Earnings Call: H2 2021

Aug 22, 2021

Well, good morning, everybody. Hopefully, all the technology is working and that you can hear me. Thank you for joining our call today. My name is Aidan Williams. I'm cofounder and CEO here at Ordinate. And also on the line is Rob Goss, our CFO. In the first part of the call today, we will run through the investor presentation just lodged with the ASX. You can ask questions at any time by typing them into the Q and A box, which you should see that on the screen, your Zoom screen. And at the end of the presentation we will collate the questions together. Presumably there will be a number of similar questions. So we'll collate those questions together and answer as many as possible in the time we have available. So please type your questions in and we'll get to those at the end of the presentation. Well, what a year it has been for all of us, I guess. The past fifteen months have been somewhat of a unique operating environment for Ordinate. However, we are very pleased with our financial performance in FY twenty one and particularly with the resilience of the business in the face of COVID related challenges. Internally, we have adapted to a variety of restrictions around the world, and we've had a renewed focus on employee well-being as staff have adjusted to the challenges of working remotely. It's encouraging to see confidence returning to the AV industry, and our core audio business has continued to grow strongly. We were particularly pleased to see strong revenue growth coming from our next generation Dante software products. That's the Dante embedded platform and Dante IP Core. For those of you who have been following Ordinate, you've probably heard us talk about those over a couple of years. So it's good to see the fruits of that effort. Our focus going into the year was to drive design wins, which are a leading indicator of future revenue growth. And so it was therefore very satisfying to see the change to a subscription pricing model drive record numbers of design wins during FY 2021. The establishment of a new video development team at Cambridge in The UK and the launch of our first Dante video product from our manufacturing customers were substantial milestones in the life of the company, bolstering our development capacity on the video side of things and providing strong momentum for our video offering going into FY 'twenty two. So we will be talking through the investor presentation that accompanied our financial statements. Both of those were lodged with the ASX earlier this morning. And in response to increasing interest in ESG matters from investors and other people, relevant disclosures have been made in the Director's report around supply chain management and diversity. So if we move to Slide two, you will see a summary of Ordinate's core business. So Ordinate is a technology company. We provide networking technology to manufacturers of professional audio and video equipment. We are primarily a networking IP and software company, although we have traditionally packaged our software for sale into chips, cards and modules, so that equipment manufacturers who make hardware can readily incorporate our technology into their hardware designs. Our customers are manufacturers like those shown on the slide: Yamaha, Bosch, Bose, but also a host of other major brands in the professional AV industry which might not be such household names. So the first step in our typical sales cycle with the manufacturer is the design win step. This is where we sign up a manufacturer to use one of our chips, modules or software products. So you can see the products there, the chips, modules and cards and software on the screen. Then it typically takes twelve to eighteen months for a manufacturer to complete a new product design incorporating our technology. Once a new product is available for sale, the manufacturer regularly orders chips and modules or pays Poon at software royalties each time they build products and that creates a repeat revenue stream for Ordinate. As you can see on the map, we are a global company with headquarters in Sydney, Australia. We have several locations around the world primarily providing sales and support functions. But notably we have recently created our first product development location outside Sydney in Cambridge in The UK and that team will be focused on the development of new video products. So Slide three shows the key operational highlights for FY21. Over the last twelve months, the number of Dante enabled products on the market grew from 2,804 to 3,255. And this is now over 19 times the number of products of the next closest competitive digital audio networking technology. Even though supply chain pressures slowed new product releases in the second half of the year, the number of manufacturers shipping Dante products increased to three seventy one, up from three twenty eight a year ago. Pleasingly, the company achieved a record 105 design wins, including an impressive 66 net new OEMs. The growth in design wins was facilitated by the introduction of an annual subscription payment model for Dante licensees, new software audio products and video products. Dante certification and training continues to be an important way to educate the market and drive end user demand for Dante networking technologies. In FY21, 112 webinars were conducted which helped train approximately 33,000 