Well, good morning, everybody, and a warm welcome to this morning's presentation of Alcidion's 4C quarterly cash flow and business update for the first quarter of FY 2023, which was released on the ASX this morning. For those who don't know me, my name is Kerstin Wahlqvist, and I am the investor relations manager at Alcidion. I'd like to begin by acknowledging the traditional owners and custodians of the various lands on which we work and meet today, and to pay my respects to their elders, past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples who have joined us on the call today. Today's webcast will feature a short presentation by our CEO and managing director, Kate Quirke, who will take you through the numbers and an accompanying business update. This will be followed by some time for Q&A.
Joining us on today's call, we also have Matt Gepp, our CFO, who will also be available for questions as required. All participants are currently in listen-only mode. If you do wish to ask a question, please do so at any time by typing it into the Q&A panel at the bottom of your screen. We have also received a number of questions in the lead up to today's session, but we'll hold all of these questions until the end of the webinar. With that, over to you, Kate.
Thanks very much, Kerstin. Thank you for everyone joining us this morning. As Kerstin said, I'll give you a bit of an update from a business perspective on how we're traveling in the first quarter alongside the numbers that released today from the Appendix 4C [audio distortion]. Many of you will have already had a look at the cover note and the appendix this morning. I'll take you through some of the highlights in a little bit more detail, a bit of an outlook, and then over to questions. In the first quarter of FY 2023, we collected AUD 12 million in cash receipts, which is a very significant quarter of cash receipts for us, an increase of 83% on the prior corresponding period.
We also recorded in Q1 negative operating cash flow of around AUD 500,000, which is a solid result in that it represents an 85% improvement compared to the same period last year 'cause in Q1 historically there is a period of larger operating cash payments. To deliver a modest cash outflow for us validates the financial long-term stability of the business and our ability to continue to drive material cash flow from a generation perspective well into the future. We added AUD 1.8 million in new TCV sales, which is typically during what's typically the slowest sales quarter of the year being Q1.
Included in that, though, was a three-year renewal from University Hospitals of Derby and Burton NHS Foundation Trust for a renewal for iPM, which is the ExtraMed product that we acquired last year. For us, it underscores the quality of the business that we acquired in acquiring ExtraMed, and also demonstrates the long-standing endurance of some of our customer relationships, particularly with Derby and Burton, who in fact are Patientrack customers who have extended iPM across both trusts. The trusts have merged in the last couple of years. Further to the end of the quarter, so the beginning of Q2, Derby has signed on to add Smartpage to the list of modules acquired for their trust from Alcidion.
While that's smaller in nature, it continues to demonstrate how we're executing on our strategy to enter into a relationship with a customer, then on-sell our additional modules as we demonstrate value from that success. You know, I think this validates that strategy and continues to demonstrate how we've been doing that across all of our geographies. Although Q1 new TCV sales were below the recent quarters that we've had, obviously, we're extremely confident in our pipeline of opportunities, several of which are well progressed through the contract negotiation stage and expect to see some of them convert through Q2 and into Q3. We also note that our contracted revenue stands at AUD 29 million, which is up significantly on the same time last year.
When coupled with the expected renewals, that we often talk about in each quarter and several of those new near-term pipeline opportunities, we absolutely remain confident in our ability to meet our expected target of being cash flow positive and EBITDA positive for the full financial year of FY 2023. Just giving you a little bit more detail, and much of this also was in the cover note released this morning, but Alcidion generated new TCV sales of AUD 1.8 million in Q1, as I said, with approximately AUD 1.3 million of that able to be recognized in FY 2023. New sales.
Of the new sales, AUD 1.6 million or 89% of the new sales were for recurring product revenue and around AUD 200,000 or 11% would fall into the non-recurring services revenue, which covers product implementation as well. Q1, as I said, is historically a quieter period for new sales. Alcidion usually expects we're certainly expecting a stronger result from new sales in Q2 as we have historically. However, it should be noted that major contracts can be signed at any time, and the truth is timing is something that is somewhat out of our control. We can certainly try to influence it, but it requires other parties to be equally active in moving these contracts through their process.
Q1 just typically tends to be needs a little bit more momentum behind it. We recorded negative operating cash flow, as I said, of about AUD 500,000 for the quarter, which was a significant improvement on the prior corresponding operating cash flow figure. The prior period operating cash flow, as in Q1 FY 2022, which was actually negative AUD 3.4 million. That's a very significant move in respect of that comparatively. Cash receipts for customers in Q1 were AUD 12 million, which is 83% higher than at the same time in the prior year. We had an operating cash flow outflow of AUD 500,000 , which reflects you know also starts to reflect the full quarter impact of new hires in the second half of FY 2022.
