Earnings Call: H1 2021

Nov 25, 2020

Good morning, everybody. Welcome to erode's Half Year Results for FY 'twenty one. You'll hear with me, Stephen Newman, who's Alex Ball, our CFO. So together, we'll go through the presentation, which we have on the screen. We've allotted an hour for this. We will try and get through it in 30 minutes and then open up to questions. There's the opportunity to ask questions as we go through this and we'll answer them when we get to the end of the presentation Or when we get into the Q and A session, you can raise your hand using the ZYN feature. So if we begin by going to Page 4, I'll begin. So really pleased with our half year results based on the difficult macroeconomic conditions that we faced. In all three markets, we were significantly impacted by COVID. That said, half year on half year revenue grew 19% and compared to FY 2020 second half year, we grew 7%. EBITDA grew, but was flat half year on half year. That really reflects the additional increase in operating expenditure as a result of accelerating both product development and also some of the spend to save opportunities. So while some of those get capitalized, there's still reasonable amount that hits the P and L. So as you can see there, middle bottom, investment in R and D increased from last year from 18% to 20%, produced a small profits before tax. In terms of AMRR, there was only moderate progress from where we ended at the full year for FY 'twenty. That was as a result of $2,800,000 of FedEx products impact with the strengthening of the New Zealand dollar against the U. S. If we go to the next page. So I'll only refer to a few things on this slide because we'll refer to them later in the presentation. As many of you know, we've successfully completed our September dual listing on the Australian Stock Exchange and raised $53,000,000 And in the time since then, we've been very focused on accelerating parts of our 5 year growth plans. So this slide here on Page 7 shows the 5% growth over the prior year that we've had today. So some growth in each market. The next slide shows more of a breakdown quarter on quarter. So you can see significant impact in COVID, but we did continue to grow. The most resilient of the markets has been New Zealand, but when you look at the slide, you can see Q1 on Q2 in North America that there has been a lot more progress made in the second quarter of the half year. From a New Zealand perspective, as I mentioned, this has been our most resilient market. Even though there was about half the time there was some level of impact from COVID, either complete lockdown or lockdowns related to the Auckland region. Asset retention rates remained stable, which was good, and there was some improvement in ARPU. And that reflects customers upgrading to Ehabo 2s from Ehabo 1s, of which you can see here that renewals during the period there was 4,142 of those, of which 1300 of them upgraded to Ehab O2 that would have improved ARPU. Also, the addition of the logbook launched during this half year, we've seen strong uptake of that with 1373 subscribers through to the 30th September. We'd expect that number to continue growing. That seems to be an incredibly well received product that has a list price of 7 and the kind of ARPUs we're achieving on that sort of around that $3 to $4 at this point. There are a number of customers which are moving across to this product from an older version of the mobile. So good improvements in EBITDA. So really a good result for the half year, and we expect that the run rate that we've seen in prior years of roundabout 9,000 additional connected vehicles will continue downforce. In America, very heavy lockdowns and much of our pipeline has been locked with prospects back in staff that would be doing any implementation or trialing operating from home. As you saw from the prior slides that there was definitely some improvement in sales quarter on quarter, we'd expect that to continue going forward as people there are starting to work out that they can't just keep kicking the can down the road. They need to start making some decisions. One of the things that occurred recently was ERAD's ERAP, which has been highly rated, assumes the number one spot, and that was as a result of the release we did in September, which was introducing all of the regulators' new regulations. We're one of the first to have achieved that. In addition, so we introduced the short haul rule set with some pretty innovative solutions in there. So it's nice to have that number one slot for ELD, which is really a foundation product for any interstate vehicle. We also had the launch of E Rate Go and E Rate Go Plus, which has the navigation in it as well. So that has been well piloted at the moment, slightly longer sales cycles than we typically used to, but bodes well very well for FY 'twenty two. Also, there was the release of the eero dashcam at the recent user summit, again, very well received. So good prospects of growth going forward. Australia was a market that was absolutely shut down in terms of our enterprise pipeline, enterprise customers are trialing the product, and we look forward to reporting progress there in the next quarter or so. I'll hand over to Alex to go through the financials in more detail. Thanks, Stephen. Good morning, everybody. As Stephen said, we've had growth and progress in each one of our financial metrics this year. And importantly, we continue to grow half on half. So as the left hand side of the slide shows, we not only were a 19% increase on the first half of FY 'twenty, we also grew 7% on the second half of FY 'twenty, up to $45,800,000 helped in part by a one off revenue item, which was related to