Good morning, everybody. Hello. Welcome to a set of in-person results. Hopefully you're expecting to be at the Gamma FY 2022 results. If not, you're in the wrong place. Lots of smiley faces. I'm not sure if it's 'cause we're all back together in person or because somebody just said to me it's the first time in three years we've had a freebie. Hopefully on the chairs you'll find there's a notebook, there's some sort of connector thing that does something quite exciting with your laptop, there's an umbrella that appears to come from a Swiss manufacturer. I believe we may have got them from somebody else who didn't need their umbrellas, but just.
Boom.
Yeah, absolutely. You can kinda work that one through. It's lovely to see you all, welcome to people who are coming through on the video link as well. gonna take up hopefully no more than sort of 40 to 45 minutes, Bill and I presenting. We may go over a little bit. This morning, clicker's not working for a start. Is that? What have I done? Okay. Right.
Back to you.
Those were the financial year 2022 results. I hope you enjoyed them. Right. No, literally nothing's working. We got anybody? Nope? Nope. Oh, hell.
There we go.
Oh, right. Okay.
Keep trying to keep going.
Oh, there we go. Now who looks stupid? Not him. What gonna be doing this morning is, I'll give you a bit of an overview of how the year's gone, significantly better than that first 30 seconds went. gonna come and talk to you a little bit about the financial highlights, and then I'll come back and talk a bit about Gamma's strategy. We haven't completely changed our strategy. We haven't pivoted. You know, as many of you know, for the last sort of four or five years, Andrew Taylor and I were running Gamma. We just kinda tweaked things a little bit and maybe put the emphasis in slightly different places to kind of reflect some of the growth opportunities that we're seeing, and we talked about those back in September.
We'll just kind of renew a little bit and maybe update on some of those sort of growth opportunities that we're seeing. We'll talk a little bit about ESG. We'll finish with how we kind of see 2023 going. We'll kind of open it up to Q&A. Let's give a bit of an overview of 2022. We think we had a fantastic 2022. Hope you agree. In many years, it was the year of the GBP 100 million. This is probably stretching things a little bit, but for the first time, Gamma's done over GBP 100 million EBITDA. We're quite pleased about that. The cashflow, operating cashflow, if you kinda squint a little bit and accept a tailwind, maybe you can just about round that up to GBP 100 million.
Actually we closed out with just less than GBP 100 million of cash. We think we've had a very, very strong year, and we're in a very good position kinda moving into 2023 as well. 2022 was also a great year for us in Europe. We've launched a number of products around Europe. We've launched our CircleLoop product now, and not just in the U.K., but in the Netherlands and Germany. We'll talk a bit more about that. Operator Connect, which is the product which enables us to voice-enable Teams users, as of now, we launched that in Belgium last week.
It's been in the Netherlands, it's been in the U.K. for a while. That's going into Germany and Spain, very soon as well. We'll talk about some of the opportunities that that gives us. We did another acquisition in Spain to kind of bolster our position there. We've also, begun to really integrate the businesses now to get common teams working on things like marketing and technology. It really does feel like Gamma's a European business. In terms of numbers, again, you know, just shy of GBP 500 million on the revenue, so we've gone GBP 484 million, which we're very, very pleased about. The U.K. business selling into small and medium-sized businesses through the channel, that grew double digit. I think we're particularly pleased with the direct business selling into enterprise.
If you remember this time last year, people were saying to us, "Has the growth come off that a little bit?" We were saying, "No, no. What happened in 2020, sales were just down a little bit because of COVID, and that kind of went through into 2021. It will all come back in 2022." I'm very, very pleased to say that that sort of direct enterprise business is now back to double-digit growth as well. Europe only grew 1%, and we'll talk about that, and Bill will explain a little bit more about that. The underlying business in Europe is good. The number of seats we're putting on is good. The product launches we're doing is good. People are actually feeling pretty good about the world right now. Perhaps in the second half of last year, they were a bit more pessimistic.
What's happening in Europe is some of our traditional business is coming off at roughly the sorta same speed that we're kinda seeing the new UCaaS business going on. Bill will kinda talk about all of that. I won't steal any more of Bill's thunder. I shall hand him a working clicker and Bill, over to you.
