Good morning, everyone, and welcome to the Objective Corporation first half FY24 financial results. I appreciate you taking the time to come and join us this morning. First of all, about our mission: outstanding digital government software driving stronger communities and nations. I think those of you that have been to one of our presentations before understand that this mission really courses through our veins here. Let's have a little bit of a talk about that. The agenda this morning: we're going to have a look at the financial summary, we'll talk through the highlights, and go through each of the business lines in review, and talk a little bit about the outlook for the second half and the full financial year. First of all, the highlights: revenue is up 5% to AUD 58 million.
I'll talk about the revenue growth a little bit later in the presentation on a couple of slides. The ARR is up 10%, which was to our expectations, so AUD 97 million. EBITDA up, obviously by a large amount due to our new capitalization regime and, of course, the sort of bringing in line our accounting policy to current practice of all the other software vendors in our space. So EBITDA of AUD 22 million, NPAT of AUD 16 million, a lift of 53%. R&D, we're now I'll talk a little bit more about this in a couple of subsequent slides, but we're now talking about R&D as a percentage of software revenue. And that's currently 29% of software revenue, again, really to get comparison with other organizations that are global peers. And then finally, our cash position up 24%.
I think you'll note that even without the capitalisation policy, that was a very strong cash flow result from the first half. That's after we paid AUD 13 million out in dividends in the first half as well. A good cash result for the organization. I'm going to go through about five slides now, which gives you quite a good insight into how we're travelling underneath the surface. First of all, we have made the successful transition to subscription software across all business lines for the very first time. As I noted in my letter to shareholders, we're now at 100% subscription software, which has been quite a while in the making, as many of you will know, but it's great to finally be to get there.
Obviously, on a PCP basis, that's been a revenue headwind because we still had potential right to use in the first half of last year. Obviously, that sort of impacted the profit before looking at the capitalization regime. The other big hit is that we got to 80% of our revenue was recurring revenue. Again, that's a new high watermark for us. I think if you look across this chart, you can see movements in top-line revenue. We will talk about the compression effect that we've had with our approach to services and service delivery models. But you can see that underneath the surface here, the trend is marching on in terms of that great recurring revenue that is obviously at the margins that we all prefer.
If I look at the next slide, again, this gives you, hopefully, as it does us, a high degree of comfort that everything's going in the right direction. If we look at the growth in our SaaS revenue here, it's still running at a five-year CAGR of 32%. And you can see, again, the top area there, only AUD 10 million in non-recurring revenue in the last half. And that's the smallest number that we've had in five years. So we will talk, as I said, a little bit about that revenue line as we go forward. And at the same time, our traditional on-prem USP revenue isn't offsetting that number. So you can see there in aggregate across those two lines, we've got sort of 36%.
So if we look at R&D, as I mentioned, 29% of software revenue, I think this chart really warms us all, whether you're an employee, a customer, or a shareholder. I think this really tells a very, very strong picture. As I said, 29%. But most importantly, 43% of our all-time R&D has happened in the last five years. And I think that bodes well as we go into the future. Our capacity to continue to invest in R&D, this number is up there with the world's biggest software companies, and I think just underpins the quality of what we're doing. Two other charts, which I think are also helpful. I mean, again, historically, we've used that 20% run rate of total revenue metric.
But as we've squeezed down the lower margin services revenue and as we've prioritized the higher margin subscription revenue, that really has sort of adjusted the way that we look at this. And if we look at this as a percentage of R&D, you can see here the gray line on the chart on the left gives us great comfort in the levels that we're investing at, but also tells us where the margin expansion's available. So we're able to sweat the intellectual property more than we ever have done before. And that's a trend that I think you'll continue to see in the future periods. The chart on the right-hand side also gives you, I guess, that same level of comfort that we're able to increase our operating leverage.
