DUG Technology Ltd

delayed start. Matt is working his way onto the call, but hasn't quite made it yet. So he's over in Houston at the moment. We've got our big image conference, our biggest conference for the year next week. So I'm going to get started while we wait for Matt to join. So we really wanted to open up, I guess, with the key themes, you know, key themes that we've seen this year and through the results. And we think one of the really important pieces and something we've obviously been talking to now since results last year is elastic multi-parameter full waveform inversion imaging, EMPFWI. And so what we've seen, and this will be something that Matt can give a lot more colour to when he joins later, but what we're seeing is just outstanding results. And we're seeing that now convert really strongly into wins. And we've got a really, a big backlog now with the eight pilot projects that we completed of really amazing results and examples from basins all around the world with our really key core customers. And so that technology now, every time we release a new algorithm, new piece of technology you know we've tested it to the nth degree but but when you get it into a production environment you really learn um you really learn you find the corner cases you know you find the areas where maybe it doesn't apply quite as well as you hoped it did just realized i've been looking down the whole time but i've got my camera up here um and so the pilot projects and and the production projects now that we're running with empfdi have been super positive because the results we're getting are blowing everyone away and we're now starting to see that come through awards um and uh you know moving on to the second point here you know we think the real standout result uh the standout point in this result um is the growing order book and so you know we closed with an order book uh here's matt

Are you?

Yeah, you're all good. We're just on to the second point. So you probably can start over now that you're here.

Yeah, sorry, everybody. Technical problems. But anyway, I've made it. Look, we're... We're really excited in Doug. The next year looks fantastic. But in presenting today, we've got three key themes for FY25. The first is that we brought our elastic multi-parameter FWI out. which was a massive step forward because it was part of that whole replace your traditional workflow, except that you went further. Now you replace not just processing and imaging, you also replace your quantitative interp and go straight to rock properties. That's been super well received. We've done a lot of proof of concepts now, and they are converting into full-blown projects, which is very exciting. And that's really adding to our order book really nicely, the elastic. The order book of 52 million is amazing. And especially when you think that 46 or nearly 46 million of it was added in just the last six months. So you can just see the huge momentum building up as we're going forward. And a lot of that is coming from our new offices, right? Abu Dhabi is winning projects, really nice projects. And Brazil, we won a really nice 4D project, a big project. And just to remind viewers, 4D is the ultimate work that you want to get as a service company because it's repeat work. You repeat it. Often you repeat it every 12 months because as they deplete a reservoir, they want to redo the work to see where they're draining the reservoir and where they're not draining it. So they do their infill drilling based on what you do in 4D. So it's beautiful work because you get to repeat it every year. So it's fantastic that that project came through from Brazil. Could someone change the slide for me, please? So what we do, just a quick recap for anybody who hasn't seen this before, services is where we make most of our revenue. And that's where our geophysicists sit and process data for a client. And that's where the elastic and acoustic MPFWI makes most of its money at the moment. But we also do conventional seismic processing imaging and we do multi-client as well, which we've put under geoservices. Software is something we're super excited about. And we had some issues with where we register wins, which took off a bit of shine and we dropped to 13% because of just a... an accounting artifact, but we're really excited and software is really building up. And I think we're building momentum there and I'm pretty confident that we're gonna, although we've grown at 13% this year, I believe it's going to grow even faster than that in years to come. We will accelerate that. High-performance computing is very important for supporting our software business. It is been a bit disappointing in the last 12 months, but again, it's just a very small part of our business. And the emerging businesses, Doug Nomad and Doug Cool, we really look forward to talking about. Over the past 12 months, as we signed the Doug Cool deal and we have been talking about it, we said we expected to make a... a sale, we expected BAC to make a sale in financial year 25, but we didn't expect it to be material. And indeed they've made a sale and indeed it's not material. So what we were expecting, it turned out. But Dan's gonna address this later and they've put a lot of investment into this and it's starting to gain momentum as well. And Doug Nomad, we've made our first Nomad sale. We're excited by that. The pipeline is building there. And again, Dan will talk about that shortly. There's someone saying, thank you. So this is the weld according to Doug, whereas Orange is where we've completed projects in the past. But the really nice thing about this map is we've now got Abu Dhabi on the map and that office is flying. The geophysicists that we've got there are very good. Our fit out of our new office is complete. We're just waiting for a little sign off from the authorities before we move in. So I think we're expected to move the week after next. So very exciting times in Abu Dhabi. Abu Dhabi is a full blown office. I think we've got seats in the first instance for 45 geos there. Rio de Janeiro is a different one. It's just more of a front end sales office. We'll have a handful of geos there in order to satisfy local needs. input local requirements, but it's a more of a front end office. So yeah, it's really pleasing to see those offices on the map and it's especially pleasing to see them kicking into our order book as they have. So financial snapshot, amazing order book, 52 million and building, right? I expect that to continue to build. As we're saying, most of that has been added in the last six months. So it's 58% up on 31 December 24 and 42% up on 30th of June 24. So it's a significant increase in order book from last year. Revenue is disappointing. We talked about that. Down 4%. And I had hoped that we'd actually end up flat, but we ended up slightly down. So I was a little disappointed in that. EBITDA is down a bit, but we've been investing a lot of money into growing, into people, into offices, into all sorts of stuff. So, yeah, that is what it is. And as we said, the actual last six months has had an EBITDA of 30%. Services revenue down a bit as expected. Software revenue up 13%. Look, software, I keep talking about software when I'm talking to you folks and I'm really excited by it. And we did increase our growth, but it was edge taken off it because of the way of few accounting things. But I expect that, watch that number. That's gonna, we're gonna continue to grow that growth number, I believe strongly. And HUC revenue, as I said, is disappointing, but it's a very small part of our business, but it's very important for software.