Great. I think I know everyone in the room. I'm Bill Castell, the CFO. First full year results. You can see I haven't been too adventurous with the formatting. gonna recognize many of the slides similar to the prior year. gonna go through around 10 slides. I have added two. One about our investments, some of the overheads and also development and capital expenditure. Another one just giving a bit more guidance for the forthcoming 2023. It's always the way when your CEO is a former CFO that he steals all your thunder with the financials up front. This is a six-box grid. I think it tells a good story. As Andrew said, strong revenue growth at the group level, up 8% to GBP 484.6 million.
Adjusted EBITDA double digit, 10%, GBP 105.1 million , in line with the guidance that we gave throughout last year, which flows through to adjusted EPS of up 12% at GBP 0.718. Clearly that's profit. How does that convert into cash? Similar to prior years, gonna hear me say a number of times that we've got a strong cash conversion at 94%, similar to what we saw H1 and at the end of last year. That flows through to cash generated, GBP 99.1 million , and we've said near the GBP 100 million mark. Basically we're at the highest cash level we've ever been in Gamma, with our net cash at GBP 92.5 million. That's before IFRS 16. Dividend, constant, progressive dividend policy. If you remember, we have the one-third, two-thirds.
We gave one-third at half one. The board has recommended that we'll get agreed, or proposed and hopefully agreed at the AGM, for a further GBP 0.10 final dividend, so GBP 0.15, which is up 14%. A lot of double-digit figures there of growth throughout the period. gonna get through some of the primary statements. gonna be hard to see on the screen. You, you'll get this on our new investor website. We've updated our website with some extra material, which I'll talk about a bit later. There's that recurring revenue, 89%. The revenue and gross profit grew by 8%.
I think the important thing is you can see gross margins maintained at 51%, and in actual fact, we saw that EBITDA margin keep going up to 21.7% with active cost control. Although reported operating expenses went up 7%, there was a alignment of our accounting policies in Germany and Europe, which meant that actually on a like-for-like basis, operating expenses versus 2021 actually are at 6%. Active cost control, which I'll talk a little bit more later. The exceptional items, I alluded to that in January, that in Spain, as a result of the kind of VozTelecom acquisition, we did impairment testing, but like everyone else, yearly, and I think there's two things. One, the Spain growth story is still there.
It's just been pushed out. We'll talk a little bit about that in the European section when we talk about strategy. I think everyone's aware, especially last September, the discount rates were in a different era at that time. We took that impairment of Spanish goodwill. As we focus on our UCaaS business, obviously we bought the NeoTel business and the UCaaS seat growth that we've seen in that in Spain. We had a loss of disposal, small loss of disposal with the sale of ComyMedia. As a result of that, you'll see a few negatives coming through on the statutory. That is just through the exceptional items.
When you look at adjusted PBT, we're at GBP 87.8 million, which is up 14% year-on-year. If I go through the three different businesses, Andrew's already mentioned our indirect business. That's 61% of our revenue comes from indirect. Basically strong performance. 10% revenue growth, 9% growth to profit growth when we went up to GBP 155.6 million. You can see from the bar charts, they all head in the same direction. I think the important thing is back in May at the AGM, obviously throughout the year, we've given guidance. We were talking about an 8% growth in indirect. We've beaten that with 9% growth in gross profit in the indirect business, and margin is staying broadly consistent at 53%.
What I will say is when people start talking about, what about 2023, I did mention at the half year that we had started sampling some price rises, in particular on our legacy and our SIP products rather than cloud PBX. We did go, if you like, a more large-scale across the piece and notified the channels partners in indirect in November, and price rises have become real as of January the 1st, so they are flowing through in our January and Q1 results. We have put those price rises through and happy to take questions later on that. Direct business, representing around 24% of our business. Very similar. It's not a typo.
10% revenue, 9% gross profit, so we're seeing exactly the same that we just same figures that we saw in the indirect business. Gross margin fluctuates a little bit. That's just timing towards hardware and installation, so basically broadly consistent growth margin. Further investment in our Gamma Hub that we put through, so a bit of CapEx there just to make that portal work better, and we've seen the good results come through that. We've, we talked about half year, some, you know, significant wins, in particular in the government sector, public sector with Work and Pensions in the first half. We've had some other wins, such as Card Factory, which is more in the enterprise space in the second half of the year.
