Thanks very much. Good afternoon, everyone, and welcome to Alcidion's quarterly update for the quarter or the three months ended 30th of September, 2024. I'm doing the presentation today from Adelaide. So Rebecca is joining us, our chair, in case anything untoward happened in terms of delayed flights on the way down. But I'm well and truly ensconced in our Adelaide office now. And also joining us on the call is our Chief Financial Officer, Matt Gepp. I'd like to begin by acknowledging the traditional owners of the land from which we're all coming from today. All of us coming from very different lands. Pay my respects to their elders, past and present, and extend my respect to any Indigenous persons joining us on the call today.
Shortly, I'm just going to take you through a presentation of the results or the information that was released today at a high level. And then, obviously, we'll give you an opportunity, as we always do, for Q&A after the presentation. The Appendix 4C and the Business Update were released on the ASX this morning. All attendees will have an opportunity to ask questions at the conclusion of the presentation. If you would like to ask a question, please use the Q&A facility at the bottom of your screen, and we will aim to answer as many as possible. If the question has been answered in the body of the presentation that I've given today, I don't see any point in reiterating the question, so we'll try and avoid that repetition. And also, we'll try and combine questions together if they are similar in nature.
If we do run out of time and there's any question you feel we've been unable to answer, if you could make sure that question's lodged with investor@alcidion.com via email, and we'll see to get back to you as soon as possible on that. Just a reminder to everyone that the webcast is being recorded today, and it will be available later today on our website. Thanks very much, and let's get into it. As many of you on this call today who are longstanding shareholders, you'll be aware that Q1's historically a softer period for Alcidion, and this quarter followed along that trend, which was wholly expected by us and well within our forecast range of where we expected the quarter to land.
Early in the quarter, we announced that we'd been shortlisted or selected, I should say, as preferred provider by North Cumbria Integrated Care NHS Foundation Trust, or we refer to them as NCIC to make it easier, and we're their preferred supplier for their electronic patient record. This is a very significant milestone for the business in terms of referenceability and the financial impact that we'll have going forward. A little bit more about where that is at later on. Shortly after that announcement, we announced a new five-year partnership with Hume Rural Health Alliance, which is a regional Victorian health organization who are going to use Miya Precision as an enterprise-wide digital platform to actually consolidate data across a number of health services with a focus on patient flow and virtual care initially.
During the quarter, we also renewed several other Miya module contracts for Patientrack and for Miya Flow, which, while not material individually, continue to contribute to the increasing annually recurring revenue or ARR position that we're building year- on- year, with other opportunities currently progressing into the selection stage of the procurement cycle, and with the heightened level of market activity that we've seen, we're optimistic about our position as we look to move forward. As many of you will have seen from our AGM presentation, we are really demonstrating significant success in our deployments, and we've been able to translate that into the material financial impact that the Alcidion solutions are having through providing productivity and efficiency and better patient care across our customers.
I suggest anyone who would like to sort of see a little bit more about that to actually go back and have a look at the AGM presentation that's on our website. Moving to the next slide. During the quarter, we signed new contracted sales of AUD 5.2 million, with approximately AUD 2 million of that to be recognized in this financial year. Approximately 88% of the new contracted sales are in recurring product revenue, with the balance related to services, predominantly services related to implementing our products. At the end of Q1, we have AUD 28.5 million of contracted revenue that reflects both the sold and the renewal revenue we expect to re-sign during the rest of this financial year. And so that will expect that to be recognized over the course of FY 2025. Of course, we expect as the year progresses to materially improve on that figure.
I'll touch on a couple of the points that will contribute to that later on in this section. Obviously, as in years gone by, as we progress through the year, new deals are signed, and you will see that contracted revenue for the year going up. The cash receipts for Q1 from customers were AUD 6.3 million. As I mentioned at the outset, Q1 is historically our softest period for receipts because the customer invoicing profile in the UK and Australia and New Zealand is skewed towards the second half of the year, although we do have some substantial invoicing that goes out in this quarter as well.
