Welcome to the WiseTech Global investor briefing call. I'd like to introduce Chief Growth Officer Gail Williamson.
Good morning, everyone. Thank you for listening in to our first half 2020 results briefing. We appreciate your interest and support, particularly on this very busy reporting day. Earlier this morning, we launched with the ASX our statutory accounts, our results release, and our investor presentation. Each of these is also available from our investor center at wisetechglobal.com. Joining me today is our founder and CEO, Richard White, and CFO, Andrew Cartledge. We'll take about half an hour to talk through the financial highlights, performance, and strategic delivery, and of course, our outlook for the full year, after which we'll all be available to answer your questions and discuss the business further. Over to you, Richard.
Good morning, and thank you for joining us today. In the interest of time, we will start on slide nine. In the first half 2020, our business delivered high-quality growth in revenues and earnings while we continued to expand our technology platform and grew our global footprint. The strength of the core business and strategic actions are clear in the continued revenue growth of 31% to AUD 205.9 million for first half 2020, a CAGR of 43% over the last four years. EBITDA grew 29% to AUD 62.5 million, the 45% CAGR over the last four years. Despite significant geopolitical and trade war tariff headwinds for logistics organizations that played out late in 2019, both revenue and EBITDA continued to grow, significantly bolstered by execution in global rollouts and greater use by existing customers.
Recurring revenue for CargoWise came in at 99%, with 99% of that revenue usage-based, and is now up to 90% recurring for the group overall, including 40 acquisitions to the 31st of December 2019. We continue to enjoy negligible customer attrition running at less than 1% per annum, as it has for the last 7.5 years since we started measurement. Our customers stay and grow transactions and users due to the power, depth, and productivity of our global platform, which is why we continue to invest about 1/2 our global workforce and over 1/3 of our revenues each period in product development. Investing deeply and innovating continuously over the very long term makes our product easier to sell, so our revenues grow faster and makes our sales and marketing efforts highly efficient, consuming just 14% of revenue and 12% of our people.
Keep in mind this includes the sales and marketing efforts of the dozens of strategic assets we have acquired. EBITDA was AUD 62.5 million, with a healthy margin of 30%, including our acquisitions. It is worth noting that our EBITDA margin, excluding acquisitions, was 49%, up 19 percentage points since FY 2016, as we continue to see the benefits of our disciplined and highly efficient commercial model in our core business. That is including the investment we made in expanding our global infrastructure and G&A to support our growth. Overall, our net profit for the half year grew 160% to AUD 59.9 million, reflecting both the strong growth in profit year-on-year to AUD 27.2 million and a required P&L adjustment for this period of AUD 32.7 million fair value gain, resulting from reduced contingent consideration liabilities in relation to acquired earnings.
More important than our strong financial performance is the continued execution of our five levels of growth. Together, these levels work to build long-term revenue, drive customer growth, and accelerate our global expansion. We remain relentless about innovation, investing AUD 73 million compared to AUD 113 million for the full year 2019, and further expanding our pipeline of commercializable innovations and delivering over 450 product enhancements seamlessly across the CargoWise platform. We continue to accelerate our development capability within our 35+ development centers worldwide, hundreds of upgrades, including initiatives around trade requirements, landside logistics, container automation, and leveraging acquired technologies to address new customer segments and expand our TAM. We have continued to invest resources into our pipeline with machine learning, natural language processing, process automation, guided decision support, along with global customs, global data sets, enterprise engines, and platform expansion.
We drove greater usage by our existing customers across transactions, modules, and geographies, providing 70% of our organic CargoWise revenue growth in the first half 2020. This growth was generated by our large customer base adding more transactions, users, and geographies, and using more modules. We made significant progress in global rollouts with DHL, DSV's integration with Panalpina, and commencing work with Bolloré on their global rollout. We continue to deepen and diversify our customer base so that our top 10 customers are now only 19% of revenue and none are more than 5%. Now, 40 of the top 50 global 3PLs and all 25 of the top 25 global freight forwarders are using our solutions somewhere in the world.
We continue to bring new customers onto the platform with new regional customer deals, and this month we signed a new global rollout of freight forwarding and customs for Aramex, with more global signings in the short-term pipeline. We now have over 280 external Wise Partner organizations across the world actively referring, promoting, or implementing our platform. We have 48 partner networks actively promoting CargoWise, and over 3,700 new CargoWise certifications were completed in the half, a total of 19,000 practitioners who utilize or advise on CargoWise in their roles every day. Turning to strategic acquisitions, we secure these for resources to accelerate our technology development and market entry. In the first half 2020, we have progressed product and tech builds across over 30 assets, along with commercial foundation development and localizations.