Great. Thanks, Matt. So I'll take over for the financial slides. So I think as Matt touched on, you know, we really finished strong in the second half. I think that's really the key message here. The first half we were, you know, disappointed in, but the second half, you know, we felt was a really strong result. And so that was headlined by the 33.8 million revenue in second half and 10.2 of EBITDA, you know, at our 30% EBITDA margin. The results we think are largely in line with consensus and we think shouldn't really be a positive or a negative surprise for FY25, but we think the headliner really is the order book number and the strong awards that have come through the second half. So to touch on that, we've seen services revenue down 5%, but we have 45.7 mil of awards, which is what boosted that order book number. um 45.7 million awards in the second half and so that second half skew um meant that you know revenue is is picking up momentum is picking up but as the projects came in over that life um you know we expect to see kind of revenue growing as we move forward it's important to note as well that of that 45.7 um more than half of it is for mpfwi work and so it's been a really positive half in terms of um solidifying the work that all the teams the r d team and all the all the teams have done in in the mpfwi and the direction you know that you know that we're heading in the direction that we see the industry heading with mpfwi So as to expand in on software and what Matt touched on, we had a few timing, a few timing pieces where, you know, revenue that should have been in July last year was in June or revenue that was in June this year should have been in, sorry, revenue that was in June last year then is in July. And that's what caused the kind of edge to come off. So just to bring it back, I guess, in first half, we did 22% software growth. In the third quarter, we did 23%. And then unfortunately, in the fourth quarter, we had some of these timing issues, which weren't lost sales. They're just timing issues with when the recognition occurs that were picked up this year. And as a result, we ended up with the 13% for the full year. Now, as Matt touched on as well, you know, 15.4 of EBITDA, that's 25% margin. We had 30% margin in second half. And, you know, the significant investments, which we touched on at half year as well, you know, we had the release of EMP, FWI, and the pilot projects that went along with that. And there was a lot of resources invested into those projects. And if you've ventured deep enough into our annual report and you see the segment reporting in there as well, it's worth highlighting that when our services business uses the computers, they pay a unit rate. They pay per server hour. And so when we're making these big investments, especially with Elastic, it's really pronounced. When we're making these big investments, and doing these pilot projects with either no or low revenue, that's where that swing comes in. And so services is making that investment, proving out these pilot projects, generating results and generating the social proof, so to speak, that we require to then go and sell and get the outstanding awards number that we got in the second half. But when we look at it on a segment level, we get services being unprofitable for the year and we get HPC being a step up in their profitability. And it's not a comment on the profitability of our services projects or any issues around that and pricing. It's just a reflection of the investment and the significant investment that was made in getting those pilot projects closed out. So then closing it off, we had employee benefits up 6%. And that's largely driven, as Matt touched on, we've got the Abu Dhabi office now up and running. We've got a bunch of staff there. And a lot of those staff were hired early in the year. And so we have their costs coming through. And we have some cost savings, albeit we had some redundancy payments in first half. We have the cost savings coming through second half from the restructuring that we did in first half. And then DNA, we're seeing that step up in depreciation, but that's just us seeing a full year now of the new compute assets that were purchased in FY24 half two and in FY25 Q1. And so what we're seeing both through the finance expense and through the depreciation line is just a full 12 months of those assets being paid for. It's worth noting that the first batch of assets will be off the books, so to speak, in the end of January as well. So we're starting to get some of those facilities coming to an end. And you'll see in the annual report a more detailed commentary about this in the operational and financial review. um you know where we talk through the the way that we acquire these assets is using asset financing and when we get technical with the accounting they come through as a right of use asset and are treated like a lease and what that means is that the tenure of the facility being two or three years is how we have to recognize it through the book so we expect we know that these assets will last five years plus you know we have assets running that we have computers running that are eight or nine years old but we have to recognize them in an accelerated manner just due to the due to the accounting rules and so that's what puts a bit of pressure you know on that dna and on that finance expense line so i think that's enough for that one i'll move on balance sheet So net debt of 3.9, you know, with total asset financing of 20.4. So that 20.4 now is, you know, that number's coming down as we make repayments on the facilities that we have. And the net debt of 3.9, you know, is down significantly from earlier in this year and last year as well. In October 2024, as many of you will be aware, we completed a capital raising. So we raised 31.4 million Australian dollars before costs. And just to remind, even though it's there, we're reporting and all these numbers are in US dollars. And so just to touch on use of proceeds, you know, for the data center infrastructure upgrades. you know the designs are complete we're now kind of in the planning and tendering phase we've we've ordered a lot of the long lead time items and so you know some things like electrical transformers and different items with the boom in the data center industry you know we're looking at 40 to 60 week lead time. So we've had all those items ordered now so that we're able to move quickly and let this project kind of unfurl as we move forward in the year. Worth noting still, as we touched on at half year, that we have floor space available in that Houston facility that's about 20%. But when we consider the density of modern computing, we've got 20%. upside in our real estate. But when we look at kind of computer throughput, you know, it looks like we could almost double the compute that we have today, if not more with that 20%. And that's just a result of the greater density we can now achieve. Matt's touched on Middle East, so I won't touch on that one. And then Doug Nomad, first sale has been completed, and we'll talk about that a bit further on in the deck. Increase in other current assets. The only thing to call out there is when we do our asset financing, we pay a security deposit on the assets. on the facility and so that security deposit is equal to the last four payments on that facility so we have some of our facilities which expire at the end of January and so our final payment for those will be in September with a small bullet payment at the end and so that's what we see then coming through in the other line cash flow then So cashless for suppliers was a result, same in the first half actually, but it's a result of the third party compute that was utilized in the second half of FY24 being paid off in FY25 half one. So that's where we get a bit of a step up in payments to suppliers, but it's as a result of that third party compute utilized in FY24. Payments to employees fell, which is a result of the restructuring initiative. And then the acquisition of PPE, you know, that was the main part of that is the final batch of AMD EPYC Genoa's that we received in July 2024. And then we also had some initial waves of infrastructure capacity upgrades in Houston and the Abu Dhabi office fit out as well. I've touched on the capacity, so I won't touch on that again. And then we have the 19.7, which is the USD figure from the October capital raise net of fees. So I'll hand it back over to Matt now as we kind of get back into the growth drivers and the business.

