Good morning, and welcome to Physitrack's Q2 2024 results webcast. I am, Henrik Molin, and I am the CEO and Co-founder of Physitrack. I'm your host for this morning, and I'm joined by the ever so illustrious Charlotte Goodwin, Physitrack's CFO. Let's kick this off. We will walk you through the quarter in short, and then we'll have the business updates from the two different divisions. We'll have a little deep dive into the financial results with Charlotte, and then we'll revisit strategy and outlook, and we'll open up for Q&A. Use the Q&A function at the bottom of your screen, and type away, and we'll answer your questions when we get to that section. Let's kick things off. The quarter in short. Well, you've seen the numbers.
It's been a challenging financial environment for us because of our expansion ambitions and combined with a slight contraction for wellness. But we managed to navigate through, and we have maintained positive growth. You see that on the left, 5% quarterly revenue growth compared to last year, and notably, their second box, 21% subscription revenue growth compared to last year. The team has been super hard at work in this environment, and we've had some significant people expansion, as you might have seen from the multiple recruitment ads out there, and this has been notably in product, in marketing, and in sales. We've had some very, very smart people join the group that a couple of years ago we couldn't dream of working with, and this has been really amazing.
It has cost us money in terms of investments, but it's led to a number of really exciting innovations and product launches. You saw the next clip there in the intro. It's super exciting. I'll talk a bit more about that in a moment. The, We are in the final stage, stages of development of the Physitrack Assistant, and that's a new mobile app that we believe will be a game changer for some of our customers. We've also enhanced our AI copilot with improved algorithmic search, and we made exercise prescription on the platform even faster and easier.
Following on from the launch of Champion Health 3.0 last quarter, which you might remember, we're continuing to strengthen our position there in our target markets with lots of exciting conversations and some deals that we have closed that are too small to be on press releases, or the customer, they wanna keep their secret sauce very much a secret. Regarding cash flow, well, you've seen that we previously messaged that we'd have negative cash flow this quarter, and we did experience a net flat outflow as expected. This is largely due to our accelerated activities, as we spoke about, and the strategic decision to deprioritize one-off revenue. Now, the second quarter tends to be very cash flow heavy for us because we have big outgoing payments, like our audit fees.
We have annual subscription renewals for a lot of the tech stack that we use to provide our solution out in the world. But we do expect cash flow to stabilize in the second half of the year, and our ambition is to be cash flow positive for the year as a whole. So despite these challenges, we are focused on recurring revenue, and that's been key to our strategy. And as you see here, we're pleased to report that the subscription revenue now makes up 82% of our business, up from 80% last quarter. So this is exactly according to plan. Continuing on, the different divisions. So you can see here the relative size of the businesses. It remains stable, so that's a positive sign of consistency.
On the left side there, Lifecare, where we put tools into the hands of healthcare providers out in the world, continues to account for 64% of our business, while on the right side, Wellness makes up the remaining 36%. That's where we put tools into the hands of employers so they can make their employees feel healthier, happier, more productive, and that's really, really exciting to be in that space. And I'll talk about that later. No major shifts here, and that reflects the steady course that we're on. So Lifecare. Let's take a little look here. Now, top right, I'm happy to share that we've seen a 16% growth in license numbers compared to last year. There's a clear indicator of our strong market leadership here.
This quarter has been particularly strong for subscription revenue growth, and this is some of the best that we've seen since 2020. The trend from earlier this year continues, with just one month that's been an exception so far. So we're up 21% in subscription revenue since last year. This is positioning us very well moving forward. We like subscription revenue. It's nice and predictable, makes it easy to scale a business. We are gaining more visibility for our product inclusion program. You see that the second bullet point, it's mentioned in the quarterly report for the first time, and we've been quietly running this in the background in Rwanda and Indonesia with support from Business Finland. This program not only supports local communities, but it also opens doors for future commercialization in Africa and other regions.
And the innovation that's come on the back of that has been really key for our launch of the Physitrack Copilot, for example, and some of the things that we're doing with the Physitrack Assistant. So it's been really, really cross-fertilizing for us in terms of innovation to have this amazing opportunity to make a difference in regions where digital health is not widely available. Now, on the technology front there at the bottom, innovation is really thriving in the group. The team is really, really keen on making a big difference, and the team's engagement is higher than ever, with over 80% expressing that they're really engaged and satisfied with working with the. Good. These are really amazing numbers. If you look at the customer churn, we have decreased that to 1%.
You see that bottom left, and we're aiming to take that even lower than that, but this is a solid step in the right direction. Nice trend. Right, on the wellness side of things, we've introduced some noteworthy innovations here. As you saw there in the intro clip, we launched Nexa. This is an AI-powered self-service MSK tool, which we believe will enhance revenue with existing customers, and with some cream on the cake, we'll have higher margins on those customers as we use our national network there, instead of using our own clinical network. And, of course, it opens the door to direct-to-consumer and B2C. So very, very exciting to follow that. Great work there by the Champion Health team, but it's been a cross-group effort, and it's been really exciting to be part of this.
