Fineos Corporation Holdings PLC

Thank you for standing by and welcome to the Finneos Corporation Holdings PLC first half 26 results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you'd like to ask a question, you'll be pressed the star key followed by the number one on your telephone keypad. I'll now like to hand the conference over to Mr. Michael Kelly, CEO. Please go ahead.

Thank you and welcome everybody to today's call. I'm joined here today by our CFO, Iain Lyna, and we're gonna go through our first half year results and give you an overview and some color behind the results. So I would ask you to turn to slide two, please, and we'll start off. So as you can see from slide two, we've had a very good performance in the half, subscription revenues of 41.9% 41.9 million euros of 15% on June 25 and 57.8% of total revenue now in line with our strategy to drive up our subscriptions as a percentage of overall revenue. Our total revenue was 72.5 million euros of 7.9% on June 25 of 7.2% to 72 million on a constant currency basis. Gross profit $54.6 million and gross profit margin $75.4 million. Gross profit is up 6.3% on the previous corresponding period of June 25. EBITDA $17.4 million and EBITDA margin expanding to 24%. so EBITDA is up 32.3% on June 25 and the EBITDA margin is up from 19.6% so again expanding our margins in line with strategy net profit after tax is 1.9 million up 254.6% on June 25 where the loss was actually 1.3 million and cash is up to $39 million, up 11.9% on June 25, and of course no debt. The positive free cash flow was $10.9 million, and really indicating that we're continuing that momentum of positive free cash flow and cash generation in this business. And the ARR was $87.8 million, and the net retained earnings 115%. and so both very strong numbers and again indicating very strong and sticky customers who are continually buying and expanding their footprint with Phineas. Our AOR is up 14.9% from 76.4 million and the NOR is up 15.3% since June 25. So overall we're very pleased with those results and those headlines. And I suppose what's causing the kind of growth is a number of things, but certainly new name sales in the half. We had two of those, Phineas Admin Suite for claims, the MAIB in Australia and one other in the States. So that kind of continues to drive that market leadership. But very, very pleasingly for us, we had two more sales of Admin Suite. One to One America. And in that one, we signed a 10-year contract. So One America worked very keen for a long-term contract for Admin Suite because they can see themselves using this for 10 years and well beyond. And of course, there was one other smaller client in the US who also bought Admin Suite. They didn't want to publicize their name due to being owned by a large Blue Cross Blue Shield in the States and not having the permissions. So we're really seeing the benefits of the admin suite now, and customers are going to see more and more opportunity to expand into the admin suite. And very pleasingly, again, One America licensed Phineas Admin Suite for quote-under-write rate, plus the Phineas Employer Connect, and both 10-year contracts. And I'm calling that out because both of these products are derivatives from acquisitions we made, One Life Health and Spree. So It's really pleasing that we've actually re-engineered and got those products in the full suite end-to-end. So we're looking forward to seeing One America really driving home now that full suite of products that we have out there. And it's proved that our R&D and our strategy is coming together very nicely. On the customer side, we've had multiple on-time go-lives. With ACC in New Zealand, one of our largest clients in the Southern Hemisphere, doing a two-year migration from an on-premise major scheme in the country to the Phineas admin suite for claims. And that just took two years, was on time, on budget, and they're thrilled with that program. And indeed, the publicity is on our website if you'd like to go and see it. Our funniest customer connect events have been in New York and Sydney in the last few months and we've one coming up in Toronto and we've another one in November in Sydney just to let you know and these are proving to be very useful because we're demonstrating product we're showing our clients where the product is going our roadmaps and more importantly I think we're bringing customers with us to talk about their experiences and their transformation and this is going down very very well we've got some really good case studies with Guardian and New York Life, but also other customers are joining in. So building positive momentum. And we're gaining a multiplier effect from embedded AI in our product. With our deep domain focus and our market leadership, baking the AI in at the core is just helping us to accelerate our growth and making our product far more attractive and sticky with our clients.

