business that we have, being headquartered here, having launched here as well. Strong performance across new business and also upselling to key accounts. As a result of that, they delivered 58% of the group's new ACV, so new licensed business in the period. But actually, when we look at the U.S., the highlight in the U.S. having not been in the U.S. as long is that for the first year, the U.S. has signed more net new logo business than the team in the U.K. That's great to see. It's something that we predicted this year. It was only marginal, but they have now got ahead. Very pleased to see that outcome. The U.S. continues to be a strong performer in terms of new partner activity. The vast majority of our global partners in this business, across all the partner types that we have are U.S. headquartered organizations. Actually, as I've said to investors time and time again, the effort we put in in the U.S. signing new partners is not just about U.S. ACV sales. It's not just about U.S. revenues. It's about the sort of global health of the business and driving pipeline everywhere across the group. Everywhere benefits, particularly the U.K. this year. We've also started to see good traction in the U.S. for strategic deals building in our pipeline. While the very large ones of these deals that some of you have seen us sign before, the sort of 300K-400K ACV type deals are few and far between, frankly. We classify strategic deals GBP 100,000 ACV or more and we're seeing really good traction in the U.S. And we've signed a good number of those deals in FY22 which is a great sign for the future because they're the sorts of customers that we have a good track record of upselling and cross-selling to. While to date we've very much talked regionally, we've talked about our efforts in the U.K. and in the U.S. and rightly so, given the money we've raised to launch in the U.S. over the years. We have also tried to balance that very much with a global view of things. As I said earlier, we're trying to very much capitalize on the global market that we have in front of us in terms of contact centers. So, we're very much looking at that wider global opportunity now. William and I are starting to take a more holistic global view of the business as well. Balancing that timing of investment into different territories versus the global view was a point that I covered at the last fund raise, when we opted not to spend more in the U.S. but to actually expand the business into other territories because actually that's showing a greater support to those global partners that we're signing. It also puts us in a stronger position against our competitors as well. We feel that we've got that decision right so far. It's also another reason why from a product perspective, we're really looking at new product developments that have international appeal. Less so developing products that are relevant regionally and more so looking at products that we can sell across our business on a global basis. From an operational perspective to the bullet points on the right-hand side there, very strong performance in professional services and engineering functions within the business. We've talked about NRR and churn looking good. But underneath that, we've got some very solid operating metrics. We referenced in the accounts that our NPS scores were 175% of global benchmarks on delivery. We're getting even more pointed in our ability to assess the data related to our performance in these operating areas as well. We've just started measuring CSAT scores, for instance, so customer satisfaction scores across different areas of the business. Looking forward to updating investors on some of that more granular detail as we build trends around that over the next 12, 24 months as well. But off the back of that, it's not really surprising that we are performing well with the partnerships that we've built because we're delivering well for them and we continue to drive scale in this business through accessing the small to mid-size business end of the contact center space. I've mentioned that we are encouraged to see some of these enterprise deals coming through, but it's very much this run rate quarter to quarter volume that comes through the small to mid-size space that is a real strength of this business. Finally on this slide, it's important that I mention the patent case myself. William's already covered some of this, but I will direct you in general to the RNS because we provided more detail on it in there. As William has covered, we've also provided a deeper dive into the budgets around the cost aspects of the case. For those that are new to the story, this relates to claims brought to us, against us by a competitor in September last year. We've been dealing with this for a year now. The claim relates to one part of our Agent Assist product. It's not relevant to any other products that we have, nor is it relevant to any of our new standalone products that are coming through our pipelines as well. In terms of our current position today, and we've had a couple of questions on this through the chat, so this will probably answer some of those. The position today is, it's very much a two-way street. Firstly, we have their claim on our infringement of their patent. As we have been from very early on, we're very confident that we do not infringe those patents. We always have been. We were cognizant of them before the case was brought and have been for a number of years. As we've stated publicly, it's our belief that this case has been brought as a tactic to disrupt this business, and that's been ineffective as our results show. Secondly, the second part of this track is that we're making counterclaims against the validity of Sycurio's patents. Our counterclaims include prior art that we've identified and a number of other claims which we believe mean the patents are invalid. Bottom line, the onus is very much on them to prove infringement, and they also have to defend against our counterclaims. We only have to win on one of those. We are prepared to see this through, though, as we have publicly stated, we are being very mindful about this and we are open to any sensible solutions going through this process. But we are prepared to take this to where it needs to go through the court process. I will just add to this that as you will have seen in the accounts, we do have our own IP for the innovative ways that we operate our Agent Assist offering. Our own patents provide protection to our own business model and specifically that Agent Assist solution. We invested a lot of time and effort in getting to that point. It is part of the reason we have built the partner ecosystem that we have. I can tell you that we are ensuring that our customers and partners are fully aware of our own IP so that we protect what we have built to date. We will move on to a bit of a product update for you. So some good stuff to talk about now. As you have seen, we are beginning to really drive more innovation into product in this business as we evolve our product roadmap. We have been dropping out breadcrumbs