If I look back to May when we gave specific guidance, we guided to the revenue would be approaching 10%. We actually hit the 10%, again, a good outcome on the direct business. Andrew said, we said it would rebound post-COVID, and it has done. Europe. Europe, the story in Europe, Andrew alluded to at the front, 1% revenue growth, 2% on a constant currency basis. Similar to H1 results in that regard, in the trading statement. As Andrew talked about, we did see at the end of the year, in particular in Germany, two significant deals come through, we have seen 28% cloud seat growth.
Gross profit, you'll see when, you know, our annual report is now out on the RNS, you will see a reported 6% gross profit growth. When you look at this alignment and reclassification on a like-for-like basis, it's 1% gross profit growth. The story gonna cover in the next slide is one of Germany performing well. Spain, obviously we had the impairment, but with the NeoTel acquisition has come back. Netherlands, there's a bit of a changing market dynamic. Although the cloud seats are going up, some of the usage has come off as we see a bit of a change in mixes from the pay-as-you-go model to more of a bundled product. In Europe, it's quite separate. You pay for the seats, and you pay for your usage.
In the Netherlands, similar to the U.K., it's becoming more mature, and you're seeing more of a bundling take place. This is an extra slide we put in. I think people are getting familiar with it. The store in Europe, as we went into Europe, similar to historically in Gamma, if you like, there's the growth of the UCaaS, which is the growth engine across Europe. We have more of the traditional income, which we've always said, will begin to tail off. Epsilon, which is our mobile in Germany, our mobile business, is actually seeing with German mobile connection strong growth. The stories you see there is Germany, as I said earlier, 8% revenue increase in EUR across the year. Spain is flat.
We did see improved performance in the second half of the year with the acquisition of NeoTel, and then Netherlands as a result of that call usage rather than seats, the revenue has come off a bit, traditional as expected, and then actually Epsilon performing extremely well on the mobile side. All of that leads to that 2% revenue on a constant currency basis, 1% in sterling. A new slide, you wouldn't have seen this one before. Looking at investments, as you look for our RNS and annual report, these numbers will no doubt come to you in respect to a few things. One, on the overheads, the overheads increased 7% year-over-year.
As I said previously, that's a 6% like for like when adjusting for the alignment in Europe. The good thing is the U.K. business, we saw overheads grow 5%, but as you recall, gross profit grew 9%, very positive jaws in that respect. In Europe, there was active cost control with a 3% cost increase. There has been a slight increase in central costs as increased governance, increased controls, as always for me to say, increase in audit fees as well. The audits do. We have a guy, I mean, he's in the room today on that side. On the capital expenditure and development costs, we have seen an increase.
You'll see there, the 2021 to 2022 numbers, an increase of GBP 9.5 million. You will see that's largely on the capitalized GBP 8.3 million increase, which we go into a little bit more detail below when we look at CapEx. This is as we continue to invest. If you recall, we bought Mission Labs in the first quarter last year. 2021 had three quarters of Mission Labs. This year, obviously, we've got the full year of the capital expenditure. Andrew gonna talk a little bit more about our product evolution. You would have heard around PhoneLine+ that we've built our own Collaborate, which Andrew will talk about in relation to our Horizon and Cloud PBX, and then CircleLoop as well.
There is a significant amount of product development ongoing, and I will provide a bit more guidance in the coming slide around CapEx going forward. Balance sheet, you've heard it. Strong cash reserves, net cash of GBP 92.5 million going through. Basically, we've had a slight increase in receivables with prepayments, and you'll see that coming through on the working capital. You see the contingent consideration at the bottom is coming down to GBP 6.8 million as we settle the earn-outs from prior acquisitions. Cash flow. Cash conversion remained at 94%. Tax, as you can see, increased, but that was in line with adjusted PBT. I'll give a bit of guidance, the obvious guidance around tax going forward.
CapEx includes, as I said, the software development costs as we build out our product portfolio. Acquisitions, unlike other years where we had maybe more significant Mission Labs and other acquisitions, here we've got NeoTel at GBP 4.3 million. Then we were settling, as I said, some of that contingent consideration, in particular in HFO with the acquisition of the shares outstanding in the German business. Consideration to be paid in the future, just to give you an understanding of the modeling, you can see the GBP 7 million undiscounted of which GBP 5.3 million is payable within the next 12 months. Guidance.