Champion Health 3.0 continues to receive positive feedback, and we're doing a lot more there. We're planning to expand the Champion offering to include mental health and GP services. We have some nice new people power to help that happen in that product team. And our goal is to provide a comprehensive care solution for our users, that they have one place to go for all of their wellness and care needs. So watch that space. It's really, really exciting. On an operational level, we've consolidated functions, like sales and marketing, into our growth team, which should drive synergies and efficiencies, while our current revenue growth in the division, as you see in the top right, is just at 5%.
We do expect to see improvement as we continue to roll out Champion Health 3.0, Nexa, and we also are about to enter new markets with the Champion Health product. Right. Innovation. There's a lot going on here, and I thought it'd be good to just mention where we're going next. Next quarter, we're launching the AI-powered Physitrack Assistant, and that is a mobile app, which makes it possible for users to manage exercise prescriptions and patient engagement straight from their palm of their hand, using a new mobile app, which is AI-powered. That's a significant advancement in terms of our product offering to notably smaller clinics. As you might recall, we do have an iOS app, but it's more of a mini version of the existing Physitrack universe. It's a little bit dated at this point.
It's gonna be really nice to just, reboot things in 2024 style. Nice and easy and fast, and obviously AI-powered, which, I think is really gonna help that, that business line. In terms of Champion Health, the third point, the platform is translated. It's ready for rollout in Sweden and Germany, and we're actually already in promising discussions with companies in these regions, with the Swedes leading the way, not surprisingly. There's a lot of interest to take meetings, and we have a number of proposals out in Sweden already. I think it's they're in the double digits in terms of number of proposals. And we're really eager to move forward to see where this goes. Product market fit can be different in different regions.
It's not one-size-fits-all in terms of that localization, but so far, so good. So stay tuned for that. On the product-led growth side, worth mentioning, there's a lot happening there on the Physitrack side. We're tooling the digital sales funnels in a big way under Mickey de Vries, our new head of marketing that joined in December last year. And so there's a lot happening sort of mid to bottom funnel there, new paywalls and a lot of different ways to go about things. You might have seen the refresh in terms of the brand, and so we are rolling out the new marketing pages. There's an AB test going on, so if you go to the U.S. version of the Physitrack page, you see the new version.
If you go to the UK version, you see the old page, but we're doing some comparisons and testing of these different ways of doing things, new tools, new methodologies for doing these things. It's really exciting. On the Champion Health side, which we wrote about here in the presentation, we are building a new self-service engine for customers, so there's a new CRM coming so that Champion customers can take care of themselves, roll out their own licenses and be more independent. There'll also be self-payment options with multiple alternatives, direct debits as well as credit cards, powered by Stripe. So that's our new payment provider across the group, which we are in the process of rolling out. So that's very, very exciting. Of course, multiple regions.
Once we have digital funnels working in one region, it's quite easy to roll that out across multiple regions with the translation that we have. So, exciting stuff there. And lastly, we are implementing a product operating model for Champion Health as well. So we spoke about this in the previous quarters with Physitrack, and we successfully rolled that out. And that type of development makes us really closely connected to customers, so that approach ensures that we're not just building what our founders and executives, sales guys think that the customers want, but what the customers truly need, because you get really close to them, and you basically build and set up your roadmap based on customer feedback, and more importantly, non-customer feedback, meaning people that are looking at you, but they're not converting.
This is a really, really important step in a maturing company with a maturing business line. Those are the updates. Now I'm gonna hand over to Charlotte for the financial overview. Charlotte, take it away.
... Thank you very much, Henrik. Here you'll see an overview of the key financial highlights for the six months ending June 2024. In the six months, we delivered revenue of EUR 8.1 million, up 8% from EUR 7.5 million in the prior year. Within this, EUR 6.5 million or 81% was subscription revenue, which was up from EUR 5.3 million in the prior year, an increase of 21%. We're pleased to see this strong increase in our core subscription high margin revenue. For the six months, adjusted EBITDA was EUR 2 million, up from EUR 1.9 million in the prior year, and this resulted in an adjusted EBITDA margin of 24% compared to 25% in the prior year.
EBITDA was EUR 1.7 million, up 16% from EUR 1.4 million in the prior year, as adjusting items have fallen away. The six-month operating cash flow for the year was EUR 1.5 million, up 19% from EUR 1.2 million in the prior year. Moving through to the next slide, take a closer look at revenue. Group revenue in the quarter increased 5% year-on-year. The growth was driven by a 10% increase in life care, offset by a small decline in wellness, where we've seen seasonal variations, a drop-off in non-subscription revenue, and the impact of the delay of the Champion Health product being available in other languages. To the next slide. Here we see the details of our subscription revenue growth. In 2024 and in the back half of 2023, all of this revenue growth is organic.
