I would now like to hand the conference over to Mr. Marc Washbourne, Co-Founder and CEO. Please go ahead.
Thank you, and good morning, everyone. Appreciate you taking the time to join our FY 2024 results call. I'm Marc Washbourne, CEO of ReadyTech. I'm joined here today by Nimesh Shah, ReadyTech's CFO, and in today's call, we are pleased to provide you with highlights from our FY 24 results, as well as an update on our growth plans and progress on our enterprise strategy. That includes recent success in the higher education market, as well as an update on our progress in driving operating leverage across the business. Moving to slide two, ReadyTech is a vertical SaaS growth company, providing next generation mission-critical software that closely meets customer needs across human-led verticals. We focus on three segments, which are currently undergoing digital and cloud transformation, Education and Work Pathways, Workforce Solutions, and Government and Justice, and it's that transformation that is driving our core growth.
Our aim is to be a trusted partner to our customers and deliver both innovation and a superior experience to the ultimate beneficiaries of our software: students, job seekers, employees, and citizens. On slide three, you will see that ReadyTech continues to deliver a combination of robust revenue growth and solid cash margins. I'm pleased to report that recurring SaaS revenue, which consists of subscription and license revenue, increased 13.1% on the prior period and now represents nearly 84% of total revenue. Despite some expected enterprise contracts shifting close dates to FY 2025, as previously flagged, we achieved double-digit revenue growth in FY 2024, with total revenue growing 10.2% on the prior corresponding period. Over the year, we signed another 22 enterprise contracts across all three verticals, representing AUD 12.5 million in deal value.
These higher value enterprise wins increased the average revenue per new customer to over AUD 119,000, representing a 25% increase on the prior period. Higher value contracts, coupled with a focus on strong operating leverage, resulted in underlying EBITDA of AUD 38.8 million, which represents an annual growth rate of 11.5% and a margin of 34.1%, while cash EBITDA grew a very healthy 20.2% year-on-year. In the period, we also saw strong operating cash flow conversion of 103.7%, up from 95.4% in the year prior. Slide four shows the broad range and high quality of enterprise contracts we acquired in the financial year.
These included our largest workforce solutions customer to date, Sika, a major contract upgrade with His Majesty's Courts and Tribunals Service in the U.K., a new contract win with the Department of Justice in WA, and several local government ERP wins, to name a few. In the last month of the year, we also signed a multi-year contract with Avondale University, our first university-wide student management system customer win, coupled with other wins, such as University of Adelaide's Pathways Institute. We are particularly excited about unlocking a new and large opportunity in the higher education sector. I'll discuss this in more detail later in this presentation. Throughout the year, we've continued to demonstrate our ability to displace incumbent enterprise players through breakthrough wins across our verticals.
We are now better positioned than ever to leverage the large market opportunities and to continue to grow our share in the enterprise arena of the markets we serve. Our strong track record of wins and customer success on our platforms has opened new and large serviceable markets and attracted new opportunities with the enterprise pipeline now expanded to AUD 31.8 million. Moving to slide five, as the chart on this slide shows clearly, we have grown our recurring subscription revenue consistently at a three-year CAGR of 23%. This is driven by the success of our enterprise strategy, our ability to differentiate from the incumbent players, and to ultimately win and deliver high-value contracts. I will now hand over to our CFO, Nimesh Shah, who although is a little unwell today, will take you through ReadyTech's financial performance. Thanks, Nimesh.
Thanks, Marc, and good morning, everyone. Let's turn to slide seven. On slide seven, as Marc mentioned earlier, ReadyTech delivered another year of revenue growth and improved cash margin, margins in the last call. Underlying EBITDA, which includes the impact of LTIP and non-recurring costs, increased 11.5% to AUD 38.8 million, delivering a strong margin of 34.1%. Equally important, underlying cash EBITDA margin improved by 150 basis points to 17.8%. Total revenue increased 10.2% to AUD 113.8 million, driven by high-value customer wins and growth in net revenue retention of 104%. Strong net revenue retention reflects the progress we've made with upgrading things like IT Vision customers to cloud, as well as success in upselling products to existing customer base.