If you look as of last night, and I realize that the analysts in this room and elsewhere will be updating their models following on our results, but as of last night prior to these results, our Adjusted EBITDA had a range of GBP 110.1- GBP 117.2. That's versus this year's performance of GBP 105.1. Our adjusted EPS was in a range, quite a large range of GBP 0.679- GBP 0. 77 versus this year's GBP 0.718. For the EPS this year, the tax rate has moved from 19% to 25% from April, which works out as a weighted average of 23.5%, which will impact EPS for 2023.
The guidance is very happy with the range, very comfortable with that range. Clearly, as the year progresses, we will give further guidance going forward. I have updated the Gamma Investor website as of today. If you go on it might clear your cache and have to reload it. If you go on it, you'll see that we've given more information. You get the delight of a few videos, myself and Andrew. You also have, we will start publishing our company compiled consensus, which will hopefully give you clarity going forward. We'll update that clearly every time there's a new forecast out in the investor community. Corporation tax rate I've talked about. Then we have the CapEx range.
I mean, historically, the CapEx range, I think from my predecessor, Andrew, was around GBP 18 million-GBP 20 million. As you saw this year, as we invest more in our own product development, plus we have seen a slight increase in the software developer market. When we talked about salary and wage inflation, we have seen that come through in the software side, that we're guiding closer to between GBP 22 million and GBP 25 million on the CapEx over this year and the following year. Cash conversion guidance, I get told that we were beating too many years, the 85%-90%.
I know there's a few analysts in this room who phone me up all the time and say, "How does 94% fit into 85%-90%?" I am changing that guidance as of today to say that cash conversion, we expect to continue above 90% this coming year in 2023. That's where we got to. I think to summarize, as Andrew said, as I sat here, I inherited a business and guidance. We've delivered on that guidance. I would actually say we've actually surpassed that in the revenue guidance we gave in direct and also slightly better in the gross profit guidance we gave in GP.
You know, the Adjusted EBITDA of GBP 105.1 and the double-digit growth that came with, plus clearly, a very cash generative business on that side. You know, I'll be asked either in Q&A, so I might as well cover it now, a healthy start to Q1. Clearly, I'm sitting here knowing the January and February results, and know half of the March numbers. I'm confident in that guidance I've just given earlier to you today. On that, gonna pass over to Andrew, who's gonna talk a little bit more about strategy and the growth drivers. Thank you.
Cheers, Bill. Can he work the clicker this time? You're all thinking, aren't you? What I wanted to do is probably take another sort of 10, 15 minutes of your time before we go to Q&A, if that's okay. Talking about Gamma's strategy, how I kinda see Gamma going forward and revisiting some of those growth drivers that we identified at the half year. For those of you who've been sort of walking with us for a while and tracking Gamma for the last few years, you may recognize this slide. It's not sort of come out of hibernation for a couple of years, but we presented it in 2018.
It was a sort of five-year strategy that Andrew Taylor and myself and the management team at the time came up with as to what we gonna do with Gamma. Over the next five years, so from 2018 to 2023, there are four things that gonna be really important for us. We had a really good Cloud PBX business in 2018, we needed to move that into a broader UCaaS business. We felt we needed to be in Europe, we felt we needed to have a digital story, and we felt we mustn't, as we kind of focused a little bit more on software as we moved into sort of UCaaS and CCaaS, we mustn't lose hold of our telco roots as a business.
The fact that we actually have our own network does differentiate us from some people, as we'll see in a moment. Beginning of last year, we kinda marked our own homework, essentially, and we said, "Well, how have we done against those four things?" Evolving from Cloud PBX into the UCaaS market, we think we've done pretty well. We've built our own collaboration software. We can integrate with Teams if that's what people want to do. We've built our own contact center software. We can do call recording. We can integrate with a number of CRM systems. We kinda give ourselves quite a big tick on that. Why is that important? Because it's beginning to pull up our ARPUs on our core Horizon business. We'll talk about that again in a moment.
Also we've begun to build products that fit in slightly other different parts of the market. We now have a product called PhoneLine+, which is designed as a single line replacement product. When WLR gets turned off in 2025, what are gonna buy? Hopefully, gonna buy Gamma's PhoneLine+ product, possibly through a channel partner. Expanding into Europe, obviously, we're in the Netherlands, we're in Germany, we're in Spain. We haven't been able to get into France yet. I'd still like to be in France as and when the right acquisition comes up.
