Okay, I think we might have everybody joined. Apologies for the late start. We're just having some Zoom issues with Matt, who is overseas. Today, welcome to the DUG Technology FY 2025 Results Update and Webinar. We're lucky enough to have Matt Lamont online, as well as Daniel, to take us through an investor presentation where we will go through the results. Matt, if I could ask you to raise your hand, I can give you speaking rights so that we can get you connected and talking. I can see, I can't see you.
I'm not sure I'm actually mattered on yet. Maybe Steve, we can just get underway, and then Matt's working with IT at the moment to get on.
Okay, so perhaps you could kick things off and run through the presentation. Would you like to share and drive the presentation?
Yep, absolutely. Just let me get to it. I'm just sending you a request, Steve.
Yep, all good.
That's showing for you now, Steve.
It is, thank you. All good.
Great. Thanks everyone, and apologies for the delayed start. Matt is working his way onto the call, but hasn't quite made it yet. He's over in Houston at the moment. We've got our big image conference, our biggest conference for the year next week. I'm going to get started while we wait for Matt to join. We really wanted to open up with the key themes, key themes that we've seen this year and through the result. We think one of the really important pieces, and certainly we've obviously been talking to now since results last year, is elastic multiparameter full waveform inversion imaging, EMP-FWI. What we've seen, and this will be something that Matt can give a lot more color to when he joins later, is just outstanding results. We're seeing that now convert really strongly into wins.
We've got a really big backlog now with the eight pilot projects that we completed of really amazing results and examples from basins all around the world with our really key core customers. That technology now, every time we release a new algorithm, a new piece of technology, we've tested it to the nth degree, but when you get it into a production environment, you really learn, you find the corner cases, you find the areas where maybe it doesn't apply quite as well as you hoped it did. Just realized I've been looking down the whole time, but I've got my camera up here. The pilot projects and the production projects now that we're running with EMP-FWI have been super positive because the results we're getting are blowing everyone away. We're now starting to see that come through awards.
Moving on to the second point here, we think the real standout result, the standout point in this result is the growing order book. We closed with an order book. Oh, here's Matt.
Are you?
Yeah, you're all good. We're just onto the second point. You probably can start over now that you're here.
Sorry everybody, technical problems. Anyway, I've made it. Look, we're really excited in DUG. The next year looks fantastic. In presenting today, we've got three key themes for FY 2025. The first is that we brought our elastic multiparameter FWI out, which was a massive step forward because it was part of that whole replace your traditional workflow, except that you went further. Now you replace not just processing imaging, you also replace your quantitative input and go straight to rock properties. That's been super well received. We've done a lot of proof of concepts now, and they are converting into full-blown projects, which is very exciting. That's really adding to our order book really nicely, the elastic. The order book of $52 million is amazing, especially when you think that $46 million or nearly $46 million of it was added in just the last six months.
You can just see the huge momentum building up as we're going forward. A lot of that is coming from our new offices, right? Abu Dhabi is winning projects, really nice projects. In Brazil, we won a really nice 4D project, a big project. Just to remind viewers, 4D is the ultimate work that you want to get as a service company because it's repeat work. You repeat it often, you repeat it every 12 months because as they deplete a reservoir, they want to redo the work to see how, where they're draining the reservoir and where they're not draining it. They do their drilling, infill drilling based on what you do in 4D. It's beautiful work because you get to repeat it every year. It's fantastic that that project came through from Brazil. Can someone change the slide for me, please?
What we do, just a quick recap for anybody who hasn't seen this before, services is where we make most of our revenue, and that's where our geophysicists sit and process data for a client. That's where the elastic and acoustic MP-FWI makes most of its money at the moment. We also do conventional seismic processing imaging, and we do multi-client as well, which we put under geoscience services. Software is something we're super excited about. It had a, we had some issues with where we registered wins, which took off a bit of shine, and we dropped to 13% because of just an accounting artifact. We're really excited, and software is really building up. I think we're going to, we're building momentum there.
I'm pretty confident that we're going to, although we've grown at 13% this year, I believe it's going to grow even faster than that in years to come. We will accelerate that. High-performance computing is very important for supporting our software business. It has been a bit disappointing in the last 12 months, but again, it's just a very small part of our business. The emerging businesses, DUG Nomad and DUG Cool, we really look forward to talking about. Over the past 12 months, as we signed the DUG Cool deal and we have been talking about it, we said we expected to make a sale. We expected BAC to make a sale in financial year 2025, but we didn't expect it to be material. Indeed, they've made a sale, and indeed, it's not material. What we were expecting, it turned out. Dan's going to address this later.
They've put a lot of investment into this, and it's starting to gain momentum as well. DUG Nomad, we made our first Nomad sale. We're excited by that. The pipeline is building there. Dan will talk about that shortly. Can someone share? Thank you. This is the world according to DUG, whereas orange is where we've completed projects in the past. The really nice thing about this map is we've now got Abu Dhabi on the map. That office is flying. The geophysicists that we've got there are very good. Our fit out of our new office is complete. We're just waiting for a little sign-off from the authorities before we move in. I think we're expected to move the week after next. Very exciting times in Abu Dhabi. Abu Dhabi is a full-blown office. I think we've got seats in the first instance for 45 geos there.