In addition, since the 1st of July 2019, we have completed a further four valuable strategic acquisitions in Switzerland and South Korea and adjacent technology for container yards and logistics-focused machine learning. And while we focus our time and resources on delivering our long-term strategy, our revenue generation continues unabated. Our CargoWise operations are a powerhouse from which we extend our market leadership. You can see the strength of the platform and commercial model we have built over the long term in the revenue trajectory of organic growth across all the cohorts. This revenue grows during extensive business transformation, license conversions, and development programs. The expansion of the CargoWise platform and adoption by existing customers provides diversification and resilience through market cycles. All CargoWise cohorts grew revenue in the first half as they did in the full year 2019.
We are rightfully proud of our less than 1%- attrition rate, which includes all forms of departure, including bankruptcy and consolidations, and it is a key KPI by which we monitor ourselves. A key catalyst in growing market leadership is further global rollouts by the world's largest freight forwarders. The top 25 forwarders continue to grow share of market with collective revenues of AUD 350 billion annually and significant volume across ocean and air. We have 10 global forwarders already rolled out or committed to global rollout, including eight of the top 25 and the world's largest and most profitable. Rollouts take time, often many years. However, a completed rollout is still early penetration, with significant increases in transaction throughput as customers utilize productivity tools, automations, and access new products and additional modules.
And more and more, the platform provides an effective tool for digital transformation and for consolidation across the industry. During the first half 2020, several customers in rollout accelerated their rollout plans or announced rapid rollout commitments. CargoWise strength lies in the diversified drivers of revenue and the highly efficient commercial model, the transformation of which over the last 10 years is provided in the appendix. This WiseTech Way is responsible for the 90% jump in EBITDA for our core business from 30% in FY16 to a 49% margin, even while supporting our global expansion and accelerated global footprint. Organic revenue drivers are listed here on the left, but not all drivers add revenue in the period. For instance, in FY18, we saw a significant increase from one-off license sale and large pipeline product launches, items which did not present in this half.
Further information on this is available later in the pack. In any given period, we see growth through existing users, new product launches, and transitioning license arrangements. Contributing to the powerful total revenue growth of 31% year-on-year, CargoWise revenue grew 24%, delivering AUD 126.5 million off prior- year base of AUD 102.3 million, healthy despite trade war headwinds for logistics providers in late 2019. As expected, revenue growth from acquired strategic assets was relatively flat, with the exception of the inclusion of AUD 22.6 million from full- year impact of 14 acquisitions in FY 2019 and AUD 0.4 million from three acquisitions completed in the first half of 2020. These assets are important strategically, and their revenues will transform over the long term as they build out the commercial foundation and development components.
In addition to revenue growth up 31%, reflecting the execution of our strategy and CargoWise recurring revenue of 99%, EBITDA grew to AUD 62.5 million. Group EBITDA margin, while lower at 30%, actually reflected strong profitable growth, particularly offset by lower margins from our acquired businesses. Overall, EBITDA has nearly doubled since first half 2018, and in first half 2020, our CargoWise EBITDA margin, excluding acquisitions but including M&A costs, was 49%. Importantly, we continue to improve the high quality of our revenue and ongoing license transitions. Excluding acquisitions, CargoWise has achieved a 99% recurring revenue, with 99% of revenue from on-demand licensing. We have prioritized license transition and long-term revenue quality over short-term revenue benefit in swiftly moving existing CargoWise customers to seat-plus transaction licensing.
This focused drive saw 95% of CargoWise revenue move to transaction licensing, up from 81% in the six months since FY 2019 and 71% in the first half 2019. Acquired business revenue from OTL will transition over the coming years towards on-demand licensing and STL where appropriate. We have a proven historical expertise in customer license transition, with less than 1% attrition throughout our transition changes. I'll now hand to Andrew to walk through our strong financial position and disciplined use of capital.
Thanks, Richard. For completeness, this table covers revenue down to EPS. As mentioned earlier, NPAT for first half 2020 includes a non-recurring AUD 32.7 million gain for fair- value changes on contingent consideration. Hence, EBITDA up 29% and NPAT up 22% provide a more useful guide to performance for the period. In the appendix, you'll find a performance summary with key operating metrics compared to the prior corresponding period and the key operating metrics for first half 2020, excluding acquisitions, along with other more detailed materials. Our gross profit margin remained strong at 82%, unchanged from first half 2019. We continue to invest in our business to support current and future growth in line with our strategic growth levers.