I think it's probably fair to say that the market forecasts that were around in 2018 that analysts were producing, not you analysts, but market analysts, I think it's probably fair to say the market's growing a little bit slower than we were all kinda hoping and expecting. It's still there. It will grow. Penetration's just a little bit lower in 2023 than we were kind of all expecting five years ago. On the digital side, well, through our acquisition of Mission Labs, we now have a product called CircleLoop. If you want to engage with Gamma digitally, you can do that, and you can do that in the U.K., you can do that in the Netherlands, you can do that in Germany as we sit here today.
If you're one of our enterprise customers coming to us directly, we have the Gamma Hub, which is a fantastic tool that enables you to self-serve on a lot of things. That gives us a better quality of customer service and frankly, also reduces our overheads because people can self-serve on stuff that five years ago we would have had to have done for them. Finally, that fixed and mobile piece. In many ways, I think this was almost like the forgotten plank of the strategy five years ago, just remembering that we're a telco. you know, we still sell data, we still sell mobile, but most importantly, we're able to provide voice enablement for people who are just providing software, and obviously, the best example of that is Microsoft.
The fact that we are a telco and we have a network in every country in which we operate enables us to serve our customers with things like Operator Connect and Direct Routing. Again, very important. We think we've done pretty well. Where do we go next? We've come up with another sort of four priorities for the next five years, or probably even four years now. These are not a massive kind of change of direction. There was nothing wrong with where we were going. The four things that we've just talked about, they gonna remain very, very important to Gamma over the next four or five years for sure. gonna focus on having a common product platform on UCaaS and CCaaS in every country in which we operate.
Why is that important? Well, where we've been buying and acquiring businesses around Europe, we've now got different platforms in each country in which we're operating. If we keep going with that, over time, we're gonna build up a lot of technical debt, and Bill sort of already explained, you know, our CapEx has increased because we're supporting a number of platforms is certainly one reason, and also we're kind of continuing to build new products is another reason. Over time, we need to pull everybody back onto a single platform. That's quite important. We also need to serve our customers through whichever route to market they want to engage with us through. Why again is that important? Well, in the U.K., it's a wholesale market. Gamma sells to channel partners, channel partners sell to end users.
In Europe, it's actually more of a dealer market. Gamma is selling to the end user, there's a channel partner who's sitting there taking a dealer commission. We see over the next four or five years digital being more important. I can't produce products that just work in a wholesale market or just work in a dealer market or just work in a digital market. Every time we're now thinking about products, we need to think about being able to take those to market through a variety of routes. The third thing, for the first time, we're calling out our enterprise business. I think people have always kind of seen Gamma as a business that serves SMEs that does a little bit of enterprise on the side. Actually, we've got a GBP 100 million enterprise business now.
It has a fantastic brand and a fantastic reputation in the U.K. We have some amazing logos with that business. We want to be known as an enterprise business across the whole of Europe. My challenge to the enterprise team now is to take all of that expertise that they've built up in the U.K. over the last 10 years, take the talent and the ability and the network that we have in Europe, and can we begin to build that enterprise business in Europe over the next four or five years? Finally, and in many ways most importantly, we want to create an organization with a common set of values and goals. I mean, I've been at Gamma for 16 years. Many of you have known me for the last seven or eight years.
I think you kind of have a sense of what Gamma's you know, values probably are. I think we do. This isn't an attempt to completely redefine who we are going through some sort of existential crisis. This is an attempt to just sort of say, "Look, Gamma's bought a number of businesses that we think share the same values that Gamma's always had." Let's just codify those. Let's define those. Let's articulate them properly to the outside world, so the people who don't currently work with Gamma, either as an employee or as a customer or as a supplier, they know what we're about and they know what we stand for, and hopefully they can kind of choose to do business with us for the right reasons.
Hopefully you kind of see how those four pillars fit with these five growth drivers that we identified at the half year. I'm just gonna touch on these again to give you a bit of an update as to how they've moved on in the last six months. I haven't got a slide for the first two, but suffice to say the U.K. market for Cloud PBX is still a fantastic opportunity. Everybody's still saying over the next four or five years, the U.K. markets gonna double, and Gamma should maintain its market share as that market doubles, and we have a great opportunity in the U.K. In Europe, it's still...
