Thank you for standing by, and welcome to the FINEOS Corporation Holdings PLC first half 2026 results briefing. All participants are on a listen-only mode. There will be a presentation followed by a question- and- answer session. If you would like to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Michael Kelly, CEO. Please go ahead.
Thank you, and welcome everybody to today's call. I am joined here today by our CFO, Ian Lynagh, and we are going to go through our first half year results and give you an overview and some color behind the results. I would ask you to turn to slide two, please, and we will start off. As you can see from slide two, we have had a very good performance in the half. Subscription revenues of EUR 41.9 million, up 15% on June 2025, and 57.8% of total revenue now, in line with our strategy to drive up our subscriptions as a percentage of overall revenue. Our total revenue was EUR 72.5 million, up 7.9% on June 2025, up 7.2% to EUR 72 million on a constant currency basis. Gross profit, EUR 54.6 million and gross profit margin 75.4%. Gross profit is up 6.3% on the previous corresponding period of June 2025.
EBITDA, EUR 17.4 million and EBITDA margin expanding to 24%. EBITDA is up 32.3% on June 2025, and the EBITDA margin is up from 19.6%. Again, expanding our margins in line with strategy. Net profit after tax is EUR 1.9 million, up 254.6% on June 2025, where the loss was actually EUR 1.3 million. Cash was up to EUR 39 million, up 11.9% on June 2025, and of course, no debt. The positive free cash flow was EUR 10.9 million, and really indicating that we are continuing that momentum of positive free cash flow and cash generation in this business. The ARR was EUR 87.8 million, and the net retained earnings 115%. Both very strong numbers and again indicating very strong and sticky customers who are continually buying and expanding their footprint with FINEOS. Our ARR is up 14.9% from EUR 76.4 million, and the NRR is up 15.3% since June 2025.
Overall, we are very pleased with those results and those headlines. I suppose what is causing the kind of growth is a number of things, but certainly new name sales in the half. We had two of those FINEOS AdminSuite for Claims, the MAIB in Australia and one other in the States. That kind of continues to drive that market leadership. Very, very pleasingly for us, we had two more sales of AdminSuite, one to OneAmerica, and in that one we signed a 10-year contract. OneAmerica were very keen for a long-term contract for AdminSuite because they can see themselves using this for 10 years and well beyond. Of course, there was one other smaller client in the U.S. who also bought AdminSuite.
They didn't want to publicize their name due to being owned by a large Blue Cross Blue Shield in the States and not having the permissions. We're really seeing the benefits of the AdminSuite now, and customers are going to see more and more opportunity to expand into the AdminSuite. Very pleasingly again, OneAmerica licensed FINEOS AdminSuite for Quote, Underwrite & Rate plus the FINEOS Employer Connect and both 10-year contracts. I'm calling that out because both of these products are derivatives from acquisitions we made, Limelight Health and Spraoi. It's really pleasing that we've actually re-engineered and got those products in the full suite end to end. We're looking forward to seeing OneAmerica really driving home now that full suite of products that we have out there.
It's proved that our R&D and our strategy is coming together very nicely. On the customer side, we've had multiple on-time go lives. With ACC in New Zealand, one of our largest clients in the Southern Hemisphere, doing a two-year migration from an on-premise major scheme in the country to the FINEOS AdminSuite for Claims. That just took two years, was on time, on budget, and they're thrilled with that program. Indeed, the publicity is on our website if you'd like to go and see it. Our FINEOS Customer Connect events have been in New York and Sydney in the last few months, and we've one coming up in Toronto, and we've another one in November in Sydney, just to let you know.
These are proving to be very useful because we're demonstrating product, we're showing our clients where the product is going, our roadmaps, and more importantly, I think we're bringing customers with us to talk about their experiences under transformation. This is going down very, very well. We've got some really good case studies with Guardian and New York Life. Other customers are joining in. Building positive momentum. We're gaining a multiplier effect from embedded AI in our product. With our deep domain focus and our market leadership, baking the AI in at the core is just helping us to accelerate our growth, and making our product far more attractive and sticky with our clients.
If you turn to slide four, this is just a look back and we're pretty proud of the growth we've had since we launched on the ASX in August 2019. As you can see, we very much have driven to the strategy we laid out in our IPO prospectus of growing our business in North America, which is 33% of the global insurance market, and by far the biggest market in the world. If you can prove yourself in North America, you can pretty much prove yourself in every country. North America is leading in the technology space, and a lot of the multinationals and so on are in North America. Very highly competitive market. It's very pleasing to see the market growth in North America up to 80% in the previous trailing 12 months.
And of course, we also promised that we would turn FINEOS from a services business into a product company, and we are well on the route there. As you can see, over 300% growth in subscription revenues since we IPO'd. Again, is that very much down to the expansion of the product and the R&D that we have invested through our IPO and ongoing profitability in the core business, the underlying core business. Indeed, when we IPO'd, most of our clients were on-premise. Most of our clients, the vast majority, are now on the cloud or moving to the cloud. That is just one step in terms of the growth strategy. Of course, the next step is to grow the FINEOS AdminSuite footprint across our whole customer base. Today, only four of our 60 clients have AdminSuite, the full product, the policy and billing product in place.
So we have a lot of runway ahead. With the very strong customer success we have been having, our customers really trust that we can bring them to the place where they can actually finally say goodbye to those legacy systems. Our people headcount, we put that in this presentation every year, but it has not changed that much in the last few months. It just gives you a breakdown there on page five. The geographic mix of revenues in terms of the region for the past six months. Again, you can see the North American market is by far the biggest space that we have been growing and where we have really doubled down on our strategy for growth for our full suite. APAC revenues actually increased by 1.1%, and indeed the subscription revenue in the APAC market grew by 17.6%.
We are seeing good progress in the APAC market, particularly around cloud upgrades and our customers starting to move to the cloud. In the recent event we held back in March, the FINEOS Customer Connect in Sydney, we had a couple of clients, icare, ART, sitting on stage telling about their transformation and how they use the FINEOS in the cloud. Again, very pleasing to see that. At that event, we also brought our EY partner from the States down, and we had Guardian give an overview of where and how they have performed their transformation. Again, very positive customer reference ability coming in there for FINEOS. Really building that trust and understanding amongst our client base. So I am going to hand over to Ian now to cover off on the financial side.
Thank you, Michael, and welcome, everybody, to this briefing. As Michael said, I am going to provide a bit more insight into the financials, and we will start on slide eight, looking at the income statement. Firstly, as already iterated there, you have seen a substantial increase in subscription fees, 15% change compared to the previous corresponding period, and now representing 57.8% of our revenue. As we move into the second half of this year, we are anticipating no client churn, and we are also anticipating some new wins. So that trajectory is going to continue, and it is obviously a key stepping stone towards the expectations we have set for FY 2027, and a big improvement in terms of the rate of growth that you saw between this year and 2025, and 2025 and 2024. So the strategy is playing out for us in terms of growing that in the right direction.