Rio de Janeiro is a different one. It's just more of a front-end sales office. We'll have a handful of geos there in order to satisfy local input, local requirements, but it's more of a front-end office. It's really pleasing to see those offices on the map, and it's especially pleasing to see them kicking into our order book as they have. Financial snapshot, amazing order book, $52 million and building, right? I expect that to continue to build. As we're saying, most of that has been added in the last six months. It's 58% up on 31 December 2024 and 42% up on 30th June 2024. It's a significant increase in order book from last year. Revenue is disappointing. We talked about that, down 4%, but it's about, and I hope that we'd actually end up flat, but we ended up slightly down.
I was a little disappointed in that. EBITDA is down a bit, but we've been investing a lot of money into growing, into people, into offices, into all sorts of stuff. That is what it is. As we said, the actual last six months has had an EBITDA of 30%. Services revenue down a bit as expected. Software revenue up 13%. Look, software, I keep talking about software when I'm talking to you folks, and I'm really excited by it. We did increase our growth, but it was edge taken off it because of the way a few accounting things. I expect that, watch that number. That's going to, we're going to continue to grow that growth number, I believe, strongly. HUC revenue, as I said, is disappointing, but it's a very small part of our business, but it's very important for software.
Great, thanks Matt. I'll take over for the financial slides. I think, as Matt touched on, we really finished strong in the second half, and I think that's really the key message here. The first half we were disappointed in, but the second half we felt was a really strong result. That was headlined by the $33.8 million revenue in the second half and $10.2 million of EBITDA at our 30% EBITDA margin. The results we think are largely in line with consensus, and we think shouldn't really be a positive or a negative surprise for FY 2025, but we think the headliner really is the order book number and the strong awards that have come through the second half. To touch on that, we see services revenue down 5%, but we have $45.7 million of awards, which is what boosted that order book number.
$45.7 million of awards in the second half. That second half skew meant that revenue is picking up, momentum is picking up, but as the projects came in over that life, we expect to see kind of revenue growing as we move forward. It's important to note as well that of that $45.7 million, more than half of it is for EMP-FWI work. It's been a really positive half in terms of solidifying the work that all the teams, the R&D team, and all the teams have done in EMP-FWI and the direction that we're heading and the direction that we see the industry heading with EMP-FWI.
To expand then on software and what Matt touched on, we had a few timing pieces where revenue that should have been in July last year was in June, or revenue that was in June this year should have been in, oh, sorry, revenue that was in June last year then is in July. That's what caused the kind of edge to come off. Just to bring it back, I guess, in the first half, we did 22% software growth. In the third quarter, we did 23%. Unfortunately, in the fourth quarter, we had some of these timing issues, which weren't lost sales. They're just timing issues with when the recognition occurs that were picked up this year. As a result, we ended up with 13% for the full year. As Matt touched on as well, $15.4 million of EBITDA, that's 25% margin.
We had 30% margin in the second half. The significant investments, which we touched on at half year as well, we had the release of EMP-FWI and the pilot projects that went along with that. There was a lot of resources invested into those projects. If you've ventured deep enough into our annual report and you see the segment reporting in there as well, it's worth highlighting that when our services business uses the computers, they pay a unit rate. They pay per server hour. When we're making these big investments, especially with elastic, it's really pronounced. When we're making these big investments and doing these pilot projects with either no or low revenue, that's where that swing comes in.
Services is making that investment, proving out these pilot projects, generating results and generating the social proof, so to speak, that we require to then go and sell and get the outstanding awards number that we got in the second half. When we look at it on a segment level, we get services being unprofitable for the year and we get HPC being a step up in their profitability. It's not a comment on the profitability of our services projects or any issues around that and pricing. It's just a reflection of the investment and the significant investment that was made in getting those pilot projects closed out. Closing it off, we had employee benefits up 6%. This is largely driven, as Matt touched on, we've got the Abu Dhabi office now up and running.
We've got a bunch of staff there, and a lot of those staff were hired early in the year. We have their costs coming through. We have some cost savings, albeit we had some redundancy payments in the first half. We have the cost savings coming through the second half from the restructuring that we did in the first half. In DNA, we're seeing that step up in depreciation, but that's just us seeing a full year now of the new compute assets that were purchased in FY 2024 half two and in FY 2025 Q1. What we're seeing both through the finance expense and through the depreciation line is just a full 12 months of those assets being paid for. It's worth noting that the first batch of assets will be off the books, so to speak, at the end of January as well.
We're starting to get some of those facilities coming to an end. You will see in the annual report a more detailed commentary about this in the operational and financial review, where we talk through the way that we acquire these assets is using asset financing. When we get technical with the accounting, they come through as a right of use asset and are treated like a lease. What that means is that the tenure of the facility, being two or three years, is how we have to recognize it through the books. We expect, we know that these assets will last five years plus. We have assets running that at, we have computers running that at eight or nine years old, but we have to recognize them in an accelerated manner just due to the accounting rules.
