Thank you very much, and obviously, good morning, everyone, and welcome to Aptitude Software's results presentation. My name is Alex Curran. I am the CEO of Aptitude Software. I am joined today by Simon Kelly. Simon, would you like to introduce yourself?
Yeah, thanks, Alex. I'm Simon Kelly, and I've been with Aptitude for over eight years. During that period, I've held a variety of senior finance roles across the organization, including working closely with and in support of Alex as Finance Director for North America when she was CEO of that region. I've since moved into the Commercial Finance Director role, where I continue to work closely with Alex and the wider SLT.
Thank you very much, Simon. In terms of the agenda today, what we want to do is, first of all, I'm going to provide a little bit of background on Aptitude, so where we've come from, where we are today, and the plan for 2025 and beyond. Then I'm going to hand back over to Simon, and he will walk you through the financial highlights, and then I'll pick it back up, and then I'll be walking everyone through what we're seeing in the market, the improvements that we've made across the business to support the business transition, and the achievements of 2024 before closing, and then obviously opening up to a Q&A as well. I just want to move down to the next slide. Fantastic.
For those of you less familiar with Aptitude, what I want to do, first of all, is essentially provide a bit of background on the organization. Aptitude, we have a rich, strong heritage, and we've been very, very successful in the regulatory and compliance software market, where we've consistently had first mover advantage and also outperformed the larger vendors. That success has enabled us to build a global client base where we have over 100 high-quality enterprise customers. I guess that success then enabled us to gain access to the CFO office, where we were able to track, monitor trends, and we began to see, I would say, a clear shift from compliance solutions to finance platforms. In response to that shift, we invested, we launched Fynapse, our AI-powered finance platform, opening up a GBP 3 billion total addressable market.
With a strong balance sheet, growing partner momentum, and traction behind Fynapse, which I'll talk through today, we are in a strong position to capitalize on the opportunity ahead. This slide gives you a quick snapshot of the Aptitude clients. A number of them use a range of Aptitude's products, but from this, you can obviously see the size, the complexity, the global nature of this client base, and also the key core sectors that we support. All of these organizations trust Aptitude to, and obviously the products that they use, to support their financial processes, their end-of-year close processes.
Every one of them, I think it's important to highlight that every one of them is a Fynapse prospect, because every single organization that you see, obviously, that's a snapshot, but on the screen, every single organization that you see are facing the same challenges that led us to build the platform. That then brings us to today, a pivotal moment in scaling Aptitude as a partner-led and SaaS organization. In 2024, Aptitude delivered on what we said we would. We met market expectations. We've been rewiring the business at speed, and we've been executing the shift from regulatory and compliance, from on-premise to a SaaS business model. We've essentially transformed the way we operate, how we go to market, and how we build product. Fynapse is gaining traction. You can see that from the net new logos and also the migrations over the 12-month period.
You can see that reflected in the pipeline that's expanding. We have key partners that are fully engaged. We will talk a little bit more about those partners as we go through the presentation today. I think one thing has become clear over the last 12 months, and that's that partner-led is not just the right strategy. It is the only way to scale faster, to fully capture the Fynapse opportunity, and essentially build a stronger growth engine with a better long-term revenue mix. Across 2024, I would say we've been straddling a hybrid model. Part Aptitude-led services and part partner-led services. What we've experienced during this hybrid model, and obviously recognized over the last 12 months, is that that is not going to take us where we want to go. Partners do not get excited unless they're fed.
That means shifting more services work their way. In addition to that, the hybrid model also leaves us too concentrated on tier one enterprise deals. Again, they're important, they matter, but they take time and move slowly. Our partners, as I've talked about over the last 12 months, provide access to tier two and tier three, so smaller, medium-sized organizations where deal velocity, volume, and repeatability live. That is why we're making the decision to accelerate the strategy that we set in motion in 2024. That is moving away from heavy Aptitude-led services and fully committing to a partner-led delivery model. That means giving up more services revenue in the short term to unlock faster growth. To support that, we're going to be increasing investment in our go-to-market and partner teams to support the scaling of that model.
While this brings a short-term adjustment to our 2025 financials, it sets us up to grow faster, to grow higher recurring revenue, and to also strengthen margins and profitability over time. I'm now going to hand over to Simon, who's going to walk you through the financial highlights.
Thank you, Alex. In 2024, we've seen growth in our annual recurring revenue, which at GBP 52.1 million represents a 2% increase from the prior year and continues to provide us with good visibility of future revenues and cash flows. This growth was underpinned by new business success from within our existing customer base, and especially through our AI autonomous finance offering, which grew by 12% in the year. This strong performance from the existing client base, in turn, resulted in an improvement in the net retention rate, increasing to 99% from 98% in 2023. We've continued to benefit from a strong balance sheet, making us financially robust, with cash as of 31st of December of GBP 30.4 million and net cash of GBP 20.3 million. This allows us to continue to provide our shareholders with returns through consistent dividends and the share buyback program, as announced this time last year.