AV professionals on Dante. Of these, 13,000 were trained in languages other than English and 12,000 received training on our new Dante video products. Slide four shows financial highlights for FY 'twenty one. I think the key takeaway from this is that we have returned to U. S. Dollar revenue growth of 22.5% and that return is really off the back of a general recovery in the professional AV industry globally. There was strong 43% growth in the number of Dante units sold and that 43% growth outstripped U. S. Dollar revenue growth, reflecting a shift in revenue mix towards software products with no COGS component. The chart that you can see on the slide shows historical gross margin dollars and gross margin percentage to highlight that ongoing shift in product mix towards software style solutions. As this transition occurs, gross profit dollars are expected to become a better measure of financial performance than top line revenue growth. Accordingly, we were pleased to see software revenue grow strongly at 62%. Overall, it was really pleasing to see broad improvement across our financial metrics even as we continue to invest strongly in product development and scaling the business. So Rob is going to speak in more detail to the financials later in the presentation. Slide five summarises various significant business activities that we undertook this year. So we shared a number of these objectives earlier in the year. So at the beginning of the year, if you cast your mind back, we were facing substantial uncertainty around the impact of COVID globally. And so several of our objectives were really geared around constructively doing what we could for the future, so particularly driving design wins whilst looking for short term revenue and managing our cash expenditure. So I'll speak to the design win side of it and Dante's video in the following slides. During the year, we also completed a AUD 40,000,000 capital raise to enable us to continue to invest strategically in the business. This has set us up well to invest in the video development team in Cambridge in The UK and to be able to explore potential M and A opportunities. The year also saw a substantial strengthening of business systems with the implementation of a merchant of record payments facility, good progress towards implementing a CPQ system and completion of the first phase of work in our information security framework. And these activities will enable efficient scaling of finance and operational functions. Slide six shows the sales cycle and repeat revenue model that is Ordnate's revenue engine. So I think I touched on this a bit earlier in the presentation, but this slide kind of drills into a little bit more detail. So the design win is a key point in the sales cycle when the manufacturer commits, and that means pays money, in order to use a particular incarnation of the Dante technology in a product that they ultimately intend to make. Once one or more products made by that manufacturer hit the market, Ordinate receives per unit revenue from each product as chip, card or module components are purchased or software royalties are paid. At the start of the year, we felt that it would be strategic for us to drive as many design wins as possible to unlock future revenue, even if FY21 revenue turned out to be negatively impacted by COVID. Offering an annual subscription model for that technology access charge at the design win phase has turned out to be very good strategy for us. It's reduced the barrier to entry for manufacturers and it has helped us to deliver a record number of 105 design wins during the year. We expect each design win to translate to one or more products on the market and repeat revenue associated with those products in future years. Slide seven highlights the progress that we made during the year on new video products. So I think it's hard to understate how much of a milestone this is for Ordinate. It is a major milestone to release completely new products to the market, and Dante video products are actually a completely new set of products for us. So it was a huge milestone, and we saw this year the release of six video products from two manufacturers. Those manufacturers are Boland Technology and Pattern. And that consists of two cameras and four networked video encoder decoder devices which take video signals and take them on and off the network. And those two cameras and four encoder decoder devices are now available on the market and AV system designers can use Dante networking as a single integrated solution for video and audio signal distribution in their projects. The pipeline of Dante video design wins is growing and has been stimulated by the launch of these six products. However COVID has been a bit of a headwind, mainly because it has prevented in person demonstration of what to some manufacturers is a new and relatively unfamiliar solution. A significant corporate development activity also related to video during FY twenty one has been the establishment of a new development team in Cambridge in The UK. This team was established to accelerate video product development and is another major milestone for Ordinate as it is the first product development group outside our Sydney headquarters. In addition, we have recruited a corporate development role in Cambridge focusing on strategic partnerships with an emphasis on video. Dante video and audio technology