In terms of service revenues, you see it is down 0.7%. I mentioned at our roadshow, for those of you that were in attendance in March, that now that we are working with SIs and we have more mature products, depending on the deals that land, SIs may pick up more of the work or may pick up a little less of the work. I did set an expectation then that we make it a toggle of about 5%, so I am very pleased that it is just 0.7%. Now that we are out in the month of August and we have already done our July month-end forecasting as well, I would anticipate that the expectation on services fees will be very similar to what it was last year. In terms of those of you that are doing modeling on FINEOS, I would keep it pretty flat as opposed to any toggle down.
That is very pleasing. 0.7%, it is not a lot of change. For the full year, it should be fine. The initial license fee, as I have mentioned before, that is very much associated with those customers that are still on-premise. As they phone us up and ask for additional licenses, we will give it to them. So it is just going to be continually a decreasing market, albeit you saw a slight increase there year on corresponding half year. That is the revenues with an overall growth rate of 7.9%. In terms of cost of sales, we have seen an increase by EUR 2.2 million compared to 1H 2025. But we have had some level of higher employee costs and contractor costs. You have seen that the gross margin in its own right has gone down a little bit. But that is partly because we brought on new resources.
We put more demand to the sales side. We allocated our effort against that. I would see that normalizing as we move to the full year, insofar as those resources will be up to speed in the second half the year, and we will not need to double up as much. So this is just part of growing pains as we have relocated resources from higher cost regions to lower cost regions. Secondly, we have also got in place a provision for an infrastructure spend, and I have mentioned this before. This is actually with Amazon AWS. We signed up to a five-year contract with them, which completes in December 2027. We have done so well in terms of managing costs and driving efficiencies in terms of use of their infrastructure, that the commitment we made in that contract we are not going to achieve within that time period.
However, we are in negotiation with them at the moment, whereby for the deficit or the shortfall in that spend, what we are looking to do is actually buy forward services for beyond the end of December 2027 at a heavily discounted price. That transaction is not yet completed, and when it does take place, it will be in 2027. But the aim is to remove that provision from the accounts. What you can see there, in terms of that at the moment, is that that provision is EUR 0.5 million that is put in against that cost of sales. So the plan would be that that will come out as we move towards the full year. That moves me on then to EBITDA. So you are seeing there that EBITDA has increased significantly. It is up 32.3% from 1H 2025. We have set a target for FY 2027 of 25%, and we are already achieving 24%.
I expect that to improve as we go through the full year, simply because within the full year, we will continue to manage costs very well, and we will also grow revenue. All the business we gained, in addition to the traditional throughput of business we gained in the first half will flow into the second half, and the additional business we will gain in the second half will also be registered to the extent it exists in the second half. So that EBITDA margin will increase again for the full year. But very pleasing to see the 24% when we set an expectation of 25% for FY 2027. So net profit after tax, that is a very good sign in terms of our journey, in terms of moving forward to be a profitable company, a cash generative company. We do not see ourselves looking back.
Albeit it looks like a small number, 1.9 compared to a deficit of 1.3, it is a very significant step. Again, if you look at the provisions that we made with respect to infrastructure, Amazon AWS, another 300,000 has been added in as well there in OpEx. So that is 800,000. If you added that 800,000 back in because it is not real money, it is not money we have spent, then you are up to EUR 2.6 million in terms of net profit after tax. That said, we need to get rid of the provision in terms of moving forward. But I just thought I would point that out. If we move now to slide nine. We are looking here at, as a product company, progressively, we want to grow the subscription revenues.
That very sticky customer base that we have plays a big part in terms of our ability to project revenues moving forward. As you can see, that is constantly increasing. We are making comparisons here against the cost base, and the cost base has increased slightly against the corresponding period, but it has increased a level more against the second half of last year. We know about the increases in fees. Michael has already mentioned subscription fees and ARR and NRR. NRR is something that we have introduced as a measurement due to requests from various investors and analysts just to show and reiterate the importance of our existing customer base in terms of upsell and cross-sell to our continuous growth as a company. We are going to keep that up in terms of relaying that from now on.
But in terms of the total cash spend going up, part of that is the increased headcount in lower cost regions. As you know, over the last two to three years, we have done a significant level of restructuring, but we also had to replace resources. So our headcount is remaining reasonably constant, but where they are has changed significantly as a proportion. As you can see on the people side, we have over 37% of our people in what we would deem to be lower cost regions. This also is reflected in the comments I made on cost of sales in terms of taking on more resources. But the resources as well are coming into the product group. So it is product delivery support is where those resources are coming in. So we have that in place. We also provided salary increases.
But the overriding element there is that in terms of the cost as well, we have moved the payment for insurance and internal software licenses, which is about EUR 3 million, from a payment in the third quarter of the year to the first quarter. The reason we made that shift was because up until 2024, our fiscal year started in July. We moved our fiscal year to start in January. So we wanted to make sure that when we are spending money on services in a particular fiscal year, we wanted that money spent to reflect the duration of the fiscal year as opposed to forward buying into another fiscal year. So that is a one-off shift, and the important thing about that shift of that approximate EUR 3 million expenditure is that it will not reoccur in the second half of the year.
We have just moved it forward to the first half of the year. So that explains the shift in cost there. We are still very much under control, very much in line with our expectations. If we can move now to slide 10, looking at the operation expenses. So, that is reflected of the cost control. You can see that R&D is down due to lower employee costs, again, reflecting the lower cost regions I mentioned earlier on. A higher capitalization of R&D, there is criteria you have to meet around high R&D. That has happened simply because of the extent of innovative capabilities we are building out, particularly around AI now as well. So a higher proportion had to be allocated towards that capitalization side of the fence. And we did not have a repeat of restructuring costs as we had in the first half of last year.
So that helped in terms of reducing the costs. We are somewhat up on sales and marketing costs, and that is intentional. As we have mentioned before, we have spent the money that you investors have provided to us into R&D, developing out that product, maturing out that product, getting our position in the market into a much more prominent space. But what we are doing now is looking at how we expand out in terms of sales and marketing and sell more of the product, get more in the face for our customers and new name prospects. So this is part of that expectation. We expect to spend more, also in sales and marketing as we go into the new year. And really where you are seeing the change there in terms of the expenditures related to sales events, the FINEOS Customer Connect events that Michael mentioned earlier on.
We had one last year, and we are planning out four this year. So we have had two already, one in New York, one in Sydney in March. Michael mentioned we have another one coming up in Toronto in September. Indeed, we have another one in Sydney coming up in November. So playing out very well in terms of relaying our product strategy with our customers, getting their feedback, and also getting customer testimonials at those events as well, particularly with an audience that includes other customers and prospects, where they are explaining the journey they have gone on with FINEOS and how that is working out for them. Cloud operations, in terms of our continuous focus on reducing costs, driving efficiencies. We have seen a decrease in terms of internal infrastructure usage, just through more efficient usage. A hiring of people in lower cost regions has helped drive that down.
