Thank you, Nadia, and a very good morning to you all. Thank you very much for joining us today. I'm delighted today to be joined on the call by David Ward, our CFO, and Dev Dhiman, our CEO designate. In terms of agenda, shortly, Dev will take over the call to introduce himself so you can all get to see and know Dev, and then David and I will talk through the progress we've made in the first half of the year, and then we'll wrap up with Q&A. On November 8th , we announced that I've notified the Board that after seven years at GBG, I intended to retire from executive life. After a thorough process, we're delighted that we announced that Dev Dhiman, who's previously been running our Asia Pacific business, would be promoted to chief exec.
Dev and I are currently running through a transition, and on January 30th, I will step down from the board, and Dev will take up the reins full- time. I think for me personally, it shows one of GBG's greatest strengths, that is our team, that we've been able to promote within for Dev to drive forward the next chapter. It gives me huge pleasure to introduce and welcome Dev to this community. So, Dev, why don't you say a few words?
Thanks, Chris, and good morning, everyone. I'm delighted to be joining Chris and David on our call today, and it's a pleasure to speak with you all. I hope to get to know you all better in the coming months and years ahead. It's been a few weeks now, as Chris said, since my appointment as his successor was announced, and I said at the time, internally here, that my appointment as CEO is a source of enormous pride for me, and that feeling of pride and privilege continues to strike true as I speak to you this morning. I am really excited to have been given the opportunity to lead the next chapter for the GBG business. A little bit about me.
So prior to coming on board at GBG, I spent 12 years with Experian, and during my time there, I worked across almost all of their businesses, the credit bureau, the decisioning analytics business, and the data quality / location business. I spent time in both established and emerging markets in which they operated around the world. I was fortunate enough to join GBG just over three years ago to lead APAC, and I'm really proud of the growth, the team and I have been able to drive in that region over that period of time. The reasons I joined GBG in 2020 continue to be evident to me today. Great customers, great product, great people, a global presence in a highly attractive marketplace, and a real purpose to build trust in a digital world.
I've experienced these assets firsthand in my time here, and I'm passionate about bringing them together to continue to build on the foundations that Chris has laid over the past seven years. As I transition into the role, my plans for the next couple of months will be to spend time with our teams, customers, and partners in the U.S. and in EMEA, before relocating back to the U.K. permanently in early 2024. I'll now hand you back to Chris to take us through the half-year results. Thank you.
Thank you, Dev. And, as Dev said, turning to the results. Overall, we are pleased with the progress we've made in the first half, and the results are largely as we expected and in line with our trading update that we posted on October 19th. We've seen continued strong performance in our Location and Fraud areas, and we're pleased that there's been stabilization in Identity, meaning we delivered revenues of GBP 132.4 million, which is a 3.3% constant currency organic growth, excluding crypto, and an operating profit of GBP 23.9 million. That's been aided by very strong progress with our simplification and cost transformation program, which David will talk more about. Our simplification program has enabled us to do two things.
Firstly, drive out an over GBP 10 million worth of annualized costs, operating costs, as well as actually accelerate innovation, that I'll touch on a little bit more shortly. We've continued to deliver a strong performance in new business across all of our segments and all of our geographies, driving 4% of revenue growth, and our customer retention ,, cross-sell and upsell remain positive and strong. As most of you know, our challenge has been net revenue retention, our existing customers using our services less, particularly in Identity. We are pleased that we've seen stabilization and that NRR is improving to just shy of 100%, as David will talk through. Looking across our three solution areas, a little bit more detail in terms of Location, Identity, and Fraud. Starting with Location.
Location accounts for 28% of our group and grew at a very positive 8.1%. We go to market in Location across three major channels: partner, direct, and self-service. Our partner channel delivered strong growth as we open up new user cases and diversify the end customer segments we serve. We have significantly enhanced our self-service offering, launching our new digital-first platform, enabling us to sell in over 45 countries, and we continued to win good new business in all of our target geographies of the U.K., Western Europe, U.S., and Australia, across multiple and increasingly diversified sectors. For example, in the U.K., we've won business with OVO Energy to help on smart metering and energy switching. In Germany, we've won Deutsche Telekom as a customer, and in the U.S., we've won Moody's Analytics.
We've also seen positive momentum in upsell and cross-sell, both within our Location services, but also between Location, Identity, and Fraud, such as Revolut, who have been a long-term identity customer of ours, are now using our Location services in 30 countries. We're proud of our differentiated offering in Location, and I'm delighted with the work our teams have done to continue to innovate. And one very recent example of that is a new service that we've introduced to market, called Global Store Finder. This very simply allows consumers from a digital experience to actually find their closest store to do click and collect or returns. But of course, this capability isn't just relevant to retailers. This is also deployed in healthcare to help find local consultants and the hospitality sector, linking hotels and restaurants, for example.