The buyback has progressed throughout 2024 and is continuing as planned, with shares to the value of GBP 4 million having been purchased up to 31st of December 2024. All of this underlines Aptitude's position of strength to drive ARR growth through AI autonomous finance throughout the period of transition and beyond. Despite the 6% reduction in total revenue to GBP 70 million, recurring revenue, the strategic focus of the group, grew by 2%, driven principally by the growth within AI autonomous finance. This is offset by a reduction in non-recurring revenue due to a combination of more partner-led implementations, as well as the successful go-lives and resulting project ramp-downs of a large number of Aptitude Insurance Calculation Engine clients following the passing of their respective IFRS 17 adoption deadlines. The combination of these movements has resulted in an improvement in the revenue mix, with recurring revenue up to 78%.
This shows an improvement in the quality of our earnings and a resulting improvement in our margins. Our improved revenue mix, in combination with tight cost control, have enabled profit levels to improve year- on- year, despite this reduction in revenue, with operating profit of GBP 9.9 million representing a margin of 14%, an improvement of one percentage point compared to the prior year. R&D investment has reduced slightly from their peak levels in 2023 and is expected to significantly reduce in 2025, based on the implementation of the new product and engineering operating model. This combination of growth through AI autonomous finance, an improving revenue mix, and a carefully controlled cost base result in Aptitude continuing to have a robust platform to provide returns to shareholders. As mentioned, in 2024, we delivered on market expectations.
Due to a shifting focus to operating under the partner-first approach, we now expect 2025 to remain in line with the levels seen in 2024, before returning to growth in 2026 and beyond as the benefits of the partner-first approach and the improved revenue mix that this will drive start to bear fruit. Revenues are expected to remain at prior year levels due to a combination of factors. The shift to a partner delivery model reduces the non-recurring revenues expected to arise from new business, with the impact of this being felt more keenly in H2 as we see pre-existing Aptitude-led implementations being replaced by partner-led new business. In combination with this, recurring revenue is up against an FX headwind when compared to 2024.
Given the way Aptitude hedge U.S. dollar recurring revenues at the point of invoice and that they are invoiced annually in advance, we have good forward visibility of the weighted average FX rate on these U.S. dollar revenues. There has been an adverse movement when compared to the weighted average in 2024. The implementation of the partner-first approach and the resulting growth of our partner ecosystem requires additional investment into the go-to-market and partner teams in order to accelerate Fynapse's success. The ongoing business transition provides the headroom for this necessary investment, as well as setting the rest of the business up for success under the new model. The combination of these revenue and cost factors result in the expectation that profitability will also be in line with 2024.
As we exit 2025, the organization will be in a materially improved position to support a return to growth in 2026.
Thank you very much, Simon. Now let me take you through the market, the business transition, and the 2024 achievements. If you want to move to the next slide. Back in March of last year, I obviously shared and walked everyone through that Aptitude would be starting a business transition, moving from an on-premise compliance software provider to a SaaS business. I would say that we are now well progressed through that journey. Before I talk about what we've done and the progress that we've made and the progress that it's also supported, I think it's important to also talk through the market shift and obviously why Fynapse. Fynapse is going through what we believe to be a profound transformation.
CFOs are under significant pressure to not just drive revenue, to mitigate risk, but they're under pressure to serve as a strategic AI co-pilot for their entire business. They're struggling because of two things. Number one, they have lots of outdated systems. They have lots of processes, but lots of manual processes. They have lots of data, but fragmented data, sorry, and siloed data. They also have no software solution on the market to support them. Obviously, you can't run AI on spreadsheets or across manual processes. In terms of systems, yes, there are traditional ERP vendors, but I would say that they are essentially built for record keeping and fall short in delivering real-time AI-driven finance solutions.
Even when an organization needs to use a general ledger, as an example, for kind of partial automation, they are looking at very elongated project timelines. Obviously, the cost of implementing those solutions is typically tens of millions, if not hundreds of millions. Typically then also often ends in disappointment. The old tools do not match the new expectations, and the traditional stack cannot support the AI shift. We know, and as we have seen within the market, that finance leaders need more than automation. They require an AI-enabled finance platform that sits at the heart of their organization and that actively, via AI, informs decision-making, delivers real-time operational insights, makes sure that those insights are at their fingertips, and enables organizations to implement those solutions rapidly. That solution did not exist, and therefore we created it.