We delivered an operating cash flow for the quarter of AUD 3.9, sorry, beg your pardon, cash outflow for the quarter of AUD 3.9 million, which was a material improvement on Q1 last year, which reflects, I think, the improved cash flow management we've had. Coupled that alongside the staff reduction costs that we did, that has contributed to that significant improvement over the same or the prior corresponding period. Staff costs, for example, this quarter were AUD 6.5 million compared to AUD 8.5 million in the same period last year. At the end of the quarter, the company had AUD 7.9 million of cash and no debt at the 30th of September. Obviously, we have a forward view of the cash that's coming in through this quarter and into quarter three, so comfortable with the cash position.
Looking at the trend slide that we provide each quarter as we give results, this gives you a view of some of the historical trends, some of which I've referenced in the prior slide. But the two key takeaways here are on the left-hand side, when you look at quarterly new sales, while we've now had a few quarters of steady new sales, large contracts can fall at any time, and these have the opportunity to significantly improve the financial position of the business, as we will see when the North Cumbria contract is finalized. On the right-hand side, this validates our messaging around Q1 being historically a soft period for cash receipts. However, as you can see from the graph, this builds materially in subsequent quarters, which is, and we would expect that to happen again in this financial year.
I have spoken about both of these contracts at the annual results presentation and at the AGM, so I won't go into too much detail here other than to highlight how it's progressing. The North Cumbria contract progresses well in terms of negotiation. It's on track to be finalized in early Q3, as we'd previously advised. So it's all running as expected. It has also, so we're getting to a point now where we've pretty well agreed what will be delivered over a period of over the next 10 years.
It was really pleasing to see overnight the new government in the U.K. announce their budget or release their budget, and there was a commitment of GBP 2 billion in funding for digital technology for the NHS, which indicates that the new government is serious about their commitment to use technology to assist the NHS to get from its current broken state, and that's not my words, but theirs, but to one of a modern healthcare service, and so that's very pleasing, gives us confidence in the continued commitment and investment in digital technology in that market, which is a significant market for us and at this point represents around 50% of Alcidion's revenue.
In relation to Hume, the Hume Rural Health Alliance, the implementation has progressed rapidly, and we went live this morning in the first site with the remaining hospitals to roll out over the course of the next couple of weeks. This is the fastest ever rollout of the Miya Precision platform and has been really three months from go to whoa. We look forward to being able to continue to demonstrate how a modern cloud architecture such as ours really does give us a competitive advantage in this market. For those of you that are new to the story, the Miya platform is 100% cloud deployable. We actually have moved, we have currently deployed it onto a new cloud provider, so we now can demonstrate that we are cloud agnostic and can pretty well run across all the major cloud platforms.
When we refer to go live, we're basically talking about the customer is now using our solution in a real live environment with patient information active and available. So we're very excited about that. And kudos to the team at Alcidion who have worked very closely with the Hume Rural Health Alliance to deliver that rapid rollout. As of Q1, we've approximately AUD 28.5 million, as I said, of contracted and scheduled renewal revenue to be recognized, noting that that excludes any potential contribution from the North Cumbria contract, which we'd realistically expect to receive early in Q3. They are definitely ready and keen to get started. In addition, we expect several opportunities to move through the pipeline over the coming months, which would add further to that FY contracted revenue figure, as has occurred in every year.
We expect a material improvement in Q2 operating cash flow driven by an uplift in customer invoicing and the continued benefits of that cost base realignment that we did. We can reconfirm our target of being EBITDA positive for FY 2025, noting that we're an EBITDA break-even business at around AUD 36 million of revenue, with AUD 28.5 million of currently contracted revenue and the expected contribution from North Cumbria, along with our clear line of sight that we have on some other opportunities maturing through the procurement stages. We are confident of our position in this. The Alcidion business represents significant long-term value, and that's demonstrated by the AUD 130 million plus of contracted and renewal revenue that's able to be recognized over the next five years without including any upside from North Cumbria or any other contracts that we signed during this year.
As I mentioned at the AGM, whilst the U.K. electronic patient record opportunity is certainly important because of their individual value potential, across the board, we're seeing several opportunities across all geographies for the Miya Precision platform to address the many different challenges in healthcare, which we do through that modular sales approach, which over time allows us to build significant recurring revenue, and it is a combination of all of those that is going to continue to support Alcidion through revenue growth in the years to come. Thanks for your time today and your continued support of Alcidion. I am happy at this point to take any questions.