So overall, we're delighted with the performance in Location, and we believe that we have a differentiated capability. Turning to Identity. Identity accounts for 58% of the group, and in terms of financial results, declined at 2.8% constant currency. If you strip out crypto, broadly flat. As we've discussed many times before, there's been two major challenges we faced in impacting our Identity offering. Firstly, the correction post-pandemic on online usage, which particularly impacted internet economy customers, and secondly, the turmoil in macroeconomics with inflation and high interest rates impacting particularly our fintech customers. The net impact of this has been that our customers are using our services in those specific sectors less. It is not a case of us losing customers.
This is particularly evident in our U.S. Identity business, really, as a result of our relative sector exposure. We have a far greater percentage of our revenues in internet economy and fintech in the U.S. than we do in our other regions of Asia Pacific and EMEA, and this is evident in performance. We've seen very strong growth in Asia Pacific, in Identity, improving, and solid growth in EMEA, and our challenge has been the Americas. What we've been working hard to do is two things. Firstly, prioritize ruthlessly our offer, using the best of everything we have in our Identity and Fraud capability set, because our sweet spot is the intersection between Identity and Fraud. This has allowed us, as I've already mentioned, to drive out costs, but also accelerate innovation.
We're delighted that we've continued to bring new capabilities to market, building on our GBG Go offering, that we talked about in January. We've also now launched GBG Score and GBG Trust. GBG Score is simply a score between 0 and 1,000, that allows our customers, B2B organizations, to understand the relative risk of onboarding a customer, as opposed to a simple yes, no answer. GBG Trust is building on our experience in the U.S. of fraud consortiums, is a fraud using the billions of data records we have, and AI technologies, is allowing us to identify different types of fraud between customers and between customer segments. That's really critical because fraud is only increasing. Our most recent statistics show that 55% of businesses in the U.K. have been victims of fraud.
So we've driven prioritization, which has resulted in cost savings and acceleration of innovation, and we've also looked to accelerate our diversification of end customer, and we're pleased to report we're making good progress on that front. We've won new business, and we continue to upsell and cross-sell across the gaming sector right around the world. Examples being Flutter Group, which we do numerous things with different parts of Flutter Group. We've added Brazil, we've added Multi Bureau in the United Kingdom, we've added more capability in the United States. We've driven good new business in public sector and in utilities such as the university sector in Australia and winning Dish Networks in the United States. And we continue to do well in our most important sector, financial services, but particularly traditional financial services.
For example, winning a new client in AIG, where we're providing data both in the U.K. and the United States, as well as document in the United States. We continue to build good progress in upsell and cross-sell. A good example being Mastercard, where we're providing Identity services in all of our regions, as well as now Location services. Lastly, Fraud. I've already mentioned that our sweet spot and our differentiated capability is the intersection between Identity and Fraud. But for the specific services that we categorize in our Fraud offering, those being our transactional fraud software and our Investigate software, we're pleased that we've continued to deliver good growth of 10.5%.
This is down to continued excellent progress across Southeast Asia, in particular, winning a number of clients in Malaysia, Thailand, Philippines, and Indonesia, as well as good upsell and cross-sell with people like Virgin Bet and E.ON here in the U.K. So overall, we're, as I said, we're pleased with the progress. Results are very much in line with what our expectations are. Now to talk about that in more detail, I'll hand to David.
Thank you, Chris, and hello and good morning, everyone. Thank you for joining us again. I will now take you through, as Chris said, a more detailed review of our first half results, and particularly our progress on cost efficiency. Overall, we're pleased with the results we've achieved in H1, which are in line with both the October trading update and our expectations for this financial year. We said at the start of this year that given the macro environment, which continues to have a little more uncertainty than we would like, that there was a range of possible outcomes for revenue, but that overall, we had confidence in our profit expectations because of the strong progress we were making on our efficiency projects.
We also said that we expected some revenue growth in Identity to return towards the end of this year as we started to lap less challenging comparatives. In H1, we delivered revenue of GBP 132.4 million. That was in line with that range of outcomes, with growth at 3.3%, excluding the drag from crypto. As Chris has already said, we've made significant strides forward with our cost reduction programs, and since the start of the last financial year, we have now already delivered just over GBP 10 million of annualized savings.
That has translated into an adjusted operating profit for H1 of GBP 23.9 million, which is 7.9% higher than H1 last year, excluding the large and unusual FX gain that we had last year, but also further underpins our confidence over the profits expectations for the full year. We did have a statutory operating loss of GBP 52.6 million, which was impacted by a non-cash goodwill impairment charge caused by a higher discount rate as a result of higher central bank interest rates since we last did that impairment test back in March.
Lastly, our cash conversion for the year- to- date has returned to more normal levels for GBG at 102%, and we're on track for further debt repayments in the second half of the year, which we expect will drive our debt leverage down to approximately 1.3x by our year-end. So now let's take a look at the income statement in a bit more detail. On a reported basis, revenue declined 1.1%, but on a constant currency basis, increased 1.8%. I have my usual revenue bridge chart to share with you in a few minutes, so I'll talk you through the revenue dynamics in a bit more detail then. Our gross margin was a little lower in H1 at 69.2%, and that reflects a number of revenue mix items, plus some higher cloud costs.