Product design and development expenses of AUD 38.3 million reflected our significant ongoing investment in the development and maintenance of CargoWise and increased investment in expanding and retaining our skill development workforce. Sales and marketing expenditure was AUD 28.8 million, or 14% of revenue, with the increase reflecting sales and marketing expenses from strategic assets, sales commissions on CargoWise, and additional investment in marketing capacity and content infrastructure to support our geographic expansion and multilingual capabilities to support new regions and growth into new technology adjacencies. G&A expenses were AUD 39.8 million and represent 19% of revenue as we continue to invest in this area to support the increased scale of the business and the expansion of our global footprint, including additional investment in M&A, inclusion of the management teams of many of our strategic assets, and additional headcount in corporate functions. However, we see long-term opportunity for further efficiencies as we scale.
In first half 2020, we capitalized $35 million, or 48% of our total innovation and product development spend, while we ensure we fully expense maintenance, bug fixes, and research costs. The 43% increase in total R&D spend over first half 2019 reflects the significant growth in the innovation pipeline of commercializable development acquisitions and additional investment in industry experts and skilled team. Our intangible assets have grown to $844.6 million and mainly comprise the value of our investments for growth, our acquired strategic assets, and the net book value of our capitalized computer software and development costs. Along with other IFRS reporting technology companies, we capitalize our commercializable development costs here too. It's the changing asset profile of the largest companies over the last 40 years or so. Today's largest companies have intangible assets of more than five times the value of their tangible assets.
Year- after- year, our high-growth CargoWise platform generates significant levels of cash, which we relentlessly reinvest back into innovation and important future expansion. Our operating cash performance delivered 36% growth to AUD 69.7 million, and the operating cash flow conversion ratio was 111%. Free cash flow was relatively stable at AUD 28 million, and the conversion ratio was 45%. Non-cash items in EBITDA mainly reflect share-based payments. Continued investment on development and innovation of AUD 33 million is reflected in capitalized development. Other net capital investment of AUD 8.7 million mostly reflected upgrades and expansions to our IT infrastructure to enhance the scalability and reliability of our platform and increase capacity for future growth. Net cash is up significantly at AUD 232.5 million, reflecting our AUD 300 million raising in the second half of 2019, and strong operating cash flows offset by payments related to strategic acquisitions and product investments.
This chart illustrates the cash flow for the period. Net cash flows from operating activities of AUD 62.4 million reflect receipts from customers, partially offset by payments to suppliers and employees and taxes paid. Our investments for growth, totaling AUD 80.9 million, consist of our investments in our IT infrastructure and global facilities, investments in product development, and payments for the acquisition of strategic assets, resulting in a closing cash balance of AUD 233.1 million. We continue to have a strong balance sheet and healthy cash generation to support our growth and strategic initiatives. We also have a debt facility of AUD 190 million, which is currently undrawn, with a further AUD 200 million accordion facility in place. The increase in intangible assets reflects significant acquisition goodwill and continuing product investments.
The increase in property plant and equipment is primarily a result of the adoption of AASB 16 Leases from the 1st of July and is offset in lease liabilities. For further information, please refer to note three in the financial statements. The changes in other current and non-current liabilities largely reflect contingent earnings for multiple acquisitions, including the acquisition of new businesses, earnout payments, and updates to fair- value estimates. Finally, in line with our policy to pay dividends up to 20% of net profit after tax, we declared AUD 0.017 per share fully franked interim dividend, which will be paid in April 2020. The dividend represents approximately 20% of NPAT, excluding the non-cash AUD 32.7 million contribution from the gain for fair value changes on contingent consideration. I'll now hand back to Richard.
We are investing to grow with the addressable market in technology for global logistics in the hundreds of billions, and the spend on digital transformation itself, hundreds of millions more again. We are moving fast to build out our technology lead. We're investing in simultaneously expanding out from the CargoWise of today, capturing new customers and markets along with increased usage and scope of our technology solutions. These strategic assets are providing key development capacity to fuel our pipeline. We are expanding the global CargoWise platform, expanding technology to new addressable markets, expanding the platform to Neo, expanding the WiseTech commercial foundation to new markets, investing in transforming our content architectures, channels, and brand, while also growing R&D speed and scale. This year, we'll be rolling out our new global brands and digital platforms.