We're pleased to see that this growth is in line with our medium-term targets and demonstrates that our core subscription products are growing more quickly than our headline revenue number. Through to the next slide. The next slide, looking at adjusted EBITDA, we've grown to EUR 2 million in the first half of the year. Within this, Lifecare continues to deliver strong EBITDA margins of 48%. However, Wellness margins have dropped from 4% to 2%, reflecting the decrease in revenue this quarter. Group costs have increased slightly due to inflation. Through to the next slide. Looking here at cash flow for the first half of the year. In the period, we delivered adjusted EBITDA of EUR 1.9 million, and this was offset by EUR 0.5 million of working capital movements and EUR 0.2 million in interest expense.
Intangible assets incurred a cash outlay of AUD 1.7 million in the period, as well as a AUD 0.3 million cost of adjusting items. This has led us to draw down AUD 0.8 million of our revolving credit facility, leaving us exiting the period with AUD 0.6 million in cash. We also have AUD 1.2 million undrawn on our facility, resulting in AUD 1.7 million of available liquidity. We expect this liquidity to be sufficient for the group's operations going forward. Through to the next slide. Following two consecutive quarters of net free cash flow positivity, we experienced a free cash flow burn in Q2 2024. This is due to seasonal variations in working capital, with Q2 being traditionally our weakest cash quarter as we see a number of cash outflows and lower collections.
Additionally, we've been investing in the group to take advantage of the many opportunities to improve our products and secure future growth. We retain the ambition to be cash flow neutral for the full year 2024. Now, through to the next slide. Looking here at the balance sheet, goodwill, intangibles, and PPE of EUR 34 million represent both our internally capitalized intangibles and the goodwill recognized on acquisitions. Cash and borrowings, we've discussed already. Trade and other receivables, we've seen an increase, partly responsible for the working capital swing, which we've discussed, and as revenue increases, receivables increase as well. Deferred revenues incurred mainly in Champion Health and Physiotools, which are built up front for a year, and deferred tax arises on the intangibles recognized on acquisition and is unwinding as these intangibles are amortized. Deferred consideration relates to the Champion Health and Wellnow acquisitions.
We had expected to pay one earn-out in the second half of this year, but that's now expected to fall into 2025. That's all from me, so I'll hand you back to Henrik for the strategy outlook. Thank you, and please let me know if you have any questions.
Thank you, Charlotte. Let's revisit the value proposition quickly. Top there, the offering is holistic. Everything the users need should be in one place. Just when you buy a car, you want to buy the whole car in one dealership and not the steering wheel in one place and the wheels in another place and the gearshift somewhere else. So that's how we think around both platforms, which you've seen, which is why we have a diversified offering. More of that on the Champion Health side. Super exciting on the horizon to expand the care offering there to include mental health and GP services through partnerships. Now, second one, we are well-positioned in the current macro environment.
The Q2 is a tougher quarter in terms of closing business on wellness, and there is stuff happening under the radar. Not all wellness businesses are performing negatively, so we are really confident there. But it's a... Again, it's a well-balanced, diversified portfolio that we have. It is well-positioned in this type of macro climate. And if you look at the bottom, the product, the offering, this diversification is designed to perform really well regardless of the market conditions on a macro level. So this is, this is robust, and it's all weather in nature. Now, just looking ahead there, on the right side, these are our financial goals, super clear. We expect to double the company in the medium term.
We expect to have strong profit margins, and of course, over time, we'll be highly cash flow generative as a business. So that wraps up this presentation, so I'm happy to take any questions that you may have. So you can use the Q&A function on your Zoom panel below. Let's, let's, fire away on that, and, let me just, pin us so that we, we are, we are here for you. Okay. There we go. Q&A. So we have a couple of questions here. Do you expect the Lifecare Division's positive growth trajectory in Q4 and Q1 to rebound during Q3 in terms of new licenses, meaning that it will, it will turn lower?
No, it's a steady trend, and in fact, we have just started on a lot of the retools with the digital marketing piece and working on that automated funnel. So we don't expect any rebound. We don't expect any reversal of that, if that was the question. So, if anything, I think we'll see a strong continuation of that trend as we introduce more tools and, of course, the new branding. And I have to say thank you to some of our investors that actually gave us some great feedback on how to retool the quarterly report, and had a great excuse just to get a nice, clean look there. Now, I digress.