You know, it feels like for those of us who are of an age, when you used to read Thomas the Tank Engine books and the engine's at the top of the hill, and it's just like gonna get there, gonna get there, gonna get there, and then gonna go over the hill and go. We kind of feel like, you know, we're in that phase in the European markets. At some point, the European market gonna turn en masse to cloud from hardware, and that point just hasn't quite yet been today. If you look at the results of our competitors, again, it's not like, Gamma's missing a big kind of swath of market move. When that market moves, we're absolutely ready.
Again, we see the European market as a really good opportunity for us. On the third point, we showed this slide at the half year, and it's actually identical. I don't think we've changed it at all, if we're honest. The point of the slide was just to say that we have this opportunity now to maintain and increase our ARPU in our Cloud PBX product as it moves to UCaaS. On the left-hand side there, you can see that the Cloud PBX product we've been selling in the U.K. for the last 10, 11 years, our list price for that is GBP 8. What we've been doing over the last three or four years is having the opportunity for our partners to upsell customers, and we've been incentivizing them to do that.
If you want to buy our collaboration software, that will get us another GBP 3. Teams integration is another GBP 1. Call recording is another GBP 1.50. Horizon Contact is another GBP 18. The idea is that as that price, as that GBP 8 per seat comes under pressure, as it surely will because we're in communications and price attrition is a feature of our market and has been for years and years and years, we can sell the additional modules to our customers to just pull that ARPU back up again. Is that working? Well, gonna argue, yes, it is. It works if we are selling those modules more quickly than we're selling the core product. As you can see there, we increased our core Horizon seats by 11% throughout last year, which we're pretty pleased about.
Still doing double-digit growth off a very, very big base now. We're up to three-quarters of a million users. Actually everything else, we increased the sales more. Okay, off a lower base, but, you know, it goes to demonstrate, I hope, that the thesis is working. Collaborate up 16%. Anything to do with Teams is doing phenomenally well at the moment. Voice recording, 43%. Horizon Contact, so our contact center, again, anything to do with contact centers is doing very well at the moment as well. If you throw all of that together, I think for those of you who've known me for a while, As Bill said, I was the CFO, so I'm an accountant. I'm also a mathematician by background. That was my degree.
If you throw all of that into a big spreadsheet, which is loads of fun if you're that way inclined, I've done it for you if you don't find it loads of fun. I think if you kind of compare the attachment rates and the notional prices we had at the beginning of the year and the end of the year, actually our notional ARPU has gone up about 2.5%, 2.6% this year just by having higher attachment rates of those products at the end of the year than the beginning of the year, if that makes sense. Now we've had a bit of price attrition throughout the year. Actually you'll find our ARPU's been pretty flat, we're pretty happy with that because for the last few years, ARPU's just been coming down and coming down.
Our hope going forward is when we're standing up here next year, we'll be able to say, actually, the attachment rates have gone up again and that ARPU just begins to turn up. You know, not only is there lots of opportunity in the U.K. market in terms of selling more seats, we actually think through some of the development we're doing, we can actually get higher ARPU for those seats. The other point I would make as well in passing is because we have a channel model in the U.K., because we're fundamentally selling to channel partners, a lot of channel partners are coming to us and bringing us just plain, naked single seats because they have the opportunity to do that upsell. It's not just as straightforward as that gives us an opportunity to get an increased ARPU.
A number of those seats are coming to Gamma because channel partners can do the upsell at some point in the future. We talked about SIP as well at the half year. Again, I'm sorry, it's another complex slide with loads of numbers on it and apologies for that. You can sort of go away and, and digest this. Again, the other sort of thesis that we were talking about was that the SIP market's evolving in the U.K. When we floated eight years ago, we talked about SIP as you put a SIP trunk into a hardware PBX, and that's a replacement for ISDN, and it's all very good, and we're selling lots of it, and we've got about 1 million trunks that are just going into a hardware PBX.