I think if we look at the 2022 to 2023 year, we know we had some headlines there, certainly in terms of payroll increases as a result of the COVID years. But we've been able to sort of bring a lot of those things back under control. And as you can see, that we're able to achieve an improvement in operating leverage as well in the current period, which we expect to fully flow through the remainder of the financial year, as well as into FY25. I think that's an overall trend that we would expect to see. So I expect that all those charts give you a high degree of comfort about the direction of flight.
If we talk about some of the FY25 highlights, first of all, I think, as I've mentioned at many of my previous presentations, this is something this concept of the flywheel of innovation is something that we like to remind ourselves about and remind all of our stakeholders about, regardless of where you sit. And that is that the more that we can invest in high-quality R&D and the more that we can deliver high-quality software and service delivery to customers, we get the financial performance that allows us to continue this flywheel going. And I think this period is a beautiful illustration of that. Again, everything from our perspective is driven by regulation and governance and digital transformation. I think it's quite interesting. A lot of people talk to me about sort of how do you see the market, what's happening in our market.
Historically, Objective has done very well in downturns. I wouldn't say that, "Okay, so it's a little bit softer in terms of the general economic situation at the moment." But true to all other downturns, we appear to be powering ahead. And I think that regulation and governance is something that is always a growth industry and doesn't slow down just because there might be a softer GDP. Again, governments continue to invest in digital transformation. That's where they can drive out new efficiency, where they can get us all to be great data entry clerks as well. But also, the combination of these things together is delivering us these national and community outcomes. So I think that value proposition is alive and well. And I'm sure we'll be out the other side of any economic softness over the next 12 or 18 months.
Objective's going to be in a great position as we go through this period. Equally, we've had really strong demand through customer value. A lot of this has been driven from the 29% investment in innovation that I've spoken about. We've got an Objective Nexus powering through, 360's making great headway, particularly offshore more than it is in Australia, in the U.S., and the U.K. Build has got some new capabilities, which I'll talk about as well. We're also driving out new and fresh demand with Objective RegWorks, which, again, when we get to the individual lines of business, I'll give some more color to each of these areas. At the same time, and I've addressed this in my letter to shareholders, the other elements that are really quite important to us are investing for life.
A lot of what we're doing, if I think about Objective Build, we're talking about this is a platform for the next quarter of a century for the markets that we're investing in. We've got a lot of things going on in R&D at the moment, as we always do have. The other elements where we're particularly focused is around security. We haven't had a security breach here at Objective, or not that we're aware of. Long may that continue. But we have a whole team of people now that are permanently dedicated to what we're doing around security. You can see some of the accreditations that we've got here. And wherever we're conducting business, we're very strong on making sure that we're reaching these accreditations. These are essential for customers. They differ from country to country.
But our security posture here at Objective is extremely high, as you would expect with an organization that's looking after the types of sensitive information that we are. At the same time, a lot of our contemporaries have been looking at customer success as an easy place to make savings and get rid of people. We're probably on the completely opposite side of that, where customer success is something that we're investing heavily in across all of our business lines. So making sure that we've got 18 practitioners out there with our customers, helping them get great success with their investment in Objective technology. And so that's been a great area of growth for us in terms of also stimulating customer demand. Then finally, M&A. We speak about M&A at every reporting period. We've been a long way down that path in the current period.
I talk a little bit about this in my letter to shareholders. But I think still in the current environment, if I look at return on capital, most of the things that we look at don't measure up to our standards. And as a result, it's been somewhat difficult to get the right level of return that we could versus, say, using our balance sheet to really try and drive out more organic growth, which I think is at a healthy point. So I'm sure there'll be more discussion about M&A later in the presentation. And then finally, scaling for profitability. Funny to see profitability back in vogue in so many places. A lot of companies clearly that are cash flow negative struggle to raise fresh capital. Profitability's always been in vogue here. I guess we're a little bit old school in that respect.