That is what puts a bit of pressure on that D&A and on that finance expense line. I think that's enough for that one. I'll move on. Balance sheet. Net debt is $3.9 million, with total asset financing of $20.4 million. That $20.4 million now is, that number is coming down as we make repayments on the facilities that we have. The net debt of $3.9 million is down significantly from earlier in this year and last year as well. In October 2024, as many of you will be aware, we completed a capital raising. We raised AUD 31.4 million before costs. Just to remind, even though it's there, we're reporting and all these numbers are in U.S. dollars. Just to touch on use of proceeds, for the data center infrastructure upgrades, the designs are complete. We're now kind of in the planning and tendering phase.
We've ordered a lot of the long lead time items. Some things like electrical transformers and different items with the boom in the data center industry, we're looking at 40 - 60 week lead time. We've had all those items ordered now so that we're able to move quickly and let this project kind of unfurl as we move forward in the year. Worth noting still, as we touched on at half year, that we have floor space available in that Houston facility that's about 20%. When we consider the density of modern computing, we've got 20% upside in our real estate. When we look at kind of computer throughput, it looks like we could almost double the compute that we have today, if not more, with that 20%. That is just a result of the greater density we can now achieve.
Matt's touched on Middle East, so I won't touch on that one. DUG Nomad, first hour has been completed, and we'll talk about that a bit further on in the day. Increase in other current assets. The only thing to call out there is when we do our asset financing, we pay a security deposit on the facility. That security deposit is equal to the last four payments on that facility. We have some of our facilities which expire at the end of January. Our final payment for those will be in September with a small bullet payment at the end. That is what we see then coming through in the other line. Cash flow then.
Cash flow for suppliers was a result, same in the first half actually, but it's a result of the third party compute that was utilized in the second half of FY 2024, being paid off in FY 2025 half one. That is where we get a bit of a step up in payments to suppliers, but it's as a result of that third party compute utilized in FY 2024. Payments to employees fell, which is a result of the restructuring initiative. The acquisition of PPE, that was the main part of that, is the final batch of AMD EPYC Genoas that we received in July 2024. We also had some initial waves of infrastructure capacity upgrades in Houston and the Abu Dhabi office fit out as well. I've touched on the capacity, so I won't touch on that again.
We have the $19.7 million, which is the USD figure from the October capital raise net of fees. I'll hand it back over to Matt now as we kind of get back into the growth drivers and the business.
Oftentimes when folks look at DUG, they think that we're doing, you know, a number of sort of things that are quite separate. Actually, the DUG ecosystem is complete. It's all interlocked with one another. Every piece is necessary for our business. The processing and imaging people we have, the teams we have, are a major asset of our organization and spread across all of the offices and are amazing. We've got a multi-client library, which is in its infancy, but it's growing and will be a significant part of our business. The software is fantastic software. It's for both imaging, processing imaging, and interpretation, including all of these. We've got a big plan out for how to grow that and how to move that forward technically and leading to growth.
I'm sitting in Houston at the minute, and this week we've had six, so far six visits where we've put our plans forward to clients and to judge their reaction to see if they like it. They're genuinely excited for where we're going. I'll talk a bit more about software later. We have a lot of great different data analytics, different workflows, different AI stuff. There's a lot of stuff going on. Integrated with everything is that HPC backbone, which is all proprietary, running our immersion cooled data centers, saving 51% of the power, really important for the environmental impact. Often, and I'll run over one of the questions often people get put to us, is why don't we use the cloud? Firstly, the thing to remember is that the cloud is not just there for us to grab.
For us to get what we need, we would have to sign up for a number of years. You don't get flexibility in how much you use. If you get flexibility, if you go into the spot market, but then we can't run our business to the size we are on the spot market. That's the first thing. You don't get that flexibility that people often think comes with the cloud. The next thing is, and Dan's already talked about it, is that even when we're making repayments on the hardware, we're cheaper than what the cloud would be. Once we've paid off, like we've just paid off the first batch of new compute, once the compute is paid off, then we get a free run of it, right? As Dan said, we've got machines running that are nine years old.
If we pay them off after three years or two years or whatever, we've then got six years of essentially free compute, just paying for the consumables. That HPC and the way we manage it and the savings we make is super important for our business. It's a major advantage over any competitors that use the cloud. I seriously don't know how they come to the decision to do that. The emerging businesses on Nomad and DUG Cool, which Daniel will talk more about in a minute, are really important for where we're going, and we're excited by them. It's just been really, really great seeing BAC get after that business. Dan will talk you through what they've done, but they've made some serious investments into the future of that business. We keep talking about this, and it's exceedingly important.
We are leading the way with seismic imaging in the world. Our elastic MP-FWI imaging is the talk of the town. We've got two big global conferences each year. I'm over in Houston because the Americas one is next week. Earlier in early June, we had the big European one, which was in Toulouse. All the majors, the super majors, so your Shells, your Exxons, your Total even, BP and so forth, all gave talks. Their talks were on MP-FWI and how that is the future. All the talk now is about MP-FWI , and they've set the edge. Although we came out two and a half years ago, it's taken a long time to get to this point, they are now saying this is the future.
