Good morning, everybody, and welcome to Physitrack's Q1 2024 Worldcast. I'm Henrik Molin, and I'm joined by the always amazing Charlotte Goodwin, Physitrack's CFO. Let's kick this off. We will start you off with looking at the quarter in short, with some of the highlights. We'll go into the business updates for the two divisions. Charlotte will talk us through some of the financial results in detail. We'll move over to strategy and outlook, and we'll finish off with Q&A. And you can ask questions using the Q&A function on your Zoom panel, on your screen. So let's just get going here. Q1 in short: a very exciting quarter for us for a number of reasons. We passed another million milestone, so we're now safely over the EUR 16 million annual revenue threshold, which is really, really nice following strong quarter-on-quarter growth.
That second box there on the left, our subscription revenue growth, is now over 80%. Or the subscription revenue, sorry, as a proportion of the whole business is 80%. So EUR 10.5 million is recurring and nicely stable. Makes it really nice and easy to plan a business when it's like that. Very strong growth. We increased with EUR 1 million compared to this quarter in 2023. Next box there: we are cash flow positive for the second quarter in a row post-IPO, which is very nice. So we keep investing in the business. We keep planning our future trajectory in the best way we can. So it's kind of one foot on the gas, one on the brake. But it's producing some nice cash flows, but it's not compromising on the way that we accelerate right now.
As you might have seen from the announcement yesterday, the Santander UK GBP 5 million credit facility has been extended for a further five years into 2029. Lastly, on the right side there, Adjusted EBITDA year-to-date EUR 1.1 million, which is fantastic. 26% growth compared to last year. Some of the highlights there in the box you can read up with. But the bottom one there, very, very important: we have merged our sales, marketing, customer excellence team into what is known as the growth team internally because the flow is more holistic. You want to keep that relationship from whenever somebody browses your website into them becoming a customer to them needing support and eventually experiencing some great things. And maybe, sadly, if that's the case, contemplating leaving. You want the whole operation to work seamlessly together with fast decisions and the best tools available.
So we've done that in the last couple of quarters, and that's really, really a great experience for us. And of course, adopting AI: you might have seen the launch of Physitrack's Copilot widely over the last few days, which is a great way to find and assign exercises. But also, this is the starting point, really, for us to develop more of these features. So more of this to come. And then powered by OpenAI, obviously, and the new GPT-4.0 launched last night with those speech capabilities are going to be very interesting for where we go next with some of our mobile apps. So stay tuned to that. Now, in terms of the two divisions, just in terms of the tilt there between them, so 63% is Life Care, 37% is Wellness.
So putting the tools into the hands of healthcare providers around the world, putting the tools into the hands of employers around the world so that they can help their employees feel better and be more productive, happier, and so on. And you saw the amazing Laura Dallas, Head of Product, launching the new 3.0 version of Champion Health, which is an amazing upgrade. But anything that's related to the actual content, the way that it's distributed, the algos, how they work to hyper-personalize that, but also wearables. You have the sleep tracking, and you have the goal settings and team challenges. I can go on like this all day because it's a massive upgrade. And this is something that's going to be really, really interesting as we roll that out globally. More on that in a second.
Now, for Life Care, we see a really, really nice strong growth in the license number. We had some record months in the first quarter. Happy to say that's also continuing into the second quarter in terms of subscription growth. Some of these numbers we have not seen since the incredibly strong pandemic numbers of 2020. As you can remember, when nobody really could see people face-to-face, so they had to work with tools like Physitrack to make things work for the patients. So we're seeing some of the best numbers ever. So top three, top five numbers in terms of license growth, in terms of that ARR growth. So really, really nice to see, and it's a great testament to all the hard work that's been done on product engineering, marketing, and customer excellence over the last few quarters there on that product.
Now, just walking down the list there on the left, you see some new features there as well. New algorithmic search that we have powered up. It's faster. It's more predictable. And it's something that's making customers much more happy. The Copilot is a big one, and there'll be several more tools like this to make sure that we can really hit the sweet spot when it comes to the way that AI can help you accelerate in terms of business development. And of course, a lot of tools in-house as well to help us with go-to-market with the new growth team that we're speaking about and the day-to-day workflow of our team. So there's not one team that is not touched by AI in terms of optimizing what they do every day, making sure we get more acceleration and turning our team into superheroes.
That's an amazing thing that AI does for us. We spoke about the growth team already and us generating already some really, really nice numbers. Some more to come from that. We've only just scratched the surface on that and also on the product team side of things. So you are seeing some interesting features. Yesterday, we had the launch of EasyAssign, which is the rapid-fire ability to push out exercise programs to patients very, very quickly, straight from the basket, for example. It's something that we've had in development for a while.