The investment in innovation can be seen in these KPIs and our pipeline to come, focusing on extending CargoWise functionality with new components and enterprise layer capabilities, and building out the ecosystem with real whole-of-cargo chain data integration and visibility into a single platform. And just as we have created a truly modeless and borderless international freight forwarding global platform used by the world's largest logistics providers, our teams are building out key components for globally integrated platform capability for customs and border compliance, landside logistics optimization, and transport management systems and international e-commerce. And in our longer-term pipeline, we are building out our global integrated platform for the consumers of logistics services, CargoWise Neo. The multi-generational development of Neo is significant and will progress over a number of years.
At this stage, early beta release to the selected beneficial cargo owners and logistics providers is planned by the end of the calendar year 2020. We have amassed over 1,200 leading experts, technologists, and industry people for an upfront spend of AUD 470 million, securing 40 strategic assets, moving swiftly on our strategy. With these key assets and market positions, we capture centuries of hard-to-access capability and significant development capacity with local feet on the ground. We have done this with our own originators and internal M&A engine. Our acquisitions are strategic, not revenue roll-ups. We are building highly efficient and scalable mini WiseTechs with significant market positions and key customer bases across the world. These positions are secured, ensuring we have the resources to fuel our growth, but the businesses themselves will be in transition over a number of years. The task we have set ourselves is not simple.
Building lasting value takes more time than an asset-stripping revenue roll-up. It involves integration and product development and reshaping each strategic asset's commercial foundations, covering content architectures, channel development, sales, licensing, and servicing and support systems. The value from each asset is in the skilled staff we acquire, the local infrastructure, the new capabilities for CargoWise, used by global customers, acquired customers, and expanded revenue streams from both. We are working hard to ensure that we are able to scale with the rate of growth, the complexity, and uniqueness of acquired businesses, and to ensure that the milestones agreed with the leaders create value for the group. During the first half, we drove integrations utilizing our engineered processes and universal architectures, along with teams from core and strategic assets. In addition to this overview, the appendix provides more information on the acquisitions.
We are moving swiftly and with determination to grow our moat. We think long-term, which has enabled us to make the investments over many years to develop four foundational components on which we build the operating system for global logistics. One, our global integrated platform to which we apply our relentless technology development. Two, the vast cleansed and verified data sets we build to which we can apply machine learning, automations, and event-driven exception management. Three, our hyperscalable, efficient commercial model that speeds onboarding and disciplined resource usage. Four, our powerful network of CargoWise connections drawing in thousands of nodes that bring millions of further connections. And as always, we will focus each period on the disciplined execution of our five levels of growth. Meanwhile, these pain points we identified years ago within the industry continue to escalate and become more interdependent each year, besetting even the largest logistics providers.
CargoWise is designed to turn these problems into tailwinds. Each one of these negatives remains individually and collectively opportunities for us to grow. In some periods, there can be unprecedented events that can create challenges among the opportunities as we are seeing currently. The predicted early 2020 recovery from the end of 2019 China export trade volume softness, as seen in the chart bottom left, was in effect in early January. However, the unexpected outbreak of the coronavirus and the effective shutdown of China, a critical driver of global manufacturing and supply chain, and a 16% contributed to global GDP created negative flow and effects to manufacturing, slowing supply chains and economic trade across the world. Our global data highlights the severe decline in container departures out of Asia and specifically China, impacting the supply chain of manufacturing and export product to the world.
While we have a diversified array of revenue drivers that provide us with resilient organic revenue growth across our global platform, we do anticipate that the manufacturing slowdown will potentially delay execution of logistics activities by logistics service providers who use our solution. The speed of recovery of China manufacturing, replenishment of inventories worldwide, and restoration of supply chain volumes, once started, will likely create a significant rebound in volumes and logistics transactions. However, the interim delay may cause some transactional revenues to move into the next reporting period and potentially delay the launch of new products planned for the second half of 2020.
In considering adjustment to our guidance for FY 2020, we are prudently taking into account the already real and future potential of the coronavirus on China manufacturing and export trade, along with the continued growth of the group during the first half 2020, the power of the CargoWise platform, drivers of organic growth, annual customer attrition rates of less than 1%, and continued relentless investment in innovation and expansion of our global business. Together, these give us the basis to expect, subject to currency movements, FY 2020 revenue of AUD 420 million- AUD 450 million, a revenue growth of 21% -29%, an EBITDA of AUD 114 million -AUD 132 million, and EBITDA growth of 5%- 22%.