Some of the mix changes we wouldn't expect to persist, and we're working hard to drive greater efficiency into how we use cloud computing. Adjusted operating expenses reduced by 8.3% period over period as a result of our sharp focus on efficiency. I have a slide on that with more detail later, too, so I'll come back to that topic, but it is worth remembering that the reduction you see here is net of the effects of inflation on our cost base. And as I have already mentioned, the FX retranslation difference has returned to a more normal level this year, and we recorded a gain of just GBP 0.3 million versus the much larger gain last year of GBP 6.3 million.
Bringing that all together, that led to an adjusted operating profit of GBP 23.9 million, which represents an adjusted operating profit margin of 18.1%. And normalizing for the FX gains, I just mentioned a growth in adjusted operating profit over last year of 7.9%. Moving below adjusted operating profit, the share-based payment charge for the year was very small at just GBP 100,000, due to a number of prior year awards now being assessed to be underwater and therefore not expected to vest. That causes a credit for those awards, which here is offset against the charge related to the more recently issued share options. And there are exceptional items of GBP 56.6 million, and these are broken down in a table included on the right-hand side of this slide.
The largest item is, of course, the non-cash impairment charge against goodwill of GBP 54.7 million. This is purely the mathematical outcome of having to use a higher discount rate. You will remember that we impaired the intangible assets associated with our Identity Americas unit last year, and of course, at that time, we took the write-down down to a level which was perfectly balanced with the DCF valuation model. Therefore, the nearly 1% increase in the discount rate since the end of March has had to lead to an increase in the impairment, sadly. The other exceptional items came to GBP 1.8 million, and these are entirely related to costs we incurred to enable the delivery of our cost savings. We do expect some more of the same in H2.
As expected, our net finance costs increased over the prior year as a result of the higher interest rate environment. But as I have said, we do expect to gradually de-lever in the second half of the year, and this will help to reduce the run rate for these financing costs. And finally, on tax, our effective tax rate was a little higher than we would expect for the full year at 31.2%. This was due to some revaluation of U.S.-based deferred tax assets. We still expect a full year effective tax rate in the range of 25%-27%. And then on to the cash flow statement, which confirms that our cash conversion in the year to date was 102%, and so has returned to a level more aligned with our history and our forward guidance.
Net debt at the end of September was GBP 104.8 million, versus GBP 105.9 million at the last year end. So only a marginal reduction in the six months, but this was due to the payment of our dividend and the other usual working capital outflows we have in Q1, plus the cash impact of exceptional items, which was GBP 2.8 million in the period. We expect strong cash generation in the second half, such that our net debt to EBITDA leverage, we expect will reduce to approximately 1.3x by the end of the year. And we have made a good start because, as we have announced today, our net debt has already reduced to approximately GBP 95 million.
Okay, next I have our now hopefully familiar revenue bridge, which is looking quite a bit simpler than it has for a while. I'm sure that will be a relief for, for most of you. We have just included the constant currency adjustment and the final piece of crypto-related drag effect. Just a reminder, cryptocurrency trading customers represented 7% of total revenue in FY 2022. That reduced to 3% in the first half of last year, FY 2023, and as I have already said, that has now reduced to a run rate of just 1%. So while our revenue declined 1.1% in reported terms, that was growth of 1.8% in constant currency terms and 3.3% growth without the cryptocurrency drag.
You might remember that the comparative from FY 2024 was 3.7%, and so the outcome in H1 is very much aligned with our guidance for the period, but in truth, it probably is approximately 1% lighter than we had targeted. Of course, we have made greater progress on cost efficiency that has at least compensated. On this slide, we have also repeated the disclosure we first gave at our last year-end around revenue from new business and net revenue retention, or NRR. Chris has mentioned that already. First, just a reminder that this disclosure is provided on a twelve-month rolling basis, and that's why at this half year point, it won't match the 3.3% growth I have just described.
We are pleased with the 4% growth coming from new customers, which demonstrates that we are still winning our share of new customers, and Chris has already mentioned a few great examples of new business wins. Our customer retention remains high. And as you can also see, our net revenue retention is starting to pick up. This is exactly as we expected, and we expect that the headwind of the internet economy customer declines to further subside as we move into our quarter four. The split of our revenue by type, shown on this slide, shows that the split between subscriptions-based and transaction-based has not shown any significant change from last year, either at the total group level, as shown on this slide, or in any of our reported segments.
We still have a total of 94% of our revenue coming from the combination of our repeatable revenue streams, being subscriptions and consumption. We did see a slight reduction in the other category, which was driven by fewer hardware orders, which, as I have said before, can be quite lumpy. So while hardware revenue is not significant or certainly not a primary focus for us, that decline of GBP 1.5 million in the other revenue clearly wasn't helpful for our overall revenue growth rate for the half year. In the bottom left of this chart, the diverse end market sectors where GBG earns its revenue haven't seen any significant shifts this period either, but you can see the positive impacts of our focus on diversification, both through our direct sales channel as well as via our partners.