Thanks, Kate. We have a few questions that have been submitted earlier before the webinar. The first one's for me. It's a question regarding directors and I assume KMPs' holdings in the company.
I'll direct that shareholder to the annual report, the 2024 annual report, which has in the remuneration report all of the directors' holdings, and then any changes to those will be released to the ASX. But I don't believe that has happened since then. The 2024 annual report is the source of truth there at the moment. The second question, Kate, it's a multi-pronged question, which you've already answered part of, which is around the 36 million target for the current year. The question is, do you have capacity to grow the revenue significantly with current staffing levels?
Yes. I think I've talked about this before in respect of the timing of opportunities and new deals as they land. We're very comfortable that we've got a good mix across both project managers and implementation staff and integration staff.
All of them are called into a project at different times in terms of the evolution of that project. So looking at the way in which we think things are going to land and the revenue growth associated with that, pretty comfortable with where the team size is at. Notwithstanding that it may be that we may have marginal increase in terms of our implementation team where a number of opportunities to land at the same time. We also have alignment with some third-party consulting and capabilities that extend our team's skill set without always needing to bring new staff on. So I'm pretty comfortable that we've got quite a lot of headroom in respect of that as we move forward into the coming years.
Thanks, Kate. The next question that's come in, I think this one's for me, and it's actually a good question.
Alcidion entered Q1 with AUD 28 million in recognizable revenue for the financial year. During Q1, it added AUD 2 million to be recognized this financial year. However, the quarterly advises that only AUD 28.5 million is now recognizable. Please can you account for the discrepancy? So the AUD 28 million that we disclosed at the end of July actually included the Hume revenue for the year as well. So the AUD 28 million had the Hume revenue, and the AUD 2 million we added also includes the Hume revenue because we added that in Q1. So that's the reason why that is not adding up this year.
Yes, because Hume, when we did the quarterly, it was the end of July, and we had already signed the Hume contract, so that would have been included at that point.
It's not often that we would sign a new contract in the first month of a new financial year, given that our first quarter is often quite a slower one. So that explains that.
Thanks, Kate. The next question is an interesting one. I noticed that Q2 has been by far the best quarter for new sales. Why, and will this persist?
Look, I think that has been the case for the last couple of years, but I think if you go back over five, six, or seven years, there's not necessarily a pattern. Last year, I believe it was the South Tees' 10-year extension, and maybe two years before that, it might have been the Australian Defence Force contract that landed.
One thing that I will say that probably drives that is, as we lead into Christmas, people who are working on contracts get a sense of momentum about getting them signed before Christmas so that they're ready to start a project after Christmas. That is sometimes the factor. I don't think you can suggest that going forward that every Q2 will necessarily be the best, but Q2, Q3, Q4 are almost always better than Q1. The next question is, can you provide more detail regarding the opportunities coming through the pipeline in ANZ in the coming months, size, type, etc.?
So in ANZ, predominantly the opportunities are for the Miya Precision platform. The key areas in Australia and New Zealand, which I've talked about on a number of calls, are for patient flow access and command or for virtual care.
Because the electronic patient record is well and truly met within the Australian market, we are basically very much unlocking the value in those investments that have been made in Australia. So you will see it is most likely to be in those sorts of modules to start off with. And as a matter of fact, nearly all our customers, even if they buy more than those modules to start off with, generally will implement those modules first.
Thanks, Kate. The next question, congratulations on your report, is the ALC platform at the start of its tech cycle, will it need significant investment to stay competitive?
Thanks. Good question. I think we're coming through what I would have called the early stages. We've now got demonstrable implementations across all our geographies. We've got benefits that can be realized, and we have made a significant investment in the R&D.
Having said that, I still think we're in the early days in the true adoption of it across those markets. So there is a lot more opportunity in respect of increasing market share. We are leveling off, obviously, our R&D. If you look back over the last few years, you will see that we ramped up R&D as we accelerated some of the development of our additional modules and, of course, the need to deliver some specific capabilities for the Australian Defence Force. We have now pulled that back to a level that is sustainable to meet the opportunities ahead of us in those markets and in new markets as well.
Thanks, Kate. The next question is around the GBP 2 billion of committed funding from the U.K. and what the difference is between that and the EPR opportunity.