the forgiveness of a U. S. Government loan for our U. S. Business of 1,600,000 cubic dollars but even with adjusting for that, we were still up to $44,200,000 from $42,700,000 of the previous half. EBITDA has increased period on period in terms of the total figure, a 29% increase on the first half of FY 'twenty and relatively flat at only a 0.1% increase in the second half. And as I said, there are one offs in that 15.3 dollars to a net amount of $800,000 The EBITDA figure also includes an increase in the level of doubtful debt provisioning that we've made because of the challenging economic conditions that we've been facing into in each of the 3 markets due to the COVID-nineteen lockdowns and consequent economic recessions in those markets. We are seeing an aging of some of our debtors and as a result we've increased that provision. So that provision was for an additional $900,000 half on half. So again, that result is reflecting that as well. And all up, our EBITDA margin, therefore, was increased from 31% to 33% for the half on half against the first half, was off a little bit around the high level we managed to achieve in the second half of FY 'twenty. A lot of that, as Stephen has already outlined, is because we are now accelerating our product development and some work on our spend to save projects where we are looking to drive future improvements in operating leverage through investments now. And so that would commence in this half, and that's reflecting of that outcome from an EBITDA margin point of view. In terms of a profit before tax, we again made a profit, which is the second half in a row. And again, that amount was slightly off just because of the additional investments that we're starting to make for future growth and that aged debt provision or doubtful debt provision that I talked to earlier. Our free cash flows, we have free cash flow positive for the first half of FY 'twenty one, which is really the first time for a while that the business has been free cash flow positive. Some of that, however, has really been driven by the lower levels of growth given our business model. We have upfront cash outflows before we then through our contractual model contractual subscription model, we earn cash inflows. So we're not expecting that to build as an ongoing trend as we invest over the course of the remainder of FY 2021 2022 future growth. Turning to the sub statement of income in more detail. I've talked to the revenue amounts and OpEx. The only other thing I really draw attention to on this slide is that we are continuing to invest in R and D for future growth and in building on the investment we made at the back end of FY 'twenty around the new generation of business systems, and that will continue into the remainder of FY 'twenty one and 'twenty two. And we do call out that we will be spending an amount of between 24% 27% of revenue for the next remainder of 'twenty one and 'twenty two on accelerating our R and D. I'll turn to the next slide. Just talking to the EBITDA results across the three markets, as Stephen's outlined, we've made good progress. So New Zealand is up significantly on the first half of FY 'twenty through the continuation of growth through attracting both new customers, but also expanding into existing customer fleets, backed up by a continuing high level of asset retention. And whilst we were slightly down period on period from the second half, again, that is reflective of that increase in the helpful debt provision that we put through in both New Zealand and North America during this first half. And North American result was pleasingly up. And even if you adjust for the $1,600,000 of the loan forgiveness that's included within total revenue, EBITDA grew 34% on the first half of FY 'twenty, which again is great. Australia, we're continuing to make progress. It has been a tough market in terms of getting growth out there. And as Stephen's outlined, a lot of the enterprise segment was close to business for much of the half. We're making progress and we're making progress with our pipeline of growth, and we're anticipating some movement there before the end of the year. On corporate segment, EBITDA reduced down to 8.9% from 6.7%, but that's really just a reflection of the increased investment in both the R and D product acceleration, but also the spend to save initiatives that we have on, again, for future growth. And if we then turn to the growth in the metrics, so AMRR has moved and increased period on period. It looked fairly modest increase, as Steve has outlined earlier, from the second half of FY 'twenty. But that small increase of $800,000 was really a net result after a negative $2,800,000 impact of the FX rate between the U. S. Dollar and the Kiwi dollar. So it's not really reflective of the growth in underlying currencies. Our future contracted income, which is our other growth future growth indicator, grew up to $140,000,000 from $134,400,000 at the end of FY 'twenty, really reflecting continuing work on renewing customers, including some significant enterprise level customers that have renewed. And the research and development spend as a percentage of revenue metric, which we talked to being in a range of between 18% 22% typically, as we outlined during the capital raise that we did a couple of months ago, we are now going to accelerate that to being within the 24% to 27% range. And as a result, you'll see that kick up. And so that's an anticipation of that happening moving up to 20% for the half. Our ARPU is pleasingly held up well and increased, albeit, again, there's been some slight negative impacts of the ARPU of the FX movements from the second half of FY 'twenty to FY 'twenty one. But