We've been very focused on driving out ARR, as you know. We've repeated our target of getting to 15% for the full year. I'll touch on that a little bit later. Operating cost control, you've seen through the margin expansion, we're well and truly aware of. And then finally, with our efficient solution delivery, we really took the decision about 18 months back now that while services was an integral part of the things that we did for customers, how could we actually drive out a lower cost to deploy the solutions, a lower cost to engage customers on our platform? How can we give them value faster than what we've done before? And the net effect of that is you actually start eating one of your revenue lines because you're trying to automate more and more of the deployment model. And you're trying to do things more efficiently.
So while that does give us, I guess from a shareholder perspective, some consternation because we're actually trying to push revenue down, which sounds a little bit counterintuitive. But the reality is, as this rolls forward over the next couple of periods, you'll see ARR will continue to grow. And at the same time, which is clearly at much higher margin than the service delivery side has historically done. And I think that sort of sets us up for future margin expansion as well. And then if we go onto the individual business lines, as you know, we have our three lines of business: Content Solutions. We previously called this Content and Process. And I think people know that's a little bit of a tongue twister. So we've gone back to where we were with Content Solutions, which is what we call it internally, planning and building and Reg Tech.
So I just want to explore a slide on each of these areas. Content Solutions, sales revenue is up 4%, ARR up 10%. We think for a mature line of business with a whole bunch of new capabilities, that's a fairly solid result. We have a very strong outlook for the second half. We've had a lot of customers go live with Nexus and more coming. I think the second dot point there is also worth calling out. 20% of our existing customers of all time have expanded their use of our solutions by purchasing additional licenses in the last six months. I think that's not a metric that we've historically tracked. But it is a very large number of customers that are clearly getting value from what they're doing with us and therefore feeling confident about investing in further purchases. R&D has been very active.
Objective 360 goes in leaps and bounds. I think not only have we delivered a lot of the new AI capabilities with 360, we're also now using 360 to help us move customers efficiently from on-prem to the cloud with Nexus. That's been somewhat of a moment of serendipity. It's been very helpful in, as I said, getting the cost of converting customers down and moving them to that new platform. I addressed this with a sneak peek in the shareholder letter as to how we're consolidating some of our products as well. I think if I go back 10 years, everyone told me that we didn't have enough products. If I go back two years, some of the feedback was we seem to have too many products.
This was really a way of us looking at we're not actually, in a real sense, taking away intellectual property where what we're really doing is grouping some of our products together. You'll see GOV365 has been rolled up into the Nexus platform as an example. So we've gone from 17 discrete products down to what will be announced shortly being nine discrete products with no reduction in capabilities, of course, but just a more streamlined way to take those messages to market. I guess some of the highlights also that I did want to call out was Keystone. It won new customers in FSI that you're probably aware of. Netwealth come onto the platform as well, which is great. We also won our first new regulation, the climate risk disclosure, which is coming to effect in New Zealand.
We expect that will come to effect in Australia as well. So we're doing our first climate risk disclosure project with a major New Zealand bank. So, as I said, there'll be more to talk about later in the year. The other thing that's happened in the U.K. is a thing called the LURA or the Levelling-u p and Regeneration Act. As a result of that, we've had four new projects in the last two months on the new KeyPlan product. Those of you that have been with us for a while will know that we split KeyPlan and Keystone apart last year and made KeyPlan very much a government-focused solution. As a result of that, we've been able to introduce new capabilities which are clearly winning new hearts and minds in the U.K. So there's some of the highlights there.
If I move along and talk about planning and building, a couple of things here to perhaps draw upon. Consenting volumes for building are down globally, not just in New Zealand but also in Australia and also in the U.K. It's probably what I'd say is a return to the trend line. I think as everyone sat around it at home during COVID, they went, "Let's build a swimming pool. Let's build a new shed. Let's build a new extension on the back of the house." And that gave us sort of escalated volumes. As I mentioned, they're really back to trend now. And I think this is a global phenomenon. It's not new. It's the same thing in the U.S. So in spite of that, we've won new customers. 50% of New Zealand councils have already committed to build. And they've been progressively rolled out.