One of them actually even mentioned, said, "DUG is on the right track, but nobody else is." That was a great, great endorsement for us and really helped us with clients. Now we're coming on board with oil companies that have never worked with us much in the past, that were 100% Viridian shops. We just won another 4D project today from a company that's never worked for us before, because on the back of MP-FWI technology. Momentum is building. It's extremely exciting. Going straight to rock properties is extremely exciting. That's a massive step forward for the industry as a whole. The multi-client, multi-client business is a really good business. It's high margin. It's basically where we own the seismic assets, and then we license them to oil companies.
Rather than processing data and getting paid once for that, you actually own the seismic data and you license it out. It's a really good business. It's in its infancy in DUG, but it is growing. You know, watch this space. Our software is the leading software in the industry, I believe. It's certainly the most modern and leading software amongst our key services competitors. The software business itself has got accelerating growth, and it's going to continue to accelerate that growth. It is recurring revenue. We get money up front every 12 months, except for some of the software that runs on the cluster. If they run on the cluster, then they pay for the hardware, but they also pay a little fee for the software that they're running on the cluster.
There's consumption-based billing for the cluster side of it, but most of the money is an upfront license fee. It is a one-stop toolkit, which is what everybody wants. I think it's the only one-stop toolkit out there that goes from processing and imaging right through to multi-parameter FWI, rock properties, rock physics, inversions, all within the one package. We've been selling the processing imaging software, as you would be aware, for the last four years, and it is really growing. It's a great area. Although you might think that it would cannibalize our services business, it's probably, number one, we really love the software business for obvious reasons. Number two, a lot of the small service companies that are picking up the processing and imaging software actually work on projects that we wouldn't really like to work on in services.
We have a great client in Pakistan who works on a lot of projects in the stands and in Pakistan. There tend to be small projects and cheaper projects, not projects that we'd like as a service business, but it's great to get a revenue stream from those projects nonetheless. Another example I've used in the past, and I'll use again, is a company called RockWave in London, and they do a lot of wind farm seismic work. Again, the projects tend to be smaller and not really what we would like in the service business, but it's great to get a revenue stream from them. We have a big plan for the software, as I've alluded to. We're presenting that plan this week and next year to clients here in Houston, and it's been really well received.
The whole plan is that at the minute, the software is used by our competitors for their multi-client businesses, so like Viridian and TGS. It's used by small oil companies, it's used by a lot of consultants, and it's used by some medium-sized oil companies, but not generally throughout their business, just in some groups and teams. Our aim is therefore to grow that share of those medium oil companies and to grow into the large oil companies and even the super large oil companies. That is what the plan is about. That's what we're presenting and getting feedback on. The feedback so far has been great, and that's how we're going to grow this business.
I'll pick it up. DUG Nomad and DUG Cool were our emerging businesses. For those who are not aware as well, DUG Cool was an internal invention that we had patented in late 2016. Ultimately, we ended up building out our Houston data center, and we won Data Center of the Year, an award from a publication called DCD. That just got us some notoriety. It started meaning that we were getting inbound. As we were getting inbound from companies who are interested in the immersion cooling, we started to work to pursue it, but realized that we weren't really set up to do it, and it wasn't our core competency. What we did in August last year was we signed an agreement with Baltimore Aircoil Company, and they've really since then taken it and started running. BAC has rebranded what we would call DUG Cool.
They've rebranded it BAC COBALT, and they've just finished, or they're just in the process of finishing their new research and development hub for immersion cooling in their global headquarters in Baltimore, which is a really exciting development. They've got a full team working on it now. They've got teams focused on building out their partnership in this kind of computing ecosystem, whether that be the fluid or the servers or all these different components that go into a tank. They've also got a team that's been on the ground selling, getting feedback. They're also doing R&D. They've got their team there doing R&D. They've been doing it now for quite a while, and they've made little tweaks, and they're getting improvements, and they're understanding, and it's been really exciting how they've been going.
As Matt touched on, we had our first sale, not material, but just in case anyone's wondering, I guess, where that's going to come through the P&L. For the time being, we'll be putting Nomad and DUG Cool revenues through the HPC line. We'll be sure to give detail and talk about that in more detail, but we're not going to be looking to add lines and lines and lines to the P&L at the moment. We'll be putting those through the HPC line. DUG Cool is going really well. DUG Nomad is also going really well. In June, we announced our first sale. That was to Perstorp, which actually might have been to BRB and Perstorp. They're all subsidiaries of Petronas. Petronas is the end client. The unit's being delivered into Malaysia, and it's going to be delivered during this first half of FY 2026.
We've not actually got any revenues through on that, albeit we've received the cash deposit, but it won't be recognized as revenue until later in the year when it's deployed. The pipeline there is just continuing to build. We've got some key conferences coming up in September and November, where, like this image you can see in the top right-hand corner, we'll have the DUG Nomad on the booth. Those are really key touchpoints and really key BD times for us. We're continuing to refine how we sell, message, and continuing to learn about that business and make sure we're getting about it the right way. It was really great to get the first sale secured in June, and now there's a really healthy pipeline there that we're working to get over the line, and we're really excited about.