that's really again, really reflective of ongoing work within all three markets as we make new sales and renew customers in our existing customer base. Our asset retention rate, which again has been very high, it was maintained in all markets, which again is reflected a lot of work that the team has done. Given the economic conditions we face into all three markets, that's a good result. As we grow, our cost of acquired customers will reduce, and it has continued to reduce period on period, so down now to a total of 13% as a percentage of revenue down from 17% at the end of FY 'twenty, and we would look to continue that trend going forward. And our cost to serve and support our customers as a percentage of revenue, again, dipped down from the 4.7% at the end of FY 'twenty down to 4.4 percent. And over time, as we make more investments into those spend to save projects I talked about, we would look to see that percentage reduce as well. The next slide is just an analysis of that $3,900,000 of increase in operating expenditure from the first half of FY 'twenty to the first half of FY 'twenty one. As you can see, the majority of that is in relation to either platform costs, which is reflective of growth or personnel expenses as we increase our spend on the teams that are active in the product development space and in the operational excellence space, which is our spend to save a range of projects. Moving just to quickly touch on our movements in our key assets on the balance sheet, our property, plant and equipment assets, which are really our hardware assets, the in cab, e hubbos. Again, our spend on those obviously dropped half on half, really reflecting the lower levels of growth. We spend the money upfront before then renting those out. So that's reflective of really the economic conditions that we're in. And if we look at the intangibles assets, however, we've continued to invest, as we've outlined earlier, in developing new products and services and new generations of products and services for future growth. And this slide really just reflects the movement on that balance in the balance sheet. So I'll move quickly on to the free cash flow analysis by segment. Again, what we've done here, as we've done in the last few presentations, is analyze out the cash flows by market. So again, very pleasing to see that New Zealand moved to a net cash inflow of $15,400,000 from $11,200,000 in the previous first half of FY 'twenty. North America, similarly, much, much stronger position, only cash to be to a position of $5,000,000 cash inflow from $1,500,000 in the previous first half of FY 'twenty. And Australia, given even the challenges that we've had in terms of growing, we've narrowed that net outflow down to $300,000 And on the corporate and development side, where we do make a lot of investments in for future growth, as you can see, dollars 5,600,000 of the outflows is directly attributable to scaling the business and developing assets for future growth. Again, we've reduced that net outflow from $17,400,000 to $15,400,000 which, as a result, has driven that free cash flow result of $4,700,000 that I talked to earlier. So I think we I don't think there's anything else to add on the 2 balance sheet and cash flow statement. We'll now turn to talk to the outlook and Steve. Thank you, Alex. So in terms of the global trends with respect to the adoption of telematics that we talked about during the capital raise. They remain unchanged and definitely further evidence that COVID is accelerating the digital transformation that is happening with our transportation and logistics customers. We've seen good growth in our e roadwear products, with more than 3,000 additional tags being put on in the half year in New Zealand, which is really proving out that point that as the cost to track comes down, our customers want to track all of the remote and mobile assets. In terms of the recessionary forces that is starting to happen across all markets and our customers are very focused on reducing the costs and inefficiencies in the business. So that will continue to be a significant growth driver for us. Also, further interest from government fleets as they try to improve their ESG shape of what they're doing as well as getting further efficiencies there. In terms of other things we're seeing with the lower use of the rates pretty well in every market due to lockdown, that is really exacerbating significant reduction in taxes as a result of lower fuel tax to fuel consumption. So I think again that is likely to accelerate the debates around right user charging. The pilots in North America is well underway starting in October. There have been delays around the anticipated pilot in Australia, but we have been shortlisted in terms of being involved in that pilot. So expect the progress to happen in the second half of the year. When we look at it from a market by market perspective, in New Zealand, that major growth driver around health and safety is very much there. And the adoption of cameras to further enhance that is also showing itself has been a growth driver. In North America, we're coming up in the next 12 months to the 3 year anniversary from December 'seventeen, which was when the first mandate came in as it related to ELD. So the resigning of small to medium customers will occur. What they're looking for is additional functionality, which we have the first time purchases was to buy the cheapest ELD they could because they were very unhappy with having an imposed on them. So that will be a positive growth trend for the next 12 to 18 months. Also, February 22, the 3 gs network on AT and T will be shut down. There's circa 1,000,000 telematics enabled vehicles