So, um, oftentimes when folks look at Doug, they think that we're doing, you know, a number of sort of things that are sort of quite separate, but actually it's, it's the Doug ecosystem is complete. It's, it's all interlocked, um, with one another. Every piece is necessary for our, for our business. Um, You know, the processing and imaging people we have, the teams we have are a major asset of our organization and spread across all of the offices and are amazing. We've got a multi-client library, which is in its infancy, but it's growing and will be a significant part of our business. The software is fantastic software. It's for both imaging, processing and imaging, and interpretation, including all of these. And we've got a big plan out for in how to, how to grow that and how to, how to move that forward technically and leading to growth. And I'm sitting in Houston at the minute, and this week we've had, um, six so far, six, um, visits where we've put our plan forward plans to, to clients and to judge their reaction and see if they like it. And they're genuinely excited from where we're going. Um, I'll talk a bit more about software later. We have a lot of great different data analytics, different workflows, different AI stuff. There's a lot of stuff going on. And integrated with everything is that HPC backbone, which is all proprietary, running our immersion core data centers, saving 51% of the power bill, really important for the environmental impact. And often, and I'll run over one of the questions often people get put to us is why don't we use the cloud? So firstly, the thing to remember is that the cloud is not just there for us to grab. So for us to get what we need, we would have to sign up for a number of years. So you don't get flexibility in how much you use. If you get flexibility, if you're onto the spot market, but then we can't run our business the size we are on the spot market. So that's the first thing, you don't get that flexibility that people often think comes with the cloud. And the next thing is, and Dan's already talked about it, is that even when we're making repayments on the hardware, we're cheaper than what the cloud would be. But once we've paid off, like we've just paid off the first batch of new compute, Once the compute is paid off, then we get a free run of it, right? And as Dan said, we've got machines running that are nine years old. So if we pay them off after three years or two years or whatever, we've then got six years of essentially free compute just paying for the consumables. So that HPC and the way we manage it and the savings we make is super important for our business. And it's a major advantage over any competitors that use the cloud. And I seriously don't know how they come to the decision to do that. And then the emerging businesses on Nomad and Doug Cool, which Daniel will talk more about in a minute, are really important for where we're going and we're excited by them. And it's just been really, really great seeing BAC get after that business. And Dan will talk you through what they've done, but they've made some serious progress serious investments into the future of that business. So we keep talking about this and it's exceedingly important. We are leading the way with seismic imaging in the world. Our elastic MPFWI imaging is the talk of the town. We've got two big global conferences each year. I'm over in Houston because the America's one is next week. but earlier in early june we had the big european one which was in toulouse and all the majors the super majors so your your shells your exons your total even BP and so forth all gave talks and their talks were on MPFWI and how that is the future. And so all the talk now is about MPFWI and they've set the edge. Although we came out two and a half years ago, it's taken a long time to get to this point. They are now saying this is the future. And one of them actually even mentioned, said Doug is on the right track, but nobody else is. So that was a great, great endorsement for us and really helped us with clients. So now we're coming on board with oil companies that have never worked with us much in the past, that were 100% Viridian shops. And we just won another 4D project today from a company that's never worked for us before, on the back of that MPFWI technology. So momentum is building, it's extremely exciting. Going straight to rock properties is extremely exciting. That's a massive step forward for the industry as a whole. And then the multi-client. Multi-client business is a really good business. It's high margin. It's basically where we own the seismic assets and then we license them to oil companies. And so rather than processing data and getting paid once for that, you actually... own the seismic data and you license it out it's it's a really good business it's in its infancy in doug but it is growing and and you know watch this space our software is the leading software in the industry i believe it's certainly the most modern and leading software amongst our key services um competitors um It's the software business itself has got accelerating growth and it's going to continue to accelerate that growth. It is recurring revenue. We get money up front every 12 months. except for some of the software that runs on the cluster. If they run on the cluster, then they pay for the hardware, but they also pay a little fee for the software that they're running on the cluster. So there's consumption-based billing for the cluster side of it, but most of the money is an upfront license fee. It is a one-stop toolkit, which is what everybody wants. I think it's the only one-stop toolkit out there that goes from processing and imaging right through to multi-parameter FWI, rock properties, rock physics, inversions, all within the one package. We've been selling the processing imaging software, as you would be aware, for the last four years, and it is really growing. It's a great area. Although you might think that it would cannibalize our services business, it's probably, number one, we really love the software business for obvious reasons, but number two, a lot of the small service companies that are picking up the processing and imaging software actually work in on projects that we wouldn't really like to work on in services. So we have a great client in Pakistan who works on a lot of projects in the stands and in Pakistan and There tend to be small projects and cheaper projects, not projects that we'd like as a service business, but it's great to get a revenue stream from those projects nonetheless. And then another example I've used in the past, I use again is a company called Rockwave in London, and they do a lot of wind farm seismic work. Again, the projects tend to be smaller and not really what we would like in the service business, but it's great to get a revenue stream from them. We have a big plan for the software, as I've alluded to. We're presenting that plan this week and next year to clients here in Houston. And it's been really well received and we really The whole plan is, at the minute, the software is used by our competitors for their multi-client businesses, so like Viridian and TGS. It's used by small oil companies, it's used by a lot of consultants, and it's used by some medium-sized oil companies, but not generally throughout their business, just in some groups and teams. Our aim is therefore to grow that share of those medium oil companies and to grow into the large oil companies and even the super large oil companies. So that's what the plan is about. That's what we're presenting and getting feedback on. And the feedback so far has been great, but that's how we're going to grow this business.