So if you turn to slide four,

and this is just a look back and you know we're pretty proud of the growth we've had since we launched on the ASX in August 19 and as you can see we very much have driven to the strategy we laid out in our IPO prospectus of growing our business in North America which is 33% of the global insurance market and by far the Biggest market in the world. If you can prove yourself in North America, you can pretty much prove yourself in every country. North America is leading in the technology space and a lot of the multinationals and so on are in North America. Very highly competitive market. So it's very pleasing to see the market growth in North America up to 80% in the previous trailing 12 months. And of course, we also promised that we would turn Phineas from a services business into a product company. and we're well on the route there as you can see over 300% growth in subscription revenues since we IPO'd and again it's that very much down to the expansion of the product and the R&D that we've invested through our IPO and ongoing profitability in the core business the underlying core business and indeed when we IPO'd most of our clients were on premise most of our clients the vast majority are now on the cloud or moving to the cloud. But that's just one step in terms of the growth strategy. Of course, the next step is to grow the Phineas Admin Suite footprint across our whole customer base. And today, only four of our 60 clients have Admin Suite, the full product, the policy and billing product in place. So we have a lot of runway ahead. And, you know, with the very strong customer success we've been having, our customers really trust that we can bring them to the place where they can actually finally say goodbye to those legacy systems. Our people headcount, you know, we put that in this presentation every year, but it hasn't changed that much in the last few months. And it just gives you a breakdown there on page five. And the geographic mix of revenues in terms of the region for the past six months. Again, you can see the North American market is the by far the biggest space that we've been growing and where we've really doubled down on our strategy for growth for our full suite. APAC revenues actually increased by 1.1% and indeed the subscription revenue in the APAC market grew by 17.6%. We are seeing good progress in the APAC market, particularly around cloud upgrades and our customers starting to move to the cloud And in the recent event we held back in March, the Phineas Customer Connect in Sydney, we had a couple of clients, iCare, Art, sitting on stage telling about their transformation and how they use the Phineas in the cloud. So again, very... Thank you.