was recently showcased by the Blue Note Group in a series of distributed performances where musicians played live with each other from three different venues simultaneously. Those venues were in New York, Washington DC and Nashville. The system used Dante audio across this distributed network so that musicians could hear each other as if they were in the same room, and Dante video so that they could see and interact with each other as if they were sharing a stage, and Dante Domain Manager was used to glue it all together. On the slide, you can see the top photo shows one of the stages, and if you look carefully, you can see that there are three musicians playing on the stage, and there is a TV screen on the left of the picture with a singer and a keyboardist who are playing with them from a remote location hundreds of miles away. The bottom photo shows all of those three locations stitched together as a single performance which appears to be on a single stage. So that's what a person watching the concert would have seen in the bottom photo. So the reactions from the musicians were fantastic and the whole project shows that our first Dante video products can make this type of solution viable in a way that it never has been before. So moving to slide eight, this basically gives you the pictures of the recently released Dante video products from Bolan and Pattern. Each of the products shown on the slide incorporates the Dante AV module which is also pictured in the centre of the slide and that module transports audio and video signals across a standard IT network using Dante technology. Both Bolen and Pattern are original design manufacturers that can offer white label versions of their products to other manufacturers. And this is significant because it enables other manufacturers to get to market quickly with their own Dante Video, their own branded Dante Video products. And with that, I'll hand over to you, Rob, for the finance section. Thanks, Aidan, and good morning, everyone. Over the next few minutes, I will be explaining the FY 'twenty one financial results that were lodged with the ASX earlier today and are summarized in the accompanying investor presentation. In particular, the information I'll be talking to you now is set out on Slides 10 to 15. I'll start with Slide 10, which explains some of the key revenue information for In U. S. Dollars, revenue was GBP 25,000,000, growing 22.5% from GBP 20,400,000.0 in the prior year. In Australian dollars, revenue was up 10.1% on the prior year with a differential growth rate due to currency headwinds as the Aussie dollar strengthened against the U. S. Dollar. As Aidan mentioned earlier, we expect to see further long term margin improvement as a growing proportion of our revenue is generated by software products. For this reason, growth in gross profit dollars is an increasingly important measure of performance rather than revenue growth alone. During FY 'twenty one, gross profit dollars grew 23.1% to USD 19,200,000.0 at a gross margin percentage of 76.4%, which is consistent with the prior year. From this point onwards, all amounts quoted will be in Aussie dollars. Growth in Dante units amounted to 43%, outstripping revenue growth and reflecting this shift to software products. We use the term Dante units as a catchall expression for the number of unique AV products and computers with Dante inside, whether that be in the form of a chip, card, module or increasingly software. Software revenue grew almost 62% in FY 'twenty one, driven by greater than 50% growth in royalties and greater than 30% growth in retail software and Dante Domain Manager revenue. Chips, cards and modules revenue grew at around 13%, whilst units of chips, cards and modules shipped grew at 26%. This reflects a mix shift towards lower channel count products, offsetting a 16% decline in our highest revenue product, the Brooklyn module. AVO adapters delivered significant revenue growth of greater than 50%, and there were strong revenue contributions from our Ultimo and Broadway products, which both grew in excess of 35%. Geographically, revenue growth was strongest in The Americas, followed by Europe and The Middle East. Revenue from Asia was impacted by customer concentration in live sound and large events. Consistent with previous commentary, the vertical markets driving revenue growth were corporate conferencing and higher education. In terms of the income statement set out on Page 11, you can see that we delivered 50% growth in EBITDA, which amounted to $3,000,000 for FY 'twenty one. Operating expenses grew 6% for the year and amounted to AUD 22,500,000.0. The main reason for this increase was growth in employee expenses, primarily as a result of the recruitment of the video development team in Cambridge, UK, which amounted to approximately $1,100,000 for six months. The other factor driving growth in employee costs was a return to paying staff bonuses in FY 'twenty one based on improved financial performance. Headcount at the end of the year amounted to 135 staff, and pleasingly, we have recruited a further 14 since year end, putting us in good stead to reach our headcount goal of greater than 170 by the end of FY 'twenty two. Aiden will touch on this again later on. In terms of other expense trends, you can see a 32% decrease in sales and marketing costs due to savings on travel and trade shows as well as favorable