that need to have their hardware upgraded. So that is a good growth opportunity for us. As we previously mentioned, insurers pulling up premiums for transport operators unless they put video telematics into the vehicles, there's also a trend, and that is really driving the pipeline that we have in North America. And as I previously mentioned, the national mileage based user pilot, which is right user charges, has begun in October and continues to attract more and more attention across regulatory and policymakers in North America. And in Australia, the main growth drivers there, the chain of responsibility obligations and using telematics to help meet the obligations there, which is very similar to health and safety. In New Zealand, similar trends around video telematics. Electronic work diary, which is similar type of product to the American ELD and the New Zealand logbook continues to be a key area for future growth. And of course, the pipeline of customers we have in Australia where we have won the business in New Zealand. And those customers continue to see the Australian and New Zealand market really as one market. So we've been through the capital raise. We are very much focused on accelerating our growth plans and really these are the key areas of focus for us. 1 is to upgrade our platform so it can support larger enterprise accounts. We enjoy 3 fleets, which are over 6,000 units, and there is the potential for some of those to break through 10,000 in the coming years. So we need to make sure we have the platforms to support them. We also have potential prospects in our pipeline of the same size. In terms of the data that is being collected, being able to provide insights in the context of our customers' business is a big area of focus and also where they want to provide their own insights and merge with other data they may have. They're looking to us to provide the data environment where they can host all that data securely and present those insights themselves. So a lot of work going on with Snowflake at the moment. So if we look at the R and D investment, you can see how the spend where the spend has been made over the last 6 months. You can see there's been a huge focus on what we call customer facing products, which is the e road go and the dashcam and the logbook. So you can see that we'd expect during this next period of time, there'll be further investment in the reliability and scalability as we strengthen those platforms. So and as Alex just mentioned, that level of R and D investment over the next 2 years increasing to 24% to 27%. I think the key thing to note is the investment that we make in products this year create revenue opportunities in the latter 2 years. So this coming 18 month period will be a huge investment period for us, and we'll see the benefits and the growth of that, some are during that period, but most of it beyond that period. But based on the global and end market opportunities on the 2 previous slides, it is a very wise investment for us to be making at the moment to maximize those growth drivers. On the remaining four slides here, we've introduced these. So in your own time, you can get to understand some of the key products that we've released. So we briefly explain what it is, what markets we've launched it into, what the customer benefit is and what is the benefit for eRODE and then what has that uptake been. So featured products is eRODE's logbook, eRODE GO, the Clarity Dashcam and by Erode's fleet maintenance. So in terms of the outlook for the balance of FY 'twenty one and 'twenty two, where we see the second half of the current financial year is being better than the first half, but will be still a level of COVID impact. We anticipate that EBITDA will be similar to the first half of the year. So essentially, the revenue growth we do occur during the second half of the year. The related EBITDA will be consumed with accelerated R and D and marketing costs as we launch these key products. When we look at FY 'twenty two, we think that we will be less impacted by COVID and customers and prospects will be very much in the recessionary mindset, which has always supported good growth and interest in our products. So we would expect a much better level of growth compared to FY 2021, but maybe not quite at the level of FY 'twenty, which was around that 30%. In New Zealand, we would expect similar unit growth that we have over the last 4 years, and we expect to see some good growth in the U. S. Market as we deliver the dash cams and Envirod Galli. In Australia, there has been some good progress during the first half of this year with customers that have been piloted, so we would expect to see some good progress in that space. We note that the sales cycle for enterprise in Australia is definitely quite a bit longer than we have experienced in either New Zealand or North America. So we are very much accelerating our investment and product development in FY 'twenty one and as mentioned will result in future growth in FY 'twenty three and 'twenty four. We anticipate that EBITDA margin will be maintained during FY 'twenty two and may improve towards the back end of 'twenty two as we start to get the benefit of the new products. So with that, we will open up to questions. So, Ira, we sorry, should we go to Hamish? Yes. Hamish, if you have a question, you can come back to the other questions. So Hamish, you raised your hand, so perhaps we'll go to you first and then we can come back to the others on the list. Sorry. Hamish, can you talk now? Yes, can you hear me? Yes, absolutely. Thank you. Sorry, technology issues. I mean, with COVID and the way everything's working, everyone's learning on the fly with