7.9%. In terms of cost of sales, we have seen an increase by 2.2 million compared to 1H25. But we have had some level of higher employee costs and contractor costs. And you've seen that the gross margin in its own right has gone down a little bit. But that's partly because we brought on new resources and put more of the monster sales side reallocated their effort against that. So I would see that normalising as we move to the full year insofar as those resources will be up to speed in the second half year. We won't need to double up as much. So this is just part of growing pains as we've relocated resources from higher cost regions to lower cost regions. Secondly, we've also got in place a provision for an infrastructure spend. And I've mentioned this before. This is actually with Amazon AWS. We signed up to a five-year contract with them, which completes in December 2027. We have done so well in terms of managing costs and driving efficiencies in terms of use to infrastructure that the commitment we made in that contract we're not going to achieve within that time period. However, we are in negotiation with them at the moment, whereby for the deficit or the shortfall in that spend, What we're looking to do is actually buy forward services for beyond the end of December 2027 at a heavily discounted price. That transaction is not yet completed and when it does take place it will be in 2027 but the aim is to remove that provision from the accounts and what you can see there in terms of that at the moment is that that provision is half a million that's put in against that cost of sales. So the plan would be that that will come out as we move towards the full year. And that moves you on then to EBITDA. So you're seeing there that EBITDA has increased significantly. It's up 32.3% from 1H225. We set a target for FY27 of 25%, and we're already at 24%. so I expect that to improve as we go through the full year simply because within the full year we'll continue to manage costs very well and we'll also grow revenue so all the business we gained in addition to the traditional throughput of business business we gained in the first half will flow into the second half additional business we'll gain in the second half will also be registered to the extent it exists in the second half so that margin will increase again for the full year We're very pleased to see the 24% when we set an expectation of 25% for FY27. The net profit after tax, that's a very good sign in terms of our journey in terms of moving forward to be a profitable company, a cash generative company. We don't see ourselves looking back. So albeit it looks like a small number, 1.9 compared to a deficit of 1.3, it's a very significant step. And again, if you look at the provision that we made with respect to the infrastructure, Amazon AWS, another 300K has been added in as well there in OPEX. So that's 800K. So if you added that 800K back in, because it's not real money, it's not money we've spent, then you're up to 2.6 million in terms of net profit after tax. That said, we need to get rid of the provision in terms of moving forward. But I just thought I'd point that out. If we move now to slide 9. So we're looking here at, you know, as a product company, progressively we want to grow the subscription revenues, that very sticky customer base that we have, you know, plays a big part in terms of, you know, our ability to project revenues moving forward. And as you can see, that's constantly increasing. We're making comparisons here against the cost base and, you know, The cost base has increased slightly against the corresponding period, but it's increased a level more against the second half of last year. We know about the increases in fees. Michael's already mentioned subscription fees and ARR and NRR. NRR is something that we've introduced as a measurement due to requests from various investors and analysts. just to show and reiterate the importance of our existing customer base in terms of upsell and cross-sell to our continuous growth as a company. So we're going to keep that up in terms of relaying that from now on. But in terms of the total cash spend going up, part of that is the increased headcount in lower-cost regions. As you know, over the last two to three years. We've done a significant level of restructuring, but we also have to replace resources. So our headcounts remain usually constant, but where they are has changed significantly as a proportion. As you can see on the people's side, we've over 37% of our people are what we would deem to be lower cost regions. This also is reflected in the comments I made on cost of sales in terms of taking on more resources, but the resources as well are coming into the product group. So it's product delivery support is where those resources are coming in. So we have that in place. We also provide salary increases. But the overriding element there is that in terms of the cost as well, is that we have moved the payment for insurance and internal software licenses, which is about $3 million, from a payment in the third quarter of the year to the first quarter. And the reason we made that shift was because up until 24, our fiscal year started in July. We moved our fiscal year to start in January. So we wanted to make sure that when we're spending money on services in a particular fiscal year, we wanted that money spent to reflect the duration of the fiscal year as opposed to forward buying into another fiscal year. So that's a one-off shift. and the important thing about that shift of that approximately 3 million expenditure is that it won't reoccur in the second half of the year. We're just moving forward to the first half of the year. So that explains that the shift in cost there was still very much under control, very much in line with our expectations. If we can move now to slide 10, looking at the operation expenses. So that's reflected of the cost control. You can see that R&D is down. due to lower employee costs. Again, reflecting the lower cost regions I mentioned earlier on. A higher capitalization of R&D, which is quite true, you have to meet around high R&D. That's happened simply because of the extent of innovative capabilities we're building out, particularly around AI now as well. So a higher proportion have been allocated towards that capitalization side of the fence. And we didn't have a repeat of restructuring costs as we had in the first half of last year. So that helps in terms of reducing the costs. We're somewhat up on sales and marketing costs, and that's intentional. As we've mentioned before, we've spent the money that you investors have provided to us into R&D, developing out that product, maturing out that product, getting our position in the market into a much more prominent space. But what we're doing now is looking at how we