The difference really with DUG Cool to Tachina, and this applies both across the BAC COBALT system and DUG Nomad, is it just simplifies the system. Our patent simplifies the system by putting the heat exchanger into the tank. That allows you to do a few things. One is it allows you to be super dense. In that 10 ft container, which you can see on the top right, the section you can see there, we've got a tank. It's one of our normal tanks. It's got two heat exchangers in it. It can do up to 80 kW of IT heat rejection. We think we can get that number up significantly, but that's what it does for the moment. Behind that wall you see is a chiller. The concept, the idea here that's been really well received is it's a 10 ft super mobile data center.
You can put 80 kW of IT. You can put it wherever you want. You don't need external cooling. All you need is to add the power. That's been really well received, and we've got this big pipeline growing. We now just need to get it converting and make sure that we're continuing to learn about the messaging and the way to get those deals closed.
You're aware that we've been globally expanding. I've touched on how well Abu Dhabi is now going and how well Brazil is going. We've really now got our offices in the key locations around the world. The only place we might put a front-end office, like we've done in Brazil, might be India and maybe Vietnam. I think we are, and we're winning a lot of Vietnamese work as it is. I think we are certainly major offices. We've got all the major offices we now need to cover the world geographically. It's just fantastic to see Abu Dhabi and Brazil kicking into the revenue and to the order book the way they are. The highest ever order book, and I think that's just going to continue to grow from what we're seeing.
We've talked about a really large, healthy pipeline, the biggest we've seen for the last 6-12 months. Now we're starting to see it really convert over the last six months. That pipeline is continuing to grow. It's not dwindling. It's continuing to grow significantly. You can see there that half of that order book came in the last six months. Not all half, sorry. $45 million out of $52 million came in the last six months. Momentum is seriously growing. We're continuing to scale. We're going to scaling. The data center, the next to last fit out of the data center is complete. We've got a lot of space capacity there now ready to go for more compute should we need it. The long lead time items have been ordered for the remaining piece of the data center that's not complete.
That's 12 months out now to get those long lead time items. They're very slow at the minute because of all the data center builds around the place. The rest of the equipment to complete that will be ordered in order to complete at the same time as those long lead time items come in. We've talked about services. Can you go back, please? We've talked about services benefiting in Abu Dhabi and Brazil. What we haven't talked about is that we are looking for, and we'll be adding salespeople for software into those offices. They're not there yet. We'll be adding Nomad, you know, front ends and so forth. Everything else is going to follow on now from services in those new offices. Thanks. To finish off, why invest in DUG? We're a founder-led innovative culture.
Within the realm of what we're doing, we're not out looking for new businesses and anything but. We have the absolute industry-leading elastic MP-FWI . That's been totally acknowledged now in the industry. We've completed 75 projects now, which blows some people's minds when they hear that. I think it's the best software in the industry, and it's certainly the broadest, covering from processing and imaging all the way through to interpret and rock physics and so forth. We've got the patented immersion cooling technology, which has now been licensed by BAC, and that's just going to ramp up and get bigger and bigger. DUG Nomad, you know, it's a slow start to Nomad, but there's a really good pipeline, and we are learning about how to get after that business. We've got a great global footprint now. We've got the global footprint we need.
We don't need to open up any more full-blown offices. Middle East and Brazil are really kicking into the coffers and the order book now, which is fantastic. The Middle East didn't kick in any money last financial year, FY 2025. The first invoices went out in July, which was fantastic to see and a real milestone. No invoices have gone out from Brazil yet. We've won the big project, and I think the data has arrived. We'll start loading data, which means we'll start to work on the data and be able to invoice shortly. Really, really great, great to see those offices really hit their straps. Brazil hit its straps very quickly, and Middle East has been a lot of work done on the ground there. It looks fantastic. The pipeline there is quite staggering, to be honest.
We've been at it for quite a long time now, 21 years. Over that 21 years, starting in a garage in Perth, we're now globally recognized, globally recognized as a technology leader. We've got a great footprint in the industry, and they're just really well known and respected. We work for everybody that you could think of. It's a case now of working our way up and doing the most, you know, more 4D seismic projects and more technical stuff for the big guys, but we work for everybody significantly. In terms of momentum, crikey, we've got a massive order book. We've got the biggest pipeline I've ever seen by miles, and it's continuing to grow. Momentum is building, and the software business, I believe we can accelerate that growth even further from year to year for years to come.
If that's not all enough, you've still got these emerging businesses of DUG Nomad and DUG Cool, which are just starting to find their feet. Thanks, Steve.
Okay, thank you, Matt. We might move to Q&A. Just to remind the folks that are on the call, research analysts are welcome to ask questions. If you could raise your hand, I will click a button and allow you to talk and ask those live. We also have a Q&A function via Zoom, and if you want to send those through, we've had a few come through that I'll call out and ask live. If we can go to [Jack Daly from Shores], please, to ask the first question.