Subscription revenue grew at 13.1% on a PCP basis and now represents 84% of total revenue. Expenses for the full fiscal year were AUD 75 million and grew at 9.6% year on year, and importantly, there was flat half-o n- half, which reflects our commitment to investing in our platform while increasing operating leverage, and also ensure that we are at the forefront of technology, and we continue to invest in sales and marketing to drive further pipeline growth. Moving to slide 8, and on the balance sheet and cash flow. As at 30 June 2024, the company had AUD 29.9 million cash available for use, including AUD 21.9 million cash and equivalents, and AUD 8 million of headroom in the AUD 50 million debt facility. The company remains considerably geared with a net leverage ratio of 0.5 times.
The company generated AUD 40.3 million in underlying operating cash flow, reflecting continued growth in subscription revenue, customer prepayments, and strong conversion rate of 104%. Turning to slide 9, which gives you a segment view of ReadyTech for the full FY 2024 performance. Education and work pathways delivered a 12.5% revenue growth, driven by new customer wins, TAFE cloud upgrades, and upsell of learning management systems. EBITDA margin continued to improve, underpinned by high value enterprise contracts.
Workforce Solutions grew revenue by 7.6%, driven by new contract wins and successful software upgrades. EBITDA margin was lower than last year due to one-time planned investment in onboarding and R&D staff. Lastly, Government Justice revenue grew nearly 10% on prior year, driven by customer wins and upgrades, and segment EBITDA for Government Justice continues to improve and near, now nearly 30%. I will now hand over back to Marc.
Thank you, Nimesh. In the next few slides, I'll walk through our strategy, our growth, growth drivers, and outlook in more detail. Turning to slide 11, our growth strategy is reflected in four coherent pillars. First of all, in terms of our dominant growth strategy, we continue to target large enterprise customers, having now been successful in winning multiple, those all-important breakthrough customers across our, all our verticals. The second pillar of the strategy captures the power of our install base as a growth lever, bringing value across our customer ecosystems and supporting transition to cloud to accelerate growth in net revenue retention. Third, and importantly, we continue to invest in R&D and innovation to aim for perfect product fit in our markets, and that includes this year's investment in AI to unlock new value for customers.
And lastly, as evidenced in FY twenty-four, we continue to target operating leverage via the benefits of scalable SaaS revenue and other efficiency gains in order to grow margins over time. Moving to slide twelve and the why of our enterprise strategy. First off, with a growing list of reference clients across our key verticals, ReadyTech is in a strong position to win large enterprise contracts in key sectors. An example of this is our success within education, where success with TAFE has enabled expansion into higher ed and our first breakthrough university win. Number two, we have a significant opportunity across the enterprise landscape to replace legacy systems as digital transformation and cloud adoption across our target markets gains more traction. Next, we have a unique value proposition with our open ecosystem approach, which gives us a competitive advantage in the market.
Finally, ReadyTech can deliver improved margins through enterprise wins via the benefits of large SaaS contracts and scale. I'll now talk you through our growing opportunity within education, and we're turning to slide 13. With a proven TAFE platform and enlarged credibility, we are well positioned to capitalize on the large opportunity with TAFE. We are confident that despite some delays in the prior period in FY 2025, many TAFEs have the readiness to replace their legacy systems. We've had several major wins in this space, including Bendigo TAFE and Kangan Institute, Chisholm and Melbourne Polytechnic, which serve as both case studies of benefits derived from the ReadyTech platform and as reference customers for our pipeline.
On to slide fourteen, in addition to TAFE, ReadyTech's breakthrough university win with Avondale University and the expansion of our higher ed customers and capability opens a large serviceable market for ReadyTech. And this is a market ripe and ready for change, with legacy systems needing a generational upgrade and a strong need for a modernized and elevated student experience. As with TAFE, the pathway is clear to become a major and trusted enterprise player in higher education, with a market size of an estimated AUD 240 million now available to us through this breakthrough half year. On to slide fifteen, and another key enterprise market opportunity for ReadyTech. In local government, we are well positioned to execute on the major market-wide cloud enterprise opportunity.