FX impacts. Consistent with the prior year, we are not in the position of recognizing tax losses, hence the large movement noticeable in the income tax expense line from the write off of tax losses in the prior year. Overall, the group reported a net loss after tax of $3,400,000 compared to a loss of $4,100,000 in the prior year. On Slide 12, there is an EBITDA bridge outlining the key movements driving the 50% increase in EBITDA in FY 'twenty one. Please note that we've shown the growth in revenue dollars at the same FX rate as the prior year and then quantified the impact of FX headwinds separately. The other factors on the graph have already been explained in my earlier commentary. On Slide 14, you'll find the cash flow statement, which shows operating cash flows of $6,700,000 which is a 39% improvement on operating cash flows of $4,800,000 in the prior year. The group undertook capital raise at the beginning of FY 'twenty one, and the gross proceeds of $40,000,000 are disclosed in financing activities. Some of the proceeds were invested in term deposits with maturities of greater than three months and under the accounting standards are not considered cash, hence being reflected as a $27,000,000 outflow in investing activities. The statement of financial position is set out on Slide 15. From our perspective, it is a clean balance sheet with no debt. At thirty June, we have $65,400,000 of cash and term deposits, which provides the company with a strong balance sheet to consider M and A and other corporate development activities. I'll now hand back to Aidan to cover the outlook for FY 'twenty two. Thanks, Rob. So if we turn to Slide 17. So I think the summary, the really top level summary here is we see increasing demand, but risks still linger going forward. So really that's due to a combination of recovery from downturn and customers placing orders further ahead to de risk component supply. That has resulted in us having a record backlog at thirty June. So that's the demand side. The recovery and customers putting in orders early really has given us strong backlog going into FY 'twenty two. We're seeing the benefits of that in the trading performance was strong in July. However, some orders ended up being deferred to later months due to a temporary shutdown of one of our manufacturing lines in Malaysia, and this was caused by local COVID cases. So there were some COVID cases in the factory. They had to shut it, clean it, and so it was out of action for a week or so. August demand is also strong. However, we are now allocating our ultimate products to customers due to global chip supply constraints. So although there is record demand for our products, we do expect chip shortages and potential COVID related manufacturing disruptions to affect our ability to supply during the '2. The good news is that the bulk, the vast bulk of our manufacturing customers have new products new Dante products under development according to a recent customer survey that we carried out. And you can see the results of that shown on the slide. However, global supply chain pressures are causing our manufacturing customers to focus on product redesign in attempts to address part shortages in their existing products, so to try and redesign those products to use alternative parts from the ones they can't currently get. And that potentially defers the launch of new Dante products. The diversion of engineering resources may also adversely impact new design wins for the next six months, including Dante Video design wins. But in the near term, we do not expect new product delays or a slowdown in design wins to impact revenue, essentially because of the ongoing strong demand from end users and a high backlog of unfulfilled orders. So Slide 18 summarises our priorities for FY22. As always a key objective is to get new design wins over the line for Dante enabled products and that's to unlock repeat revenue from per unit sales in future years. We continue to believe in the long term value of the business and intend to increase staff to over 170 to support ongoing growth and to continue to invest in video and cloud product development. I won't read this slide, but rather I'll summarise by observing that our priorities here fall into three broad themes. The first theme is to drive new Dante products and services. The second is to increase Dante adoption and reduce friction. And the third is to set our business up to structure it to manage growth over the next few years. So in summary on Slide 19, strong demand for our technology continues as the AV industry recovers from the downturn and that is very encouraging for Ordnate's long term outlook. In the short term, however, we expect continued supply chain uncertainty to affect us and our manufacturing customers throughout the remainder of the calendar year, this calendar year 'twenty one. And whilst this may limit revenue growth in the near term, we remain confident that Ordinate can deliver U. S. Dollar revenue growth in the historical range for FY 'twenty two. Overall, the launch of the first Dante video product, record numbers of design wins and the establishment of a video product development team in Cambridge and The UK are significant milestones as we execute our strategy to revolutionise the AV industry. And with that, I think we have some time for Q and A. So Rob will be coordinating the Q and A. Yes. Thanks, Aidan. So