expand out in terms of sales and marketing costs and sell more of the product, get more in the face of our customers and new name prospects. So this is part of that expectation. We expect to spend more also in sales and marketing as we go into the new year. And really where you're seeing the change there in terms of expenditures related to sales events, the Phineas Customer Connect events that Michael mentioned earlier on, we had one last year, and we're planning out four this year. So we've had two already, one in New York, one in Sydney in March. Michael mentioned we've another one coming up in Toronto in September. Indeed, we've another one in Sydney coming up in November. So playing out very well in terms of relaying our product strategy with our customers, getting the feedback, and also getting customer testimony at those attempts as well, particularly with an audience that includes other customers and prospects. where they're explaining the journey they've gone on with Phineas and how that's working out for them. Cloud operations in terms of our continuous focus on reducing cost, driving efficiencies. We've seen a decrease in terms of internal infrastructure usage just through more efficient usage. Hiring of people in lower cost regions has helped drive that down. and in terms of G&A, the real factor there is FX movement. Our reporting currency is Euro. Approximately 70% of our revenues comes in US dollars and we receive about six different currencies. So we're all a substitute to the FX movement side of things. But on the flip side, about 50% of our costs are in Euro and approximately 35% of our costs are in US dollars. So there's always an argument about the currency and the approach it should take. But in the meantime, there will always be an FX movement for a global company like ours. We move on now to slide 11. Again, we've made a commitment in terms of FY27 and FY29 in terms of overall R&D spend as a percentage of revenue. Because obviously, when we IPO'd back in 2019, as referenced above, the whole thesis there was to build out a product to service the life accident health industry all the way from quote to claim. So we were spending very much ahead of the curve in terms of revenues coming in. We've now rebalanced that through 25 now into 26. So our expectancy is that we'll continue to reduce the relative cost of R&D as a percentage of of total revenues. You're seeing a slight rise there. As demand comes in from customers in terms of what we're delivering to them, so we can secure that additional fee, we will toggle a bit. Some of our flexible resourcing, mentioned on the people side there, it's also an R&D. So we can toggle that up and down a bit. But overall, if you look at each half year there, you're seeing our spend is remaining reasonably consistent. So we're keeping very strong focus on that and intend to keep that percentage moving in a general downward direction in line with the expectations with specialty guidance. If we move now on to slide 12, the balance sheet, the BITCOIN points out it will just be around trade receivables. So obviously you're seeing that our subscription fees are going up. some services for bigger customers at a reasonable level as well. So we've seen an increase in trade receivables. We are comparing against the second half of last year on the balance sheet as opposed to the previous corresponding period, 12 months in the past. But that's a good indicative sign in terms of the increased revenues that we're going to secure within the marketplace. And indeed, if you look down at deferred revenues, which we also see there is a big increase. To put that in context, we invoice typically yearly in advance for subscription fees, monthly in the rear for service fees. And with the subscription fees, almost about 40% of invoices go out in January. and about another 20% go out in the second quarter. So there's a skew in the first half of the year in terms of those subscription fees, 60% versus 40% in the second half. We do see that bouncing out a bit more, and that's already started happening, where it may even out a bit more throughout the year. But it's always that magnetic pull back to that first quarter as customers expand within years. If their fiscal year is down the year, and typically it is, they may wish to reset contracts for the beginning of the year. That works well for us because, again, just mentioned the FX volatility that any company has that feeds globally. We can get the invoices out early on in the year, so that gives us predictability around that proportion of revenue as we look forward to the rest of the year. So we move on now then to slide 13, the cash flows. So this year, in terms of net cash generated, you can see a decrease of 24.7%. And the explanation around that particle was defined in the 4C for Q2. But just to provide a bit more color around that, there's two large invoices amounting to approximately $8 million for two large U.S.-based insurers where the payments were delayed into this quarter. One of them was with an insurer that actually changed their payment, their online payment system. They had teething problems in that delayed payment, and that payment has been secured as they teased out those problems. So it was just a delay in payment. The second one was a situation, again, with another large insurer, and we renewed our five-year contract with them. It's for the larger proportion of that amount. We managed to secure an uplift in subscription fees and that contributed towards the ARR contract aside. And we also managed to change the pricing approach for the absence product to a per employee per month type basis. So as they grow, we'll grow in line with that because previously it was on a per user basis. That took a while to negotiate. These things generally do when you're looking to extract more money from customers, usually as a negotiation. And also because of the size of the contract, because the five-year contract multiplied by that singular invoice amount, it goes to a lot of sign-offs. There were about 10 sign-offs within that. It was just frustrating for us to make the process, but it's done and dusted now. So if you look at that $8 million that was delayed and you look at the $3 million that I mentioned earlier on in terms of insurance and software payments, that would have made a difference of $11 million. And you can work your way down. Even taking out the exchange rates, you see a positive impact in terms of the bottom line. I think that will all be just true as we get into Q3. And, of course, we're still producing plenty of cash to get out at the end of the quarter. So we're very, very positive about that cash flow movement overall, knowing the dynamics of what happened with respect to those couple of inboards. And I'll leave it at that, Michael. I'll pass it back to you.