Chris has already mentioned some of the great wins that we have had in some of these diversified sectors. It is worth noting that the relative stability in financial services, which reflects the challenges in the fintech space that we have talked a fair bit about, but balanced against further growth in more traditional financial services. You can also see the declining revenue from crypto exchanges that I mentioned earlier, now just 1% of group revenue. Retail remains a sector under pressure for fairly obvious consumer budget and confidence reasons, but this does underline the impressive nature of the growth we have seen in our Location segment, where retail makes up a higher proportion of that segment's revenue. It really shows the success we have had in that team in diversifying.
And finally, the other category here grew nicely as a result of our success in selling through our partners and also some good growth in utilities and telco. Chris mentioned a few of those names earlier, which was up to approximately 3% of total revenue in the half year. From the analysis of revenue by geography, as you can see in the bottom right-hand chart, you can see the decline in revenue from the U.S.A., given the tough comparatives and the drag effect of the correction to internet economy customers. You can also see the relative success and strength of our growth in APAC and in Europe. In APAC, particularly, where our growth was into the high teens. Chris and I have both said a fair bit so far about our focus on cost efficiency.
And so here I have a slide to provide a bit more detail on what we have been focused on. Firstly, just a reminder that this has been a focus now for almost 18 months, and which we first kicked off as soon as we saw some of our transaction volumes were under pressure last year. In this half year versus the first half of last year, our operating expenses on an adjusted basis were GBP 6.1 million lower.
Now, some of that is due to currency translation rates, but the key message I would like you to take from this slide is that across that same period, we have now achieved an annualized run rate reduction of GBP 10 million, and that is at constant currency rates and is net of inflation impacts on our costs. While we won't see all of that in FY 2024 as a reduction over FY 2023, we do expect to see approximately three-quarters of that amount in the year, and there are still a few ongoing projects that we are working through into the second half. At the bottom of this slide, I have set out some of the optimization initiatives that we have been driving hard to achieve these savings. Clearly, people is the largest component of our cost base, and since March 2022, we have reduced our headcount by 9%.
We have been quite efficient in achieving this, with only approximately one-third of this reduction being from paid redundancies, while the remainder coming from a combination of being tougher on performance management and stricter and tighter on hiring replacements when we have had leavers. It is for this reason that we have been able to achieve a strong payback from annualized savings versus the exceptional cash costs we have incurred, which is currently close to a ratio of 3 to 1. While we have also focused on integration and simplification within our product and technology team projects, we have balanced that with retaining a clear focus on driving differentiation from our competitors, particularly in Identity, as Chris has already talked about, and we are excited about the projects we are pursuing. Through stricter prioritization, we have been able to save costs in other areas.
In sales and marketing, we have increased our focus on marketing returns on investment and have deployed some modern sales productivity tools that use AI and analytics to drive efficiency. So that takes me on to our final slide. So to summarize the key messages that you have heard from Chris and I this morning, we are pleased with our first half performance. That has largely panned out as we expected. We've made good progress with our projects aimed at increasing our differentiation and continuing innovation, with solutions such as Score and Trust in Identity and our digital-first platform and Global Store Finder in Location. These will further consolidate GBG's position as a partner of choice for our customers. Our customer retention remains high, and NRR is improving.
New business from logo acquisition continues to be good, and we are pleased that monthly volumes in Identity have now stabilized, and this reinforces our confidence that we will see growth from our Identity segment before the end of this financial year. Lastly, but perhaps most importantly, we are pleased with our progress on the execution of our simplification and efficiency projects that have already delivered an annualized saving run rate of GBP 10 million, and which underpins our confidence in our FY 2024 profit expectations. With that, I think it's time for Q&A, so I will hand over to the operator to see if we have our first question.
Thank you. We will now begin the question and answer session. Our first question today goes to Tintin Stormont of Deutsche Numis. Tintin, please go ahead. Your line is open.
Morning, guys. Three questions for me. First, well done on the GBP 10 million of cost savings achieved to date. Dave, you talked about some ongoing projects still, and I guess for people on the call, and if we were to think that were there to be further weakening, what's the ability to do to achieve more? Any quantum that you could attach to that? And then secondly, in terms of, again, for Dave, David, sorry, NRR, just shy of sort of kinda 100%. I think from the last time you disclosed this number, you did give some insight as to sort of kinda the big proportion that some of the internet economy customers cost in terms of that NRR number shifting down.
With this improvement, i s it being driven by those internet economy customers, or are other customers kinda picking up as well? And then finally, on new wins, could you just give us a flavor, Chris, of the conversations that you're having with customers? Maybe it's different across the three different divisions, but is it product? Is it capability-led? Is pricing sort of kinda a determining factor in some particular areas? Would just be interested in that sort of with 4% growth coming from new customers, what's driving those new wins?