I'll pick it up. So Doug Nomad and Doug Kool were our emerging businesses. So for those who are not aware as well, Doug Kool was an internal invention that we had patented in late 2016. Ultimately, we ended up building out our Houston data center and we won data center of the year, an award from a publication called DCD. And that just got us some notoriety. And it started meaning that we were getting inbound. And so as we were getting inbound from companies who are interested in the immersion cooling, we started to work to pursue it, but realized that we weren't really set up to do it and it wasn't our core competency. And so what we did in August last year was we signed an agreement with Baltimore Air Coil Company and they've really since then taken it and started running. So BAC has rebranded what we would call Doug Cool. They've rebranded it BAC Cobalt and they've just finished or they're just in the process of finishing their new research and development uh research and development hub for immersion cooling in their in their global headquarters in Baltimore which is a really exciting development they've got a full team working on it now they've got teams you know focused on building out their partnership in this kind of computing ecosystem whether that be the fluid or the servers or all these different components that go into a tank um and they've also got a team that's been you know on the ground selling getting feedback um and they're also doing r&d so they've got their team they're doing r&d they've been doing it now for quite a while and they've made little tweaks and they're getting improvements and they're understanding and it's been really exciting um how they've been going so As Matt touched on, we had our first sale, not material, but just in case anyone's wondering, I guess, where that's going to come through the P&L, you know, for the time being, we'll be putting Nomad and Dubcool revenue through the HPC line. We'll be sure to give detail and talk about that in more detail, but, you know, we're not going to be looking to add lines and lines and lines to the P&L at the moment, and we'll be putting those through the HVC line. So Doug Cool is going really well. Doug Nomad also going really well. So in June, we announced our first sale. That was to Perstorp, which is actually moving to BRB and Perstorp. They're all subsidiaries of Petronas. So Petronas is the end is the end client. The unit's being delivered into Malaysia and it's going to be delivered during this first half of FY26. So we've not actually got any revenue through on that, albeit we've received the cash deposit, but it won't be recognised as revenue until later in the year when it's deployed. The pipeline there is just continuing to build. We've got some key conferences coming up in September and November where, you know, like this image you can see in the top right-hand corner where we'll have the Doug Nomad on the booth. And those are really key touch points and really key BD times for us. And we're continuing to refine how we sell message and, you know, continuing to learn about that business and make sure we're getting about it the right way. So it was really great to get the first sale secured in June. And now there's a really healthy pipeline there that we're working to get over the line and we're really excited about. The difference really with Doug Cool to touch on it, and this applies both across the BAC Cobalt system and Doug Nomad, is it just simplifies the system. Our patent simplifies the system by putting the heat exchanger into the tank. And that allows you to do a few things. One is it allows you to be super dense. So in that 10-foot container, which you can see on the top right, the section you can see there, we've got a tank container. You know, it's one of our normal tanks. It's got two heat exchangers in it, can do up to 80 kilowatts of IT heat rejection. We think we can get that number up significantly, but that's what it does for the moment. And behind that wall you see is a chiller. And so the concept, the idea here that's been really well received is It's a 10-foot super mobile data center. So you can put 80 kilowatts of IT. You can put it wherever you want. You don't need external cooling. All you need is to add the power. That's been really well received, but we've got this big pipeline growing. We now just need to get it converting and make sure that we're continuing to learn about the messaging and the way to get those deals closed.