Just this week, we released the new inspections capability, which has been something that we've been waiting on from our side to actually go and prosecute the other 50% of councils that we don't have. So that's a strategic new piece of capability which has gone live just in time. It was actually yesterday. So great to see the team deliver that. We've also got a slight change in the regulatory regime in New Zealand whereby for the first time, say the first time, Kāinga Ora, which is really a government agency, part of New Zealand Homes and Communities or is New Zealand Homes and Communities, I should say, is already an Objective customer for many of our products, ECM, Connect, and clearly in the planning and building space. But we've got a new entrant which is Building Consent Approvals.
They're looking at how to streamline a lot of the group home builders across New Zealand. We've become a strategic partner with them. They'll be using our software going forward for their new capability, which we think is actually going to take up or has the potential to take up a great deal of capacity in new building consents in New Zealand and bring us into councils that we currently don't have as part of our customer portfolio. At the same time, we've been doing a lot in the planning and building space. From an R&D perspective, we're working on other markets including Australia, the U.K., and the U.S. I think you'll see the fruits of that labor in the second part of the year. At the same time, the customer success team's been really busy with Objective Trapeze.
We've now got 4,500 professionals using Trapeze every day across ANZ and the U.K. So that's a fantastic achievement for the team to think that that many people are using this platform every day to process the nation's building consents. And then finally, in terms of line of business, just talk briefly about RegTech . We had a very quiet time at the end of FY2023 with new customers. But in the first half, the market was again very active for us. We landed NRAR here in New South Wales just before Christmas. And that's our first new project that's really using a lighter weight delivery model. So a lower cost delivery model, a faster delivery model, and a much shorter time to customer value. So that's a very welcome new customer for us using that delivery approach.
We transitioned a whole bunch of customers onto the latest versions of RegWorks. And there's a lot going on in the thought leadership area. We're one of few organizations that's focused on this regulatory market. We published a new report here in Australia. We are headline act at the U.K.'s Institute of Regulation conference next week in London. And that will bring with it a whole bunch of new marketplace awareness for what we're doing. We are anticipating closing our first deals in the U.K. in the second half. So I think that's something to look forward to reporting on as the half progresses. And then finally, I should say Firearms Safety Authority of New Zealand marked its first anniversary. And we cleared the backlog of 5,700 license applications through that platform.
So, I think if you're in New Zealand, there's quite a bit on firearms legislation through the change of government. But certainly, the Firearms Authority is here to stay. And there's been great success with that application. So finally, in terms of the outlook, all of the things that we do here at Objective are still really around these four pillars. It all starts with great software, how we're delivering more opportunities for customers, how we're doing that more efficiently, how we're growing our family traditionally through M&A, and how do we attract new fans. And we still look at the world through that lens today. But I also wanted to reiterate our strategic priorities for this financial year or this full financial year.
So first of all, coming back to outstanding innovation, we've got that consolidation of capabilities with content solutions headlined under the Objective Nexus brand, all the things that we bring through that with 360, which is getting really incredible results for all of the proof of concepts that we've run here in Australia, the real delivery that we're doing in North America, and certainly engaging with CIOs across government. We've got a lot going on in AI. I know AI is the flavor of the month for many people. We've been doing AI for a long time, whether it's been computer vision in things like Objective Trapeze or other parts of the applications that we've worked on. I know that there's been a lot of excitement around ChatGPT. And we've had OpenAI as part of our solution for a long time. So these are not new concepts to us.
These are things that we're delivering on all day, every day. We're doing a lot in ODL2, our user interface user experience platform. You'll see a lot of that in the second half of the year as we roll out more things, particularly in planning and building. We're committed to deep customer engagement. As I said around our customer success team, that's a really, really important part of what we're doing today. It's giving us great insight. I'd say at Objective, I've never seen greater market engagement at a grassroots level than what I see today. And it's really given us confidence that we are investing in new geographic markets for each line of business. And some of the M&A work that we've been doing in the U.S. in particular has given us the comfort that we really need to go and drive that market ourselves.