Given the recent price increases in the Lifecare Division have not led to higher churn, how much pricing power do you believe remains? Well, we believe that, price elasticity is in our favor. There's been a lot of external analysis of that as well in terms of, the robustness of our pricing. We are much cheaper than competitors if you look at the list pricing, around that. So, it's anyone's guess. We have our own pricing power, obviously, in our little universe, but it's also the general trend for SaaS, which SaaS prices are increasing, which I think is healthy for a lot of businesses. They need that for profitability. So, we are not seeing any taper in terms of, price raises, anytime soon, actually, which is really good.
We continue to deliver value, so we're not raising prices just for the sake of it. We actually have a lot, a lot of interesting stuff going on, which I'm sure our customers appreciate, even if prices are slightly higher. In the previous conference call, you expressed confidence in organic growth rebounding to 30% by the second half of 2024. Does that outlook still hold? I'm not sure I said specifically organic growth would rebound to 30%, but the pacing is, I think, what it needs to be if you look at the Lifecare ecosystem and, there's more room there, so 21% revenue growth is, very much the type of pacing that we need right now. And, yeah, there's still an outlook.
I think a healthy software business that is small, you know, EUR 16-17 million of revenue is small in a big total addressable market. It should be posting numbers that are at least along these lines. So, so those are certainly our ambitions, and that's, reflected in our financial goals. So let's, just keep working hard on innovation, and then we'll, we'll get there. What marketing activities are planned for the release of Champion Health in Sweden and Germany, and do you have an estimated time of delivery for the launches? Well, we, we have teams on the ground. We have, the more traditional way of speaking to customers in these markets in terms of the relationships that we have with them, so we expect to work on this on the basis of expansion, so revenue expansion with existing customers, notably in Germany.
So the, you sort of, you go close to home when you do most of these things. In Sweden, it's been a mix of new customers and existing customers, and it's been, you know, enterprise salesy in combination with social media to drag people in. But I think it's, as a starting point, it's traditional shoe leather business. We don't expect anything CAC heavy in terms of, you know, big launches, paid advertising and expensive digital marketing. There's so much in those existing customer databases. We're not starting cold, which is the upside with having subsidiaries on the ground, and that was the whole point with the acquisition program, to get companies with existing relationships that we could inject new software into.
We have been late with that software, so I'll admit that, and you can see that in the numbers as well. But, thanks to the fact that you have people on the ground, sort of you hit that ground running. So, but those are the, those are the marketing activities, and then we'll see. As, as we get traction, you can increase spend, but as, we're not gonna front load that with, with CAC just to get it done. It's, I think that would be counterproductive, and, then you'll have an artificial sort of product market fit if you do that. Next question: Could you elaborate on the newly launched Nexa platform and potential revenue impact for the Lifecare division? Well, there's...
This is obviously a wellness product, and it's in Champion Health Plus, and it's a tool designed to enhance revenue with existing corporate and insurance customers. So a lot of these customers, they want to have a low load in terms of their covered people in those programs, in terms of their access to hands-on care. So they want that as a, as a money-saving effort, and so this fits really, really nicely with that. So they can go from assessment to self-service or to a care situation in 15 minutes. So that's a great enhancer for that revenue, and it's a cost saver for them. We also have self-service, MSK-...
Planned for the B2C angle of Champion Health Plus that we have, but I think the notable revenue that we, that you'll see there is going to be with the corporate space and existing customers. And, so it's a, it is a tool that's been asked for, and it's a tool that's been developed in hand-in-hand with customers. So kudos to Chris Bartlett and Anne there for doing a great job. Now, impact for the Lifecare division. Over time, I think, what we plan for B2C in terms of escalation into self-service care and also into escalation of employee wellness through Champion Health, in B2C, that's something that's Nexa is supporting. You know, so that's, that AI chat interface will be able to be recycled in other places, and so I'm really excited about that.
So I think, I think over time, there'll be a revenue impact in Lifecare, but it's not something that we're banking on at the moment. This is mainly around an enhancer for Champion Health Plus, and obviously, that that lead-in to care that we have on Champion Health for employees, Nexa will be a great tool for that. Regarding the cost base, do you expect it to normalize around these levels, or do you expect it to expand further? I think we're pretty happy with the team that we have.
I think, we've had a regime shift in terms of the team, in terms of the talent we could attract, and a lot of these incredibly talented individuals, they are only ready to take a bet on you as a company once you've passed sort of AUD 10-15 million mark. It's been, it's been really, really accretive to have them on board, and they're accelerating things really, really nicely. There might be some incremental increases to the teams, but there's nothing, there's nothing that we see that's gonna front-load the cost base for it. So we'll see increases in the sales team, and, you know, we might have, we might have some digital marketing spend as revenue expands, but it will go hand in hand with that.
And so for now, the cost base is stable with a real dream team that's really making a difference in a big way to this business and also to our customers around the world. So there are no more questions, I will let that be my final words for today. Thank you so much for watching, and thank you for tracking the company. And take care, and have a great day. See you!