um and so you you're aware that we've been globally expanding i've touched on how well abu dhabi is now going and how well brazil is going so we've really now got our offices in the key locations around the world the only place we might put a front-end office like we've done in brazil might be india And maybe Vietnam. But I think we are really, we are, and we're winning a lot of Vietnamese work as it is. So I think we are certainly major offices. We've got all the major offices we now need to cover the world geographically. And it's just fantastic to see Abu Dhabi and Brazil kicking into the revenue and to the order book the way they are. The highest ever order book. And I think that's just going to continue to grow from what we're seeing. We've talked about a really large, healthy pipeline of biggest we've seen for the last six, 12 months. And now we're starting to see it really convert over the last six months. But that pipeline is continuing to grow. It's not dwindling. It's continuing to grow significantly. And you can see there that, you know, half of that order book came in the last six months, not all half, sorry, 45 out of 52 million came in the last six months. So momentum is seriously growing. Yeah, and we're continuing to scale and scaling and the data center, the next to last fit out of the data center is complete. And so we've got a lot of space capacity there now ready to go for more compute should we need it. And the long lead time items have been ordered for the remaining piece of the data center that's not complete. And that's 12 months out now to get those long lead time items. They're very slow at the minute because of all the data center bills around the place. And so the rest of the equipment to complete that will be ordered in order to complete at the same time as those long lead time items come in. But we've talked about services. Can you go back, please? We've talked about services benefiting in Abu Dhabi and Brazil. What we haven't talked about is that we are looking for and we'll be adding salespeople for software into those offices. They're not there yet. And we're adding Nomad front ends and so forth. So everything else is going to follow on now from services in those new offices. Thanks. So finish off, why invest in Doug? So we're a founder-led innovative culture, but within the realm of what we're doing, we're not out looking for new businesses and anything but. We have the absolute industry-leading Elastic MPFWI. That's been totally acknowledged now in the industry. We've completed 75 projects now, which blows some people's minds when they hear that. We have... i think it's the best software in the industry and it's certainly the broadest going covering from processing imaging all the way through to interp and rock physics and so forth we've got the painted immersion cooling which has now been licensed by bac and that's just going to ramp up and get bigger and bigger and doug nomad you know it's a slow start to know nomad but there's a really good pipeline and um and we are learning about how to how to get after that business um We've got a great global footprint now. We've got the global footprint we need. We don't need to open up any more full-blown offices. Middle East and Brazil are really kicking into the coffers and the order book now, which is fantastic. The Middle East didn't kick in any money last financial year, FY25, The first invoices went out in July, which was fantastic to see and a real milestone. And no invoices have gone out from Brazil yet. We've won the big project and I think the data has arrived and so we'll start loading data, which means we'll start to work on the data and be able to invoice shortly. So really, really great to see those officers really hit their straps. Brazil hit its traps very quickly and Middle East has been a lot of work done on the ground there and it looks fantastic. But the pipeline there is quite staggering, to be honest. You know, we've been at it for quite a long time now, 21 years. And over that 21 years, starting in a garage in Perth, we're now... globally recognized globally recognized as a technology leader we've got a great footprint in the industry and and they're just really well known and respected we work for everybody that you could think of it's a it's a case now of working our way up and doing the most you know more 4ds and more technical stuff for the big guys but we work for everybody and significantly And in terms of momentum, crikey, we've got a massive audible. We've got the biggest pipeline I've ever seen by miles, and it's continuing to grow. And, you know, momentum is building. And the software business, I believe we can accelerate that growth even further from year to year for years to come. And if that's not all enough, you've still got these emerging businesses of Doug Nomad and Doug Cool, which are just starting to find their feet. Thanks, Dave.

Okay. Thank you, Matt. We might move to Q&A. Just to remind the folks that are on the call, research analysts are welcome to ask questions. If you could raise your hand, I will click a button and allow you to talk and ask those live. We also have a Q&A function via Zoom, and if you want to send those through, we've had a few come through that I'll call out and ask live. If we can go to Jack Daly from Shores, please, to ask the first question.

Yeah, hi guys, you can hear me all right?

Yes.