While we're still looking for the right partners, we have some very active partners there delivering for us now. We've been very active on the M&A front but haven't concluded anything now. I think our best return on capital in the near term is to make sure that we've got enough of our own people on the ground driving up the market opportunity. Then finally, operational excellence. I've mentioned several times now we remain with our 15% target for ARR growth for the full year. We're delivering on margin expansion. We're really going to keep focused on how do we deliver faster for customers, which we'll probably get to the end of the headwind effect on revenue at some point in the next 12 months. Certainly, that will continue to reduce as a total percentage of our overall revenue.
With that, I'm going to open it up to questions. Ben, do you want to read out the questions?
Yeah. I will. I'll combine together a number of different questions. The basic theme is the ARR growth for the year assumes a larger second half than the first half. Can you talk about the seasonality? And what gives you confidence to deliver that close to AUD 10 million in the second half?
Yeah. So no, that's a relevant question. Look, we're always second-half biased. I think people know the way the government's fan pattern works. So we would normally do somewhere between 30%-high 30% in terms of new growth in the first half. And I think we're in that range this year. At the same time, I don't want to get overly bullish. But we certainly have the near-term deals in the market that give me confidence that we're on track. And the typical first-half, second-half split is what we would expect. So I think there's a high degree of confidence.
Just on R&D and the move to R&D being as a percentage of software, where do you see that in the future? And how should I start thinking about the move from the 20% of revenue to putting it against software revenue?
Yeah. I mean, look, clearly, you can back-solve 2% of revenue as well. So it's hiding that the original comparative number is hiding there in plain sight. I do not anticipate that it's going to rise above where it currently is. I think even the most R&D-focused companies on the planet are probably in the low 30s. But I think we've got capacity to spend more if we wish, of course. But I think around that 30% level as a percentage of software revenue is probably where it's going to land for the foreseeable future.
A bit more specific now. Just talking about from Content, we talked about the 20% of customers increasing their license number. Can you just talk about how that either reflects growth in the headcount at the customer sites? Or is it more modules and products going into the customers?
It's a combination of all those things. I think in any given month, it probably has a different bias. But I don't think we don't see there is no overarching trend of it's a particular module. I don't think that there's necessarily there are some headcount growth in some of the government agencies. I think it's fair to say that if you're a regulator that has got a particular initiative or a particular program, it's going to grow. But equally, we would have had some government agencies that shrunk their use of Objective in that timeframe as well. So there's probably an offsetting. So I guess I'm trying to get behind the question a little bit. I don't think there's any massive growth in government agencies necessarily. It's perhaps more the initiatives that the government agencies have got and where they're being funded for new regulation or new efficiency drive.
Again, this is combining a few different questions. But just talking about each of the lines of business individually, how does the 15% ARR growth break down roughly between those lines of business? Are they all contributing? Or where's the driver of that growth?
Look, they're all contributing. I think it was called out. Again, it's there on those couple of slides that I went through against the individual business lines. So you can actually break it down and see where the growth's come from. But I think it's for the first half, I mean, you've got to respect the fact that our sales cycles are somewhere between six-24 months. And if I just look at that window of the last six months, you can see the breakdown there. Content Solutions was robust. Planning and Building was off but with a one-off factor of the sort of transaction rate. And RegWorks was sort of relatively strong as well. But you would expect RegWorks and Planning and Building to be for the full year very strong numbers, very high teens.
I think you'll see in a couple of those cases there that they weren't. You would expect to see strength in the second half from that.
Just sort of a follow-on to that is just around the Nexus conversions and how that's driving up the Content Solutions number and how that's going generally and what the outlook for second half and future periods is?