Fynapse is the market's only true AI-enabled finance platform. The shift that we are seeing impacts every finance team across all industries, making the opportunity both fast and obviously compelling. We are not just launching a product, we are defining a new category. As Jamie Dimon recently noted, the impact of AI could be as transformational as the steam engine, the internet, and we absolutely agree. Nowhere is that transformation more urgent or more valuable than in the finance function. To support and benefit from this market, we have needed to fundamentally change our business model to support it, which I will now talk about. I would say, look, over the last year, we did not just merely adjust the organization. I think, as it says on the slide, right, we completely rewired the business at speed, at pace. We have overhauled go-to-market execution.
We've overhauled product development, client experience, and partner engagement to move Aptitude from a regulatory and compliance organization to a platform organization that has a client-partner-first mindset. As I said, we've executed at pace. Today, as I sit here as CEO, I lead and sit in a significantly improved organization with notable progress across key functions. What I want to do now is talk about what we've done across some key areas that you can obviously see on this slide, but also talk through what's still left to do across the remainder of this year. If I start with go-to-market, as I've spoken about, our sales approach was fragmented. It was regional. That obviously led to lots of different inconsistent processes. Following that, we've obviously globalized the team across the last 12 months. We've rebuilt from scratch both the sales and partner functions.
We have really kind of laser-focused them on a set of priority regions, sectors, and strategic partners. I would say in 2025, we've reduced that focus and kept that focus even tighter. That change, those improvements have improved the way that we engage with the market and the engine is working. I would say we've made good progress. There's still a little bit more to do in that area across 2025, being primarily making sure that we embed the changes that we have already made. Also, just as importantly, making sure that we continue to shift very quickly or continue to shift very quickly to a much more data-centric kind of KPI-led approach across the go-to-market function. If we take client success next, support, account management, professional services, all operated independently, that did create silos, led to inefficiencies, and an uneven client experience.
We've unified those teams under one team to make sure, obviously, we have a clear accountability for implementing and embedding that client-first mindset. Essentially, we have also been rebuilding the account management team to ensure that we continue to improve retention. In terms of what we're going to be continuing to do across 2025, again, embed the changes that we've made, make sure that they're working, evolve, tweak as we go. Across 2025, the main focus will be on continuing the modernization of our services function to make sure that we can enable our partners to lead at scale.
If we move to product and engineering, previously, across our product and engineering functions, I would say they were fragmented, operated in silos, and followed a, I would describe it as a project-based delivery model that had slowed down momentum and, I would say, diluted accountability. In 2024, across 2024, we've been unifying product and engineering under one leader, and we've adopted a product-first operating model, and that has significantly improved the efficiency, output, and quality across Fynapse. We've started with Fynapse. We've also rolled that out across 2024, also across our eSuite product. In terms of what we're going to be doing in 2025, we're going to be completing that transformation across the entire product portfolio. That means we'll be rolling out the product-first model. Again, embedding a partner and client-first mindset across the entire team.
Again, not only will we see increased velocity and quality, but we'll also see continued efficiencies across that area as well. I would say product and engineering, go-to-market, and client experience have definitely been the priority areas of focus in 2024. We've obviously made some significant progress. Looking ahead, we'll be cementing those changes we've made in those key areas. We'll also begin to work through some of the remaining parts of the business that also need to evolve to support our new business model. What progress did we achieve with Fynapse and our wider product portfolio in 2024? Okay, perfect. Since becoming CEO in December 2023, I focused on aligning the business around the Fynapse opportunity. Do I wish for more momentum and sales, as I sit here today? Absolutely. Yes, I do. I would say consider this.
In July 2023, Fynapse was yet to be properly brought to the market. In 2024, we changed that. In 2024, we were defining a new category, educating the market on a superior approach to finance transformation, accelerating the build of the product and revamping our go-to-market function simultaneously. The pipeline reflects our progress. In mid-July 2023, we had limited opportunities. Today, we have 15 times the active opportunities and 10 times the opportunity value, with 70% of our pipeline tied to partners. Month on month, we see that pipeline or the number of leads coming into or generated into our pipeline increasing. Beyond pipeline growth, we've shown tangible momentum. We now have six Fynapse clients, including Chubb, HCSC, OneDigital, Inspired, and KPMG, three of which are existing Accounting Hub clients, again, showcasing the migration opportunity.
We've expanded relationships with 21 existing clients, which reinforces not just our position within the CFO office, but it also helps to support future adoption across our 100-plus client base. We've also refined our go-to-market execution approach, as I've obviously just spoken about. That's important to highlight because as part of that, what we did was streamline our partner strategy from 60 partners down to a group of high-value partners like Microsoft and HSO. Across 2024, we also surpassed our 30% of partner-sourced annual recurring revenue target in the year. I would say that this success stems from three factors. We have a product the market craves. We have completed a business transition that has sharpened the execution focus. Our partner-centric approach has meant that we've been able to expand our reach and will continue to expand our reach and educate the market.