Here we have the benefit of a large serviceable market, existing relationships with 51% of the 530 councils Australia-wide, and growing momentum across the cloud upgrade opportunity within the IT Vision customer base of 170 clients. Our Ready Community Cloud product, which puts the citizen at the heart of the experience, is resonating strongly with both our existing customers, as well as increasing traction in the wider market via notable new ERP wins. To optimize our success in this important market, in FY 2024, we have invested in our local government capability across key senior roles and continue to leverage our partnerships with leading ERP and technology providers, as well as the key implementers in the space, such as Atturra. Slide 16 provides a snapshot of our enterprise wins over the last two years.
These logos demonstrate the broad range of organizations who are not just now ReadyTech customers, but also serve as valuable references for similar opportunities across the pipeline and across our wider markets. The chart on the left shows a steady increase in the average revenue per new customer over the last three years, which now stands at AUD 119,000. Slide 17 depicts one of the key reasons we are winning in enterprise. ReadyTech provides our customers a unique value proposition with our open ecosystem architecture and approach. Being open and connected means greater choice, flexibility, and interoperability compared to legacy systems and the platform monoliths. This approach also means we can play well with the horizontal big tech players who are committed to investing in our markets in areas like CRM and finance, and this is serving as a major advantage for ReadyTech.
To further extend the advantage, we can also leverage specialist vertical partners who act as a valuable referral network and bring deeper innovation to our customers. Slide eighteen provides more detail on unlocking the value in our large customer install base, one of the other pillars of our growth strategy. We are actively pursuing continued growth in net revenue retention by ensuring our customers are satisfied and highly engaged, minimizing any customer churn, while also driving an increased share of wallet by adding value and upselling and cross-selling new solutions. In the immediate to longer term, we aim for a net revenue retention rate of more than 106%. One of the primary drivers here will be an acceleration of the migration of the remaining customer sets onto cloud, particularly in local government.
The next two slides, and connected to the installed base strategy, go into more detail on how we leverage AI at ReadyTech. So turning to slide 19, as a business, we are well positioned to benefit from the AI revolution, and we recognize the immense potential it presents in terms of the value exchange with our customers. In the coming year, we're investing in a dedicated emerging technology team, who will unlock this value for our customers across every platform, delivering AI-enabled products that will increase productivity, automation, and provide more focused task management for our customers. The first ReadyTech-wide release of Ask AI in FY 25, a policy and process agent, is expected to further increase customer engagement, put customers on the AI runway, and unlock new revenue opportunities.
Slide 20 provides details on the ways we are leveraging AI to drive operational efficiencies and open up new capacity within our teams. In FY 2025, we will see the increased use of AI in customer service at ReadyTech, with agents acting as first line of support, copilots increasing software development velocity, as well as growing capacity across our quality assurance teams, all providing a potential to require lower corresponding increase in human resources as we scale and grow, this being strongly aligned to our strategy of driving operating leverage at ReadyTech. Slide 21 provides an overview on our outlook. In FY 2025, we expect further enterprise wins and solid net revenue retention to deliver revenue growth accelerating to low to mid double digits.
We're targeting an EBITDA margin, which includes the impact of LTIP, of 34%-35% and a further cash EBITDA margin improvement of 100 basis points. Today, we also maintain our medium-term revenue target of AUD 170 million for FY 2027, and we expect cash EBITDA to exceed 20% in the medium term, as we continue to benefit from a growing recurring revenue base and operating leverage, as we have outlined. Finally, on Slide 23, and the key takeouts from today's presentation. We are benefiting from significant momentum in the enterprise space, having delivered another 22 contracts in FY 2024, and with a solid pipeline of over AUD 31 million in new contract opportunities. The higher education market has now been unlocked.
We are excited about this new expansion opportunity, significantly increasing our serviceable market and further strengthening our position within the broader education vertical. As outlined, we have introduced several initiatives that leverage AI to build capacity within our teams, supporting our strategy of continuing to increase operating leverage and grow cash margins to greater than 20% in the medium term. Lastly, I'm very confident that our open ecosystem, alongside our innovation and AI agenda, will continue to resonate with enterprise customers across our core markets, and that our strategy will deliver continued and sustainable revenue growth, coupled with incremental year-on-year margin improvements. I'll now pause, and I'm very happy to take any questions.