Yeah. So we've got seven customers onto the Nexus platform now. So I don't want to say it's slow going. I think it's a little bit like the move of customers to Build. We're taking the first ones nice and slowly, holding their hands, making sure there's no issues. Because we want to make sure that our reputation for doing these things builds confidence. So the outlook for the second half in terms of the Nexus conversions is quite strong. But I think that, again, when I model this out, we're not going to have this big Nexus balloon after which there's a cliff. I think it's a progressive movement of customers, which will make up a portion of our Content Solutions business as I look over the next sort of three to five years.
Moving on to margins, just what are the drivers of margin expansion beyond this half or for the next half and then on into future halves?
Yeah. I think they're twofold. That can occur with little increase in headcount. Hosting costs are really the biggest variable there. So clearly, from a go-to-market perspective, that should drive efficiency. At the same time, thinking about the other side of the equation around service delivery, there's no great need to hire more people to go and deliver the projects that we've got coming on. So even though the business continues to drive on from a revenue perspective, there's very little driving the payroll or increases in payroll. There's a lot of leverage out of the 400-odd people not odd people, but 400 people that we have at Objective today.
I think just a couple of clarification around the margin expansion you're referring to is not driven by the capitalization of R&D that it's at the.
Right. Yeah. Okay. Yeah. That's a relevant question. Look, in terms of the capitalization and how that's presented, we're doing that from a comparative perspective. But we're still driven internally by operating profit in the same way that we always have. We don't even, as a leadership team internally, even look at the EBITDA and NPAT outcome as to the two reporting periods. The ELT is very much focused on the operating profit growth. That's very healthy.
Just further to that as well, you mentioned as you were talking that there's a headwind effect on revenue for that we'll get through a headwind effect on revenue in the next 18 months. Can you just clarify what you mean by that?
I'm talking about the service delivery element. Look, we're probably at there now. But we're still focused on making sure that we're—it's very clear, not just at Objective but at every software company that's mature, that the margins around software and the leverage effect that you have around software is substantially greater than services. I mean, our services business has never operated it better than single-digit margins. And I think at times operates at break-even or worse. And so it's really about the quality of the underlying revenue. So as we've been sort of driving that out, that has a headline effect. And if you look at some of those earlier charts, again, it's there in plain sight for you to see just what the growth has been.
Just taking on that theme, can you elaborate on how that potentially plays into using partners to deliver the solution as well?
I think we are so established in Australia that it is unlikely that we would do anything different in Australia or New Zealand for that matter. Look, we still do use partners in Australia and New Zealand where there's a go-to-market partnership. So it's not that we don't do it. I think what's happening, certainly from an international perspective, in North America, we only have partners. And in the UK, we have a mix. I should say when it comes to 360, we've only got partners in North America. But I think overall, yes, if we're going to get more leverage out of this business globally, we need to reduce the complexity of deployment, which we're doing. Far more things are automated. And the more you automate, the more partner-ready the applications become.
So again, this is sort of part and parcel of the strategy, particularly with RegWorks, is how do we get more people globally able to deploy that application? And this just feeds into that.
Again, this is combining a number of questions into a question regarding that build and how the build transition is progressing, how inspections impacts the transition of customers onto build, and more generally, how we're going with some of the larger customers. It was touched on about the regulatory change and how that impacts that ability to get into the larger customers.
Yeah. So I think there's I think that there's two questions there. So let me sort of split that up. Look, first of all, the inspections capability has been a big thing for us. It's been a big thing to be able to take into existing customers of AlphaOne in particular but more broadly in the marketplace. Inspections is a big part of the solution. And I think the current inspections capabilities that we have that anyone has are substandard, whether they're using one of our historical ones with GoGet or Alpha or whether they're using an independent third-party inspection capability. They are all, in my view, not what you would expect in the current day and age. We've been investing in inspections for the last 18 months. And now we've got a very elegant inspections capability that runs on iOS, Android, Windows Mobile.