I'm now going to spend a little bit more time going through the key Fynapse clients. We now have six Fynapse clients, including a mix of net new logos, migrations, and our first formal resale agreement with a strategic partner. Obviously, as you can see from the chart on the left-hand side, our pipeline has grown significantly since 2023, mid-July 2023, I should say. The line shows basically the unweighted average value of the current pipeline. I'm not going to cover each client in detail today, but I do want to highlight HCSC, a key win secured in the first quarter of this year. HCSC is a $50 billion organization. It was an existing Aptitude Accounting Hub client, and they've now made the decision to migrate to Fynapse. The sales cycle was rapid, so it was around a five-month timeline.
That was obviously helped and supported by the fact that we have obviously been successful in converting Chubb and also T-Mobile. I'd say just the level of effort in the sales cycle was very low. Again, I think that also continues to demonstrate how quickly clients will purchase Fynapse. Obviously, widened HCSC by Fynapse. HCSC purchased Fynapse to migrate from, obviously, to Fynapse, but also to support their acquisition of Cigna. The CFO has been very focused on simplifying and rationalizing the finance infrastructure following, obviously, their purchase of the piece of Cigna business that they announced at the back end of last year. That is translating in them being able to essentially decommission a number of different Oracle systems based on their use of Fynapse.
When they use Fynapse to migrate their existing instance across, they can obviously move away from paying for Oracle hardware. In addition, when it comes to the Cigna rollout, Fynapse is being used to onboard and support the complexity that's currently in their PeopleSoft GL. They will be able to obviously reduce the cost based on that reduction of complexity in that general ledger system. I would say HCSC is a strong example of how Fynapse clients can win twice. A, obviously, by reducing costs, but secondly, to support obviously the creation of their modern finance architecture. Again, the progress that we've made in 2024 does confirm product-market fit and also shows that our strategy is working. Now we need to accelerate through partners to scale the organization.
I think it's also important to highlight that throughout 2024, we also secured a number of wins across our broader product portfolio. As you can see on this slide, we onboarded several new logos, which then also drove significant upsell and cross-sell activity across our existing base. I wanted to spotlight two examples of net new logos. If we start with Macquarie. For those of you not familiar, Macquarie is one of the largest Australian banks. They selected the Aptitude Accounting Hub. The Aptitude Accounting Hub does continue to resonate with very traditional large financial services organizations. Typically, those organizations want an on-premise subledger. Macquarie selected Aptitude to address essentially some limitations created by their Oracle Fusion ERP rollout, which had led to a series of different manual workarounds and some reconciliation processes that needed to be addressed.
The Aptitude Accounting Hub was evaluated. We went through a proof of concept process. This gives an example of how long a tier one net new logo occasionally or typically takes. This was an 18-month sales process. The Aptitude Accounting Hub is being used to automate a series of very complicated accounting processes, support data lineage traceability, and also is able to process over 200 million journal lines per day. A very strong example of an Aptitude Accounting Hub net new win. The second example is Sonatype. Sonatype is a code quality security software provider. They selected the RevStream product to essentially support the complex billing scenarios that they are working through and also to support the growth that it's experiencing. They needed a revenue recognition engine that would scale with their business.
I think it's important not only to highlight Sona, but also what you can see from this slide is that you can see that the RevStream product, again, continues to resonate with the market, as you can see from obviously the HubSpot and Imperva wins on the left-hand side. All of these wins highlight the strength of the broader product portfolio. I think it's important to flag that every one of our 100-plus clients represents a future Fynapse opportunity. As an example, we still have 37 clients that have not yet migrated to Fynapse. Several are already active in our pipeline. We are on track therefore to obviously migrate a third of that base across to Fynapse by the end of 2027.
I would say in line with our plan, you should expect to see a continued healthy blend of Fynapse new logo wins and client migrations driving growth. Perfect. Perfect. Great. Cool. In 2024, as I said, we did what we said we would. We delivered on expectations. We rewired the business, and we committed to a partner-first SaaS-led model. The last 12 months have proven that this is the right path. By enabling partners to take on more services, we're unlocking faster growth, higher quality revenue, and accelerating our go-to-market execution. Fynapse is gaining traction, sales cycles are shortening, and our pipeline is expanding. We're now accelerating execution to scale a high-margin SaaS business that delivers long-term value and positions Aptitude as a leader in AI-powered finance.