Over the next few years, we actually gonna push those customers to take a different product. Hopefully, they take Gamma's Horizon product, and if they do that, we move people from an ARPU of GBP 1.25 up to GBP 8. That's a really good news story for us. Actually, many people are moving to Teams, so they're using a Teams server rather than a hardware PBX. That's okay because ARPU goes GBP 1.25 to GBP 2.50. Some people, for whatever reason, they're using a third-party UCaaS provider. We're gonna name any brands, but you probably know who I'm talking about. That, you know, we're still making GBP 0.60 PP user, and the reason that we're able to do this, it goes back to what I was saying earlier on.
We have a telco heritage in the U.K. We have a network and indeed the other countries in which we operate, that means we can support customers who do this. What we need to do, and what we need to push our customers to do, and what we are pushing our customers to do is to move from SIP either to Horizon or to Microsoft. If there is a use case that we can't support, then gonna have to go there. We'd rather they go to Horizon and Teams, and gonna carry on building things on Horizon to make that more and more attractive. Again, that just kind of helps increase our ARPU going forward. I think we got asked at the half year, how is that kind of migration going?
In 2022, of those million trunks, 13,000 actually migrated off of SIP to one of those three. It's not a trend that's kind of moving in volume yet. It will come, and it's an opportunity for us, and we will push our customers towards it. Hopefully that makes sense. We talked about enterprise, and I'm gonna kind of keep banging on about Teams as well. Again, this slide might be slightly familiar to you. We sort of said at the half year, Teams is a great opportunity. We get asked an awful lot, is Teams a good thing, bad thing, neutral thing? Teams is fundamentally a good thing. The only area we lose out to Teams is where people don't buy Gamma's collaboration software.
They buy Teams instead, and we integrate with Teams. Gamma's collaboration software is designed for a different market to Teams. It's designed for small businesses rather than enterprise. I wanna focus on that box on the left there, which is voice-enabling Teams. The other things we do, as I say, is we integrate our Horizon product with Teams, and we can do professional services and more complex integration. Just focusing for a moment on voice enablement and what's called Operator Connect. In the U.K., we've been selling Operator Connect for a while, and Microsoft don't produce any stats, but we believe we are the leading provider of voice enablement to Microsoft in the U.K. As you know, we keep talking about the Department for Work and Pensions, 100,000 seats.
We have some very, very big Microsoft estates sitting out there, and it's been a real driver, particularly in our enterprise business. We've taken that, and we've done two things with it. Firstly, we can now provide Operator Connect to our channel partners. It's not just something we're now taking into the enterprise space. Our channel partners can take it to their end customers as well. We've also taken Operator Connect overseas. It's already been launched in the Netherlands. We did that in 2022. We launched it in Belgium last week. gonna be in Spain and Germany by the end of the month. Why is that important? I think probably I'd say there's three things that Operator Connect does for us that are kind of quite interesting.
The first thing it does is it takes us into channel partners that we've historically not had any contact with. What we found launching it in the Netherlands and launching it even in Belgium last week, we're getting inbound calls from channel partners who want to talk to us because we can provide Operator Connect for them, channel partners who maybe have never talked to us before. It's opening up that part of the market for us. What we found in Spain is that Microsoft actually launched a webinar that Gamma was hosting. Microsoft did a webinar for their partners that Gamma was presenting at to explain to Spanish Microsoft Teams partners how Operator Connect works and how we can help them fire up Operator Connect. We met 25 Microsoft partners that we'd never met before.
We are now meeting partners in Europe that we've not previously had contact, and that's a good thing. Second good thing about Operator Connect is actually the size of the prize is bigger. Again, in our European countries, if we have a sort of 10, 20, 30-seat Cloud PBX deal, we're quite excited about that. Operator Connect deals you see coming in can be hundreds of seats, even sometimes thousands of seats. Again, it's taking us into a slightly different part of the market, slightly larger customers, slightly bigger opportunities. Again, before you'll get very excited, the ARPU's lower, but it's just opening up part of the market that we're not currently in in those countries. The third thing about Operator Connect that's worth noting is calls are bundled in an Operator Connect world.
I think we sort of said earlier on one of the issues we're having in the Netherlands is that where people aren't using the phone as much, things aren't bundled in the Netherlands, that call revenue is coming down. You don't have that problem in Operator Connect because everything's bundled. Three reasons why we're quite excited about Operator Connect and why we've been launching it. Fourth thing is this important point about just defining who Gamma is. We're not redefining who Gamma is. I think we know who we are, having now welcomed lots of people from Europe and the U.K. into the Gamma family, we want to just kinda come up with a common set of language and a common set of vocabulary that we can use to describe who we are.