to investors over the last 18 months to 2 years. The product vision has been evolving for some time. This may not be a surprise to some of you, but our messaging, we are expecting to ramp that across this year. In our efforts to date, we have very much focused on these key strategic pillars that I have talked about. Be leaders in cloud, leverage cloud technology to access that global market and build a strong partner ecosystem. We have done all those very well. It is now the right timing for us to look to expand what we are doing from a product perspective. We are looking to expand the value proposition within our solutions, which will allow us long term to grow our addressable market further. We are going to leverage the technology and the ecosystem that we have built to date, in particular, leveraging our Digital product capabilities that we have, broadening what we do, driving more interest in our products and services. Ultimately what it is going to do is drive us more towards payments. That shouldn't be a surprise in the latest accounts. That is something we have been talking about for a while. We touch payments all day, every day. We are just looking at getting further involved in the payment process. We are going to be updating you across FY 2023, but we are going to be talking to our customers this year, and we already are, not just about compliance and security, what we have done to date, but how we can drive more revenue in their business, how we can help them reduce costs in their business, how we can add more control for them over payment fraud, and effectively looking to bring some of the more e-commerce and website capabilities to business communications environments. We will be doing that whilst we keep an appropriate focus on our core business to date. This is very much about evolving. It is evolution, not revolution. That is one of our themes this year within the business is to evolve. We think it's a sensible but ambitious next step for the business, and we're looking long term at unlocking wider fintech opportunities that would be available in the payment space as we move this forward. Bottom line, really looking forward to updating you on it more in the year. Later this month, we've got our first product coming to market, I suppose, under this evolved vision, which is our open banking product, which is being launched in just a week or 2 from now, actually. You can catch up with that on our website. Just to finish up. In terms of outlook, important year ahead, more strong growth required and expected from us. We are cash generative in the second half of the year, followed by our first months of group profitability. There was a question that's come in about whether we plan to bring that forward given the changes in investor sentiment around growth and profitability, and we don't intend to do that, provided that our performance across H1 continues as we expect it to be, because we want to keep the growth momentum going, and then cash generation won't be far behind in H2, and then we'll get to our first months of profit, and we're showing good signs of doing that. We've made a good start in the year. We've signed some excellent brands, actually. Really well-known brands. It's always exciting to see those come through. Signed a great new partner in Canada, a regional carrier with more than 100,000 business customers. That'll be excellent for the Canadian team to get stuck into. Quite keen to get some questions, and actually we've ended with some decent amount of time, so we can get to some of those. Wrap up the presentation now and move to questions. Great. Super. Okay. Thank you, James. Thank you, William. If we could turn to the questions, we've had a number of questions submitted in advance, and in fact, you've touched on a number during the course of the presentation. If I could just remind all viewers that a recording of this presentation, along with a copy of the slides and published Q&A will be accessible via the Investor Meet Company dashboard. Also, your feedback is important to the company, so immediately after the presentation has ended, you'll be directed for the opportunity to provide your feedback. While you're submitting further questions, let's first have a look at a couple of these others. One you have touched on slightly, James, but if we can just revisit it maybe. Your employee numbers have grown a lot. How have you attracted the newcomers, and how have you retained them all in this market? Okay. The market did go pretty bananas between about October and March time, so the war for talent, as it was called, particularly impacted the tech market. It was very obvious to see there was definitely a shortage of good candidates in the market at that time. There were way more jobs than there were candidates. Money was getting a little bit silly, too. We did have to react. We stepped up our hiring strategy, or we changed it up. Went into the year with more of a focus on a small group of dedicated recruiters that we were using. We actually expanded that at the time because we needed more quantity out there really in terms of our job descriptions getting out and job ads getting out into the market. We did that to try to get more candidates coming through, because recruiters were coming to us with one or two candidates, whereas they'd typically be coming with sort of 10 or 15 for each role. We really stepped that up. It did take us a little longer than planned on a few of those hires, but we generally got to where we wanted to be, and where money was under pressure, we managed to work within the realms of the sensitivities of the budget. William was watching over that one pretty closely. The other part of that question was about retention. I think I answered most of this earlier, but prioritizing our people. We run an OKR system, objectives and key results within this business. I have a company-wide OKR linked to people as well. Obsessing about hiring, that was particularly relevant when it was hard to find people. Even if we're sort of 85% about someone, we don't go with it. We wait until we find someone that we're really excited about. We're very passionate about developing people's careers here as well. Actually funnily enough, if you help people to work towards developing their career, then we generally find they stay longer. All of those things come together. Hopefully, that's a decent response to that one. Yeah. Super. Thank you. Do you think your competitors are trying to follow your channel go-to-market strategy? Some, not all, I would say. Some of our competitors have more of a focus, we believe, on enterprise. The very large contact centers or very large companies, that tends to suit competitors of ours that have products outside of our core product suites, so outside of just securing payments. We see that. I am not sure that the channel model works as well for those companies, given that they sell products that compete with the sorts of companies we partner with. But certainly we have seen it with some others. But we have got significant first-mover advantage or certainly