we might start off with a couple of questions which are relatively similar in nature. So these are both for you. One is can you please expand on the following comment, completed infrastructure fee in field activation via ordinate.com. Please explain what progress was made during the year. And then there was a a related question, which someone asked, are in market Dante enabled products able to be over the wire updated for new software upgrades?' Yes, I'll start with the latter one first because that's fairly simple. The answer to that is yes, all Dante products in the field. It does depend a little on the exact approaches used by different manufacturers, but all Dante products are upgradeable, software upgradeable over the network and that gives us, I think uniquely in the industry, the ability to deliver new products and features into the existing Dante products that are deployed in the field. The first part of the question I think was around the infield activation comment. So we have been wanting to enable the sale of increased Dante functionality, so more channels or to be able to turn on Dante in the field for some time. So this financial year we did quite a bit of internal work on the engineering side to develop prototypes and proof of concepts of that. One of the key things behind that is to reduce friction, so to be able to offer Dante in very cost effective products where you don't want to burden the price of the product with the Dante functionality out of the gate, but yet give the end user opportunity to turn that on at a later date. So we've had a number of prototypes and we've also had this year some validation from one key customer around that particular structure and strategy. And so we think that in the next financial year we will be able to offer that sort of functionality to at least some products with some manufacturers in the field. One other comment I would make is that the new software products that we have with Dante Embedded EmbeddedPlatform and Dante Application Library are well suited to this type of functionality and we already have customers like QSC for example who are actually offering in field upgrades but they are using their own mechanisms to do that. This particular activity is about us being able to offer that in field upgrade and enablement functionality to all manufacturers in the industry. Thanks Aidan. There's a couple of financial questions which I'll deal with. So question understanding the GM change from half to half. Second half GM was down slightly versus almost 77%. Please explain the second half fluctuations. So there are a couple of things which went into it. So there were some spot purchases of materials at a higher cost, and that did have a marginal sort of impact on the gross margin percentage. The main other thing that happened was really strong increasing volumes around chip cards and modules revenue, in particular, adapters and ultimos, which do have a lower gross margin percentage. So change in the second half was really that sort of mix shift. In the first half, we did also have some more sort of upfront design win revenue under the old model, which had a favorable impact on their GM margin. Longer term, there's sort of no change to the previous commentary that we've made where we expect that shift to continue and that GM margin to go up in the medium term, but might move around just based on fluctuations in product mix. Another question regarding the 33,000 professionals in FY 'twenty one. Trained 16,000 in the second half, but also trained 12,000 on Dante video. Is that inclusive of the 33 of of video? So 33,000 who were trained in total. Within that 33,000, there were 12,000 of those 33 who undertook some form of training, which covered video. So the the video is a subset of the 33. Aidan, a couple of questions for you sort of around chip shortages. So will will chip shortage drive a faster conversion to to software? And where was the other question? There was a question around does it cause people to design out? Yes. Yep. Or switch from hardware to software implementations, that type of thing. I guess they're kind of related. Yep. Think potentially but I see that happening with our customers at the moment. Think the thing is that your average AV product like, one one of our adapters, for example, our little AVO adapters has got, like, a 120, 150 separate parts in it, components. So it could be any one of those parts potentially that you can't get access to, unfortunately. And it isn't just, silicon chips, can be other components too. So the redesign that's being engaged in is often to make sure that you can have more than one type of power supply chip or more than one type of network connector or components, things like that, and not so much a wholesale shift of the product from hardware to software implementations of Dante. I think it's certainly the case that if you're going to do a redesign then once that rubicon has been crossed, then manufacturers are certainly more open to doing redesigns than they were in the past because they've exercised that muscle recently. I think the redesign piece is probably not driving a shift to software, but I think the ability to deliver software across a wide range of products, I mean the software solutions are driving their own demand so I don't think it's been particularly driven by the chip shortages. Hopefully that answers those two