In terms of G&A, the real factor there is FX movement. Our reporting currency is euro. Approximately 70% of our revenues comes in U.S. dollars, and we receive revenue in six different currencies. We are always substitute to the FX movement side of things. On the flip side, about 50% of our costs are in Europe, and approximately 35% of our costs are in U.S. dollars. There is always an argument about the currency and the approach we should take. In the meantime, there will always be FX movement for a global company like ours. If you move on now to slide 11. Again, we have made a commitment, in terms of FY 2027 and FY 2029, in terms of overall R&D spend as a percentage of revenue.
Obviously, when we IPO'd back in 2019, as referenced above, the whole thesis there was to build out a product to service the life accident health industry all the way from quote to claim. We were spending very much ahead of the curve in terms of revenues coming in. We have now rebalanced that through 2025 now into 2026. Our expectancy is that we will continue to reduce the relative cost of R&D as a percentage of total revenues. You are seeing a slight rise there. As demand comes in from customers in terms of what we are delivering to them so we can secure that additional fee, we will toggle it a bit. Some of our flexible resourcing mentioned on the people side there, it is also in R&D. We can toggle that up and down a bit.
Overall, if you look at each half year there, you are seeing our spend is remaining reasonably consistent. We are keeping very strong focus on that and intend to keep that percentage moving in a general downward direction in line with the expectations with respect to the guidance. If we move now on to slide 12, the balance sheet. The bits I will point out would just be around your trade receivables. Obviously you are seeing that our subscription fees are going up. Some services for bigger customers at a reasonable level as well. We have seen an increase in trade receivables. We are comparing against the second half of last year on the balance sheet as opposed to the previous corresponding period, 12 months in the past. That is a good indicative sign in terms of the increased revenues that we are going to secure within the marketplace.
Indeed, if you look down at deferred revenues, what you also see there is a big increase. To put that in context, we invoice typically yearly in advance for subscription fees, monthly in the rear for service fees. With the subscription fees, almost about 40% of invoices go out in January, and about another 20% go out in the second quarter. There is a skew in the first half of the year in terms of those subscription fees, 60% versus 40% in the second half. We do see that balancing out a bit more, and that has already started happening, where it may even out a bit more throughout the year. It is always that magnetic pull back to that first quarter as customers expand with FINEOS.
If their fiscal year is a calendar year, and typically it is, they may wish to reset contracts for the beginning of the year. That works well for us because, again just mentioned the FX volatility that any company has that deals globally. We can get the invoices out early on in the year, then that gives us predictability around that proportion of revenue as we look forward to the rest of year movements. We move on now then to slide 13, the cash flows. This year, in terms of net cash generated, you can see a decrease of 24.7%. The explanation around that partly was defined in the 4C for Q2. But just to provide a bit more color around that, there was two invoices, two large invoices, amounting to approximately EUR 8 million for two large U.S.-based insurers, where the payments were delayed into this quarter.
One of them was with an insurer that actually changed our payment, their online payment system. It had teething problems, and that delayed payment. That payment has been secured as they teased out those problems. It was just a delay in payment. The second one was a situation, again, with another large insurer, and we renewed our five-year contract with them. It is for a larger proportion of that amount. We managed to secure an uplift in subscription fees, and that contributed towards the ARR contract assigned. We also managed to change the pricing approach for the absence product to a per employee per month type basis. As they grow, we will grow in line with that, because previously it was on a per user basis. That took a while to negotiate.
These things generally do when you are looking to extract more money from customers, there usually is a negotiation. Also because of the size of the contract, because the five-year contract multiplied by that singular invoice amount it goes to a lot of sign-off. There was about 10 sign-offs within that, and it was just frustrating for us, delayed the process. But it is done and dusted now. If you look at that EUR 8 million that was delayed and you look at the EUR 3 million that I mentioned earlier on in terms of insurance and software payments, that would have made a difference of EUR 11 million. You can work your way down, even taking out the exchange rates, you see a positive impact, in terms of the bottom line. I think that will all be flushed through as we get into Q3.
Of course, we are still producing positive cash from billing. You will see that at the end of the quarter. We are very, very positive about that cash flow movement overall, knowing the dynamics of what happened with respect to those couple of invoices. I will leave it at that, Michael. I will pass it back to you.
Thanks, Ian. Pretty comprehensive overview there. I am going to move along to the outlook and the key priorities. If you turn to slide 15, this is a new slide in the presentation, which really is for our ASX investors to take a view of the investment thesis for FINEOS. I think we are coming off a very good half. We are increasing our revenues, profit, and cash, as you can see. We have no debt, and actually we have a deferred tax asset, which is quite significant given the losses we have had over the past several years building out the AdminSuite. That is there to be had.
I would also point out that our headquarters is in a low corporate tax operating center or country, where the headline tax is 12.5% on profits when we do have to start paying tax, which obviously is a great position to be in as well. Recurring revenues are increasing, and as Ian said, they are 57.8%, and we are on our way to the 65% we said we would achieve in FY 2027. I want to point out the strength of our customer relationships, the size of our customers, blue-chip clients who are tying up five-year agreements, and in the case of OneAmerica wanted a 10-year agreement with us based on GWP, gross written premium growth, and lives on our absence product. Very long-term, sticky clients, blue-chip, who are totally reliant on the mission-critical system we provide them.
That is giving us increasing visibility on long-term profitability and growth and cash generation as a business, which means that we have got a great operating leverage ahead of us. We are already, as I said, growing our EBITDA and our cash, but we have not cut our costs and cut everything to the bone to arrive at a margin or increasing margin. We have continued to invest, but we are getting far greater efficiencies as we move along now going forward, and particularly now with AI. As we operate in the North American market, we tend to stay very, very current with technology trends. Which is one of the huge advantages of being an American market leader versus anywhere else, because things happen just faster over there, and clients want things quicker. That gives us a competitive edge as well on a global basis.
Our operating expenses are declining as a proportion of revenue. Really where we are getting that leverage is through revenue growth and continuous efficiencies that we are driving within the business. We have a large North American TAM, and we talked about this all going back as far as November 2024, where we said there was a EUR 200 billion premium market in North America. A serviceable addressable market that we can target with the product set we already support of EUR 125 billion in premium. Our own clients, who are some of the most substantial customers, are carriers in the employee benefits world, already account for about EUR 50 billion of that, of which we have only penetrated just a bit more than 10% of that opportunity within those customer sites. As I said, we have got four full suite clients out of 60 customers.