Thanks, Steve. Pretty comprehensive overview there. So I'm going to move along to the outlook and the key priorities. And if you turn to slide 15, this is a new slide in the presentation, which really kind of is for our ASX investors to take a view of the investment pieces for Phineas. So I think we're coming off a very good half. We're increasing our revenues, profit and cash, as you can see, with no debt. And actually, we have a deferred tax asset, which was quite significant given the losses we've had over the past several years building out the admin suite. So that's there to be had. I'd also point out that our headquarters is in a low corporate tax and operating center or country where the headline tax is 12.5% on profits when we do have to start paying tax, which obviously is a great position to be in as well. Recurring revenues are increasing, and as Ian said, they're 57.8, and we're on our way to the 65% we said we'd achieve in FY27. I want to point out the strength of our customer relationships, the size of our customers, blue-chip clients who are tying up five-year agreements, and in the case of when America wanted a 10-year agreement with us, based on GWP, gross premium growth, and lives on our absence product. Very long-term, sticky clients. Blue Chip who are totally reliant on the mission critical system we provide them and that is giving us increasing visibility and long-term profitability and growth and cash generation as a business which means that we've got a great operating leverage ahead of us and we're already as I said growing our EBITDA and our cash and but We haven't cut our costs and cut everything to the bone to arrive at a margin or increasing margin. We've continued to invest, but we are getting far greater efficiencies as we move along now going forward, and particularly now with AI. And as we operate in the North American market, we tend to stay very, very current with technology trends, which is one of the huge advantages of being an American market leader versus anywhere else because Things happen just faster over there and clients want things quicker. So that gives us a competitive edge as well on a global basis. Our operating expenses are declining as a proportion of revenue. And really where we're getting that leverage is through revenue growth and continuous efficiencies that we're driving within the business. We have a large North American TAM and we talked about this all going back as far as November 2024 where we said there was a $200 billion premium market in North America, a serviceable, addressable market that we can target with the products that we already support of $125 billion in premium. And our own clients, who are some of the most substantial customers or carriers in the employee benefits world, already account for about $50 billion of that, of which we've only penetrated just a bit more than 10%. of that opportunity within those customer sites. As I said, we've got four full suite clients out of 60 customers. Two of the top 10 of these carriers are now admin suite clients. And of course, we see more opportunity to convert clients across to our full suite and really get the benefit of all the historical investment we've made. We are the market leader in this employee benefits space in North America. And we're really driving the customer success. And so we're driving those partnerships to deliver more revenues, more trust, and, you know, more kind of new business in terms of opportunity to work with our carriers and our partners. And it's a cloud native product. And again, you know, we were early into the cloud because we were very much competing in North America. We had the cloud well before any other country. Many countries didn't go into the cloud until much later because of data residency and the technology itself had to move to them. And our cloud is very much built on the AWS cloud, which is secure, scalable, and future-proofed. And because we've embedded AI in the product safely, it's right there at the heart of the core. So everything we're doing in our base product, We can take advantage of AI more and more, and we're showing that to customers, which is coming through very loud and clear. So the embedded AI for Phineas is a real advantage. We see it across our whole suite, and of course our suite is now in production with New York Life on a $5 billion US dollar book for group, voluntary, and absence management. We are implementing very, very quickly now in terms of deployments. And really, we've shifted the focus to maximizing the benefits of Phineas when it's already implemented. So we immediately talk about operating models and so on with our clients and how we actually help them really transform and help their bottom line. And as I said, AI is an accelerator. It really, where we see the advantages in Phineas, it provides more intelligence and assistance and automates a lot of stuff to our agentic side as well. Our AWS partnership is really good for Phineas and we have a strategic partnership on a global basis and very much at executive level, at technology and engineering level and at sales level as well. Our SIs are becoming more and more competent and are growing the teams on Phineas. So as Ian said, we give them as much services as we can and we're pretty and open with them around how do we cut the cake in terms of services. To be quite honest, we're not looking for services, and we are upping the kind of quality of services that we do in terms of helping customers to maximize the benefits of the product. So, you know, the services revenue ultimately in total would have grown on Phineas, surely in terms of the new business growth and the subscription growth, but we've given a lot of it away to our SI partners who really appreciate it and indeed who work closely with us. And then we're building B2B partnerships as well that are complimentary and that help our customers. So, you know, overall, I think feeling very positive about the business. If you turn to slide 16 and our key priorities for the second half, we definitely want to get One America up and running as quickly as we can. That's going very well. And of course, our other admin suite clients as well. So they'll go live early in 2027. We've also continued to scale with Guardian and really hit that legacy system now where we've actually developed the Phineas Migrator 2 and that will assist them to get off that legacy. So that one is going well as well. Upselling to existing large clients. Again, we've got customers who've got mega portfolios spread across multiple legacy systems and we're well down the road with that as well in terms of growing that Phineas footprint. and migrating stuff across to Phineas and we also want to grow our new business sales as Ian indicated you know we definitely want to invest more in sales and marketing we want to progressively embed the AI across the whole platform and expand the internal use of AI as well within the company which obviously gives us great efficiencies and so on and you know we're already seeing the kind of uptick in terms of what that is doing for our bottom line and so all very positive and then of course Phineas Absence for Employer we're working with some carriers as well around how do we work and get this product into the employers in parallel and in partnership with some of our carriers as well again the employer market is very much small deals but really our main focus is with our carriers who are you know our partners in this growth trajectory of Phineas so I'll move on to slide 17 and talk about the outlook and the guidance. So again, as you can see, we're well on target to hit the range in terms we gave at the start of the year. So as Ian said, we're reiterating that we will be within the range with a healthy number at the end of this year, supported by a strong pipeline and locked in long-term revenues with existing clients who are scaling on the Phineas of Mint Sweden fully committed. and we're growing profitably and generating cash through the year. And indeed, you know, we want to drive the North American employee benefits domain on the sales side. We want to explore opportunities too of new product lines where carriers are actually talking to us about various product lines that they'd like Phineas to look at. So again, that'll be another expansion opportunity and will be more revenue for us as well. And then as we said, invest in the marketing, more events, you know, more case studies, more customer success stories, and indeed more sales and revenue. So, if I turn to slide 18, before I talk about this slide, I want to go back to November 24 when Ian and I visited Sydney, and we made some declarations and promises to you as investors in Phineas. We said by the end of 2025, we would be cash flow positive, free cash flow. We delivered. We are saying that in FY27, our subscription fees will make up 65% of our total revenues. And as you can see, we're well on target. We'll bring the R&D investment into a 30% range in terms of total revenue, in terms of spending investment. And our gross margins will be 75%, which as Ian has already said, we've achieved that last year. And we're on it again this year. and EBIT margins of 25% moving up to 40% in FY29. So we reiterate that guidance around what we want to do, particularly in FY27. So hopefully you see that we're delivering on our promise and you see Phineas has a good investment.