all of these. We're all accelerating. Could you just step us through just the additional part of the guidance where you just talk about FY 'twenty two growth and your expectation for, I guess, that to normalize but not normalized to that FY 'twenty run rate? Then you step us through, I guess, the regional expectations and all of them look quite solid plus the product launches. Could you just, I guess, a little bit more granular detail on what's driving those expectations for it to the and where that sits? Maybe I'll start. So I mean, I guess, if you look at the run rate unit growth that we've achieved in New Zealand, I think we previously said it's 2nd 9,000 at least units a year, and we don't see any reason for that not to continue into FY 'twenty two. That will give you a certain level of growth for the new Zealand market. The U. S. Market should and we're heavily anticipating it improving, not just in terms of people getting used to living with COVID and coming out through it, but also because we are opening up that addressable market. So our sales will be coming from effectively the value proposition we've now got to where we will have video telematics integrated logistics management and the best in class ELD in the market. And as a result, we will be targeting that segment, which is the between circa 200 vehicles up to several 1,000 vehicles that sort of lower end of the enterprise segment. And that is where we will get that growth from. And the Australian pipeline, as we said, is 15,000 to 20,000 that's in there. We've been working that pipeline throughout the last financial year and this financial year. We have 1 or 2 opportunities that are certainly more progressed than others and one we were very hopeful we would lock in this half, but we may yet do that into the second half of FY 'twenty one. They're quite lumpy though, of course, so you can only factor in a certain number of those within a period to derive that growth. As I said, we've been experiencing growth in revenue of 7% half on half from the second half of 'twenty onwards. We certainly wouldn't anticipate getting up to the 30% growth that we achieved in FY 'twenty on FY 'nineteen. But I think we'll be back into some healthy double digit territory, and we'd anticipate getting significantly into double digit territory around that. And it really just depends on the momentum that we come out of FY 'twenty one with in those markets to get into FY 'twenty two. Yes. Okay. So maybe that's where I was a little bit confused reading it. So you guys are talking in terms of percentage growth, not an absolute figure. Correct. Yes, exactly. Yes. That is revenue growth, yes. Yes. Because I mean, I appreciate that you guys have got your crystal ball and given us a lot of guidance on it by 'twenty two, which a lot of companies aren't doing. But if all things with COVID going well, am I correct in thinking that if the run rate I mean, if you continue the growth in New Zealand and then you can execute in North America and expand that addressable market and the ARPU with the big launch of Dashcam and COVID sort of headwinds alleviate, we could be looking at quite a strong second half 'twenty two. That's certainly the plan, and that's certainly the signaling that we're providing through the guidance is that the back end of 'twenty two, we'll be starting to see the benefits of the acceleration of the investments that we're making in product development. We will start to see some of the benefits at an EBITDA level in terms of some of the spend to save initiatives that we're working through in the next 18 months. And we should get the momentum reintroduced into those 3 markets with COVID alleviation, coupled with the product market fit that we will have, where we believe will be sufficiently disrupted in Australia and the U. S. To grow some good growth. Yes. I mean, thank you, Hamish, for acknowledging the outlook. I mean, it's something that as a Board and management, we thought about a lot based on our business model being primarily SaaS with 36 month contracts. And now we've traveled for nearly 11 months with some level of COVID impact, we understand we did a step. So we can actually really project better than most. So we've been able to provide the guidance that we have. Thank you, guys. That's it from me. I'll pass it on. Yes. Thank you. We'll just go to the second person who got their hand up and then we can come back to the questions through the Q and A function. So Wilson, welcome. Good morning, Alex, Steven. How are you? Just I've just got a question on the sales footprint in the U. S. Can you maybe just talk about how you're feeling about that at the moment and where sort of additional investment is needed in terms of your distribution capability from a sales perspective in the U. S? And then as part of that, maybe just flesh out how much visibility you're seeing over that enterprise pipeline in the U. S. At the moment? What sort of prospects you are getting a look in at, please? Sure. So in terms of if we look at the makeup of business that we have, one that has been typically sort of flex less than 50. And that's just the practical nature of where we're at and that size of fleet is able to make a decision. 