Thank you. If you wish to ask a question, please star one. Please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two, and if you are on a speakerphone, please pick up your handset before asking your question. Your first question today comes from Chris Gawler at Goldman Sachs. Please go ahead.
Hi, Marc and Nimesh. Can you hear me okay?
Yep.
Yeah.
Great. Just a few questions from me. Firstly, on that pushout of timing from deals from FY 24 into FY 25 that you flagged back in February and you flagged again today, do you mind giving us a sense of whether any of those have landed so far in FY 25, and how important are those deals landing hard to being able to accelerate revenue growth to your 25 guidance?
Yeah, to answer the question, Chris, so I think we would have flagged that there were four enterprise opportunities that slipped from FY 2022.
Twenty-four.
24, sorry, to FY 25. Apologies. The key reason for that really was deferrals of procurement processes, for one reason or another. Predominantly, they were based around budgetary decisions. I think that the reason that we've remained confident on all those opportunities is that they are replacing legacy technology that is causing issues, some of them very major issues. So, you know, they have to procure new software. They all remained open and live, as we previously reported.
I think since we last updated, one of those has since closed, and that was the university opportunity that we have announced. Another of those opportunities we are confident closes in the next couple of months, with very high quality revenue, and the other two remain live opportunities, with close dates during the financial year. So, you know, when you put those together, as well as the wider enterprise pipeline, that's what has given us the confidence in the accelerating revenue growth and the guidance that we've been able to provide today.
Okay, sure. And then just a couple on the medium-term guidance. Just noticed for FY 2027, it used to be greater than 170, now it's 170. Is there any change to your medium-term thinking, or is it more a factor of where we are now in FY 2024, growing at 10% on 2023?
Yeah
... and just making that a little bit harder to get to?
Yeah. No, thanks, Chris. If you look at the AUD 170 million, you know, we did 10% in 2024. To get to 270, that means we'll have to grow to double digits this year and do 14% and 15% for the next couple of years, which is around the mid-teens growth. We are very comfortable getting that. We've got a good pipeline, as we have said, AUD 31.5 million. We've mentioned a number of good logos that are on the page of AUD 12.5 million value of 22 clients. So the pipeline is good. It'll. You know, as your earlier point is, as Marc mentioned, that those that slipped will come in 2025 plus we've got some new ones coming through in local government, justice, and education. So we're very comfortable with the medium-term guidance.
Okay, and then on the change to the medium-term margin guidance, before you were saying it'd be high thirties pre-LTIP EBITDA. Now you've moved to cash EBITDA. Is your thinking still the same with the pre-LTIP EBITDA? Or any sort of things you'd call out there?
Yeah, look, like, we said greater than 20% cash margin. And look, it's really important that cash margins, as we've said for a long time, that our monthly insight is all about cash margins. You know, we previously used to say EBITDA, so greater than 20%. It's very similar to what we have said in the past. We retained that, and, you know, we want to grow those margins. We grew 150 basis points in 2024. We've said 100 basis points in 2025. We'll continue to grow that to be greater than 20% by 2027.
Okay. And then one last question on the Workforce Solutions business. It's a little bit of a drag on the group at the moment in terms of both growth and margins. What's the outlook for that business in 2025? Is it, you know, is it sort of underperforming compared to your expectations? Would you consider any strategic options for that business?
I think the key reason again was some deferrals of procurement processes. You know, I think that probably reflects somewhat of sort of uncertainty in the overall economy, was certainly how we read that. I think that one thing worth noting in that business is it does have a managed services component, although it's predominantly software, the managed services component does grow a slower rate than the software. But we certainly expect the pipeline that we see, some of the opportunities that we're working on, and really, I think a deeper strategy into the verticals that we focus on. I'm sure you know, we work in the Stand Up Economy, areas like agriculture, hotels, where we play transport and logistics. As we go deeper into those verticals, you know, we remain confident in the medium and long-term prospects for Workforce Solutions.
Okay. Thanks, Marc. Thanks, Nimesh.