Thanks, Tintin. Maybe I'll start with the question you posed to me, and then I'll hand over to David on the cost and NRR question. So, yeah, as both David and I have said, and you've reiterated, yeah, we are pleased with the levels of new business across the half. 4%, I think, is a good number, and I think, y eah, it's strong across all three solution areas and all geographies. It's difficult to summarize about the conversations, but I'd say, I think we'd say it's really about outcome- driven. You know, our customers are facing numerous challenges, both in terms of the macros, but also a bit closer to home, the threats that they're facing, particularly enhanced by things like AI.
Therefore, our customers are really focused, almost irrelevant of sector, about how can they continue to onboard customers that mitigate the risks that are facing them in the face. So it tends to be outcome-based. Therefore, we think that is what drives a strong competitive position and differentiation for us. Because with our access to billions of data records and strong capability sets, we think that. You know, when we come to proof of concepts, we outperform on outcomes. And what we, what I simply mean by outcomes is, you know, the number of valid customers one can be sure about, whether they're trustworthy or not. So I hope that gives a bit of color to that. And, David, why don't you take Tintin's other two questions?
Thanks, Chris, and morning, Tintin. Yeah, two good questions. I'll take them in order. So savings first. Yeah, just to repeat what I said, GBP 10 million of annualized savings discovered, and found so far. There are some projects that are continuing into the second half for us. We expect for most of that focus on those projects to be largely complete by the end of this financial year. There will be a bit more exceptional cost incurred to execute on those.
Some of those are around teams and structures, and some of those are around office locations where you remember last year we started a project to rationalize some of our office spaces, and there just hasn't been so much of an opportunity in the first half to do those as leases were not expiring, but in the second half, we have a bit more opportunity. So I do expect that runway of GBP 10 million to be a little bit higher. I'm afraid you're not gonna get much more of a number out of me at this stage, but I do expect it to be a bit higher.
The combination of those two things, as I said, I would expect that we should be able to deliver on a reported basis, versus last year, probably GBP 7 million-GBP 8 million of operating cost savings. That savings on NRR, it's a good question, and actually it gets to the heart of really what's been happening with some of our revenue dynamics. I think we're very pleased to be able to say that the wins from new business has held up well at 4%. That's a real positive. And as Chris said in his piece, a challenge for us really has been NRR, but that is starting to improve. You're right.
At last year end, I said that about 3% of the drag came from a relatively small cohort of internet economy customers, and that headwind has started to unwind, but won't be fully unwound until we get into our Q4. Aside from those customers, it continues really reflecting the macro position. It continues to be a pretty mixed picture. There are still some customers that have been trimming, and there have been others that have been showing some growth. And that really reflects us bouncing back at this stage to 100, but I'd expect that to improve in the second half as we get beyond some of those headwinds. Okay. Thank you, Tintin, for your questions. Next question, please, operator.
Thank you. The next question goes to Andrew Ripper of Liberum. Andrew, please, your line is open.
Yeah, morning, everybody. Thanks for taking my questions. I've got three, if I'm allowed. I'll start with one just, following on from the last one regarding NRR. Just wondering, I mean, have you got any more that you can do in terms of trying to drive, greater share of wallet? Obviously, GB's got a lot of different solutions. You know, can you give us a sense of what your share of customer wallet is? And, you know, are, are you in a position to, you know, to go to customers and, and, and basically offer, offer more? How easy is that? Is that an opportunity to improve revenue growth?
Andrew, why don't you give us your other two questions as well, and then we'll come back to them?
Yeah, the second one was just regarding visibility for revenue for this year. You know, if you take into account sort of the wins that you've mentioned, improved NRR, crypto drag dropping out, just wondering if you can give us a sense of what you expect the exit rate to be in terms of organic revenue growth when we get to March 2024, and what the sort of the range of outcomes is around that. And then the third one, just if I'm allowed, was wanted to ask Dev a quick one, just regarding, given he's, you know, spent 12 years working for a bureau, whether he can give some perspective of sort of how GBG is positioned versus the bureaus. That would be helpful. Thanks. In terms of the Fraud and Identity business.
Sure. Thank you, Andrew. So, why don't we do this? I'll take the NRR one, David, you touch on visibility, and then, Dev, you can touch on your view of bureaus. So from a NRR and our ability to take more share, Andrew, it's a really pertinent question. Maybe I did a poor job of trying to explain actually exactly what we're trying to do around that. I mean, both David and I talked at some length today about our drive on simplification and efficiency. I talked about how that drives two benefits, OpEx savings, but also accelerating innovation. All of that innovation is centered around making it easier and simpler for us to upsell, cross-sell, or take more share of wallet.
I touched briefly on a couple of examples when I talked about Identity in what we talk about GBG Score and GBG Trust. Those capabilities actually allow us to add further differentiation and value to existing customers and therefore charge more for them. And so absolutely a natural add-ons to allow us to take a greater share of wallet. So that's it. So I think I'd summarize by saying, yeah, actually, we've been ruthlessly focused on doing just that. You know, in a world where we're not getting growth from existing customers as a result of macros, how do we get growth from existing customers by offering a broader solution set? And I think, you know, we're pleased with the progress we're making. And actually, probably most importantly, new services we're bringing to market, which will make that easier.