questions. Yes, thanks Aidan. I might pick up on a few questions around video. So there's comment there's questions around new video products expected to be released over FY '22, how important the video solution is for Ordnate's long term market dominance, then a question around sort of market lead over competing video solutions. Yeah. So taking those in order so you can them all. Typically we can only announce manufacturers' plans if they allow us to. So what is usually the case for our design wins is that manufacturers want to control the release and marketing of their products and so we typically can't forward announce what products are actually going to come onto the market. So unfortunately I cannot answer that question apart from saying that there is a healthy pipeline of products and I'm looking forward to a good number of products coming on the market over the next financial year. Frankly, having the first half dozen Dante products on the market has stimulated interest, so my expectation is that there will be more coming on the market or more designs being done over this next financial year. But keep in mind there is diversion of engineering resources at the moment dealing with supply chain related stuff as well. Think the other questions were around the importance Market of domination. Yeah, so in terms of market dominance for Dante's video solution at the moment, the reality is we've just got our first six products on the market so market dominance is quite small at this point. However, I would say that our audio networking technology is widely used in the industry and particularly the professional AV industry. So many integrators I think have spoken to us over the years saying can you please deliver us a video solution that works like our Dante audio solution. So I'm very optimistic about our ability to succeed with Adante Video solution. The other thing I'd say about the video solutions in the professional AV market is at the moment they are very fragmented. So there's three or four different kinds of chipsets from semiconductor manufacturers, all of which are kind of incompatible. There are various wall garden manufacturers driving their own sorts of networking solutions. So I think from that point of view, if we get it right, there is certainly plenty of opportunity to consolidate that. In terms of the long term future of Ordinate, the reason why we're going into this market is because AV systems have an A bit and they have a V bit, so they usually consist of both audio and video. We've historically been very strong in audio, but offering a video solution allows us to tap into that whole other chunk of the market which is video related. We estimate that the size of that addressable market for us is at least as large as the audio market that we have today. So being able to offer video products into this market at least doubles our addressable market if not increases that over time. So it is strategically quite important for Ordinate. I think it's not the only thing we're doing and we obviously need to continue to grow the audio business, but it potentially sets us up to double our addressable market. Very good. Thanks, Hayden. Now I'll just leave you I'll pose a question to you and give you a moment to ponder the answer. So a couple of questions around please elaborate on the expected supply chain issues within your revenue guidance. Do you expect second half revenue second half weighted revenue to be weighted second half given the current issues? So maybe if you just take a second to consider that, I'll knock off a few other questions. What percentage of total revenue was the one off lump sums paid at the design win stage? How many years of subscription design win payments will be needed to replace that revenue? So yes, effectively, I guess, the net impact of changing from the one off upfront to subscription revenue cost the business in the short term in the order of about $600,000 The cut over at which we're better off is sort of between years two to three. And then there was a second question, which was sort of, I guess, somewhat related. What percentage of new product wins this year have adopted software instead of cards and modules. There's still a lot of smaller OEMs which will buy chips, cards and modules in the form of things like Ultimos and Broadways, so they're still very popular. Where we're seeing good traction in software is around the top 20 OEMs where there is a greater level of expertise in in their ability to deploy products like DuntPay embedded platforms. So I think over time for us, it's a matter of making sure that more OEMs deploy that technology. But certainly really strong traction with the design wins around those new products. Aidan, back to you on that question around the revenue guidance and supply chain. Yes. So I think the sort of crux of the question is around do we expect revenue to be second half weighted? I think where we sit at the moment I think that's a hard question to answer and it's a little bit to me it feels very sort of COVID crystal ball territory as is usual with or has been the case over the last sort of eighteen months. So I think where we sit at the moment, we do see supply chain issues. Know, I I would say they have been worsening probably over the last couple of months, and we foresee that that's gonna be the case for the next several months for sure. So I I think we're very actively