Yeah, Chris, I'm just going to say, if you look at the workforce software part, that was just shy of 10%. So as Marc mentioned, the managed services growth, which is mainly predominantly for client retention-
Yeah
... the software part is still growing faster than total segment.
Yep, got it. Thanks.
Thank you. Your next question comes from Cameron Halkett at Wilsons Advisory. Please go ahead.
Hi, Marc. Hi, Nimesh. Just two quick ones. I'm just trying to understand the margin or potential margin expansion in the forthcoming year. So your guidance is either calling it, you know, either largely flat year-on-year or just under one percentage points higher. So just looking to understand the operating leverage, you know, IT Vision scaling quite well, so it's reducing its dilution on the overall group margin. You also had strong hiring in the first half of FY 2024. But just kind of wondering on the reinvestment requirements for this forthcoming year. Thanks.
Yeah. Look, Cam, if you look at our cost picture, you know, we are actually doing quite well. You know, the first half cost was operational cost of 37.5, and we maintained that in the second half. Our labor capitalization in the past was more towards product market fit. We've actually maintained that labor capitalization amount. It's gone 3% on absolute values. So we expect the cost to hold, and operating leverage is coming through, integration of IT Vision and growing the cloud upgrades, growing the net revenue retention from 103% to 104%, and grew to 106%. That's very high accretive margin growth there. So all that will add to growing our cash margins.
... Yep. And if I just come back to, I guess, a follow on from what Chris mentioned around the medium-term targets for revenue. You know, if you've done 10% growth in the top line this year, you know, slight pickup next year in the guidance, it implies you need about 15% for 2026 and 2027 to get to about AUD 170 million. So what's some of the key initiatives that reignites that growth rate? Is it the NRR getting to 106? You know, what are some of those things that give you confidence that you can get there?
Yeah, I think first of all, that, you touched on it. I think the one of the key elements is the net revenue retention. You know, it was 103% in FY 2023. We've just done 104% this year. You know, it's growing and accelerating. We think that continued to grow. As we said, we target 106% plus. First of all, that comes from continually opening up the ecosystem of customers and adding new value. There's an element here which is that as the new AI solutions and AI products are made available and delivered to customers, that's gonna provide incremental revenue opportunities across the customer set.
We have one of those, being released in the first half, which is called, Ask AI, as we mentioned, which, we're confident will, be- have strong uptake across the customer sets. And then, of course, we have the, the cloud upgrade opportunities predominantly driven, by local government. We feel that that will accelerate in the coming years and, and, helps with that, net revenue retention. And obviously, on top of that, to get to the, to the one line-- one, one month, the 15% mid-teens revenue growth is the continuation of the enterprise strategy. Of course, we feel we have a strong pipeline for FY 25, but there are also a number of opportunities that we flagged for FY 26 and beyond that are very large, where we're well placed, that also help us to get to that higher number.
Yeah, sounds good. Looking forward to it. Thanks, guys.
Thanks, Cam.
Thank you. Your next question comes from Wei Sim at Jefferies. Please go ahead.
Thanks, Marc. Thanks, Nimesh. Hope you get better soon.
Thanks.
A few questions from me. The first one is just in terms of the labor cap guidance that we previously had given. Are we sticking to that or is that? I don't think I've seen the commentary this time around.
Yeah.
So, yeah.
Yeah, yeah. And absolutely sticking to that. I think we've said 14%-15% for 2024, we said in the past, and we have said for medium term, 12%-13% of revenue, right? We're sticking to that. If you do the numbers, you get the greater than 20% cash margins. I think we just want to make it clear again that internally, it's all about cash margins. And as stated, that labor cap is a big component in that, and those guidance remain, but we'll drive cash margins into operating leverage.
Okay, great. That, that's perfect. And then just, in terms of the accelerated amortization of acquired intangibles, like, so the IT Vision thing, Can you talk about how we should be thinking about, you know, that component going into FY 2025, please?