We're moving into a product operating model for the product team, which means that customer research using great data-driven tools like FullStory is something that's powering our marketing sites and powering the product so we can understand exactly what our users are up to and what their needs are on an anonymized basis, of course, so that we can make the right prioritizations and product decisions in a world that's moving extremely fast in tech. We will actually host our first hackathon in May to look at gamification features for the patient app. The patient app is really at the heart of everything. We have 7-8 million people every year that use that for their rehabilitation.
We want to empower the patient to make decisions about how that journey should be more in detail, so not compromising, of course, on clinical quality, which is set by the healthcare provider, but having some choices available for those patients on how that journey should be. So that hackathon with over 30 really, really clever people in-house in the group with engineers and developers and product people, that's going to be amazing just to see what comes out of that. Now, as an effect of all of this work, you can see churn is also down. So we're down at 1% with monthly data, 12 months looking back. So really, really nice strong month, sorry, quarter for the Wellness division. Looking at Wellness here, and I should have said Life Care on the previous slide. I meant to say Life Care. This is Wellness.
We are seeing some really nice innovation there. So you saw Laura Dallas from Champion Health introduce 3.0. It's an amazing upgrade to the platform. And of course, we are launching in eight languages in the coming months. So localization work is well underway there. It's going to be super exciting to cater to multinationals, of course, based out of the U.K., but also to cater to the people that we have under our wings in the Nordics and in Germany for business development directly with existing customer bases. So some really nice things there coming live in the next few months. Strong quarter of sales overall with Champion Health and some nice wins there. The pipeline is being expanded.
We have some new amazing salespeople that joined just in the last few weeks, actually, and they're already hitting the ground running with record numbers in terms of meetings booked and in terms of how that pipeline is developing. So great things to come from there. And lastly, Champion Health Plus also riding the AI train here and we're developing self-service tools for MSK and also the development of our national network there to be able to reach more people more widely in the U.K., but also powered by some great, great tools for self-management. So that's the ability to diversify what we do there with our existing and new customers. So many, many exciting things to come. Now, in terms of the growth team, so I mentioned this in the introduction.
Of course, this is a way for us to turbocharge what we want to do here in terms of that customer journey. So things move so fast these days. Customers are very picky in terms of the relationships that they want to have with their software providers. They want things to be really seamless. They want things to be really fast. They want things to just be as amazing as they can. And once they've had a great experience, they want that to be replicated everywhere. And that's throughout the whole journey. So really to make sure that we can work as quickly and as seamlessly as we can with our groups of customers, we've merged sales, marketing, customer excellence into our growth team. So we're very, very serious about meeting these ever-challenging expectations that customers have by doing it this way.
And some great, great tools coming into this. We just launched our AI agent, Robin, on our marketing pages and in the product. And so that's something that's powered by AI to make sure that you can get answers to prospective customers and existing customers as they go through that journey. And it's very, very nice. The resolution rates are incredible. They're over 80% in terms of what we can achieve with Robin. And these are only early days, but we're really, really catering to the ever-increasing needs of an exciting customer base. So hello to the growth team, and I will see you on the moon. That's the business update from my side. I will now hand over to Charlotte for the financial results.
Thank you very much, Henrik.
As usual here, we'll start with an overview of the key financials for the three months ending in March 2024. In the quarter, we delivered revenue of EUR 4.1 million, which was up 10% on an absolute and organic basis from EUR 3.7 million in the prior year. Within this, we've continued to see strong growth in our core subscription revenue, which has grown 23% in the quarter to EUR 3.3 million and now represents 80% of our total revenue. In the quarter, the Physitrack group delivered adjusted EBITDA of EUR 1.1 million, up 14% from the prior year. This results in adjusted EBITDA margins of 26%, which is up from 25% in the prior year. Total EBITDA has increased 32% from the prior period to EUR 1 million, driven by adjusting items falling away. Operating cash flow has increased 379% to EUR 0.9 million. This reflects our continued focus on cash generation.
Moving to the next slide. Now, on to a closer look at revenue. On the left here, you can see group revenue by quarter, both on an absolute and organic basis. There's not a difference this quarter between absolute and organic because FX rates have been pretty steady, and we haven't had near M&A activity. On the right here, you can see this revenue split by Life Care and Wellness. You see the revenue growth is being driven by both divisions. Through to the next slide. Now we can see the group subscription revenue, which we've seen strong growth. Subscription revenue has been growing as a percent of total revenue for some time now and now represents 80% of total group revenue, grew 23% in the quarter against what was a strong comparative in the prior year. Through to the next slide.