While this significant disruption in the supply chain as a result of coronavirus has impacted China manufacturing and export trade volumes, what has not changed throughout this period is the accelerated adoption and continued rollout of the CargoWise solution among our customers. These short-term challenges that represent immediate headwinds for the industry and the world economy in no way diminish the rising demand drivers for our platform among logistics providers. Our success has been founded on a long-term focus and strategy, which has enabled us to make deep investments to cement our technology and product leadership. We will continue to focus on delivering on our five levels of growth as we build the operating system for global logistics.
We have delivered strong progress in the first half of 2020 across our technology and operations, which will create long-term value for shareholders, and we continue to drive the business through 2020 and beyond in the uncompromising execution of our strategy. Thank you, and now we'll open for questions.
Thank you, Richard. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel a request, please press the pound or hash key. Your first question comes from Lucy Huang from Bank of America. Please ask your question.
Morning, Richard. Morning, Andrew. Thanks for taking questions. I've got three. So firstly, are you able to give us an indication of how much growth you saw in transaction volumes in the first half? And understanding that there was an impact from the coronavirus in China, are you able to quantify what that impact was on volumes transacted through the system? And then secondly, I guess in the context of lower trade volumes currently, in terms of your discussion with customers, are you seeing them delay their, I guess, digitization plans into next year? Just wondering if. Thanks.
Thank you for that. So I think the first thing is it's important to understand, if we can go back to the graph on that page, there's two effects going on with volumes. And the first is that China-U.S. trade was quite badly affected in the last quarter of calendar 2019. It didn't affect Australia particularly, but it certainly affected globally the volumes coming out of China, particularly the U.S. trade war and the imminent arrival of the phase I tariff agreement massively destocked the supply chain in that last quarter, the last part of 2019. Now, it was expected by everybody that that would recover in January. And if you look at the graph, there was a really big spike in the second week of January, which is about when people get back to work and things start moving quickly.
But then the New Year, Chinese New Year, and then the coronavirus hit. And of course, you can see on the graph what has occurred in trade volumes. However, most of our customers are actually this is the answer to the second question. Most of our customers have actually got long-term programs, and particularly a number of them have sped up in recent times their rollout. And we have said that in the script, and we confirm that there are a number of customers rolling out very rapidly. We see when these things happen that it is actually an increase in adoption rather than a decrease. We do not expect any deferrals. In fact, we expect some pickup in those sort of things. What was the third question?
Oh, it was around the customs, which we haven't rolled out all the customs yet.
Right. So we've done South Africa and China. We've done a lot of the English-speaking countries, but we're still deep in the build of that universal customs set, which includes quite a lot of countries. That isn't yet commercial and available, but it will be coming on in the next period of time.
I just have one follow-up question. So I guess in terms of your exposure to China, how big is that in terms of the revenue base?
There's lots of different drivers for revenue. A number of customers have transitional pricing arrangements that don't vary because of volume. A lot of customers have commitment agreements that have a floor to the revenue. And there's a lot of other revenues that come from other places other than China. So it's a complex mix. And the real question is you don't know what the resolution for coronavirus is. If it's short, then the impact is smaller. If it's long, then the impact is larger. But it's not a one-to-one connection between us and the volumes. We do have some connection, but it's relatively resilient in the sense that it covers many things.
Great. Thank you.
Your next question comes from Paul Mason from Evans and Partners. Please ask the question.
Hi, guys. Just the first question is related to the last one that was being asked. Maybe could you give us a bit of a view on, say, with the revision to your guidance, what you've assumed around the impact on volumes through your platform in order to revise your guidance down to where it's sitting currently?
Andrew, answer that question.
Yeah, Paul. We've looked at it several ways, really, on a top-down basis in terms of the projected impacts on GDP and how that sort of would run through the numbers given the impact from China. Also looked at it on a bottoms-up basis with our transactional activity that we see through China. So we looked at it a number of ways. And of course, as everybody knows right now, the length of this disruption is not able to be determined. So we've kind of used the basis of a combination of GDP and transactional information. We've been sort of prudent in the way that we've approached the guidance that we've given you here. And obviously, there's quite a deal of uncertainty in terms of the way that that's going to turn out.
Okay, well, maybe I could rephrase it a bit. So have you assumed that coronavirus has an impact that basically extends through the entire second half or only a portion of it?
No, just a portion of it in terms of the way that we've extended the guidance at the moment. If it extends longer than that, then that'd be a different outcome, but yeah, it's partway through the second half right now with the timing coming along.