managing our ability to supply with semiconductor manufacturers. So far I think we've done quite well. I can't predict what will happen with respect to COVID related manufacturing shutdowns. So one possibility so I wouldn't want to put my hand on my heart and say everything we thought we'd do in the first half will move to the second half. And the reason why I say that is because it is possible that there could be a relatively large scale delta outbreak in China, for example, and we may find that manufacturing is just really difficult for some extended period of time. That might not be in the next six months, it might be the next six to twelve months, it might be the second half in which that occurs. I think what we're really trying to do is to flag that we are seeing good recovery in the AV industry and we're seeing good demand, solid bookings. So we think that, you know, all things being equal, we should be able to deliver on that demand, but there still are just risks out there associated with the chip supply issue and the second piece is really the COVID thing is not over yet, and particularly we are starting to see things like Delta affecting our manufacturing capabilities. So things like manufacturing shutdowns are going to continue to occur over the next at least twelve months. And the key thing there is it isn't just us. It's not just our ability to manufacture something or flash the chip, it also affects all of our customers as well. So if they can't manufacture something in their factory, then they won't necessarily take delivery of of you know, things can delay from us. So I think it's certainly not like it was last year. It's much better than it was last year. But there are these lingering risks, which I think is what we're trying to call out. Aidan, just to sort of pick up on your response to knock off another question around percentage of products manufactured in China versus Malaysia. So now there's about onethree of our revenue, which is derived from software, so that's not impacted by this, of course, directly in the first instance. And then it is sort of about sort of a onethree, twothree split between China and Malaysia. There have been some various questions around video video revenue both in FY 'twenty one and FY 'twenty two. So that revenue is still relatively sort of lumpy and sporadic because it's based on the chip orders of two manufacturers. And I guess we've been relatively conservative in our expectations for revenue in FY 'twenty two in the guidance that we've provided. Obviously, if the supply chain issues abate and there's strong demand, then there is some good upside in that. But I guess we certainly haven't made any heroic assumptions in the revenue guidance that we've provided the market. I'm just trying to at this point, I will apologize for the meeting. We we do have more questions here than we will be able to get through get in the time allowed. Good question here around the cost base. Think about the timing of new hires. Is this weighted to the first half or the second half? The expectation is certainly a ramp up in the first half. We have had good momentum. But equally, I'm sort of very mindful of the impact of any delay in sort of headcount. So just to provide people with some sensitivity around that. If the headcount that we have planned for FY 'twenty two is delayed by one month, that is a 350,000 favorable impact to EBITDA. But but, really, you know, our preference is to get the get the people in and driving growth for the business. I would reinforce that. I think our goal is to, if we're hiring people, it's to actually enable growth and to deliver on our strategy. So it's not necessarily a plus for us to delay our hiring. Yep. Aiden, a question. Any medium term strategic threat or competition on the horizon? Well, the this is yeah. I mean, so so there's there's probably a few things that are occupying me at the moment. One one is certainly the whole supply chain and sort of manufacturing COVID related issues. I think COVID is a is a substantial shift. COVID has generated a lot of interest in video solutions, so I think we need to make sure that we execute in order to try and tap into that. Other sort of longer term issue I think is around things like manufacturing generally and where to put it. So if we see increasing competition between The US and China, one thing that I do have on my mind for years out, several years out, what does that all look like remanufacturing in two, three years' time when perhaps we're behind the whole COVID thing? Where do we have that manufacturing? I guess we do have various things going on on the video side of things. So from a competitive point of view, I think we can't certainly say that we're the dominant solution in the video side of things at the moment. I think it is early days for us yet. So there's a lot of strategic thinking going into how to win in the video space. And that obviously involves investment as well and making sure we have the right products and particularly the right software products. So we've launched our Dante AV technology in a hardware form with modules at this point. But clearly we want to have PC and Mac based software products somewhat analogous to the products we have like Dante Virtual Soundcard and Dante Via going forward. Video is a particularly important strategic focus for us as we deal with the combination of the fragmentation