Hey, Jack. Hey, Matt, how's it going? Yeah, congrats on a great result and great to see order book at $52 million. I guess just in terms of the kind of quarterly contract wins, so it was 23 mil this fourth quarter, about 22 and a half last quarter. we're two months into this current quarter is that and you're looking at the demand that we're seeing is that kind of the run rate that we should be thinking about um that step up to like the mid 20 low 20s um contractor warns per quarter um it'll be it'll still be lumpy jack um

You know, I would, um, some quarters are always stronger than other quarters and, and it, and it changes a little bit. Although when we look at, when we look at wins and proposals written and so forth, we always compare them with the same month from previous years. Um, and likewise for writing proposals. And so you get that, and then you also get, you know, some, if you write $20 million worth of proposals. then you expect to get a lot of wins in two months time. So I would rather looking at it on a quarterly basis and say, that's what we would expect on a quarterly basis. I would probably look at it on an annual basis and say, this is what we expect on an annual basis, but growing from that.

Okay. And I guess it's kind of the second half is probably indicative of what you'd be thinking about from an annual basis.

Certainly. And growing. I expect it to grow.

Yep. Okay. And then I guess just on the 4D work that you spoke about seems really exciting and especially the repeatable nature of it. Can you give a sense at all on like the quantum of that? And is that something that you're going to be selling more moving forward?

Oh, yes, we try to sell it. It's the pinnacle of seismic processing and imaging, so it's the hardest work to get. But yes, we want another one, as I was mentioning just today. And the quantum of that project from Brazil is very large. It's in the millions and millions of dollars, multiple millions of dollars. So it's... And as I said, it's 4D, so you would expect it to be done regularly. Sometimes they're done every 12 months. Sometimes they're done every 18 months and so forth. So you expect it to. So that's absolute. We have a, we've been doing a great 4D project. I think we've repeated it three times now for Chevron in Western Australia. And yeah, so we're certainly chasing that work.

And I guess maybe just last one, I think maybe when we think about part of the size of the opportunity in Abu Dhabi and Brazil, like you did for the year, 10 mil in Malaysia, 28 in USA and 20 in for the UK, like what kind of profiles you would be thinking about these geographies to kind of in the short and medium term?

So I think Brazil is, itself is part of the Houston business unit at the moment. So it'll add to Brisbane. It'll add to Houston's revenue. But the quantum out of Brazil that we're seeing, well, we'll see. It'll come in somewhere between – I think it'll come in somewhere between – APAC and London, somewhere in that $15 million worth is probably what I would expect it to do this coming year, something around there. The Middle East, honestly, could be anything. Some of the projects we're looking at there are just so large. You win one of those and wow, you're away to the races. So it's very difficult to predict in the same way just because some of the projects are so large. But Jay has done a tremendous job there. And, you know, we're known. People know us. People know Jay. We're really getting involved in a lot of tenders and opportunities and stuff. It's amazingly slow to get things done there. Things just take a long time. So, but we're getting used to it. But once it's rolling, of course, you know, you're up and away. Got it.

Cool. Thanks for that, Colour. I'll jump back in the queue. Thanks, Jack.

Thanks, Jack. Alan Franklin at Canaccord Generity, if you can ask your question.

Hey, Alan. You're back on mute, Alan.

Have you got me now? Guy Coward- Yes, we got you now perfect Thank you sorry hi guys yeah well done on the progress, thank you for your time. Guy Coward- Just wanted to clarify one or two things, please Dan just on the finance. Guy Coward- cost of things around the compute just to sort of clarify if there's any nuance on the cash flow side of things versus versus p&l. Guy Coward- Because he also to thinking some of the cash cost of that compute starts to roll off in in the current house.

Yeah, so I guess when you're looking between the P&L and cash flow, it's probably worth remembering that, you know, that those right of use assets, you know, they come through the depreciation. So our repayments come through depreciation and finance. You know, which is not always, you know, traditionally, you know, if you're talking about capex or depreciation, it's not always necessarily a cash cost. But in this instance, with those facilities, it is. And so that can cause, it's worth keeping in mind, I guess, when you're looking between the P&L and the cash flow and trying to tie the two together. I'm not sure if that's what you're asking, Adam.

Yeah, you're correct. Maybe some of the compute was obviously received later in the period as well, but just noting, I think F25 was probably the peak drag on cash costs from the compute. Just in terms of the customer concentration, I know you haven't sort of drawn it out in any detail, but that looks to have changed, certainly so for your largest customer, being less of a...

uh concentration during f25 if there's any color you can provide on customer concentration please yeah i think um you know it's definitely come off so the we have some really big key customers still but we don't have one customer that's 20% of revenue or, you know, to that effect where in years gone by when we used to do that graph in this deck, you would say that kind of one kind of dominant customer. We don't really have that anymore. And so we've got a good swath of really important, you know, significant customers but the concentration in one particular one um has come off a bit and that's just due to the cycle of their projects it's not you know we're still working for them we're still doing all their work but um you know they just have a bit less work at this moment as they work as they get through the work that we've done for them over previous years

Yeah, and it probably doesn't necessarily matter at a group level, but just intrigued by some of the sort of divisional cost allocation changes, because it does look like that's shifted around a fair bit between the divisions during the period.