It can be disconnected from the network. It is a modern user experience. It doesn't have all of the issues that come with taking a tough book into the field. And so it's something to just help customers across the line in terms of, "Okay. Here's a technology uplift. And to get that technology uplift, we need to migrate to build." We've been very focused during the last 12 months on just making sure that all of these customers that we've been moving on to build have been having a good experience. We've been doing a lot of field testing. So where there's been any issues, they've been addressed. So it's really been. I've had to remind the team many times about the value of patience and about the value of getting it right.
I was more intent on doing an outstanding job for customers by taking the time to make sure that what we were rolling out was of super high quality, not just in terms of the software but in terms of it doing the job that they need it to do. And as a result, that builds confidence to make sure that build becomes a national platform. And I think we're I think the team's doing an outstanding job with that. Is it slower than I'd like? Is it slower than they'd like? Yes, it is. But I think when we look back at history, we'll find that this is absolutely the right approach to build trust with those customers. So I think we're well poised to start moving some of the bigger councils along. And I think you'll absolutely see that.
With BCAL, it's a new idea and I think something that's sort of timely. We see it here in Australia to some extent but not at the scale that we're seeing it with BCAL. So essentially, I've mentioned this before, that there are 15 group home builders in New Zealand that build roughly 50% of the new homes in New Zealand. And New Zealand's got the same housing shortages as what most countries have. As a result, there's clearly a high degree of frustration in the market at how long the process takes. And you've got these group home builders who have got a big say. So the team at BCAL are essentially going to each of the group home builders and have gone through the accreditation process with IANZ to become the first truly independent building approval assessment organization.
And so a group home builder will contract with them regardless of what council that they're in to actually do the building approvals, which will be respected by the council. So look, I think there's still a bit of a journey for them. But I think they're well placed to pick up a lot of work. And in a lot of council jurisdictions where we currently don't have one of the Objective Build platforms. When I say that, I'd be talking about Christchurch as an example where BCAL is located, also Auckland. But we'll also see this in smaller local government authorities as well. So I think that's going to be a very good step for New Zealand and a very good step for Objective and Australia, actually, won't affect Australia at all.
This is, again, summarizing many questions in relation to M&A and capital allocation and just how we're balancing the capital allocation between M&A, organic growth, and potentially share buybacks given the cash balance.
Yeah. Look, from a buyback perspective, I mean, we're keen buyers. We're keen buyers of our own stock when the opportunity arises. But we're equally trying to not take liquidity out of the market. So it's a bit of a fine balance. But I always take the view that if external investors don't want it, we'll certainly have it back. From an M&A perspective, I think I've spoken about the U.S. many times before. We have been super active over there. There is just still a fundamental problem that's been driven by PE. And that is tailing off now. I mean, a lot of people can't get funding. PE firms are struggling to get new capital inflows unless they're going to be used for new purposes rather than propping up existing portfolios.
We've got a PE market which is disengaged from the public market. I just clearly look at the business through the lens of where can we get the best return on invested capital? I don't care where that is. I don't care if the answer is organic growth is the faster way to get that return on investment. I think that's why we've been very close in this last couple of months but have paused on a couple of things, particularly in the U.S., where I just look at the value. We've got the balance sheet to support it. Looking at the value and looking at the return that we're going to get on that invested capital, it just doesn't make sense to me. Yes, we could buy something. Yes, it'd be a great thing to announce.
Yes, it would lift ARR. But at what cost? I think when I look at it through that lens and look at it as a long-term shareholder, even a short-term shareholder, I think that we've got to see better return on capital before we go and deploy it.
I think that covers the main themes of the questions, if not.
All right. Again, look, thanks, everyone, for their time. I'm sure I'm going to see more of you, some of you, over the next couple of days. And again, thanks for your trust and support. And yeah, look forward to being back here in six months' time talking about the full year. Thanks again.