So I hope that covers that point. David, why don't you touch on visibility?
Yeah. Thanks, Chris, and morning, Andrew. Thanks for your question. Yeah, visibility, really at this stage for H2, clearly we are a business that lives off, lives off of run rate in the majority of our businesses, particularly Location and Identity. In Fraud, it's slightly more around renewals, so clearly we have a forecast and are constantly reviewing the pipeline. We're happy with that pipeline of deals. And on the more transactional side of Location and Identity at this stage, clearly, we're winning customers, but actually, you know, in terms of the performance for the remainder of this year, it's mostly about volumes from the customers that we've already got and have onboarded.
In that, as you know, we do have a bit of event-driven volume in the second half, in Location. It's around Black Friday and Christmas spending. In our Identity business, it's around gaming activity. And I think you've heard us talk before about tax season in the U.S. But I think on a number of those things, we feel we're in good control. Actually, you remember last year, actually, tax season revenues were a bit lighter than we had expected. So obviously, you know, that's fed into our assumptions for the second half of this year. So visibility pretty strong actually at this stage. And then so I think you had a question about exit rates. I have talked about us expecting some growth from Identity in Q4.
I think that will still be low to mid-single digits, as we wind past those tougher comparatives. But I think as that rolls into the next year, that combined with the other two business units and segments that have been delivering good growth, will improve our average for next year. Dev, over to you for the third part.
Yeah. Thanks, David. Maybe before I answer the question on the bureaus, just to chip in on the NRR point around market share. I think one of the reasons we are so excited about things like Trust and Alerts as we launch in Australia is, it really does help us to differentiate and actually win more of the core business back. We have a choice point around making those solutions available if you consume Identity through us. And we're seeing customers come to us with an interest in Trust or Alerts, and that's leading to a broader conversation on other GBG solutions that we need them to consume before we allow them to take the benefit of the consortium. So I think that is something we are really excited about, and I'm personally very excited about.
On the question of bureaus, again, it's been a while now since I left that space. I would say in terms of their ID and Fraud outlook and capability, it's mixed. It's very mixed by geo. I think what you see is more capability in the bigger businesses that they operate within, but equally in those markets, you see a big, big bit of inertia around the core business of credit bureau, which has probably limited the growth that they have seen in those spaces. In emerging markets, we see them far, far less, and I think the proof of that is how you've seen our APAC business really scale up in terms of the Fraud operation, as we have in the past couple of years. Back to you, operator, for more questions.
Great, thank you. The next question goes to James Zaremba of Barclays. James, please your line is open.
Good morning. I've got questions on management change, UK growth, and growth margin, please. So firstly, Chris, what advice are you giving Dev on how to deliver continued success at GBG? Secondly, the U.K. share revenue was flat year-over-year. I assume, given growth in Location, the U.K. Identity business was down. Can you discuss the drivers and outlook there? And then lastly, David, for more color on the cloud computing costs will be helpful, please. For example, you know, the rough share of the cost base, how pricing evolved over your tenure, are the costs more associated with development or delivery, and I guess the levers you're looking to pull to reduce that. Thank you.
Thanks, James, and good morning to you. I'll take the first two questions, and then I'll hand to David on the third. Advice to Dev, Dev's a very capable individual, doesn't need a lot of advice from me. But, no, all joking aside, I mean, Dev and I have worked together for a number of years. Obviously, we worked together; our paths crossed at Experian, too. I think the core piece of advice I'd be sharing with Dev is keep focused. There's a lot of things that one can't control, and at the end of the day, the most important thing is to focus on what we can control.
I think that is around making sure that we continue to innovate and bring differentiated propositions to market, continue to make sure that we have a highly engaged team, and continue to ensure that we deliver, you know, very best-of-breed customer satisfaction and net promoter. 'Cause those are the things that we can control. Those are the things that will make a difference, and when times improve, will put us in an even stronger position. So I think that's my major advice: Focus on what we can control. Certainly, I look back over the last couple of years, there's a lot that's gone on and that perhaps caused a lot of anxiety that actually, frankly, couldn't do a lot about.
In terms of the U.K., I'm not gonna go into lots of detail on that, James, but suffice to say, looking at revenue streams geographically, it's kind of one angle. You know, U.K. is slower growth for us. Has been actually all my time at GBG for seven years, which is one of the reasons that we've worked hard at best over 10 years to internationalize the business, and the reason it tends to be a little bit slow growth is our relative market shares.
Actually, our Location business is, you know, growing at 8.1% globally, and I think as most people know, that most of that growth is driven through our international expansion outside the U.K., which we're showing low single-digit growth in the U.K, and most of that is driven by competitive takeout, because we do have a high market share. Identity is basically, for the period, basically flat, but actually improving strongly as I referenced, actually. So that's kind of the shape on that piece. And perhaps I'll hand to David on GM, and David, you might want to touch on U.K. as well. You might want to add some flavor.