Yeah, the method is actually largely the same. I think what we're seeing in FY25, the biggest difference the biggest shift is we, when we're allocating a lot of the costs, not all of the costs, but we're allocating a lot of the costs, especially corporate things that run across the business, we'll do it on a revenue basis. So, you know, if we take HPC, for example, you might, see a step up in revenue based on what we touched on earlier that, you know, we got the new compute online and there was a lot of resources invested into the pilot projects. And so then, you know, HPC is generating more revenue as a segment. And so then because it's generating more revenue as a segment, you know, for the costs that are split based on revenue, it's then getting a higher allocation rate. you know, from that pool. And so it's not that the base, you know, cost of operating our infrastructure has stepped up. We have some higher power costs because we've got more equipment running, you know, but it's not like there's a fundamental step change in the cost of running those facilities. It's just because the unit is making more revenue. They pick up a higher proportion of the, you know, corporate kind of corporate costs.

Yeah. Is it also affected by, Well, some of the costs, we shifted all the shared services to Malaysia over FY25. So the finance team, for example, and the IT team, for example, now reside in Malaysia. And so that picked up extra costs while we made that, while we made people redundant in Australia and hired new teams. And they had to overlap those teams, obviously. I don't know if that affects it as well.

The only clarifying remark was just to make that the software division, I guess the profitability or the underlying profitability thereof wouldn't have changed because I would have felt that you would be driving EBITDA growth out of that. software business, but ultimately, as you said, it's more of a cost allocation because that is growing revenue and the other departments went down. So you've just shifted it into the software bucket, I guess.

Yeah, it's a funny note. It's hard to get that note perfectly correct, I guess.

All fine. Thank you for your time.

Thanks, Alan.

Thanks, Alan.

Okay. Next question comes from Lachlan Woods at Wilson's Advisory.

Hey, thanks for taking my question. Hey, how are you both going? The first question was just on the, like, at the half, you obviously outlined that you had eight Elastic MPFWI projects. So, well, pilots, sorry. So, is there an update on how many of those have completed? And then, I guess, have you started to win any full, like, contract in terms of, like, actually paying customers or just any update there?

yeah we've absolutely got standard full-blown elastic mpfwi projects now um in terms of how many of them completed a couple of the big ones um like for a ramco and adnok have not completed they're still underway but the results are quite staggeringly good they've got everybody everybody quite amazed clients and us so i would expect them to move to to a project um But a number of complete and a number of turned into work. I can't think of any that have done, that are completed that haven't turned into a project, to be honest. I'm sure there is one. I just can't think of it at the top of my head. So that's flowing onto projects very nicely.

And then when you think through, I guess, like the pipeline, like what would you say is like the rough mix of like Elastic versus, you know, traditional NPFWI versus, I guess, other work in the contract book?

Dan knows the answer to that, I think.

Yeah, so I think what we've, you know, in FY24, we had the one third of services revenue was MPFWI. And then what we've seen, especially through this second half, is we're seeing that split start to climb above 50% now so you know more than 50% of the awards are for MPFWI and we're seeing that then come through the order book so you know it seems to be pretty steadily climbing now to a point where we're over half half the half the order book half over half the wins um And I think that's what we expect. You know, we expect that to continue and we expect the proportion of conventional versus MPFWI to kind of to keep skewing to MPFWI as that technology is really genuinely accepted now, accepted, desired in the industry.

Yeah, thank you. On the elastic question, Lachlan, top of my head guess is that half of those NPFWI project or half the revenue, not half, is now elastic. But everybody wants elastic. but they might not have the budget to do it just yet. So the budget cycle needs to renew. People need to see results and they need to add more money into the budgets for next year, I think, and we'll see a lot more Elastic come up, even more than what we are now. But everybody wants Elastic. There's very few people who don't want Elastic and don't think it's worth it. They just don't necessarily have it in the budget right at the minute.

Yeah, thank you. And then just going back to the first one, I know, like you said, there's eight Elastic. There was eight Elastic. And I believe if I remember correctly, you did one pilot in each of the major like oil and gas basins, as you could use it as like a, then a case study for, for winning, I guess, customers in that region. And obviously like certain basins have larger contracts. So are you able to kind of talk through which pilots you've completed, like which oil and gas basins, like I assume Middle East is still ongoing, but like.

Yeah. And we've completed, um, pilots for Petronas. Um, we've completed, um, pilots in, in the Gulf of Mexico, sorry, Gulf of America now. Um, so, um, and we've completed some, um, in Norway as well, I think, um, And it's almost like where there's bigger problems, like in the Middle East, it's actually where it's really shining the most because that's where the better physics and so forth really help to solve problems that have been fairly insurmountable until now. So the projects are harder to complete, they're harder to do, they take longer, but that's where the biggest value add, I think, and that's where you're going to see amazing things going forwards, I believe.

Perfect. That helps a lot. Thanks, guys.

Thanks, Lachlan.

Thanks, Lachlan. A question that's come in over the wires and probably one for you, Matt. Could we get some clarity as to how long the order book is expected to convert to revenue? How many quarters would you expect it to take on a typical?