Hi guys, you can hear me all right?
Yes.
Hey Jack.
Hey Matt, how's it going? Yeah, congrats on a great result and great to see order book at $52 million. I guess just in terms of the kind of quarterly contract wins, it was $23 million this fourth quarter, about $22 million last quarter. I guess we're two months into this current quarter. Is that, and you're looking at the demand that we're seeing, is that kind of the run rate that we should be thinking about? That step up to like the mid $20 million, low $20 million contract awards per quarter?
It'll still be lumpy, Jack. Some quarters are always stronger than other quarters, and it changes a little bit. Although when we look at wins and proposals written and so forth, we always compare them with the same month from previous years. Likewise for writing proposals. You get that, and then you also get, if you write $20 million worth of proposals one month, you expect to get a lot of wins in two months' time. Rather than looking at it on a quarterly basis and say that's what we would expect on a quarterly basis, I would probably look at it on an annual basis and say this is what we expect on an annual basis, but growing from that.
I guess it's kind of the second half is probably indicative of what you'd be thinking about from an annual basis.
Certainly, and growing. I expect it to grow. Yep.
Okay. I guess just on the 4D work that you spoke about, it seems really exciting, especially the repeatable nature of it. Can you give a sense at all on the quantum of that? Is that something that you're going to be selling more moving forward?
Oh yes, we try to sell it. It's the pinnacle of seismic processing and imaging, so it's the hardest work to get. Yes, we've won another one, as I was mentioning, just today. The quantum of that project from Brazil is very large. It's in the millions and millions of dollars, multiple millions of dollars. As I said, it's 4D, so you would expect it to be done regularly. Sometimes they're done every 12 months, sometimes they're done every 18 months and so forth. You expect it to, that's absolutely. We've been doing a great 4D project. I think we've repeated it three times now for Chevron in Western Australia. Yeah, we're certainly chasing that work.
I guess maybe just the last one, I think maybe when we think about kind of the size of the opportunity in Abu Dhabi and Brazil, like you did for the year, $10 million in Malaysia, $28 million in the U.S.A., and $20 million for the U.K. What kind of profile should we be thinking about these geographies to kind of in the short and medium term?
I think Brazil itself is part of the Houston business unit at the moment. It'll add to Brisbane, it'll add to Houston's revenue. The quantum out of Brazil that we're seeing, we'll see. It'll come in somewhere between, I think it'll come in somewhere between APAC and London, somewhere in that $15 million worth is probably what I would expect it to do this coming year, something around there. The Middle East, honestly, could be anything. Some of the projects we're looking at there are just so large. You win one of those and you're away to the races. It's very difficult to predict in the same way just because some of the projects are so large. Jay has done a tremendous job there. You know, we're known. People know us, people know Jay. We're really getting involved in a lot of tenders and opportunities and stuff.
It's amazingly slow to get things done there. Things just take a long time, but we're getting used to it. Once it's rolling, of course, you know, you're up and away.
Got it. Cool. Thanks for that color. I'll jump back in the queue.
Thanks, Jack.
Allan Franklin at Canaccord Genuity, if you can ask your question.
Hey Allan, you're back on mute, Allan.
Have you got me now?
Yes, we got you now.
Perfect. Thank you. Sorry. Hi guys. Yeah, well done on the progress. Thank you for your time. Just wanted to clarify one or two things, please. Dan, just on the finance cost of things around the compute, just to clarify if there's any nuance on the cash flow side of things versus P&L. I was thinking some of the cash costs of that compute start to roll off in the current half.
Yeah, so I guess when you're looking between the P&L and cash flow, it's probably worth remembering that those right of use assets, they come through the depreciation. Our repayments come through depreciation and finance, which is not always, traditionally, if you're talking about CapEx or depreciation, it's not always necessarily a cash cost, but in this instance with those facilities it is. That can cause, it's worth keeping in mind, I guess, when you're looking between the P&L and the cash flow and trying to tie the two together. I'm not sure if that's what you're asking at.
Yeah, look, correct. Maybe some of the compute was obviously received later in the period as well, but just noting, I think FY 2025 was probably the peak drag on cash costs from that compute. Just in terms of the customer concentration, I know you haven't sort of drawn it out in any detail, but that looks to have changed, certainly so for your largest customer, being less of a concentration during FY 2025. If there's any color you can provide on customer concentration, please.
Yeah, I think it's definitely come off. We have some really big key customers still, but we don't have one customer that's 20% of revenue or, you know, to that effect. In years gone by, when we used to do that graph in this deck, you would see that kind of one kind of dominant customer. We don't really have that anymore. We've got a good swath of really important, significant customers, but the concentration in one particular one has come off a bit. That's just due to the cycle of their projects. It's not, you know, we're still working for them. We're still doing all their work, but they just have a bit less work at this moment as they get through the work that we've done for them over previous years.
Yeah, it probably doesn't necessarily matter at a group level, but just intrigued by some of the sort of divisional cost allocation changes, because it does look like that's shifted around a fair bit between the divisions during the period.