As I indicated, we have had increased operating expenses from Q4 because we had hired people that hadn't been there for the full quarter or full half. You add the increased headcount, what also reflected in that is payment of the FY 2022 staff bonuses in August, which was accrued for in the FY 2022 results. The actual impact from a P&L is seen in FY 2022, but the payment is done in August in respect of those bonuses. Also, a large net GST/VAT payment of AUD 2.2 million, which had to go out in that quarter.
You know, the good news about that is that's as a result of the strong sales receipts that we had in Q4, where the payment is actually made in Q1 of the activity before. At the end of the quarter, we have a healthy cash balance of AUD 16.2 million, with no debt. As noticed previously, the end of the quarter total contracted revenue able to be recognized in FY 2023 stands at AUD 29 million, which is an increase of 69% at the same time last year. Just to point out that, and we just wanted to indicate it to explain this so that people who are comparing what we put forward in the half year can actually reconcile it.
On a constant currency basis, the contracted revenue to be recognized in FY 2023 is actually AUD 29.3 million. As we increasingly generate a greater portion of our total revenue from the U.K . Market, the Australian dollar reported figures will be subject to, obviously, foreign exchange rate changes, and they're quite fluctuating at the moment. We report the current year contracted revenue using the prevailing foreign exchange rate for the quarter. However, if we use the same foreign exchange rate that had been used when we did the FY 2023 current contracted revenue at the end of Q4 or at the half year, the revenue would be approximately AUD 300,000 higher at AUD 29.3 million. Just for anyone who's reconciling those two figures back to each other.
We also have a further AUD 2.6 million of scheduled renewal revenue from existing customers renewing their current subscriptions and license periods, which is expected to convert to contracted revenue in FY 2023, taking that to the AUD 29 million + AUD 2.6 million. With the contracted revenue up significantly on the same time last year and several near-term pipeline opportunities well progressed through contract negotiation and expected to convert, certainly some in this quarter, we remain confident in our ability to meet the expected target of being cash flow and EBITDA positive in FY 2023. We look forward to continue to keep the market updated as those contracts move to a final closed phase. Thank you for your attendance. That's all I really wanted to cover in the update.
I will stop sharing the screen now, and we will answer some of the questions that are coming up in the Q&A, but also some that were previously sent through. Kerstin.
Thanks, Kate. Thanks to those of you who have already submitted questions. Just note that any questions that are of a similar nature, we'll aim to group by theme to allow for a greater breadth of discussion. Any questions that we don't cover today, we'll aim to answer in writing separately. All right. To kick off, we've had a couple of questions around the U.K. Kate, could you advise how the current turmoil in the British government is affecting our ability to grow in the U.K. health sector or just any implications for our U.K. operations?
Thanks, Kerstin. Always expect to get this question at the moment when there are so many things going on in the markets. To be fair, I think first it's important to understand that the new Prime Minister, in fact, was the treasurer who was behind approval of the funding for the Frontline Digitisation program. At some point in the cycle of what's been going on, he's been very supportive of the program of work in the U.K. The current turmoil, I think, seems to have impacted the speed at which the money is being spent and the speed at which negotiations are progressing. We've not seen any signals at all that the program's under threat or that spending to the NHS in this area has been impacted.
I think you know remains to be seen. Rishi has only been there a little while in that role. As I said, he very much was the treasurer when these funds were approved. According to the latest U.K. data, I think, which is also important, approximately seven million people are now on waiting lists looking for elective care, and emergency department wait times are increasing to unprecedented levels. Our technology solution supports some of these challenges. You know, we can play a key role in alleviating some of that future strain on the healthcare system. Whilst timing, as I said, is out of our control, we are in active negotiation, and we expect to see some of those concluded.
Obviously, we remain confident in respect of our strategy around the NHS.
Great. Thanks, Kate. Next question. What is Alcidion's current staff retention level like across geographies?
Thank you. We follow staff retention very closely. Obviously, as in all companies, there's been a whole lot of things impacting that. One of the things that we've done certainly in the last six months is really look at our employee value proposition, and we've seen retention and attrition remain about the same, certainly in the last few months. If you look at the people that have left in the last few months, the highest percentage was in people who started and left within the probation period. Generally for a higher-paying role, which is a bit of a feature of what we're seeing at the moment.