first-mover advantage in really committing to channel, and we have done that over the last 5 years. We have got the most mature channel program. We have got the most extensive partner ecosystem. I think we are selling more through the channel than anyone else. We have got great relationships, and we have got to keep investing in that, keep working at that. Partly the product roadmap is to do with that as well, to keep adding more value to those partners. Yeah, we are not generally afraid of that. We are quite comfortable that we can do a good enough job that if others start talking to our partners, that we can come out in a strong position. Super. Okay, we have got a couple of questions around new product vision and new product timescales. Do you have what you need to deliver your new product vision in the medium term? Yeah, we do. The fundraise in April last year, part of that was investment into engineering and product. That was engineering and product to drive long-term future proofing for the business from a product perspective. We are investing in our core products today, so we have new user interface coming out soon, upgrades in our reporting platform, and stuff like that. It is not all just about new, bright, shiny things coming through in product. We are improving what we have today, but it is really just to grow our resources on the product and engineering side so we can move these things through our sprints quicker, and we can get products to launch much quicker as well. Right now, no, we have already done that fundraise effectively. Great. Okay, in terms of timescale, is there anything else you might add in terms of when one might expect meaningful contribution from those new products? We are looking more meaningful contribution from those new products based on just sort of a general run rate assumptions. More material, looking at what revenues are going to look like in FY 2024. It is more sort of back end of FY 2024 onwards, if you think about how long it takes to ramp. But we always have the propensity to sign one or two larger deals. Clearly we will be looking at trying to do that with any new products we bring to market. So we will build up the gentle scale through the small to mid-size end of our market, which will give us long-term scale with the customer base. But we will also be looking at some of our larger customers and looking at some one-off large deals, which could well drive a more meaningful and sort of material numbers, sooner than the back end of FY 2024. Yeah. Great. Okay. Should I take a couple from the chat, Tom? Indeed. Yeah. That would be good. Yeah. Canada and Australia, there was a question on that. Now that your offices are open in Canada and Australia, how does PCI-PAL view the prospects of these territories compared to when the plans were announced in April 2021? Just to be clear, there's been no delay on that as such. When we did the fundraise, the plan was always to open those territories in H2 of this year. We had other things to put in place first, and a lot of our investors were mindful that they didn't want us to rush out and spend all that investment immediately. Most of that investment's coming in H2, but everything's pretty much gone to plan in terms of the timing. Nothing has really changed from our plans as such. It's all kind of going as expected. I would say if I was being totally open about it, that Australia's probably making a slightly quicker start to things, but we did anticipate that because we've, funnily enough, actually got a sort of slightly larger customer base in Australia, even though it's further away, just by nature of some of our partners pulling us in that direction before we launch. We got a question from Thierry L., which I've got another question similar to this, so I'll go to this one. In light of the massive change of view of the equity markets from high growth at any cost to profitable growth, do you have a plan to become profitable earlier than what you said? I think we, both William and I, sort of touched on this, and no, we don't have plans to bring this forward. I've always got plans to try to overachieve, so if we overachieve, then we would get to those points sooner. That's part of the plan. If that's not the case, then no, we would be expecting based on the current assumptions. We're not planning to move that. We've spent a long time building up this business to the momentum that it's got. We've got enough cash to get us to where we need to be. We don't have any debt. We're performing well in the market. We've got extremely low customer churn, so I don't see any reason to pull it forward and would be concerned if we did, that it might hamper, slow down some of the future prospects, which I don't think most of our investors would want us to do necessarily. Just looking through these, I think we're probably There are other questions, but some of these, probably don't have time for right now, but we will get to questions afterwards. William, there's a question about foreign currencies. Can you explain the GBP 1 million foreign currency charge in the cash flow statement? Yes. I did touch about that in my presentation. Okay It's to do with the intercompany revaluation of sterling loans between the U.K. and US Inc. If you remember, we've done two fundraises for the U.S. totaling about GBP 10 million. When you revalue it, the cost goes to the P&L, but conversely, in the balance sheet, there's an equal and offset. Just one's more visible than the other. And then I think just perhaps one final one. There is one here from MP, which is, are your contracts with customers for fixed amounts, or do they vary based on a number of transactions? Our contracts with customers in general are based on fixed license amounts. So typically, a minimum annual rolling contract, but sometimes longer contracts than that, and we often back-to-back with our partners terms. But typically, they have fixed amounts. Some contracts do have variable amounts, often on top of the fixed amount if they do. But most of our contracts do not have that variable amount. And that variable amount would either be transactions if there is an arrangement where we are charging them per transaction, which is less common. Or it might be minutes if we are having to deploy carrying call traffic. So sometimes we bundle that, but sometimes it is separate to that as well. I think that is probably Great. Okay. Well, the other questions we can review and answer after the presentation in the Q&A portal. So, great. Okay. Thank you, James. Thank you, William. Could I ask investors not to close this session as you will now be automatically redirected for the opportunity to provide feedback. If you access this meeting from your website, the feedback page will appear. If you access from a link sent to you by email, you are asked to log in and submit your feedback. If anyone has any further questions or would like additional information on PCI-PAL, please get in contact via pcipal@walbrookpr.com. Thank you for attending, and we look forward to updating you again soon. Thank you, everyone. Thank you, everyone.