I think we have to make assumptions that whatever happens, China is going to recover as quickly as it possibly can, and that it's unlikely because of the integration of the world supply chains, it's very unlikely that China will stand out of the production system for very long, but we just don't know. We're not predicting, and I don't believe anybody can predict the full extent of this, but we've made an assumption that it'll be relatively quick to come back, but it does take a long time to recover from these things because the destocking that occurred in the last quarter of 2019 calendar has got to be fulfilled first before you get back to the normal trade volume, so it's a complex mix of those two things.
Okay. And just a second question on the contingent liability online that you guys have booked. Could you maybe give us an overview of which elements have contributed to that?
Yeah. So obviously, we reassess the contingent liability for all our acquisitions at every reporting period. And these are mainly the performance obligations that are built around some of the performance on the in-house activities around revenue and EBITDA for half a dozen or so of the acquisitions.
Okay. All right. That's it from me. Thanks.
Your next question comes from Jules Cooper from Ord . Please ask the question.
Morning. Thanks for taking my question. Look, it looks like if I'm reading this correctly, the revenue has been lowered at the midpoint by about AUD 23 million or AUD 24 million. If I go back to FY 2019, the on-demand revenue of the business was about AUD 250 million. I was just wondering if you could give us a perspective on what proportion of that on-demand revenue is actually transaction-based relative to the seat charge, just so we can sort of encapsulate the risk profile going forward.
I'll let Andrew answer that in detail, but you have to remember that what I said just a little while ago was that we have a variety of contracts, particularly these transitional pricing issues and commitment agreements for customers that don't get affected by volume.
You also have to offset that with the acquisitions that we completed in the first half as well.
Also, there's just one more thing that's not a financial matter, but a product- delivery matter. If you're in the middle of coronavirus and restocking and everybody's dealing with that crisis, it's very hard to introduce new product features and new products themselves, so there are some potential time delays to product releases which would have been in our revenue guidance, and we've made some assumptions about those things. Some of those products are, of course, things that we can't predict exactly, but we've made some assumptions about them.
Sure. I guess the question, though, was more directed at the proportion of your on-demand revenue that would be linked to volume. I know some customers aren't, but just to give us a rough feel for what that portion of revenue that moves up and down with volumes is within the business.
Jules, we haven't provided an explicit guidance on that. What we've shown you is that the move to STL increased in the last six months as it did the six months before that. So in terms of CargoWise, we have the majority of our customers now on STL. With the increased rollout and increased seats moving on to CargoWise, we're seeing, obviously, some lift in that. And so that's helping to offset some of the slowdown in transactions with the manufacturing stop in China. As that rolls back, and we expect that to, then obviously those transactions will lift again. And what we've done is made some prudent allowance around the uncertainty of the timing, but it's the nature of the supply chain to bounce back quite quickly.
Sure. Okay. All right. Thank you.
Your next question comes from Siraj Ahmed from Citigroup. Please ask the question.
Thanks for taking my questions. Just first one, I mean, about the revenue downgrade, Richard, you sort of mentioned that there's also new products that have been pushed out. Could you just quantify how much of the downgrade is from the new products? And the expectation would be that that comes through in FY 2021? Would that be right?
It's only a small amount of the revenue downgrade that comes from the potential for products to be slowed.
And I think we should mention too that we're not referring to any of the advanced rollouts or any of the new rollouts that have been signed or in the pipeline. What we're talking about is new forms of technology that would require early development adoption by large customers, and that may potentially be moved into the next period.
Yes. In fact, several of our customers have actually accelerated their rollouts in recent times. So we expect there's a range of moving parts here. It's not a simple one-plus-one formula here. The design of this is quite complicated.
Got it. And just secondly, just for Andrew, just on a contingent consideration, I mean, is the way to read that when there's half a dozen acquisitions, that they've not really met their performance obligations? If you just give some detail on that as well, please.
That's right. I don't think that's right. We've got to reassess the earn-out obligations, as I said, every reporting period. As we deal with these businesses, we get a clearer idea of their operating performance and their future projections. And clearly, we have to put up that liability the best we can when we acquire these businesses. And any reevaluation of that is taken through each reporting period.
Okay. So they're tracking as to what you're expecting?
Say that they've not met their expectations.
Okay. Got it. Thank you.
Once again, if you wish to ask a question, please press star one on your telephone.
Thank you, everybody, for listening in today. We know it's a very busy day for you, and we appreciate your time. All the best.
Thank you very much, everybody.