Two of the top 10 of these carriers are now AdminSuite clients. Of course, we see more opportunity to convert clients across to our full suite and really get the benefit of all the historical investment we have made. We are the market leader in this employee benefits space in North America, and we are really driving the customer success. So we are driving those partnerships to deliver more revenues, more trust, and more new business in terms of opportunity to work with our carriers and our partners. It is a cloud-native product. Again, we were early into the cloud because we were very much competing in North America. We had the cloud well before any other country. Many countries did not go into the cloud until much later because of data residency, and the technology itself had to move to them.
Our cloud is very much built on the AWS cloud, which is secure, scalable, and future-proofed. Because we have embedded AI in the product safely, it is right there at the heart of the core. So everything we are doing in our base product, we can take advantage of AI more and more, and we are showing that to customers, which is coming through very loud and clear. So the embedded AI for FINEOS is a real advantage. We see it across our whole suite. Of course, our suite is now in production with New York Life on a $5 billion U.S. dollar book for group voluntary and absence management. We are implementing very, very quickly now in terms of deployments. Really, we have shifted the focus to maximizing the benefits of FINEOS when it is already implemented.
So we immediately talk about operating models and so on with our clients, and how we actually help them really transform and help their bottom line. As I said, AI is an accelerator. It really, where we see the advantages in FINEOS, it provides more intelligence and assistance, and automates a lot of stuff to our agentic side as well. Our AWS partnership is really good for FINEOS, and we have a strategic partnership on a global basis, very much at executive level, at technology and engineering level, and at sales level as well. Our SIs are becoming more and more confident and are growing the teams on FINEOS. As Ian said, we give them as much services as we can, and we are pretty okay and open with them around how do we cut the cake in terms of services.
To be quite honest, we are not looking for services, and we are upping the quality of services that we do in terms of helping customers to maximize the benefits of the product. So, the services revenue ultimately in total would have grown on FINEOS, surely, in terms of the new business growth and the subscription growth. But we have given a lot of it away to our SI partners who really appreciate it, and indeed who work closely with us. Then we are building B2B partnerships as well that are complementary and that help our customers. So, overall, I think feeling very positive about the business. If you turn to slide 16 on our key priorities for the second half. We definitely want to get OneAmerica up and running as quickly as we can. That is going very well. Of course, our other AdminSuite client as well.
They will go live early in 2027. We have also continued to scale with Guardian and really hitting at that legacy system now where we have actually developed the FINEOS Migrator tool, and that will assist them to get off that legacy. That one is going well as well. Upselling to existing large clients. Again, we have customers who have mega portfolios spread across multiple legacy systems, and we are well down the road with that as well in terms of growing their FINEOS footprint and migrating stuff across to FINEOS. We also want to grow our new business sales, as Ian indicated. We definitely want to invest more in sales and marketing. We want to progressively embed the AI across the whole platform and expand the internal use of AI as well within the company, which obviously gives us great efficiencies and so on.
We are already seeing the kind of uptick in terms of what that is doing for our bottom line. All very positive. Then, of course, FINEOS Absence for Employers. We are working with some carriers as well around how do we work and get this product into the employers in parallel and in partnership with some of our carriers as well. Again, the employer market is very much small deals. But really our main focus is with our carriers who are our partners in this growth trajectory of FINEOS. I will move on to slide 17 and talk about the outlook and the guidance. Again, as you can see, we are well on target to hit the range and terms we gave at the start of the year.
As Ian said, we are reiterating that we will be within the range with a healthy number at the end of this year, supported by strong pipeline and locked-in long-term revenues with existing clients who are scaling on the FINEOS AdminSuite and fully committed. We are growing profitably and generating cash through the year. Indeed, we want to drive the North American employee benefits domain on the sales side. We want to explore opportunities too, of new product lines where carriers are actually talking to us about various product lines that they would like FINEOS to look at. Again, that will be another expansion opportunity, and will be more revenue for us as well. Then, as we said, invest in the marketing, more events, more case studies, more customer success stories, and indeed more sales and revenue. If I turn to slide 18.
Before I talk about this slide, I want to go back to November 2024 when Ian and I visited Sydney, and we made some declarations and promises to you as investors in FINEOS. We said by the end of 2025, we would be cash flow positive, free cash flow. We delivered. We are saying that in FY 2027, our subscription fees will make up 65% of our total revenues, and as you can see, we are well on target. We will bring the R&D investment into a 30% range in terms of total revenue, in terms of spend and investment. Our gross margins will be 75%, which as Ian has already said, we have achieved that last year. We are on it again this year. EBIT margins of 25% moving up to 40% in FY 2029. So we reiterate that guidance around what we want to do, particularly in FY 2027.
Hopefully you see that we are delivering on our promise and you see FINEOS as a good investment. Thank you. I will open it up for questions.
Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Siraj Ahmed from Citi. Please go ahead.
Hi, Michael. Hi, Ian. I have three questions. Just first one, very strong ARR growth, right? Just want to confirm that this includes the new wins in the crossover that you called out, like OneAmerica?
Hi, Siraj.
Go ahead, Ian.
Yes, it does. Yeah, it does.
Yeah, because I was just confused because your NRR growth is actually higher than the ARR growth, so I just wasn't sure if it includes some of the new wins. Okay. That's good. Just looking ahead, right? Michael, your comments sort of indicate the pipeline's very strong. You just had a very strong half of ARR growth. Do you reckon you can repeat that in the second half, or is that a bit too tough?
I think we'll see, Siraj. We are optimistic about the second half and into next year as well. As you know, we have got a business that is long-term, lumpy deals. It does take time to kind of get deals through some of the very largest carrier companies in the world. So, we've given a prediction that we're well within, and we'll see how it goes through the year. As I said, we're optimistic. We've come in with a very good half and, as you say, the ARR is heading in a very positive direction. So I'll leave it at that for the moment. Thank you.
Michael, the reason I'm asking that is. Sorry, just secondly, the reason I'm asking that is, you sort of need your ARR growth to pick up to get to your FY 2027 targets, right? Which like Ian mentioned, it needs to accelerate from here, sort of needs to get like 20%+ subscription growth. Just, can you help us build that bridge right from where you are right now to FY 2027 to get to 65%?
Do you want to do that, Ian?
Yeah. So your start point obviously is the ARR at the half year. As I was speaking earlier on, we expect to get a level of new win, during the second half the year. We expect no churn during the second half the year. So that will be a higher figure. The services fees for next year will, in terms of our expectation setting, will either be in line with what we achieved this year. And I indicated earlier on that that will be in line with what we achieved last year, or it could toggle by 5% next year. Again, that SI bit really makes a difference as deals flow. If there's more SIs involved and they become more versed in our product, they may take on more services. And the reason we allow them to do that is that they influence buyer decisions.
It's not that we're giving it away. We're giving it away in exchange for them helping us make greater sales. If we toggle that up and down, that services bit in your modeling a little bit, then you know that what we need to achieve in terms of the subscription growth is probably bringing it up to about EUR 107, EUR 108, in terms of actual revenues for next year. We're going to be going into the new year with 80%, 85% of that achievable, will be the target we're setting ourselves. We got to bridge that gap. We have a number of customers then, in terms of, as we've always said, upsell is the key element for us, and that really is scaling what customers already have, as opposed to trying to sell them something new.