It's a very good question, and I would say we probably don't really have the unpacked detail about what the GBP 2 million is earmarked for at the moment, but I expect that we will see a lot of commentary about that in the next few days. What I take from it, regardless of whether I know that's earmarked for EPR or it's for new investment opportunities, is that there is a commitment to the digital health funding that we have seen historically. My understanding at this point is that people are speculating that it is new and additional funding, but it clearly does say in the announcement that it is for modernization of the NHS, for example, in electronic patient records. So they do refer to the EPR in the announcement, but I expect we will definitely get more detail on that in the next few days.
Yeah, it's quite fresh news. Another good question. Given the increase in defense budgets and the success with ADF previously, what is Alcidion's opportunity in this sector?
We certainly see ourselves as being, and I think others do, as specialists in this particular area and that what we have created through our work with Leidos for ADF is something that the rest of the world has looked favorably upon. We were recently at the International Conference of Military Medicine in Brisbane, which gathered countries from all around the world, and we were partnering with Leidos on a trade show there, and the opportunity to demonstrate what we're doing to many different countries was received really positively. As you know, even if they are going through a process, it will be top secret and it will take some time.
But yeah, we look forward to being able to continue to promote the really excellent partnership that we have there.
Clarification here for me, Kate. Could you confirm whether the 28.5 of FY 2025 recognized revenue represents the revenue for the remaining three quarters, or is it the total for all of FY 2025? So yeah, so the 28.5 represents what we have on the books as recognizable for the full 12 months of FY 2025 at this point in time. Can we get some commentary, Kate, please, about new markets and specifically, is the Alcidion platform applicable to the U.S. health industry?
We believe it is. We believe in the respect of the U.S., you have to be very careful and mindful about how you enter that market, which is a very large and complex market.
To that end, our strategy has been to look at Canada as an interesting entry point for us to test out the platform in North America, and we are actively talking to potential customers on the ground there, but it will take time to build that, and other markets, so Canada is of interest to us. Other markets where they have a mature electronic medical record deployment so that Alcidion can continue to unlock some of the value on that data like we see in Australia, so United Arab Emirates is, again, another market that has really invested in the last 10 years in EMRs and is starting to look at how they can use that data to better drive efficiency in healthcare.
Okay.
So we have all of the questions that have come in have either been answered or were answered in the webinar presentation, which means we have one, oh, one more question's come in. That's been answered. Okay, so the final question, Kate, is regarding AI. What threats and opportunities does the rapid advance of AI present for Alcidion? Does Alcidion face increased competition from large AI-enabled tech companies entering or expanding in the digital health space?
Obviously, everybody knows that AI has got enormous potential and opportunity across all industries. In healthcare, we're taking a fairly cautious approach depending on what level we want to and how we see it being deployed. For us at Alcidion, it's always been about augmented intelligence.
So how do we actually support clinical decision-making by being more efficient in how data is presented, by using data to help clinicians make a decision more quickly about treating a patient, and so we have been working through that and working in that realm for some time. The opportunity that now presents itself to us, particularly with our electronic noting and the EPR capabilities, is how do we work with the likes of Google and Microsoft, who are putting a huge investment into their large language models and natural language processing and embed that into the Alcidion platform without having to be the company that is focused on trying to compete with them. That's the advantage of Alcidion's platform. We built a platform so that we could be part of an ecosystem that could take advantage of all these amazing things that are happening in AI.
And so we see this as an opportunity for Alcidion to be at the core of bringing in a lot of the AI advancements that we're seeing in healthcare actually to the clinicians at the workplace. And that's one of the challenges for people who are creating AI in healthcare is how are they going to deploy it in a way that doesn't interrupt the actual workflow of our clinicians? So I think we're incredibly well placed at what is an exciting point in time with healthcare, but that we do so with cautious optimism in terms of how quickly we will see that make an impact on the efficiency of healthcare. If that's all, Matt, no further questions?
None that haven't been answered already, Kate. So that's it for today. A nice short one.
Thank you very much, Matt. Thanks, Beck, for joining us.
Thank you very much to our shareholders for your continued interest. As I said, if you have any additional questions that we have not answered and you would like to send them through to our investor email box, please do so. Otherwise, I look forward to updating you at the next quarterly. Thank you.
Thank you.