Thank you. I'll open it up for questions.

Thank you. If you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Siraj Ahmed from Citi. Please go ahead.

Hi Michael, hi Ian. I have three questions. This first one, very strong ARR growth, right? Just want to confirm that this includes the new winter metros that you called out, like One America? Hi, yes it does. Yeah, yeah, it does. Yeah, because I was just confused because your NRR growth is actually higher than the ARR growth, so I wasn't sure if it includes some of the new wins. Okay, so that's good. So just looking ahead, right, I mean, Michael, your comments sort of indicate the pipeline is very strong. You just had a very strong half of ARR growth. Do you reckon you can repeat that in the second half or is that a bit too tough?

I think we'll see. Siraj, we are optimistic about the second half and into next year as well. As you know, we have got a business that is long-term, lumpy deals and it does take time to get deals through some of the very largest carrier companies in the world. So we've given a prediction that we're well within and we'll see how it goes. The reason I'm asking that is

I mean, you sort of need your AR goal to pick up to get your FY27 targets, right? Which, like Ian mentioned, needs to accelerate from here. Sort of needs to get like 20% plus subscription growth. Can you help us build that bridge right from where you are right now to FY27 to get to 65%?

Do you want to do that, Dean?

Yeah. So your start point, obviously, is the AR over the half year. As I was speaking earlier on, we expect to get a level of new wind during the second half of the year. We expect no churn during the second half of the year. So that will be a higher figure. The services fees for next year, in terms of our expectation setting, will either be in line with what we achieved this year, and I indicated earlier on that that will be in line with what we achieved last year, or it could toggle by 5% next year again. That SI bit really makes a difference as deals flow. If there's more SIs involved and they become more versed in our product, they may take on more services. And the reason we allow them to do that is that they influence buyer decisions. So it's not that we're giving it away. We're giving it away in exchange for them helping us make greater sales. So if you toggle up and down that services bit in your modeling a little bit, then you know that that's what we need to achieve in terms of the subscription growth. It's probably bringing it up to about, you know, 107, 108, you know, in terms of actual revenues for next year. We're going to be going into the new year with 80, 85% of that achievable, you know, will be the target we're setting ourselves. So then we've got to bridge that gap. We have a number of customers then, you know, in terms of, as we've always said, upsell is the key element for us. And that really is scaling what customers already have as opposed to trying to sell them something new. So as they move their legacy across to Phineas, we see that as being the biggest growth area. If I look back at the last 12 months and look at that ARR growth and just look at it through the lens of upsell, upsell, and even AIM, the upsell element of that growth is about 80% of the growth. The cross-sell is about 15% and the new name is about 5%. You know, as it comes in and then, you know, obviously those new names become existing customers moving forward. So we see a significant amount of coming to upsell and we see a significant amount of that coming from a handful of customers. So we very much apply the site of how to achieve that, you know, in terms of those particular trajectories.

Okay. Sure. And this last one, in terms of just confirming two things, Ian, as you mentioned, services flat for the year, so that we should imply that second half is slightly up, half and half. And secondly, your FX assumptions for the revenue there is 1.175. The spot is right now 1.15. So just confirming that that should be like maybe a million euros benefit to your revenue number. Thanks.

Yes, the revenues in the second half of the year traditionally are higher than the first half because the second half benefits from deals, closure, and other increases in the first half. Plus the fact that as we win more deals, then the services will go up as well. So definitely the services and the overall revenue expectations for the second half of the year will be greater. Sorry, what was the second part of your question there, Shiraz?

Just on FX, right? I think your guide assumes 1.15, right? That the store trade is 1.15, so there should be a benefit if this holds, right, in terms of second half?

Yeah, I mean, so far the benefit will be about a million, a million or thereabouts. But, you know, as I said earlier on, you know, the more we invoice, the deeper subscription fees. So the invoice is actually, that's when the FX is set. in terms of what we put out there. So it's about a million to date, but I don't know what's going to happen in the second half of the year. Sure. Okay. All right. Thank you.

Thank you. Your next question comes from Tim Lawson from Macquarie. Please go ahead.

Hi, guys. Thanks for taking my questions. Just a couple. Just to confirm on your median terms, FI27, FI29, Are there percentages across the year rather than exit rates, just to make sure?

In the guidance that we've set, Tim?

Yeah, the 65% subscription fee in 27.

Yeah, that's only at the end of 27, you know, and it's the end of 29.

So it's an exit rate rather than the percentage across the year, to be clear.

Yeah, because there's a lovely nature of our business and the lumpiness of the invoicing cycles.

So for the full year revenue, when we look back at the end of the year, we'll say 65% of that is subscriptions.

Sorry, that's why I'm getting confused. So the way you say that, Michael, I'm assuming therefore across the full year, FY27... the number that you report, 65% of that will be subscription fee rather than looking at the mix on the day you leave the year.

Oh, correct. We'll be under 65% as we look back.

Okay, across the full year. Okay, that's right. That's good. In terms of pick-up... Yeah, yeah. In terms of pick-up on the pricing changes, you talked about that contract you renewed and renegotiated and a bit of a slight pay, which, I mean, it's good to get price increases even if they pay a bit late. Can you talk about what that might mean if you apply that across your book? I mean, how much do you feel like you've got existing contracts that are underpriced, effectively?

Yeah, that's a good question. Yeah, go ahead.

Yeah, so... Around about four years ago, Tim, we switched the pricing to GWP and per employee per month. Obviously, what would have happened in the interim is we had already signed up to five-year duration contracts with customers. So we couldn't make that switch in the middle of that five-year period. We had to wait until we got to the end of the term to make that switch. In the interim, as we gained new customers, we put them straight on to the new model. but there have been other customers that we have in the mix that have come towards end of term. One of them was mentioned there in Iran in terms of that delayed payment where we went through that switch because they were on a per user basis prior to that. So at this point in time, the majority of our customers are on that growth model, value-based pricing as opposed to per user-based pricing. Per user-based pricing was always something you know over the last five years or so that we hit against just in terms of general automation but the need to move away from it with the advent of AI has been accelerated and customers get that as well so they may haggle over pricing etc and the fact that they need to switch but the understand particularly with the advent of AI needs to happen so we're materially across the line I would say we've let's call it 90% are there across the line. The rest should be resolved within the next 12 months.

Okay. Yeah. And to add to that, Tim, we do have other contracts that are coming up that are new, and so we can get increases on those as well. So the vast majority of the growth we see, you know, 2027 and beyond, is already in our base, you know.

Yeah, okay. So it sounds like only that 10% of that that remains to get – repriced, so it's probably not going to have a huge material impact. Not that end of it, no.