As they move their legacy across to FINEOS, we see that as being the biggest growth area. If I look back at the last 12 months and look at that ARR growth, and just look at it through the lens of upsell, cross-sell and new name, the upsell element of that growth is about 80% of the growth. The cross-sell is about 15%, and the new name is about 5%. As it comes in, and then obviously those new names become existing customers moving forward. We see a significant amount of coming through upsell, and we see a significant amount of that coming from a handful of customers. We very much have line of sight of how to achieve that in terms of those particular trajectories.
Okay. Sure. Just last one, in terms of just confirming two things, Ian. As you mentioned, services flat for the year, so that we should imply that second half is slightly up half on half. Secondly, your FX assumptions for the revenue guide is EUR 1.175. Spot is right now EUR 1.15. Just confirming that that should be maybe EUR 1 million benefit to your revenue number? Thanks.
Yes. The revenues in the second half of the year traditionally are higher than the first half, because the second half benefits from deals closure and other end or increases in the first half. Plus the fact as we win more deals, then the services will go up as well. Definitely, the services and the overall revenue expectations for the second half of the year will be greater. Sorry, what was the second part of your question there, Siraj?
Just on FX, I think your guide assumes EUR 1.15.
Yes.
Right? The spot rate is EUR 1.15, so there should be a benefit if this holds, right, in terms of the second half?
Yeah. So far the benefit will be about EUR 1 million or thereabout. As I said earlier on, the more we invoice, particularly for subscription fees, when the invoice is actually released, that is when the FX is set in terms of what we put out there. So it is about EUR 1 million to date. I do not know what is going to happen in the second half of the year.
Sure. Okay. All right. Thank you.
Thank you. Your next question comes from Tim Lawson from Macquarie. Please go ahead.
Hi, guys. Thanks for taking my questions. Just a couple. Can I confirm on your medium- term, so FY 2027, FY 2029, that their percentage is across the year rather than exit rates? Just to make sure.
The guidance that we've set, Tim, in terms of-
Yeah, the 65% subscription fee in 2027 and 25% in 2029.
Yeah, that will be at the end of 2027 and at the end of 2029.
That is an exit rate rather than the percentage across the year, to be clear.
Yeah, because of the lumpy nature of our business and the lumpiness of the invoicing cycles, that is correct.
For the full year revenue, when we look back at the end of the year, we will say 65% of that was subscriptions.
Sorry. Okay. That's where I am getting confused. The way you say that, Michael, I am assuming therefore across the full year FY 2027, the number that you report 65% of that will be subscription fee, rather than looking at the mix on the day you leave the year.
No, correct. We will be under 65% as we look back.
Okay. Across the full year. Okay. That's right. That's good.
All the way.
Yeah. Can I just pick up on the pricing changes? You talked about that contract you renewed and renegotiated and a bit of a slow pay, which I mean, it is good to get price increases even if they pay a bit late. Can you talk about what that might mean if you applied that across your book? How much do you feel like you have got existing contracts that are underpriced effectively?
Yeah, that is an interesting-
Okay, I will-
You go ahead.
Yeah, no, go ahead. Go on.
Yes, around about four years ago, Tim, we switched the pricing to GWP and per employee per month. Obviously, what would have happened in the interim is we had already signed up to five-year duration contracts with customers. We could not make that switch in the middle of that five-year period. We had to wait until we got to the end of the term to make that switch. In the interim, as we gained new customers, we put them straight onto a new model. There have been other customers that we have in the mix that have come towards end of term. One of them was mentioned there earlier on in terms of that delayed payment, where we went through that switch because they were on a per user basis prior to that.
At this point in time, the majority of our customers are on that growth model, value-based pricing as opposed to per user-based pricing. Per user-based pricing was always something over the last five years or so that we hit against, just in terms of general automation. The need to move away from it with the advent of AI has been accelerated. Customers get that as well. They may haggle over pricing, et cetera, and the fact that they need to switch. They understand, particularly with the advent of AI, it needs to happen. We are materially across the line. I would say we, let us call it 90% or thereabout across the line. The rest should be resolved within the next 12 months.
Okay. That is helpful.
Yeah. To add to that, Tim, we do have other contracts that are coming up for renewal, so we can get increases on those as well. The vast majority of the growth we see, 2027 and beyond is already in our base.
Yeah. Okay. It sounds like only about 10% of that remains to get repriced. So it is probably not going to have a huge material impact.
Not that end of it, no. There's other contracts though, that are due for renewal. Again, we can crank up pricing based on their GWP usage and indeed the lives. We still see an opportunity to continue to do that. As we lay in new products and features and stuff, we sometimes charge some extras as well for those. The AI is a good example. There is continual opportunity to cross-sell and upsell.
Yep. Then just with the ACC renewal, when we look at the APAC revenue growth, it has been broadly around that EUR 10 million, EUR 11 million number for quite a number of years. Does that reset cause that number to grow into the next half? Have we seen the full annualization of that repricing impact or that contract impact?
Ian?
Yes. Albeit the revenue has remained at that type of level or grown a little bit year-on-year, the mix of that revenue has changed quite materially. Initially within the market is going back to the IPO days and slightly beyond. The majority of revenue we are getting from the market was services revenue. What we are seeing is that we are getting more high-quality recurring revenue in terms of subs. ACC in its own right we effectively doubled what we were getting out of them.
That contract was signed two years ago, and we got an uplift when we went live in April. It is higher quality revenue that we are getting there. Again, we are working with partners in the region also, so they are picking up some of the services, so we are splitting that out. It is much more sticky and particularly as we move to the cloud and we are starting to see that movement.
Now in the region, we've got a number of customers that are in the cloud or are in discussion with us about moving to the cloud.
Yep. Okay. The subscription revenue for ACC would've doubled, but the overall total revenue would not have doubled. Is that the message?
Correct. Yeah. Correct.
Okay. Just staying on the sort of revenue, I've got one more question on after this as well. You talk about the sort of broadly flat services, partially because you're passing more work to SIs. Do you have a feel for if you combined the SI sort of take and what you're still riding, how much is that actually growing by? How much are they actually doing with you, the SIs? Because ultimately that's what's going to drive your confidence in the subscription number.
Are you asking what kind of revenues are the SIs getting?
Yeah.
For our implementations? It certainly will be combined double digits, Tim. We do not know the exact numbers because they contract directly with the customer. But they will be looking after significant tranches of work that historically FINEOS would have performed such as program governance, integration, data conversion. It will be double- digit. I would make a difference to
Double- digit millions, you mean? Double- digit million?
Yeah. Double- digit millions. Yeah.
Yeah. Okay.