On the left here, we have Adjusted EBITDA shown by quarter for the prior year and so far in the current year to date. On the right, we have EBITDA by division in Life Care, which is our longest established division. EBITDA margins at 49% in line with the prior year. In the Wellness division, margins are currently at 6% compared to 4% in the prior year as we focus on margin expansion in this division. The gray bar represents group costs such as board fees, listing fees, and associated advisory fees. These are flat year-on-year, so now represent a smaller percentage of total revenue. Through to the next slide. Now looking at cash. Adjusted EBITDA in the quarter has generated EUR 1.1 million and was offset by interest payments of EUR 0.3 million. Sorry, EUR 0.1 million.
Intangible assets and fixed asset additions were EUR 0.8 million and consist of development of the Life Care tech platform and investment into the Wellness ecosystem. There was also EUR 0.1 million of adjusting items related to M&A integration. This leaves the group exiting the quarter with cash of EUR 0.6 million. In July 2022, we entered into a GBP 5 million revolving credit facility with a three-year term. This has recently been expanded for a further five years. The EUR 0.6 million of cash plus the remaining undrawn facility of EUR 2.1 million gives a total available liquidity going forward of EUR 2.7 million. We expect this liquidity to be sufficient for the group's requirements going forward. Through to the next slide. This slide shows the total free cash flow by quarter.
Due to spend on M&A and integration costs, Rajet recognizes adjusting items in the P&L and investments in both the Life Care and Wellness divisions. We've had a net cash burn in recent years. This cash burn has been steadily decreasing and was reversed in Q4 2023. We're pleased to continue this cash generation into Q1 2024. We'll continue to focus on improving cash generation going forward. And although there will be seasonal variations in quarters, overall, we expect 2024 to be Free Cash Flow positive. Moving through to the group's balance sheet, the next slide. The first line here includes the internally developed technology platform as well as intangible assets and goodwill recognized on acquisitions. Cash and borrowings we've already covered. Trade and other receivables have increased in line with the increase in revenue.
This increase is partially offset by an increase in deferred revenue where we've had more up sales. Deferred tax arises on the intangible asset balances recognized on acquisition. This will unwind over the period of the amortization of those assets. The third consideration has dropped year-on-year, both through payments being made and a revaluation at year-end reflected the current expectations of the timings when certain revenue and profit targets would be met. We currently expect to pay one third consideration payment in the year, likely to be in H2, and this is currently recognized as current third consideration. That's all from me, and I'll pass you back to Henrik. Thank you very much.
Thank you, Charlotte. That's great. So strategy and outlook, just a quick revisit of this. And remember, I used the word holistic quite a lot, and you saw that with the intro clip there with Champion Health, that new platform 3.0, amazing is really that holistic needs that companies have. And we believe that this is really pushing us into true product-market fit. So you see also the Physitrack family of products. So trying to cater to all needs in one place. And that's the tune of the world that we're in right now. So that's really excellent. There are some great macro growth drivers, although the macro climate can be slightly challenging when it comes to the interest rate levels in terms of payment speeds. And some customers are a little bit more slow in making decisions in the environment.
But net-net, as you can see, this is something that's not really affecting us that much, but it's something we are watching closely. That profitable growth is very much part of our DNA, but as you've seen as well, it's very important to invest into new initiatives so that you can launch them when things are really current and hot. You don't want to be a laggard in the world of tech. You don't want to be the last one on the ball with certain things unless you're at Google and you lost the last search engine. But jokes aside, it's very, very important to stay on top of the innovation curve. And that's what we do when investing in the business. And so we have one foot on the gas, one on the brake as usual with that. Robust business model as you have seen.
So 3 years of nice, steady planned growth for this and no real hiccups, I'd say, in terms of how that portfolio has performed for us in terms of the businesses that we have, making it an all-weather product. There are some changes to our financial targets. So we lived through the medium term on our first target set post-IPO, which was 30% organic growth over the medium term. And so with that medium term pretty much past, we have now set our eyes on the next financial goal, which is to double a company in the medium term in terms of top-line revenue. And this is something that's highly motivating to us and our teams. And we see some great things coming out of that. And profit margins unchanged, as you can see, with the Life Care division clocking in at almost 50%.
EBITDA margins is something that's very realistic for us to achieve across the whole group. Now, again, one foot on the gas, one foot on the brake. Very important that we don't compromise on investments in the key initiatives that's going to drive growth to the tune of doubling the company in the medium term and beyond. But we are, of course, very focused on profitability as we do this. Value cash creation, we see this as a highly cash flow-generative business over time, which can lead to distributions, just not in the phase that we are in when we need to invest in the business as much as we can. And that concludes the presentation here. We're going to open up for some questions. Let me just open the Q&A panel. First question here. Do you see the positive trend from Life Care continuing into Q2?