People come in, particularly in those technical roles, join us and then, a week later, another role that they've been applied for comes along and offers them more funds to take theirs. I think we're seeing a bit of that across the whole industry. Our long-term valued staff pool remains with us predominantly. We have been increasing our numbers during that time. I'm very comfortable with where we're at, but we like to always keep an eye on ensuring that the Alcidion as a workplace, both culturally, and in terms of what we offer in terms of benefits, is a really attractive place to work.
Thanks, Kate. Perhaps a follow on from that. Aside from replacing leaving staff, what other areas does the company expect to be hiring more staff in over the rest of FY 2023?
Yes, I think as we've said, we're leveling off in terms of the numbers and percentage numbers of new staff that are being added, but we are obviously replacing some. The new staff have been added. Real focus for us has been in the area of product management as we scale and deliver on the growth in product deliverables, and that's not necessarily development staff. There are a lot of staff involved in the delivery of product and the management of product and the number of customer releases and so forth. We're really focused on ensuring the product team has deep healthcare knowledge as our solutions, you know, are increasingly clinical in nature. We have a few technical roles open as well that we're continuing to look at filling.
Great. Thanks, Kate. Okay, we've had a few questions around Silverlink. Are you starting to see the benefit of Silverlink in TCV pipeline contracts? Just some general comments around the status of the Silverlink acquisition program.
Yeah, well, I'm, you know, I remain very confident in the strategy and reasoning behind the acquisition of Silverlink and some of the opportunities in the U.K. that we have in flight at the moment, both from a contract negotiation but more so from a pipeline opportunity, would not have come our way. We would not have been able to be competitive with them without the Silverlink acquisition. I did say at the time of the acquisition, it would take time to demonstrate the value in that. Also I've said the timing is somewhat out of my hands in that there is a little bit of a slowing around that Frontline Digitisation Program, but not to the point that it's concerning me significantly. There's no indication they're pulling back.
If anything, what we are seeing is they're less inclined to spend on the large electronic medical records. The sorts of funds that are being lent to the trusts are much more within the gamut of what Alcidion does in respect of modular in nature, delivered over time, capitalizing on existing investments they've already made, so not having to rip everything out and replace it, and effectively at a more cost-effective price. You know, I remain absolutely committed to the decision we made around Silverlink and the position and the opportunity it's providing us in the NHS.
Great. Thanks. Oh, that's an interesting one. Is there any possibility the software could be used outside of health, such as in the prison system or schools, et cetera?
It is focused on health. Therefore, I'm not sure I would see it playing out from a schools perspective, but certainly in adjacent areas. In fact, I mean, in some of what we're seeing in respect to the Australian Defence Force program of work, but also aged care and some of those types of engagements and environments where we're looking at consolidating data across a number of encounters with a system or service. I think certainly in the area of aged care in particular, Alcidion will be keeping an eye on how our longitudinal health record can actually play a part in that sector as well over time.
Thanks, Kate. Next question. Could you please provide an update on why there are no new contracts in U.K., Australia, New Zealand? Has the current reduced health budget in the U.K. and Australia impacted this? If yes, what's the bottom line impact on revenue?
I guess I explained a little earlier that timing is somewhat out of our control, but we are in active negotiations for contracts across all our existing territories, not just the NHS. To be honest, I don't see any evidence or announcements related to a reduced budget that should impact our anticipated FY 2023 revenue. Were something to change, obviously substantially, we would update the market. At this point, I'm seeing no impact on our revenue. It is about timing. I think, as I said, I remain confident that the discussions that we're having will, you know, come to fruition in time.
Great. Next question. Thinking beyond FY 2023, should shareholders expect to see operating leverage in the business as expenses grow more slowly than revenue from FY 2024 onwards?
Yes. Most definitely. If we continue to create and produce revenue at the rate that we have and anticipate doing in this year, as I've been saying for a little while, we're coming out of that accelerated growth phase that requires some expenditure to build the business to leveraging, leveling out in our operating expenses, expenditures. Therefore, as we increase revenue, you'll see a larger portion of that revenue be demonstrated as bottom line profit.
Great. Next question. Is there any update on the New Zealand market now that the new health authority is in place after consolidation?