Yeah. I think for us, and again, it is a message we keep on reiterating. It is a very, very sticky time base. Recurring revenues is where the future growth is. The subscription fees are key, five-year contracts. Once you are embedded, we are placing systems, as we said before, that are 20, 30, 40 years old. Sometimes we get the sense that services is valued the same as subscriptions, but in our mind it is not. It is very important for us to stay very focused on that subscription and just accept the services yield to the SIs as being part of the way we grow forward.
Yep.
Absolutely, yeah.
Just last question from me, and thanks for the answers. They are really helpful. You have got a comment in the pack talking about explore opportunities to expand product lines and new markets for FINEOS AdminSuite. Is that dental and is that with one of your key customers? Does that mean that you think they are progressing down a path to use you for that product and is that what is driving the interest and the comment in the pack?
Yeah. Look, there's a few lines of business, not just dental. Things like stop-loss business, vision business. We're very close to those lines of business as well. Other variants of the life side in terms of the various types of life assurance, just adding more and more tweaks to the product that allows us to grow the kind of footprint of the TAM and indeed the opportunity with the clients. Dental is not something that we have on our horizon at this stage in terms of the claims side, but we will see obviously Guardian coming towards FINEOS on that side, on the dental side with the admin side. Yeah, look, just kind of continuously, these are incremental add-ons that we can do and just tuck it under into the R&D budgets and so on, and work with the clients.
I think as well, when you look at the subscription growth, I just want to point out as well that subscription versus services. Given the global situation in the markets, and particularly the broad investment going into AI start-ups and AI this, AI that. If there's any kind of a turndown, our subscription revenues will stand up. We're locked in, and that's why we're going after subscription. Services will just be wiped out immediately if there's any kind of a downturn. From our perspective, we're locking in certainty on these numbers and with these clients. That's why we're happy to continually build up our SIs as well and let them take the risk around services and us basically drive that long-term growth and that product revenue.
Yeah, thanks. Can I just clarify that you talk about the R&D budget. The opportunities that you're looking at to expand product lines and new markets, et cetera, does that fit within the R&D budget that you're talking about? Because you've got medium-term targets of that R&D investment as a percentage of revenue, so we're not seeing incremental R&D spend that would be captured within that envelope?
Yeah. In the main, Tim, yes. The answer to that is in the main. We are putting more and more of our R&D into the AI and into the innovation side. So we're growing our investment in that. We could easily cut back our R&D now because we've kind of hit a plateau in terms of the product and we've got ourselves to where we wanted to be. But obviously with AI coming in over the last three or four years, we bought Spraoi and then we've been investing in the AI and rewriting the Limelight and Spraoi products into our base product. So we're continually innovating so that the product stays modern and ready. Then in terms of the extra business, in most cases, we can tuck that in on our R&D number, and we won't be increasing our R&D numbers.
If we have to, the client will basically pay us and we'll do some kind of partnership where they'll pay us for the services or whatever are the product revenues for that extra line of business. We can easily carve that out and show it to you if we do do that, if there's a big spend in any particular year. But it'll be well covered, and it's outside the thesis that we've set ourselves for FY 2027 and FY 2029.
Yeah. That's great. Thank you very much.
Thanks, Tim.
Thank you. Your next question comes from Jackson Lee from RBC Capital Markets. Please go ahead.
Hi, guys. Well done on the strong ARR print. Just a question around the GP margins. Ian, I know you mentioned it in the prepared remarks, but I just want to understand. We are seeing sort of like a decline in GP margins despite you guys having higher subscriptions as a percentage of revenues. I know you mentioned the AWS provision. Does that come from the GP margin line? And if you could just help us or break out that GP margin.
Over to you, Ian. It is about the decline in our gross profit margin, which is small, as against the big growth in ARR and why that is, the decline. You might cover that off.
Yeah. So hi, Jackson. The AWS provision you already have, so you see the amount that is there that has impacted it. The second reason I mentioned as well, and that is we have taken on a lot of new resources, particularly from lower cost regions. And what we were effectively doing during the first half of this year is we were doubling up on resources for a number of projects. So we had to allocate that cost against our cost of sale during the first half of the year. Those individuals now are skilled up throughout the first half of this year, so we do not need to do that handholding, that double up of resources we go into the second half of the year.
I would expect that by the time we have done the full year for the entirety of the year, we will see a gross margin, which will be roughly reflective of what we achieved last year. It also is ahead of expectation that we set for FY 2027 at 75%.
Okay, great. Just a quick one on AI. Most of your software peers in the small cap space have seen their headcount decline. I think you have added 40 in the half. Are you seeing any AI benefits internally, and do you expect this number to keep climbing?
Yeah, I can take that one.
Do you want to take it?
Yep. We are seeing benefits from the AI internally, and we have very much a focused program on making sure we extract those benefits across our teams. We have increased the headcount. As Ian said, we have increased headcount because we doubled up in some headcount on lower cost countries. He has basically mentioned that to you already. We will see less headcount needed for what we are doing today as we move forward. There is a cost, of course, to the AI, which needs to go back in. But we are moving faster now, developing features quicker and turning quality product out faster as well through our investment in the AI within our engineering and SDLC. Yes, we definitely get more bang for our buck out of our engineering and testing teams, and across the organization.
Again, our business is growing though, and therefore with new name and existing cross-sell, up-sell and extra features and functions we are doing, we are where we are, but we do see that we are gaining the efficiencies from the investment we are making in the AI. That is going to continue. Any further questions?
Thank you. Your next question comes from Jules Cooper from Shaw and Partners Limited. Please go ahead.
Hi, Michael. Can you hear me?
Yep. Hi, Jules.
I just wanted to say thank you for putting the slide on page 15 in the deck. It is a great overview of the business, and I loved the passion that you could hear in your voice as you were going through it. So well done on that. My question was really about one of the boxes there, which was the embedded AI. I wondered if you could just talk to us a little bit about the interest and the engagement that you are seeing from your customers, where they are asking you about what you are doing, how they could utilize the AI embedded in the platform, just to sort of gauge where the sort of interest and the demand is.
Also, we have definitely noticed an improved deal cadence. I just wondered, is that, in your mind, do you think related to your customers starting to think about if they are going to move into this sort of agentic era about tightening up the core system? Is it actually driving benefits from you, not just in AI itself, but in selling the core and upgrading customers in readiness?
Thanks, Jules. Yeah, great questions. In terms of the AI, at our event in New York, where we brought together eight CIOs in a room of our biggest clients, we had a discussion around how do we partner, what are the common themes? What would you want us to focus in on and double down on? AI, AI were the answers. So there was a kind of an interesting perspective from them. They want us to help them to make AI safe, so they were all interested in FINEOS leading out on compliance and AI compliance. Given that we are global as well, and European Union has brought in some AI legislation as well, we are able to take all that on board, and we have a compliance team in FINEOS. So we have doubled down on the compliance side.