In the purpose there in the middle, Gamma is a business that empowers people at the heart of good business. What do we mean by that? Well, probably two things, and it sort of deliberately can be read two ways. Firstly, we want to help people do good business in the sense we want them to help do business well. Whether you are a small business that was battling through COVID, is battling through all of the macroeconomic stuff that's coming down the track, and you want a decent, reliable, easy-to-use comms system that enables you to talk to your employees, your customers, suppliers, we can do that for you.
If you're somebody like Macmillan or an NHS trust that has a whole different reason for wanting to connect with its customers, we can do that for you as well. We want to help people do their business and run their business well, and that's what we mean by good business. We also mean doing business ethically. We mean doing business honestly. I hope you've realized over the years, Gamma is hopefully an organization that is transparent. We're honest. We just tell people how it is, and we do that with our investors, we do that with our suppliers, we do that with our customers, and we do that with our employees. We define four values, and I'll just go through those super quickly. Firstly, we're there and we care, on the top left there.
Gamma, we care about our employees, we care about our customers, we care about all of our stakeholders. We love to grow. I mean, we love to grow as a business, of course we do, but also we have employees who want to grow, who want to challenge themselves, who want to get up in the morning, and learn and develop, and maybe take on new skills or take new opportunities as they arise. Bottom right-hand corner, we do the right thing. As I say, you know, Gamma is a business that behaves ethically and honestly. Also we step up and own it. We have 1,800 people in Gamma who wake up every morning, and they want to own whatever problems are thrown at them that day, and they will solve them.
That might be something to do with customers, that might be something to do with the business, we have people who are willing to step up and solve those problems. Just a very quick ESG update before we end. As a reminder, we have an entire website devoted to ESG, and we have a wonderful team who are pulling all of that data together. Please do go and have a look at that 'cause people work very, very hard explaining what we're doing, so we're very proud of what we're doing. I'll probably just pull out a couple of things. On our CDP rating, that's gone up from B- to B.
Again, lots of hard work from the team, both actually reducing our carbon emissions, but also going through all the work to articulate exactly what it is we're doing and gathering the data to demonstrate to people that we're doing the right thing. On the social side of things, I mean, a lot of our employees, and particularly some of the lower-paid employees, have had quite a tough back- end to FY 2022. There are a number of measures that Bill actually took with the HR team to change the way we were paying people and bonusing people and giving people one-off allowances to get them through that. I think that was well-received. You know, looking after our people is one of the things that I think Gamma is very, very good at.
On the governance side, again, MSCI have increased our ESG rating up to AA. Again, it's the same team doing a fantastic job, not just actually governing the business properly, but articulating how we do that. I think, lots to get excited about on the ESG side. Where do we go? Final slide. I think, as we've said, probably for every results session that we've done over the last few years, we have a robust business model. You know, whatever happens, wherever the economy goes, whatever happens in the macro, whatever happens with banks, we have strong recurring revenue with margin. Businesses rely on us for what they do. We have a very strong balance sheet, as Bill articulated. Cloud PBX penetration in the U.K. is still below 50%.
In Europe, it's a lot lower. The markets that we are in will grow, they will continue to grow. There's significant migrations to happen in the U.K. We've talked about SIP. We've talked about the upsell opportunities on Cloud PBX. We haven't really talked about PSTN switch- off, we could have done. That's coming in 2025. That will give us an opportunity to sell more PhoneLine+ as well. We continue to build more and more of our own IP, many of those additional modules that I talked about earlier, things like contact center, call recording, those are built in-house by Gamma, by our own team. We're continuing to look for M&A opportunities across Europe because we see the opportunity in Europe. We continue to look for M&A opportunities where it makes sense for us to buy our own technology.
Finally, we have that fantastic opportunity to work with people like Microsoft. We haven't really talked very much about Amazon this morning. Maybe we can pick that up in Q&A to replicate the success of the enterprise business in Europe as well as in the U.K. I think lots of reasons to be positive, and I think we have a strategy now that gonna exploit those growth drivers by building on the strengths that we have as a business to take us through for the next sort of four or five years and carry on growing.