Yeah, the method is actually largely the same. I think what we're seeing in FY 2025, the biggest shift is when we're allocating a lot of the costs, not all of the costs, but when we're allocating a lot of the costs, especially corporate things that run across the business, we'll do it on a revenue basis. If we take HPC, for example, you might see a step up in revenue based on what we touched on earlier. We got the new compute online, and there was a lot of resources invested into the pilot projects. HPC is generating more revenue as a segment. Because it's generating more revenue as a segment, for the costs that are split based on revenue, it's then getting a higher allocation from that pool. It's not that the base cost of operating our infrastructure has stepped up.
We have some higher power costs because we've got more equipment running, but it's not like there's a fundamental step change in the cost of running those facilities. It's just because the unit is making more revenue, they pick up a higher proportion of the corporate kind of corporate costs.
Yeah, is it also affected by some of the costs? We shifted all the shared services to Malaysia over FY 2025. The finance team, for example, and the IT team, for example, now reside in Malaysia. That picked up extra costs while we made that, while we made people redundant in Australia and hired new teams. They had to overlap those teams, obviously. I don't know if that affects it as well.
Yeah, the only sort of clarifying remark was just to make that the software division, yet I guess the profitability or the underlying profitability thereof wouldn't have changed because, yeah, I would have felt that you would be driving EBITDA growth out of that software business. Ultimately, as you said, it's more of a cost allocation because that is growing revenue and the other departments went down. You've just shifted it into the software bucket, I guess.
Yeah, it's a funny note. It's hard to get that note perfectly correct, I guess.
All fine. Thank you for your time.
Thanks, Allan.
Thanks, Allan.
Okay, next question comes from Lachlan Woods at Wilsons Advisory.
Thanks for taking my question. Hey, how are you both going? The first question was just on the, like, at the half, you obviously outlined that you had eight elastic multiparameter full waveform inversion projects. So, pilot, sorry. Is there an update on how many of those have completed? I guess have you started to win any full, like, contract in terms of actually paying customers or just any update there?
Yeah, we've absolutely got standard full-blown elastic MP- FWI projects now. In terms of how many of them completed, a couple of the big ones, like for Aramco and ADNOC, have not completed. They're still underway, but the results are quite staggeringly good. They've got everybody, everybody quite amazed, clients and us. I would expect them to move to a project. A number of complete and a number have turned into work. I can't think of any that have completed that haven't turned into a project, to be honest. I'm sure there is one. I just can't think of it at the top of my head. That's work that's flowing onto projects very nicely.
When you think through, I guess, like the pipeline, what would you say is the rough mix of elastic versus, you know, traditional MP-FWI versus, I guess, other work in the contract book?
Dan knows the answer to that, I think.
Yeah, so I think what we've, you know, in FY 2024, we had the 1/3 of services revenue was MP-FWI. What we've seen, especially through this second half, is we're seeing that split start to climb above 50% now. More than 50% of the awards are for MP-FWI, and we're seeing that then come through the order book. It seems to be pretty steadily climbing now to a point where we're over half the order book, over half the wins. I think that's what we expect. We expect that to continue, and we expect the proportion of conventional versus MP-FWI to kind of keep skewing to MP-FWI as that technology is really genuinely accepted now, accepted, desired in the industry.
Yeah, on the elastic question, Lachlan, top of my head guess is that half of those MP-FWI projects, or half the revenue, not half, is now elastic. Everybody wants elastic, but they might not have the budget to do it just yet. The budget cycle needs to renew. People need to see results, and they need to add more money into the budgets for next year, I think. We'll see a lot more elastic come up, even more than what we are now. Everybody wants elastic. There's very few people who don't want elastic and don't think it's worth it. They just don't necessarily have it in the budget right at the minute.
Thank you. Just going back to the first one, I know, like you said, there's eight elastic. There was eight pilots. I believe, if I remember correctly, you did one pilot in each of the major oil and gas basins, as you could use it as a case study for winning, I guess, customers in that region. Obviously, certain basins have larger contracts. Are you able to kind of talk through which pilots you've completed, like which oil and gas basins? I assume Middle East is still ongoing, but like.
Middle East is ongoing.
Yeah.
We've completed pilots for Petronas. We've completed pilots in the Gulf of Mexico, sorry, Gulf of America now. We've completed some in Norway as well, I think. It's almost like where there's bigger problems, like in the Middle East, it's actually where it's really shining the most because that's where the better physics and so forth really, really help to solve problems that have been fairly insurmountable until now. The projects are harder to complete, they're harder to do, they take longer, but that's where the biggest value add, I think, and that's where you can kind of see amazing things going forward, I believe.
Perfect. That helps a lot. Thanks, guys.
Thanks, Lachlan.
Thanks, Lachlan. A question that's come in over the wires and probably one for you, Matt. Could we get some clarity as to how long the order book is expected to convert to revenue? How many quarters would you expect it to take on a typical?