There's other contracts, though, that are due for renewal, and again, we can crank up pricing based on their GWP usage and individual lives. So we still see an opportunity to continue to do that, and of course, as we lay in new products and features and stuff, sometimes we charge some extras as well for those. The AI is a good example. So, yeah, there's continual opportunity to cross-sell and up-sell.

And then just with the ACC renewal, can you just, when we look at the APAC revenue growth, it's been broadly around that sort of 10 million, 11 million euro number for quite a number of years. Does that reset cause that number to grow into the next half? Have we seen the sort of full annualisation of that repricing impact or that contract impact?

Yeah, so obviously the revenue has remained at that type of level or grown a little bit year on year. The mix of that revenue has changed quite materially. Initially within the market, going back to the IPO days, it's slightly beyond. The majority of revenue we're getting from the market was services revenue. So what we're seeing is that we're getting more high-quality recurring revenue in terms of subs. So LACC in its own right We effectively doubled what we were getting out of them. But that contract was signed two years ago, and we got an uplift. We're doing it live in April. So it's higher quality revenue that we're getting there. Again, we're working with partners in the region also. So they're picking up some of the services, so we're spitting that out. So it's much more sticky, and particularly as we move through the cloud, we're starting to see that movement. Now in the region, we've got a number of customers that are in the cloud or in discussion with us, that move into the cloud.

Yeah. Okay, so the subscription revenue for ACC would have doubled, but the overall total revenue would not have doubled. Is that the message? Correct. Yeah. Okay. Just staying on sort of revenue, I've got one more question after this as well. You talk about the sort of broadly flat services, partially because you're passing more work to SIs. Do you have a feel for... Like, if you combined the SI sort of take and what you're still writing, like, how much is that actually growing by? Like, how much are they actually doing with you, the SIs? Because ultimately, that's what's going to drive your confidence in the subscription number.

So, are you asking what kind of revenues are the SIs getting? Yeah. For our implementations? It certainly will be combined double digits, and we don't know the exact numbers because they contract directly with the customer, but they will be looking after significant tranches of work that historically Finneas would have performed, such as problem governance, integration, data conversion. So it will be double digit.

Double digit millions, you mean? Double digit millions?

Yeah, double digit millions, yeah.

Yeah, okay.

Yeah. You know, I think for us, you know, and again, it's a message we keep on the ear tracing. It's a very, very sticky time base. Recurring revenues is where the future growth is. The subscription fees are key. Five-year contracts. And once you're embedded, we're placing systems, as we said before, that are 20, 30, 40 years old. So sometimes you get the sense that services is valued the same as subscription. But in our mind, it's not. and it's very important for us to stay very focused on that subscription and just accept the services yield to the SIs as being part of the way we grow forward.

Yeah, absolutely. Just last question from me and thanks for the answer, that was really helpful. You've got a comment in the pack talking about explore opportunities to expand pipelines and new markets for fitness administration. Is that dental and is that with one of your key customers? Does that mean that you think they're perishing down a path to use you for that product? And is that what's driving the interest in the comment in the pack?

Yeah, look, there's a few lines of business, not just dental. You know, things like stock loss business, vision business, you know, we're very close to those lines of business as well. Other variants of the life side in terms of, you know, the various types of life assurances just adding more and more tweaks to the product that allows us to grow the kind of footprint of the TAM and indeed the opportunity with the clients. Dental is not something that we have on our horizon at this stage in terms of the claim side, but we will see obviously Guardian coming towards Phineas on that side, on the dental side with the admin side. So yeah, look, just kind of continuously, these are incremental add-ons that we can do and just took it under into the R&D budgets and so on and worked with the clients. I think as well, when you look at the subscription growth, I just want to point out as well that, you know, subscription versus services. You know, given the global situation in the markets and particularly that brought the investment going into AI startups and AI this, AI that, if there's any kind of a turndown, you know, our subscription revenues will stand up were locked in, and that's why we're going after subscriptions. Services will just be wiped out immediately if there's any kind of a downturn. So, it's just, you know, from our perspective, like, we're locking in certainty on these numbers and with these clients. And that's why, you know, we're happy to kind of continually build up our SIs as well and let them take the risk around services and us basically drive that long-term growth in that product revenue.

And can I just clarify that you talk about sort of the R&D budget. So the opportunities that you're looking at to expand product lines and new markets, etc. Does that fit within the R&D budget that you're talking about? Because you've got medium term targets of that R&D investment and synergy revenue. So we're not seeing incremental R&D spend that would be captured within that envelope?