How confident are you in signing some large Wellness contracts during Q2? So the answer to the first question is yes, we do see the positive trend continuing in April. We continue to see top five subscription growth on the Life Care side of things, which is really, really nice. We'll see the jury's obviously still out for the rest of the quarter, but that positive trend that started in December and moving into the first quarter, it is continuing, which is very, very nice to see. Great testament to the hard work that's done by all the amazing people on board. Large Wellness contracts during Q2, yes, we are very confident about that. Pipelines are really nice and full. I indicated some challenges with payment speeds and decision-making speeds, but that shouldn't affect what we have there in the pipeline for Q2.
Second question there, and I'll pass it over to Charlotte. What portion of the year-over-year growth in ARR stems from volume increases compared to price increases?
Jamie, the subscription going is roughly 1/3 price increases and 2/3 volume increase across the group.
There we go. I continue to believe that our technology is underpriced compared to the utility that it has for our customers and the value that it brings. And of course, with the increasing feature set and the great investments that we do with it, we see that there's quite a lot of prices, the elasticity in our favor going forward. So we will continue with that trend for the foreseeable. Next question here. Regarding the growth of licenses within the Life Care division during Q4 and Q1, what percentage originated from new customers versus existing Physiotools customers transitioning from a multiple user license to one user per license? I'll bounce the first part of that over to Charlotte and I'll fill in the gap.
Important to there. None of it originates from that. The user data that we give is users. So where people have concurrent licenses, we count per user. So it was a comparable metric between Physiotools and Physitrack, and we could combine it into one to report for Life Care as a total. So there's no impact of people just moving license types there is by user.
We do see some interesting traffic between tools and track, which is nice to see that we get adopted in the old PhysioTools homes. It's obviously great to be able to cater to as much as possible one platform in terms of innovation. That's really helping us with growth. But PhysioTools, it's a really, really nice, steady cash flow-generating business. We're very, very happy to have that on board. We'll see what happens here over time in terms of that journey from tools to track. During the last conference call, you expressed strong confidence in return to 30% organic growth by the second half of 2024. Is that outlook still unchanged?
I remain very confident, and I remain very optimistic about the capabilities of these products and these teams, especially with the way that we have invested in the platforms, in the features, in the growth team, and in some great, great people. I think we net added 12 people to payroll since the third quarter of 2023, just to make sure that we could accelerate in a very, very nice way. So we are in two exciting total addressable markets. We're doing some great things there. So we have no reason to not be confident about our abilities to achieve great numbers there. Next question. Considering the current cost base and investments, what run rate is necessary for the Wellness division to begin gaining significant leverage for enhanced scalability? And when do you anticipate this to be achievable?
Well, we don't look at the wellness division and the life care division as two siloed businesses where you have people and innovation and great products siloed on one side with Champion Health and then the same thing for life care. There's a lot of crosswork with what we do with product engineering and sales and marketing and so on. So it's much more fluid than that. So it's not really necessary to isolate a certain sort of critical mass of run rate that you need to get operational leverage because you get the operational leverage with that cross-functioning of it. So Champion is a business that is powered by people from EUR 15-16 million worth of revenue at this point. And that's huge operational leverage.
That's really necessary because with the size of that total addressable market, we really need to put all firepower available from the smart people in the team into what we do there because our competitors in the space and the developments in the space indicate that if we don't do that, we're just going to be sandblasted out of a very exciting situation. Operational leverage comes from the whole group. I hope that's a good answer for you. The second, the next question here. With continuing education, we recorded 0 sales for the quarter. I'd say actually with rounding into the closest 100,000, that's it was not actually 0 sales. Just dig into the decimals, you'll see that it wasn't.
But what's the current status of PT Courses and what actions are needed for a turnaround. Now, so there's a lot of cross-selling going on between courses. So we have a 15,000 customer database on the courses side of things. And so that's cross-fertilizing nicely into the track ecosystem. And conversely, which we'll see more of with the growth team just getting their feet to the ground in terms of campaigning. We've been quite quiet actually on campaigns for the last few months. But as we get going there, we will see more of track users using the PhysioCourses solution. Right now, it's growing nicely. We have 400 courses now in courses. I think we had about 100 when we acquired them. We had to scrap some because of legislation in the U.S. So we were regulated there in, I think, 47 states.
But we have over 400 courses now, 2,500 hours of content, new ways that we're working with that content with our end users in a great way, thanks to the work of the courses team. So much, much more to come there. But it's playing a really nice role there in terms of that cross-fertilization in between the business entities inside of Life Care. And I believe that is it. I didn't have any more questions in the Q&A box. So I'd like to thank everybody for joining this call. And thank you, Charlotte, for being amazing as always by my side. And let's get going. Enjoy your day, everybody. See you soon. Bye-bye.