Certainly within a year. A lot of that order book will be complete within six months because they're MP- FWI projects which take less than six months to do. Certainly within six months, yeah. Some of the projects won't complete in six months, though; more traditional work will take, you know, nine, 10, 11 months. Yeah.
Okay. And.
Daniel thinks about stuff like that too. Daniel, do you have any view on that or with me?
I think there's just lots of different, lots of different layers to the order book. I'm sure there's probably some small portion of it that's an FY 2027 number. Usually there'll be one project that for whatever reason is 15 months long, but the bulk, bulk, bulk majority of it will be solidly within 12 months. 95% of it will be projects that are, you know, because those projects are at different stages as well. You get a whole mix-up of projects that will be 90% complete and projects that have not started yet. On average, we talk about a project being, you know, a conventional project being 10 - 11 months in, you know, kind of time, and that kind of flows through here as well.
I forgot that. It's all biased to more than less than six months because your MP -FWI projects are all less than six months. You've got projects in all different stages, as Dan said. A lot of that order book will be well and truly complete in six months as well, and you'll have some that runs a bit longer.
Okay, thank you. Keeping on the theme of the order, the sales book, I think you've touched on the geographical regions where you've won work. A question around is this land or seabed subsea work that you're winning. The reason for the question was the oil price appears to have a different impact based on the region. I don't know if that's something you agree with, but that was the question that came through.
In the Middle East, for example, we're seeing a mix of land and marine. In the Middle East, it appears that it's less impacted by oil price because their production prices are much lower. I remember at Aramco, a long time ago, they were producing a barrel of oil for $0.20. If you're producing a barrel of oil for $0.20, you can sell it for $5 and make quite a nice profit, let alone $60. They're less impacted. They're looking more, and they've got the money, right? They've just got the budget. They've got the money. They're not going to run out of cash to do work. They tend to just keep going. Whereas smaller companies in the West, when the oil price is down, they can just run out of money. They just don't have the money to do work if they want to do it.
I agree with that comment. It's very related to the oil. It's very related to their price of production, and it's very related to the size of the oil company. Did I cover the question?
I think the other bit then is land versus marine.
Yeah, it's about 50/50 in the Middle East. Land in, and it's probably something marine projects in America would be more valuable a lot, but there'd be more land projects in the Americas. Land is going in a little boom because the domestic gas price was $1.50 for a long time, and now it's $3 and going north because Trump has done a deal with the Europeans. There's a bit of a boom coming on here because of Trump.
Historically, just to give color as well, we, in recent periods, we're about usually about 60/40, so 60% marine. This is on a global basis, about 60% marine and then 40% land. I'm not, that's a number from about three months ago for where we were sitting in terms of our order book as well.
Okay. Thank you. Sticking with the questions that have come in over the Q&A function, it's a question around the STI and LTI arrangements. Matt, can you shed some color around the hurdles that were in place and the outcomes that were delivered in FY 2025?
Oh, crikey. I don't pay much attention to that stuff, to be perfectly honest, but the STI wasn't paid out.
The money that we'll see coming through in this financial year is in relation to FY 2024, when we had a really great year with the step up in revenue and a really strong EBITDA. The cash impact from that is from the previous financial year. Obviously, the share-based payments is kind of an average cost, you know, based on the ZPOs that have been issued. It actually doesn't tie to vesting.
That's a good point. The STI and LTI in these results are through to FY 2024, which was a very good year. The FY 2025 STI and LTI is not as good. It's probably half just because the year wasn't very good and a lot of the checks, a lot of things weren't ticked off.
In the REM report, you'll see the STI for FY 2025, the financial metrics weren't met. The other metrics, one is related to a compliance item, the ISO certification, which we were able to keep rolling forward. That was a recertification for us, which probably doesn't mean anything to anyone, but it's the big one once every three years. The other two are performance-based items, which are kind of, you know, greenlit by the REM committee and the different board. The cash impact in this financial year is from the great financial FY 2024 and those results.
Okay, thank you, Matt and Dan. Just last c all for questions. Anyone has any that they would like to ask? Could you please raise your hand? The last one I had was in relation to DUG Nomad and DUG Cool revenues when they come through. Are you going to report those separately, or how will we see those come through in the P&L?
Those will come through the HPC line for the time being, but we're working on the best way to disclose that, and we'll give a lot of detail around it when they come through. Rather than adding two extra lines to our P&L, for the time being, we'll just be including that into the HPC BU. I think the other one, Steve, we had come through was on the software timing.
Yes.
On software timing and the stuff that was mentioned before, I don't actually have an exact number off the top of my head, but notionally thinking through the numbers, I think we'd be looking instead of 13% growth, you'd be more in the lines of 16%, 17%, 18%. We had some good wins in Q4, and the timing issues just brought the edge off of it. It was still a little bit of a step down on half one and Q3, but the timing issues pulled, I think, about 4% - 6% off that annual growth.
Okay, thank you very much for attending today. Thanks, Matt and Dan, for taking us through the results. We will post this recording on the website. The last thing to say is to thank everybody for their attendance, and we look forward to speaking with a number of you on the road show. Thank you.
Thanks, everybody.
Thanks, everyone.