Yeah. Thanks, Chris, and morning, James. Yeah, just one final comment on the U.K. piece. Just remember, while we associate most of the correction for internet economy customers with the U.S., I think we have always said there is a bit of that in Europe and particularly in the U.K. So, Chris mentioned, you know, pretty flat performance in Identity, but actually the team have worked really hard to make up for that sort of deficiency coming through from last year's corrections. And they're coming out nice and strong, actually, for the second half. So yeah, moving on to cloud computing costs.
First thing I want to say is just to put it in context, we did talk about, I mentioned, in fact, that our gross margin was a little lower this first half. There's two things there, really. It's mix, and there's I did mention a bit of cloud computing. The majority of it is mix. And as I said, I wouldn't expect that to persist. There were some unusual items. We had some deals through some partners that ordinarily, partners are not necessarily lower gross margin, but there were a couple of ones in the first half that were. I mentioned the fact that actually hardware orders overall were a bit lower, but generally we did have a couple of hardware orders that were at very low margin.
It, you know, it's not a primary focus for us, so it didn't matter, but that obviously has played into gross margin and the mix. So that's just to set the context. But we have mentioned cloud computing. There has been some price rises, as you'd expect from those providers. We use most of the names you would expect. There has been some price rises, and in some of our businesses, as you know, we've been able to pass on price increases, in others, we haven't really. So one of the things that we have been very focused on, our technology teams have been, is seeing if there are ways that we can use cloud computing more efficiently. And I think we're pretty optimistic that there are opportunities for that.
I think you wanted some level of size. I mean, what I can say is clearly after, it's probably the third of our larger cost items. Obviously, people is our largest cost item, followed by the data that we use to provide our services to customers, and then probably the third largest item is, probably won't surprise you, would be the cloud computing costs. Thank you, James. Next question, please.
Thank you. The next question goes to Kai Korschelt of Canaccord. Kai, please go ahead. Your line is open.
Yeah, thank you. Good morning, everyone. I had three as well, if that's okay. The first one was around the, I guess, sort of U.S. sports betting, which has been taking off strongly, but it doesn't feel or look, you know, looking at sort of your numbers in Identity or in the gaming sector, that, you know, it's created much of a benefit. So I'm just wondering, you know, are you perhaps under- indexing the customers there, or kind of, you know, why is that not a larger or more material growth driver? That was the first question. The second one was for Dev.
Just wondering what could be sort of additional or incremental growth opportunities or vectors as you look at the business, and I think particularly APAC, I think is very much or mostly a fraud market. So I'm just wondering where, you know, where there might be opportunities to perhaps sell some of that software a bit more forcefully into other regions. Just wondering how you think about sort of, yeah, some of these growth opportunities in the business. And then the third one was around price competition. I remember at the Capital Markets Day, it was one of the sort of themes that as a lot of the competitors had seen growth slow down, that it just became a bit more competitive on that front.
Just wondering, in which product areas are you seeing that? And I think, David, you mentioned that as well, just recently in the recent answer. So just wondering, you know, which areas, products are you seeing that, or geographies, where are you not? Thank you.
Thanks, Kai. I'll touch perhaps on U.S. sports betting and price, and then, Dev, you can pick up to Kai's question, and David Ward, you want to add anything? So Kai, U.S. sports betting, when I referenced it briefly in my prepared remarks when I was talking about Identity. We're actually, we absolutely believe that liberalization of sports betting in the United States, Canada, Latin America, is a good, strong structural growth driver for us. And, yeah, we are pleased to see that we are growing and growing well. It isn't a case of just simply turning a tap on, though. Firstly, and I suspect a number of you on this call know this, you know, in the United States, as an example, it's state by state.
You know, therefore it's kind of a slow, long grind. There are one or two. There's about half the states now that have liberalized sports betting. A number of them never will. But actually there are a couple of states where we don't have a license. We have to apply for a license in every state in which we provide service. There are a couple that we are unable to gain a license because of some of the compliance requirements. So yeah, no, we're actually pleased, we think, but it is a steady build that isn't suddenly turning on a tap, and it all comes flooding through.
I think we also observe, and I think the publicly listed companies that we supply kind of say this a lot themselves, is that they are investing dollars, you know, away from perhaps the United Kingdom to, say, the United States. So some of it is moving geographically. But overall, we absolutely still believe it to be an important growth segment for us. And then on price, I think I would summarize by saying, you know, price competition and pricing generally hasn't changed substantially over the course of 2023. What we talked about at CMD is largely the same as we see today. Now, we, as David just touched on in his answer to James's question, you know, we do have pricing power in a few areas, particularly around Location.
You know, Identity, it's harder because of the price positioning of some of our competition, but also actually, candidly, competitors—sorry, customers are prepared sometimes to trade off risk versus value, particularly in tough times, if you're trying to move to profitability in the fintech space. But our strategy to solve that is really twofold. Firstly, drive efficiency ourselves to mitigate any to allow us to be competitive pricing and not have any impact on margin. But actually, most importantly, is to, which really plays to my response to Andrew's question, really it's around broadening our offer and actually therefore, given we are a premium priced provider, actually offer more value with services like GBG Score and GBG Trust. So I hope that helps.