1 or 2 people, their fleets are typically all in one place not distributed. So the installing of the equipment is reasonably straightforward. There has been progress and therefore anticipation around the dashcam and the e rate go with larger types of opportunities. But again, you're talking about the distributed decision making multiple sites where product needs to be tested at and then the onboarding challenge. But progress has been made with those pipelines. In terms of the sales breakdown, there will be additional roles that we will start advertising during FY 'twenty two as we start building and delivering some more of these enterprise type of products and that will be really around enterprise sales management. There will be some investment in sort of over the phone sales, but I think the nature of those phone sales will go more to supporting and build salespeople as opposed to continuing to sell to the smaller fleets, which we expect to be a place where there will be a lot more competitive pressure and based on the environment, maybe some silly pricing behavior, so we would rather focus our efforts in different spaces. So hopefully, that answers your question, Hamish. Yes. No, just Ankit, can you sorry, you've got Waseem Sohana here from Jarden, Stephen. But just as a follow-up there, can you give us a sense of can you give us a sense of the sort of current sales force in terms of size and where that sort of needs to get to by FY 'twenty two to pursue some of these enterprise opportunities that you're talking about? I think we will look to add half a dozen additional sales folks. The makeups spread across inside sales, territory sales, which tend to look after 3 to 5 states, but with fleets less than about 500. And then we have 2 strategic account managers over sort of 500 size lengths, which is where we would put most of that additional headcount Okay. So just looking at some of the questions we've got here. The first one was, I think the total number of Evoque Vertex sold so far. I think that number is just north of 5,000. Next question is around the Canadian opportunity. So what's happened in Canada is they share a border with the U. S. So there are a lot of carriers that are traveling across the Canadian U. S. Border. Canada has taken their time to understand the ELD in North America and where it could be simplified and improved, but at the same time, reasonably harmonized with what's in the U. S. We have actually done a fair amount of work in Canada with the regulators then. And I think where we did help to the extent of suggesting more of a third party certification of the product as opposed to self certification, which has happened in the U. S. And has proven to be problematic. So in Canada, it's about somewhere around about an 8 to 10th the size of what's in America. The fleets tend to be larger based on the consequences of being caught in a snow blizzard. There is higher adoption of telematics as a general rule. We'd expect there to be fewer players in that market because there needs to be certification of the ELD. Canadian ELD is on our roadmaps. And there's kind of 2 ways to look at it. 1 is in terms of ensuring that we have a product that our American customers have that go into Canada. The second is to make a decision to go into the Canadian market. We have made a decision to support how U. S. Customers are going to Canada. We haven't made a decision to go to Canada. So that would be a future thing for us to consider. But certainly, having a product, the Canadian ELD that supports our U. S. Customers, we will absolutely do during FY 'twenty two. Got it in from our end by the looks of things under me. So maybe if we get you to talk, Alan, we can go through your questions. I'm hoping I can get somebody else. So do you want to talk to that? Yes. So there's a couple of questions for Mel. And first one on what we talked about around Australia that's seen that pipeline conversion extended. It is really around the enterprise decision making process. And as we've talked to in the past, it is a much more complicated process of decision making in Australia than it is here. And surprisingly, in many instances than it is in America, Obviously, being extended out by the impact of COVID and a lot of enterprises just basically going to ground and just to try and work out what life looks like during and post lockdowns. We are dealing with very large fleets in some of these enterprise opportunities. And as Stephen said, there's therefore more and more decision layers that we have to go through and in some cases that we weren't aware that we had to go through. So examples would be talking to quite a lot of people within a group who are all divisional CFOs before you get group CFO sign off and before that you have to get procurement sign off as well as obviously legal sign off and the line management sign off. So working through all those steps is just a continuing set of work, and this is post, obviously, the pilot processes that we have in place to prove the merits of what we're putting proposing to put into those fleets. We're still progressing through those. It's just there's more steps to go through. We anticipate 1 or 2 of the very larger organizations that are in that pipeline will probably be similar, and that's why we're going to put that message out to folks. That said, we are we have 1 or 2 opportunities that have progressed significantly down the pipeline. And as we've said in previous updates to the market, we are anticipating at least one of those highly likely to convert this financial year. 2nd question is around Dashcam and presales in those key markets also from Boeing. So perhaps, Stephen, that's probably a good one. So in terms of the dashcam, the initial first primary market is the U. S. There we have a pipeline of interest from existing customers and prospects in the order of 5,000 that is growing further since the user summit a few weeks ago. So we're looking to start piloting with many of those having launched it a couple of weeks ago. So inventory arrives in market to begin that piloting process during the mid of December. So we would expect some good progress happening in the last