Well, certainly within a year. A lot of that order book will be complete within six months because there are MPFWI projects which take less than six months to do. So certainly within six months, yeah. But some of the projects won't complete in six months. So more traditional work will take, you know, nine, 10, 11 months. So yeah.

Okay.

Daniel thinks about stuff like that too, Dan. Do you have any view on that?

Yeah. I think there's just lots of different layers to the order book. And so I'm sure there's probably some small portion of it that's an FY27 number. Usually there'll be one project that for whatever reason is 15 months long. Um, but the bulk, bulk, bulk majority of it, um, will be solidly within 12 months, you know, 95% of it will be, will be projects that are, you know, because those projects are at different stages as well. You get a whole mix up of projects that will be 90% complete and projects have not started yet. And so, you know, on average, we talk about a project being, you know, a conventional project being 10 to 11 months and, um,

you know kind of time and so that kind of flows through here as well yeah i forgot that so that it's all biased to to more than less than six months because your mpfwi projects are all less than six months but you've got projects in all different stages as dan said so a lot of that order book will be well and truly complete in six months as well and you have some that runs a bit longer

Okay, thank you. Keeping on the theme of the sales book, I think you've touched on the geographical regions where you've won work. A question around is this land or seabed subsea work that you're winning? And the reason for the question was the oil price appears to have a different impact based on the region. I don't know if that's something you agree with, but that was the question that came through.

So in the Middle East, for example, we're seeing a mix of land and marine. In the Middle East, it appears that it's less impacted by oil price because their production prices are much lower. So I remember at Aramco a long time ago, they were producing a barrel of oil for 20 cents. So if you're producing a barrel of oil for 20 cents, you can sell it for five bucks and make quite a nice profit. let alone 60 bucks so they're less impacted they're looking more and they've got the money right they've just got the budget they've got the money so they're not going to run out of cash to do work and so that they tend to just keep going um whereas smaller companies in the west um when when the oil price is down they can just run out of money and so they just don't have the money to do work if they want to do it so um So I agree with that comment. It's very related to their price of production and it's very related to the size of their oil company. Did I cover the question?

I think the other bit then is land versus marine.

Yeah, it's about 50-50 in the Middle East. Land in... And it's about, it's probably something marine projects in America would be more valuable a lot, but there'd be more land projects in the Americas and land is going, it's going in a little boom because the, um, domestic gas price was a dollar 50 for a long time. And now it's three bucks and going north because, um, Trump has done a deal with the Europeans. And so, um, there's a, there's a bit of a boom coming on here because of Trump.

And I think historically, just to give colour as well, in recent periods, we're usually about 60-40, so 60% marine. This is on a global basis, about 60% marine and then 40% land. So that's a number from about three months ago for where we were sitting in terms of our order book as well.

Okay. Thank you. Sticking with the questions that have come in over the Q&A function, it's a question around the STI and LTI arrangements. Matt, can you shed some colour around the hurdles that were in place and the outcomes that were delivered in FY25?

Oh, crikey. I don't pay much attention to that stuff, to be perfectly honest, but the STI wasn't

The money that we'll see coming through in these financial years in relation to FY24, when we had a really great year with the step up in revenue and a really strong EBITDA. So the cash impact from that is from the previous financial year. And then obviously the share-based payments is kind of an average cost, you know, based on the ZIPOs that have been issued. It actually doesn't tie to vesting.

That's a good point. So the STI and LTI in these results are through to FY24, which was a very good year. The FY25 STI and LTI is not as good. It's probably half. just because the year wasn't very good and a lot of the checks, a lot of things weren't ticked off.

In the REM report, you'll see the STI for FY25, the financial metrics weren't met. And then the other metrics, one is related to a compliance item, the ISO certification, which we were able to keep rolling forward. That was a recertification. for us which probably doesn't mean anything to anyone but it's the the big one um once every three years and then the other two are performance-based um performance-based items which are kind of you know green lit by the rem committee and the different board but the yeah the cash impact in this financial year is from the the great financial fy24 and and those results

Okay, thank you, Matt and Dan. Just a last call for questions. Anyone has any that they would like to ask? Could you please, could you please raise your hand? The last one I had was in relation to Doug Nomad and Doug Cool revenues when they come through. Are you going to report those separately? Or how will we see those come through in the P&L?

So those will come through the HPC line for the time being, but we're working on the best way to disclose that and we'll give a lot of detail around it when they come through. But rather than adding two extra lines to our P&L for the time being, we'll just be including that into the HPC BU. I think the other one, Steve, we had come through was on the software timing.

Yes.

And so on software timing and the stuff that was mentioned before, I don't actually have an exact number off the top of my head, but notionally thinking through the numbers, I think we'd be looking instead of 13% growth, you'd be more in the lines of 16, 17, 18. You know, we had some good wins in Q4 and the timing issues just brought the edge off of it. So it was still a little bit of a step down on half one and Q3. But the timing issues pulled, you know, I think about four to 6% off that annual growth.

Okay. Thank you very much for attending today. Thanks, Matt and Dan, for taking us through the results.