Dev, over to you. You might want to add color on those points as well.
Yeah, thanks, Chris. So in terms of the question around incremental growth opportunities, so, I mean, it's clear to me that in the short and mid-term, the U.S. represents our single biggest opportunity, and that's why I'm really excited to be getting out there in January to meet with the teams, customers, and our partners. So that's really going to be a focus. I think in terms of then your question around APAC, we've worked really hard to build what I think is a outstanding customer base in APAC. And moving forward, I see that gives us a huge amount of optionality in terms of how, when we penetrate other solutions into that region.
As I spoke to the capital markets that day, back in January, I really believe a huge long-term opportunity exists for us in APAC, and I'm excited for us to take steps towards realizing that. I guess more tactically, in terms of an immediate growth opportunity, I think you mentioned it there around sports betting. You know, sports betting is a vertical, and gaming more broadly is a vertical for us in the U.K., Australia, and in Americas, more recently, is a huge opportunity. And by joining forces across how we tackle that opportunity, I think we can see a lot more benefit coming through sooner rather than later. Thank you. And the next question, please.
Thank you. The next question goes to Bridie Barrett of Stifel. Bridie, please go ahead. Your line is open.
Hi. Thanks. Morning, everyone. Two questions from me. Obviously, you know, good news that transaction volumes in Identity are stabilizing, and you're expecting that to pick up a bit in the second half of the year. But I understand you think that the Location, Fraud businesses will soften into the second half of the year a little bit. I wonder if you could just kind of talk us through, in a bit more detail, the revenue dynamic in both of those businesses. So I know in Location this year, you've done well, both in terms of prices and new business. Kind of in the second half of the year, how do you think growth will look for that division? I suppose, particularly as I would have thought that some of the transactional headwinds will ease a little bit.
And then in Fraud, I think you said that the APAC business is up 18% and Fraud is up double-digit. Obviously, it is a lumpier business, but could you just talk a little bit about the sales cycle there? So that's a sort of very long first question. And my second question is just kind of coming back to a point you made on the gross margin that you took a little bit of a hit on some new business coming through your partners. Are you essentially saying there that the 4% growth you got from new business was at the expense of gross margin? Thank you.
Thanks, Bridie. David, I think those questions are both appropriate for you, particularly when we talk about revenue outlook , and GM. So David, why don't you pick up Bridie's questions, and thanks for the questions, Bridie.
Yeah. Morning, Bridie. Thank you for your questions. So just on Location and Fraud first, I guess, so I wouldn't use the phrase softening. Actually, I think as we've said, those two businesses have had a really good run, and, you know, performed, you know, and delivered good growth rates almost despite the macro over the last 18 months. So we're very pleased with how they've performed. It, particularly Location, as we know, the business has been performing very well. It's benefited from a number of things, particularly some proactive pricing last year.
But also, as we know, there was a couple of very key strategic deals in the second half of last year that we may be able to replace, but at this stage, we're not baking those into our numbers. And in Fraud, so somewhat similarly, it is as you said, a bit of a lumpy business. It does depend on renewals, and it does depend on when we're able to bring new business over the line. We had a really strong second half last year, so similarly, not expecting a soft second half. That's not how we would describe it, but clearly against that tough comparative growth may not quite be as strong as we would expect over the medium term or in fact, as it has been in the first half. So that's those two.
Then in terms of gross margin percentage, I did mention, just to clarify on partners, generally, it's not true to expect that our partner business would be at a lower gross margin. But, but it just so happens that in this first half, there were a couple of deals that came through partners and were at lower gross margins, and I mentioned one particular, or a couple of particular hardware deals. So, the 4% is slightly complicated because actually, obviously, business through one of our existing partners would not show up as new logo win, so that would actually be in retention. So it's not within the 4%, so it wouldn't be true to say that the 4% has come at expense of lower margins.
Overall, just, just coming back to the gross margin point, you know, last year we did 71% gross margin. I would expect for the second half, our gross margin for a discrete second half would be more like 70%, as some of those mix changes don't persist. And as I've already talked about, we are focused on a few other areas where we think actually we'll be able to bump it up a bit higher than 70% into next year. Thank you, Bridie, for your questions. I think we'll move on to the next question, please.
Thank you. We have no further questions, and I'll hand back to Chris for any closing comments.
Thank you very much, Nadia, and perfect timing, so thank you all for judging your question timing perfectly. Look, I'll wrap up by saying, firstly, thank you all very much for your time today. Secondly, thank you to Dev and David for joining me on the presentation. And last but not least, a huge thank you to the GBG team. I touched on it in my opening remarks that it gives me personally immense pride that we've been able to promote internally. You know, there's many great strengths of GBG. The greatest one of all is the team and the capability. So it feels totally appropriate for me to finish by thanking the GBG team. Thank you all. Have a good rest of the day, and we look forward to catching up with you soon.