quarter of FY 'twenty. New Zealand, Australia, we wouldn't expect a lot to happen really until February, and that's really about the New Zealand, Australia summer and Christmas period. Level of interest across the 3 markets is much higher. In the U. S, in New Zealand, we will have an incredibly well priced, very capable product, but we'll need to build that underlying demand through marketing as we move into FY 'twenty two. But I think it is going to be a significant product across all three markets. But I think it will be interesting to see what that demand looks like at the price point that we've all established for New Zealand, Australia, which will be at a lower price point than what the market pace typically expected that functionality to be at. Next question is Maybe we'll go to Mr. Vale to ask this question. Josh, are you able to maybe just talk through your question? Are you there, Josh? Okay. We're just having problems hearing you. So perhaps we'll talk to those and then come back to the question about it as well. Just your question is also around enterprise customers in Australia, and we started to touch on that. But I guess the overall picture I would paint is that there is an enterprise pipeline in Australia, which has opportunities in all stages of the pipeline, and it is an enterprise pipeline. So it has opportunities from ones at the lower end of what we would define as enterprise, which is over 500 vehicles, all the way up to quite frankly 1 or 2 that are in the 4 figures category, I. E, over 10,000. So we have a range of different opportunities. And as you wouldn't anticipate, a range of complexity in terms of the sales cycle for that. We've been working on a couple of those opportunities that are further down the pipeline, and we certainly have one that we would anticipate being a high likelihood of getting a decision by the end of the year. That is in the several 1,000 category. And beyond that, we have 1 or 2 others that are within the several 1,000 in the high 100s. And I think what we would really anticipate is we would be looking for a minimum of 1 or 2 of those to convert per year. And if we can get that accelerated, we'd actually like that to happen. But it really is dependent on the sales cycle. So we can talk more about that at the year end. I think when we've got some more progress on that, we still are early days in terms of some of those opportunities reopening up post lockdowns in Australia and Victoria specifically. In terms of Josh's second question around second half of 'twenty one guidance, the when we say we're going to be around about the same, I. E. Flat on EBITDA, that is after adjusting for those one offs in the first half, which were the forgiveness of the U. S. Government loan and an additional one off provision that we've put in around superannuation 401 fund in America for our American office. We will that guidance continues to factor in some level of doubtful debt provision. We are comfortable with where we've marked the doubtful debt provision for the first half of FY 'twenty one Based on what we know and what we're seeing around payment trends, we would probably classify as slightly conservative, and we're anticipating a continuation of an increase in the doubtful debt provisioning, but perhaps not at the same level as the first half. And that's where that sort of outcome of being flat EBITDA comes from because, of course, we are also talking about a level of increase in investment into product acceleration and some additional marketing costs as we move through those launches. So the net result is that we believe our EBITDA will be flat, net of those one offs that are in the first half results. So it's a long answer. And I guess I could start on the remaining question on here, unless anybody has got any additional ones. This is the question about where we might sit following the R and D step up that we have for the next few years and at what revenue level we could expect sustainable free cash flow and the margin of around that. I guess the point I would make is that we can be free cash flow positive pretty much at any time we choose to at the moment as an organization and you see that through the $4,700,000 of free cash flow for this half year. Our business model is such that we make cash investments before we get the return on those investments coming through as cash inflows through that contractual model, similar to a lot of SaaS models. And of course, we have the anticipated increased upfront investments in hardware. It really will depend when we get that sustainable free cash flow level on the level of growth we pull through. And we've historically said that we wouldn't anticipate being free cash flow positive until about 2022, at some point in 2022, the actual year. The margin level around that, we're currently sitting at 33% EBITDA margin level. And obviously, we anticipate driving that up over time. And whilst we will maintain that level of margin or thereabouts, given the investments we're making in FY 'twenty one and FY 'twenty two, we are certainly anticipating that increase, and we certainly want that to increase into the high 30s and into the low 40s as a percentage. That would be certainly our medium term target, but it really, really does depend on the structural leverage that we can get from a further revenue growth because that will drive a lot more of it once we leverage off the systems that we've now put in place in the last year. Thank you, Alex. That brings us to the end of the questions. So if there is no more questions, we'll bring the presentation to an end. Thank you, everybody. Look forward to catching up with many of you over the coming weeks. Thank you. Take care.