Yeah, sure. So it was AUD 2.2 million accelerated depreciation because we bought some of the assets that were integrated with Open Office. It's ahead of the plan, and in fact, also the intangibles were paid ahead of time. So it came to around AUD 11.2 million for 2024. We expect that to reduce to around AUD 10 million amortised next year, and then it will step down the year after. It's more of a timing thing, Wei. We just had to bring that forward because due to the integration between Open Office and IT Vision.
Okay, that makes sense. And then just the last one from me is just on slide 16, when we talk about the enterprise customers, can you just give us a bit more flavor on, you know, what is the upside upsell opportunity into the enterprise customers? And is it any different from the non-enterprise customers? Thanks.
I think that generally, part of the reason, I think, Wei, that we like the enterprise space so much, is that the clients tend to be larger and they have larger technology budgets. I think at times you can find in SME that you get tapped out in terms of the technology budgets that may be available. So, you know, the majority of our products have a backbone system, which is often the core system of record, but have many additional modules. I think, you know, we've proven over the last few years that as we move into the enterprise space, we can land and expand with different opportunities.
You know, by way of example, we have in the local government space, most of our ERP customers will take the Property and Rating solution, but then we may be able to offer them things like planning and things like procurement. It's been a really key upsell opportunity. So yeah, certainly confident as we land more enterprise customers that we'll take share, move share of wallet up over time and grow revenue within those customers.
Great. Thank you, Marc. Thanks. Thanks, Nimesh. That's all for me.
Thanks.
Thank you, Wei.
Thank you. Your next question comes from Sinclair Currie at MA Moelis Australia. Please go ahead.
Okay, sorry. Thanks for taking my questions, and congratulations on the results. I guess just quickly want to understand, and apologies if this has been disclosed before. With IT Vision, I think on slide fifteen, you speak to a three to four times uplift in ACV. Can you give us an idea of what the ARR impact is, and essentially how you get to that ACV uplift overall?
Yeah, thanks for the question. So we acquired the IT Vision customer base that have around roughly a hundred and seventy clients. They are predominantly weighted towards Western Australia and South Australia. And these customers are on an older technology, so we really acquired this business for the customer set. These customers, many of them bought the software many, many years ago. They're on a maintenance contract, and as we offer them these customers to move across to cloud, they're not only moved to a cloud and an improved platform, and a more modern platform, they also move to subscription for the first time.
and when they do, and they move through the different modules of that system and adopt the modules that are available, we see ACV grow three to four times, from an average of an ACV of around AUD 60,000 to when we acquired the business, to around AUD 180,000-AUD 240,000 as they move across to subscription. In terms of progress there, we now have just over 25% of that customer base who have committed to the cloud journey.
They tend to move through that in modules. There's five modules altogether. We're moving through that well, and we have a very significant pipeline of further upgrades to come. It's a multi-year process to move through that transition and also increase that ARR. But obviously, for us, feel very good about the very strong value that's trapped in that customer base within IT Vision. I hope that answers the question.
No, that, that's brilliant. Thank you. Answers perfectly. And I just one last question from me. I'm interested in the Avondale win. Just be interested to understand the next steps in terms of what that implementation rollout looks like, whether you're using a integration partner, and how it sort of scales over time. Thanks.
Yeah, thanks. This is our first university win. We have won private higher education providers before, but this is a university. There's 42 universities across Australia, albeit this is the smaller end of universities, you know. This is a major breakthrough. Obviously, winning our first TAFE some years ago, it's harder to win, harder to win as your first one. But look, we are predominantly running this onboarding exercise directly. There is minimal implementers in this space.
And, you know, this is a, as we did for the first phase, we do run a phased implementation, and so we rather than a big bang approach, we move through multiple phases of the system, so it helps to unlock value early and de-risks the implementation. It's around 18 months is the full onboarding process. And, yeah, very confident we have the capacity and the capability to have a very successful project. Very a good win here from one of the incumbent players in the space, and I think it unlocks many other opportunities in universities at the time, also on this incumbent legacy software.
Thank you very much.
Thank you. Once again, if you would like to ask a question, please register by pressing star, then one on your phone. Your next question comes from Claude Walker at A Rich Life. Please go ahead.