in the industry but also strategically how we get into lower price points and how we drive the cost down of video solutions yet still maintain the kind of performance that we need. Okay. Very good. Now, Aidan, once again, I'll I'll just leave you with a couple of questions to to think about and then deal with one directly. So two questions to finish off for you. So can you expand on the M and A opportunity set? And then a second more general question, what surprised you most this year? While you're considering those, I'll deal with another question about depreciation and amortization increasing at more than 40% versus revenue growth of 10% for FY 'twenty one. Can you comment directionally on how this relationship is expected to evolve going forward? So what I would say in response to that is that you can see the amount that we are investing in r and d, and you can see that set out in the information contained in slide 13. You can see a general sort of decrease in oh, sorry, not a decrease. You can see the increasing r and d investment over time. But those dollars and that trend from $9,100,000 in R and D to 10,700,000.0 in the current year, that kind of trajectory is expected to continue. The revenue growth of 10% is really a factor of the FX rate this year. So I guess we've guided the market around revenue growth in the historical range. The depreciation and amortization is a much smaller number. So I think you can pretty clearly sort of pencil out what depreciation and amortization will look like going forward, taking a view that our r and d activities will continue on the trajectory that you can see on the graph. And the expectation also is that the the revenue growth certainly in FY 'twenty two, will continue on that trajectory that we've had historically. Back to you, Aidan, to close out with those last two questions. Sure. So if I take the question around M and A opportunity set first. Think Ordinator's a longer term strategy to really drive the networking. When we put the signals on the network, means that we can start to use standard IT equipment to process and manage those signals. So what we end up doing is we end up taking the centre of AV systems, which today is often some kind of strange box that you put in a building and run all the cables to it, and you turn that into a piece of software that runs on a computer and delivers the same type of solution. So that's the longer term strategy is to really provide disruption by enabling software oriented AV solutions down the track. And so our M and A opportunities set is really around anything that would accelerate that strategy. So we we obviously are a technology company, so we can we can create technology ourselves organically. But in terms of accelerating our strategy, anything that would that would facilitate our video products, our audio products, you know, to move those forward, I think would be in the frame. Things like cloud services, particularly for the management of devices are in the frame and things that we would be considering. Complementary products of various sorts. They could be hardware or they could be signal products. I think for the right product that actually fit that would make sense. We are a technology company though that provides essentially a platform to the industry upon which people build their own products. So we do need to be careful about what we do. We don't necessarily want to directly compete with our manufacturing customers, for example. So it needs to be a considered approach in terms of M and A. To round out that question, think in the last financial year we've actively looked at two different opportunities, although we've passed on both of those for various reasons. A combination of fit and price I think were probably the two things there. I think the second question was what surprised me most during FY '21? And I thought about that for a second, and I think the summary is the adaptability and resilience of people. So I think of that in two ways. One is our ability to adapt internally. Working from home changed an enormous number of things for Ordinates development teams and for people inside the company, and yet people have managed to adapt to that. There are challenges, don't get me wrong, but it is phenomenal what people have managed to do throughout the year and how they've managed to remain productive and in some cases improve productivity even when working remotely. That's been great. And the same thing is true for the industry at large, the the adaptability and resilience of the industry because, you know, we see things like that blue note that Blue Note thing where where I mean, that's stimulated by, you know, COVID related stuff and not being able to travel and and being able to have musicians do concerts without leaving their their little bubble or lockdown area, that type of thing. So the industry has been resilient as well, both coming back and doing things differently. I think that's just the the resilience of people actually has surprised me. Perhaps it shouldn't surprise me. Humans are resilient, but it's it's certainly been impressive to to see what people have been able to do. And with that, I guess it's a wrap. So thank you for joining us today on the call, and I hope you stay safe and healthy, and I'm sure we'll see you again at some future date. Thanks very much. Thank you. Thanks for your ongoing interest and support.