What's happened now is from the IT perspective so that we've got the actual [Health] New Zealand in place. They're operating across four regions. They've appointed the equivalent of a digital health lead for each of those four regions, and all of whom are known to us. They're now starting to look at what the priorities are for those areas. I'm, you know, feeling quite positive about a lot of what we're seeing in New Zealand and our engagement there. With our Director of Business Development, Florian, being based in New Zealand and having a lot of relationships there, I'm hopeful that we'll start to see activity pick up in that territory as well.
Great. Next question. What would you say is Alcidion's most important competitive advantage, and do you think this will allow the company to make sustainable net profit margin in the future?
I think the competitive advantage comes in a couple of areas. We have come at this as a platform play, so we're not, you know, a software solution or, you know, commercial off-the-shelf solution that has to replace something that is already deployed. We actually are looking to add value to those existing deployments. I think that's a real differentiator for us. In an environment where they're looking to get the biggest bang for their buck from the customers, from the perspective of customer, I think that's a real advantage for us. I think where we're taking our modules, so modular in nature is again, a very significant advantage for us. The modules that we're creating off that platform, Miya Precision, are really focused in addressing some of the key challenges in healthcare today.
Being able to deploy Clinical Decision Support to help more efficient, better decision-making at scale on top of existing EMRs is something that is uniquely an Alcidion proposition.
Thanks, Kate. Now this one's a bit long, so I might just break it up into three parts. I think they tackle different areas. Can you please provide some insights on the following? The first, following TCV new sales in Q1 FY 2022 of AUD 1.8 million compared to AUD 2.7 million in PCP.
I mean, that's just the vagaries and the differences of the size of contracts in any quarter. If you compared quarter-on-quarter, PCP, when it's around the same, you know, there'll be some contracts that are larger, some that are smaller. I don't think that signals anything other than it's, you know, been timing issues on contracts in Q1.
Great. Okay. Next part of this. Is the procurement process, as in the time required, getting longer because Alcidion is no longer offering a standalone and smaller value product to customers, but more of an integrated, higher valued product, including the Silverlink?
There's no doubt that the bigger contracts, the more modules that are involved, the larger the size of the contract. Typically, it takes longer to sign those contracts. But as was seen in Q4, we can still generate significant TCV with a number of contracts where we're taking some of the individual modules or groups of modules into those opportunities. You know, I think there's a combination of those things impacting. We will continue to see our contracts spread across a number of smaller engagements and some larger, meatier, chunkier contracts as well. Where they fall will not necessarily always be consistent in terms of which quarter.
Thanks, Kate. Okay. Finally, is Alcidion looking to manage its risk to volatility in the British pound due to the political turmoil? I'll pass one to Matt there.
No, I'll leave that to Matt, yeah.
Sure. Thanks, Kerstin. Look, interestingly in Q1, you know, the sterling was much stronger against the Aussie dollar and we saw that play out a little bit in the contracted revenue and a little bit in the cash flow. You know, since the beginning of October, that's completely turned around and is now in our favor. In terms of the question, if we have a material FX risk, we'll take action to mitigate it. Like, in terms of the British P&L, you have to remember that as the revenue goes down because of the FX, you know, so too do our costs. There's a bit of a natural hedge in place there. That's really not of concern to us at the moment.
If there is a material risk identified, we will take action to mitigate it.
Great. Thanks, Matt. I think we've got time for one last question. Can you please explain the revenue breakdown by region, Australia, ANZ, and U.K.?
I'll let Matt answer that one as well.
Look, at the moment, it's not that different to what we reported in the full year accounts. We're running at almost 50/50 in terms of ANZ versus the U.K. I think it was 53% ANZ, 47% the U.K. I suspect the U.K. will overtake us this year, but we'll have to wait for the half-year accounts to see exactly where we land for the half on that one.
Great. Thanks, Matt. That brings us to the conclusion of our questions and today's update. For those of you who are interested in joining us, Kate will be presenting a further business update at next week's Bell Potter Virtual Healthcare Conference. If you'd like registration details and haven't already received them from us, please don't hesitate to get in touch via email at info@alcidion.com. It just remains for me to hand back to Kate for closing remarks. Thanks, Kate.
Thanks. Thanks, Kerstin and Matt. Thanks everyone for joining us. I hope we answered any questions that you had, and look forward to keeping you updated. Wishing everybody a happy Halloween, trick or treat if you're up to any of that, today, and a happy Melbourne Cup for those that follow the horses, tomorrow. You know, just finally, thank you all for your continued support of Alcidion, and wishing you a very happy day. Thanks.
Thanks, everyone.
Thanks.