They all saw that FINEOS has the opportunity at the core to drive agentic AI and automation in terms of our workflows and orchestration of our core system. Indeed, the insights that we can present in terms of the deterministic and the assistive type AI that we can present into case managers, whether it be on the underwriting or on the claim side or in the service side, they all see that as FINEOS having a big jump. That is encouraging them to kind of come behind us. It will encourage more AdminSuite deals because of that, because they can see the multiplier effect we get by having AI at the core and across the full landscape of our suite. Obviously, it being safe. That's where it really comes down to. The CIOs have experimented with AI.
They have been working in POCs and developing stuff themselves and bringing in consultants, some very expensive ones, to help them to get their heads around where they can use AI. They're concluding that the data is the most important aspect of being able to drive AI, followed by a really modern workflow system which can be automated. Indeed, agentic can be implemented within the core to orchestrate the business. It's a step-by-step process, though, because they obviously are in a regulated environment, and they want to test everything. They want to be absolutely sure an agent couldn't go AWOL and do things on their core system, on their business that would get them into big trouble. Again, it has to be done in a compliant way.
I think ultimately we all see the advantages of FINEOS being a core system, a system of record, which is crucial to having the modern data set for a business like an employee benefits carrier. Also crucial in terms of being a system of intelligence and system of automation and orchestration. That's where we're going. I think what you'll find with the AI is that it's going to be a huge benefit. Honestly, I see the AI becoming a commodity. You can see what's going on in the world on AI in terms of more and more models coming out and the competitive environment. Watch this space is my view. It hasn't played out yet. In the long- term, where it will play out is that systems very much will be much more intelligent at the core.
Indeed, they need to be compliant, but it should leverage up time then for carriers to really focus in on their clients and change their business models. I'll talk about that in November when I come down for the event in Sydney. I do believe that there's a huge opportunity, and there's going to be big winners and losers in this market in terms of the carriers we have versus other carriers.
Okay. Thank you very much, Michael. We look forward to seeing you in November.
Thanks, Jules.
Thank you. Your next question comes from Richard Harrisberg from Canaccord Genuity. Please go ahead.
Hi, Michael. Hi, Ian. Congrats again on a great result, and thanks very much for taking my questions. Just wanted to ask on Guardian legacy migration and how that's been going. Maybe you could give us a bit of color. I wanted to ask you about the ARR number that you put out of EUR 88 million. I'm assuming that that doesn't include Guardian legacy aspect. So maybe you could just give us any color around when that starts to hit in terms of revenue, the implementation type timeline. Yeah, any detail, that would be great. Thanks.
Richard, good to hear from you again. The first thing is the number doesn't include the legacy. Our Guardian number hasn't shifted in terms of our licenses yet. They are driving all their new business onto the FINEOS AdminSuite for the lines of business that we currently serve. They are going to expand lines of business and do more with us. The legacy side of things, we have been working with them and helping them to line up the legacy data in terms of it coming across to FINEOS. Indeed, they're using AI on the legacy migration side, on that old legacy mainframe. We've developed a FINEOS Migrate product, which again is an automated product around reading in the business and the employers into our suite. Again, we will be able to assist them and go.
They're kind of lined up now to do it, and over the next few months, we'll start it. As in we've started it, all the prep work has already been taking place. We'll start taking data across in the next few months, and it'll come across in increments. We expect that's going to pick up through 2027, and towards the second half of 2027, we'll start to see that legacy kind of data start to make a big impact on FINEOS.
That's really helpful. Just to be clear, it is kind of an incremental over time. You should start to see revenue benefits from that sort of in the second half of FY 2027. It's not sort of a light switch moment where you flick a switch and it's a big lump increase.
Correct. It'll be through second half 2027 into 2028, 2029, and that should kind of conclude it. It's a big process. They have a multi-billion book, so it's not a light switch, as you say in a complex business like this.
No, that's really helpful. Thanks. I just wanted to ask as well, on the penetration rate that you guys have in existing customers just over 10%, obviously it would be nice to say you'd like to get that to 100%, but do you guys sort of have internal targets over the next two to four years? What's like a reasonable number of how you sort of start to think of the cross-sell opportunity and where that penetration rate might get to at some point in the future?
Yeah, look, I couldn't give you a percentage in terms of penetration within that base. What I can tell you is that each one of them is targeted, and Ian carries all the spreadsheets and it's in our sales force as well. But each one of them is targeted around AdminSuite and additional product cross-sell, up-sell, more lines of business coming over, migrations and so on. So we have that trajectory, particularly with our big guys, the six. We've two of them, as I said, as full AdminSuite users, New York Life being our original partner. We have an opportunity in a few years' time to reprice that, but that won't be until just beyond five years' time. But the others are all basically lined up, and they don't have any other option except to look at us.
It wouldn't make any sense for them to go off and try and buy a policy and billing system like over the last few years, where a number of players moved in with policy and billing and tried to cut us off. Those days are over. Those companies have not been successful. So we're back to a kind of a steady trajectory now where as we prove ourselves, whether they use us for claims or claims and options, they are thinking, "What are we going to do with the legacy and what's next?" and so on. Of course, we're having the discussions as well. So more lines of business, which is kind of going across the org, and then more product in terms of going end-to-end. That's the opportunity with these carriers.
They've all got legacy in the back end and they all need to change, and they've all realized as well that the data is the key to the operational efficiency and customer success.
Yep. No, absolutely. Good one. Maybe I will just ask one more question just around the AI and the capabilities you are putting into the product. Obviously, I understand there is a slow process of customers being very careful and cautious in how they implement that. But have you started to have discussions around pricing of the AI elements specifically? Is there going to be a price for AI usage within the modules? Is that going to be all-inclusive? Is that coming into contract negotiations as well, which we kind of touched on earlier today? That would be great.
As of 2025, our release 25, which is 2025 Release 4, 25.4, all our clients can easily move to the full AdminSuite. As I said, most of the clients are still using claims, 50, whatever it is, of them just use claims or claims in absence. Also, as of 25.8, they have the AI core at the heart. So that release of our platform has the AI built in. So we can start to open that up to them, and as I said, they are very cautious and they want it all tested and so on. Yes is the answer. As I said earlier in the answer to Jules, I do believe that it is going to become an expectation that a system like ours is driven by AI. As we move forward, we do price today by usage, and we put a margin on that.
But look, as time goes on, as I said, as these things become more and more commoditized, I do see AI like something like Workflow was 25 years ago. I think that over time we will build all that pricing in. Yes, we will see uptick in our numbers through the AI. But as we sell new deals, we will be expected to have the AI embedded. We will be expected to show AI and the automation and also the insights in the system. So I see it very much as a competitive moat expander for FINEOS to drive ahead and to go hard at the market. Let us face it, we are dealing with clients that have been abused and really some of them have spent hundreds of millions gone down wrong roads and continue in some cases.