Oh, hi there. Thanks for taking my question. I apologize if someone's already asked it. I just had a question regarding the revenue growth outlook accelerating to low to mid double digits. I just wanted to, I guess, understand better what low to mid double digits means. I guess the way I've conceptualized that would be anywhere from, I guess, maybe 15%-40%. Is that kind of right? I mean, is mid double digits 50%, so low to mid is, you know, somewhere from 40% down to 10%?
Yeah, look, I think, we've done a 10% growth, and in the past, you know, we've said, around mid-teens. So there's always, you know, a lot, low to mid double digits, you know, overview is. So we did 10%, but in the past we've done about, 13, 14% organic revenue growth.
Okay.
So between those baselines, that's where we are.
It's more low to mid-teens rather than double digits, as opp.. You're not thinking of double digits... Is the range double digits ten to twenty, or is double digits ten to ninety-nine?
It's more the former, and
Great.
That's probably better. Yeah.
Thank you for clarifying.
Thank you. Your next question comes from Brendan Carrig at Macquarie. Please go ahead.
Good morning, Marc and Nimesh. Just one more from me, please. Just on the composition of the enterprise pipeline, are you able to just sort of flesh that out a little bit more, and sort of separate out those four opportunities that you mentioned? So, obviously one of them has already landed, being Avondale, so that sort of brings that 31.8 down, you know, closer to 30, just above 30. And so then, yeah, the remaining three opportunities, what proportion of the pipeline do they make up? And then from a segment perspective, where some of that pipeline is spread across. Thank you.
Yeah, thanks. Worth noting that Avondale was closed before the pipeline amount was updated. So that's post the signing of the Avondale contract, the 31.8. So give you a bit of color on that pipeline, you've got roughly 45% of the pipeline is in education work pathways, 40% government and justice, around 15% in workforce solutions. What makes that up is first-year subscription and first-year implementation.
And of that, around 55% would be services revenue and 45% would be subscription. A lot of high conviction opportunities in that pipeline. Probably wouldn't want to put an absolute number on how much of that is within those opportunities that got shifted. But certainly a number of high conviction opportunities, and I think it's the conviction in those that really underpins this confidence in the acceleration of revenue growth that we anticipate for the year ahead.
Then just to clarify for you, this, when you mention this pipeline, it's first year subs and services, not total contract value. So when Marc mentioned 55% services and 45% is subs, it's only the first year subs, annualized subs.
Understood. And then one more from me. Just maybe sort of a follow on from Sinclair's question. Just as those customers are converting over to the cloud, some of your competitors in the industry, I guess, have had some somewhat forceful tactics of migrations of their clients from on-prem into the cloud and whatnot. So just in terms of how those discussions go and how the delivery of that transition happens and the customer satisfaction during that process?
Yeah. That's a really, really great question. Well-informed question. I think that, first of all, you know, we try to do this in a very customer-centric way. You know, I think from a customer culture perspective, you know, we think it's important that the customers are moved to the cloud when they are ready, and not forced to. So you know, I think that first of all, I would say there's very strong demand for the cloud-based system. I'm sure you can imagine some of the more legacy technology is somewhat limiting and certainly has some limitations in the ability to, for example, offer things like self-service to citizens in the local community space. So the demand is very strong.
I think that as we have stepped through the first numbers of implementations, many of the customer base, who act as a community themselves, and certainly self-reference and talk and discuss, you know, sort of look for evidence and case studies that the implementations have gone well. I think that's certainly the case, and I think that's why we expect to see an acceleration over the next couple of years across that. There may be a time further down the track, where we may pursue the upgrade opportunity a little more aggressively, particularly as you get to the back end and or the tail of those customers, but you know, at this stage, we're very happy to be more customer-led in that demand.
Thank you. Helpful. Cheers.
Thank you. Great question.
Thank you. That concludes our question and answer session for today. I'd like to hand back now to Marc Washbourne for closing remarks.
Yes. Thank you. Thanks, everyone, for joining today. We're certainly excited about the year ahead, and certainly excited about continuing our growth journey. Look forward to meeting many of you on our upcoming roadshow, and have a great rest of the day.
Thank you. That concludes our call for today. Thanks for participating. You may now disconnect your lines. Thank you.