So really, we have got to prove to these clients that we have a better approach and we are trustworthy, long-term, good partners for the industry. Look, we do see pricing increasing, but it is probably not the most important thing to me. The most important thing is that we get the product right and that we use it to pull more business into us, totality-wise, get rid of that legacy.
Great. Thanks for that, Michael. Well done again. Good momentum heading into next year's targets. Congrats.
Thanks, Richard.
Thank you.
Much appreciated.
Your next question comes from. Thank you. Your next question comes from Max Moore from Veritas Securities. Please go ahead.
Michael and Ian, I hope you can hear me okay.
Yep.
Yep.
Well done, firstly. Just a quick question, maybe a follow-up on the pipeline and the sales cycle. Something we might have seen with other software companies and after the impacts of the Middle East war and AI just generally, that customers are potentially sitting on their hands a bit more. Have you seen that trend? Or you see that maybe normalized to last year where the nature of needing to migrate from their legacy systems is, yeah, forcing them to speed up the process?
Yeah, look, I think the war side of things has settled down, strangely enough. I think we all feel it's kind of a weird place to be globally in terms of the geopolitical setup, but I think that's settled down. Our clients are really fighting for business, continuing to try and drive their OpEx and growth and they're just as aggressive and focused on modernization as they've always been. I think the AI has been a disruptor, and it's probably the biggest technology change since the World Wide Web. Let's face it is a complete game changer. And I think that it has been a disruptor because the usual thing happens, big consultants go in and tell them that they can build new systems for them around AI and whatever else, and POCs have begun, and a lot of that is starting to kind of be put away.
If anything, I would say that they are kind of getting sensible now around the focus. I think we probably see better, things calming down in terms of back to, yes, you do have to replace your legacy. You will get the AI in there, and you will be better off doing that than spending lots of time and money on different point systems and various technologies. It has been a learning curve and IT teams have been very keen to get out there and do things on AI and show what they can do. As they have kind of done things and then they see the kind of complexity and the risks, and they see the maintenance factors and the costs, they are kind of coming back in a little bit because the business are saying to them, "Okay, what is the benefit of what you have done?
Yes, you have been a year doing this. Yes, you have been able to do that a little bit faster or whatever. But what is the ultimate benefit? What are we getting out of this? What is the bottom line?" The business are actually starting to bring the IT people back in and really focus on the strategic focus around AI.
Just one more quickly. Just interested in, yeah, how you are using AI to speed up and migrating legacy books and then maybe also onboarding customers. I am interested to see if there is anything you can reference how as your product becomes a bit more off the shelf and more developed, how quick you can onboard a customer now versus maybe 18 months ago?
Very good question. If you look back, it took us seven years to build the AdminSuite, two years to onboard and bring New York Life's EUR 4 billion book over to FINEOS, in terms of migrations and everything else. Guardian went live in a year, then they have basically got it fully rolled out and connected up everything in the second year, and we are doing the migration now. OneAmerica will go live within a year, and they are going end to end in terms of quote to claim, and they have basically got the AI core in there. Effectively, as we move more towards more new deals, they get the latest version of the product, which is kind of easier to start on and faster to go on. There is that kind of natural trajectory that is making it easier to onboard, do upgrades, and do the migrations as well.
We do see a momentum picking up. Because a lot of our clients have already upgraded to the platform, as in FINEOS AdminSuite for Claims, and they are well-positioned now to do the upgrade to the AdminSuite and take on the AI core. Some of them may stay on claims, and they can have the AI core there, and we can do the document summarization, case summarization, all the things we do around insights and automation. That is just going to make them feel more that they need to leave the legacy behind because the gap will grow between what they have got in their hands on FINEOS and what is behind.
The AI gives us a really strong opportunity to completely rewrite the whole of the UX, the user experience, the customer experience, and it gives us that opportunity to drive more margin for them and leverage our business as well. Internally, we are getting some great results with the AI as well. Again, we are really focused in now more and more on innovation, and you will see that coming through in FINEOS in the next few months. We may make an announcement or two during the next few months that will show you that. As I said at the start, we are a North American high tech core system that is very focused on a niche space. That gives us those competitive advantages that we talked about over the years in these updates.
Appreciate it, guys, and well done again.
Thanks very much.
Thank you. Your next question comes from Sinclair Currie from MA Moelis Australia. Please go ahead.
Hi. Thanks for taking the question. Sorry, I know it's late. Just one question around the new business underwriting and quoting. Just be interested to understand how you see the scope of that as an add-on or a cross-sell to one of your large clients. What do you see as the sales cycle with that? Is it something which you can get in people's hands relatively quickly, a quicker decision for your clients to make?
Yeah. Hi, Sinclair. Good questions. The new business quote and underwrite is at a crucial part of the business. Most carriers are really big into their customer service and their claim service. Obviously, they make their money through the claim service and really being efficient around that. But they get the growth from the quote and underwrite and how that integrates into their new business environment. Again, it's a very hot area. We do expect we'll be selling that standalone and obviously as part of the full suite. As part of the full suite, it gives a carrier real benefits in that the quote underwrite and the rating kind of go straight into the billing and onto the policy admin. There's massive benefits. Today, they don't have that. They've broken up core systems and the quote underwrite rate is usually separate.
They do put a lot of investment into that because they're looking for that frictionless new business coming through. Again, we're putting a lot of focus into it now to cohesively integrate it into the suite, which we've done, and then look for those differentiators that we have as a full suite for that quote underwrite rate. We've kind of got this bookending approach that we can easily do with clients. We've obviously got the strongest claims and absence system in the carrier market in North America. Now the quote underwrite rate is coming hard and fast on our new technology platform, which is true SaaS and really very lightweight and has the AI and everything embedded. I do think that's going to be a grower for us. It's a Trojan horse type approach. You basically move in and say, "Where have you got your problems?
In the claims area, the underwriting area, or should we just take the whole enchilada? What do you want to do first? Is it a line of business you want to go into the full enchilada on, or do you want to, where are your pain points? Where are your problems? Most carriers have a few of those, and then they start prioritizing. It all depends on budgets and return and so on that they can get. It takes time to set up a deal, as you know, because they have to get budgets. Because these budgets need to obviously take into account their own work and retirement of legacy and everything else and the cycles around that. We do see the quote underwrite as very much a compelling proposition going forward.
Thanks a lot. Appreciate your time.
Thank you. There are no further questions at this time. I will now hand back over to Mr. Kelly for any closing remarks.
Yeah. Thanks very much, and I appreciate everybody staying on. I know we overran a little bit. We are pretty passionate, as you can see, about this business. Ian is traveling down tonight to talk to investors and analysts over the next week or so. We will both be down in November, and we will be running an event as well. Again, similar to what we did before earlier this year. We are also running a customer event in Sydney. Looking forward to that and very happy to have any follow-ups or whatever. Either of the two of us are available for investors and analysts. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.