Yeah, in the main, Tim, yes, the answer to that is in the main. We are putting more and more of our R&D into the AI and into the innovation side. So we're growing our investment in that. You know, we could easily put back our R&D now because we've kind of hit a plateau in terms of the product and, you know, we've got ourselves to where we wanted to be. But obviously, with AI coming in over the last three or four years, we've bought Spree and then You know, we've been investing in the AI and rewriting the Limelight and Spree products into our base product. So we're continually innovating so that the product stays modern and ready. And then in terms of the extra business, in most cases, we can tuck that in on our R&D number and we won't be increasing our R&D numbers. If we have to, the client will basically pay us and we'll just put on a partnership where they'll pay us for the services and whatever are the product revenues. for that extra line of business. And we can easily carve that out and show it to you if we do do that, if there's a big spend in any particular year. But it will be well covered and it's outside the thesis that we've set ourselves for FY27 and 29. Yeah, that's great. Thank you very much.

Thanks, Tim. Thank you. Your next question comes from Jackson Lee from RBC Capital Markets. Please go ahead.

Hi guys, well done on the strong ARR prints. Just a question around the GP margins. Ian, I know you mentioned it in the prepared remarks but yeah, just want to understand, we're seeing sort of like a decline in GP margins, you know, despite you guys having higher subscriptions as a percentage of revenues. I know you mentioned the AWS provision. Does that come from the GP margin line? And if you could just help us or break out that GP margin.

So over to you, Ian. It's about the decline in our gross profit margin, which is small, as against the big growth in AOR and why that is the decline. You might cover that off.

Yeah. So, hi, Zach. So the AWS provision you already have, so you see the amount that's there that has impacted. The second reason I mentioned as well, and that is we've taken on a lot of new resources, particularly from lower cost regions. And what we were effectively doing during the first half of this year is we were doubling up on resources for a number of projects. So we had to allocate that cost against our cost of sales during the first half of the year. Those individuals now are skilled up throughout the first half of this year, so we don't need to do that hand-holding, that double-up of resources that go into the second half of the year. So I would expect that by the time we've done the full year, for the entirety of the year, we'll see a gross margin which will be roughly a reflector of what we achieved last year, and also the head of expectation that we set for FY27 at 75%.

Okay, great. And just a quick one on sort of AI. You know, most of your sort of software peers in the small cap space have sort of seen their headcount decline, but I think you've added sort of 40 and a half. Sort of are you, you know, are you seeing any AI sort of benefits internally and do you expect this number to keep declining?

Yeah, I can take that one. Yep. Yeah, so we are seeing benefits from the AI internally, and we're very much a focused program on making sure we extract those benefits across our teams. We have increased the headcount. As Ian said, we've increased headcount because we've doubled up in some headcount on lower-cost countries. So he's basically mentioned that to you already. We will see a less headcount needed for what we're doing today. as we move forward. There is a cost, of course, to the AI, which needs to go back in. But we're moving faster now, developing features quicker and turning quality product out faster as well through our investment in the AI within engineering and SDLC. And so, yes, we can, you know, we definitely get more bang for our buck out of our engineering and testing teams and across the organization. So again, our business is growing though, and therefore with new name and existing cross-sell upsell and extra features and functions we're doing, we're kind of, we are where we are, but we do see that we're gaining the efficiencies from the investment we're making in the AI. And that's going to continue.

Any further questions? Thank you. Your next question comes from Jules Cooper from Shore and Partners Limited. Please go ahead.

Hi, Michael. Can you hear me?

Yeah.

Hi, Jules. Look, I just wanted to say thank you for putting the slide on, you know, page 15 in the deck. It's a great overview of the business and I love the passion that you could hear in your voice as you were going through it. So well done on that. My question was really about one of the boxes there, which was the embedded AI. And I wondered if you could just talk to us a little bit about, you know, the interest and the engagement that you're seeing from your customers, you know, where they're asking you about, like, what you're doing, how they could, you know, utilise the AI embedded AI in the platform just to sort of gauge where the sort of interest and the demand is and then also you know we've definitely noticed an improved deal cadence and I just wondered is that in your mind do you think related to your customers starting to think about if they are going to move into this sort of agentic era about tightening up the call system and Is it actually driving benefits from you, not just in AI itself, but in selling the core and upgrading customers in readiness?

Thanks, Jules. Yeah, great questions. In terms of the AI, at our event in New York where we brought together eight CIOs in a room of our biggest clients, we had a discussion around how do we partner, what are the common themes, what would you want us to focus in on and double down on and AI AI AI were the answers so there was a kind of an interesting you know perspective from them they want us to help them to make AI safe so they were all interested in Phineas leading out on compliance and AI compliance given that we're global as well and European Union has brought in some AI legislation as well like we're able to take all that on board and we have a compliance team in Phineas. So we've doubled down on the compliance side. But they all saw that Phineas has the opportunity at the core to drive agentic AI and automation in terms of our workflows and orchestration of our core system. And indeed, the insights that we can present in terms of the deterministic and the assistive type AI that we can present into case managers, whether it be on the underwriting or on the claim side or on the service side, They all see that as Phineas having a big jump. That is encouraging them to kind of come behind us. And it will encourage more Admin Suite deals because of that. Because they can see the multiplier effect we get by having AI at the core and across the full landscape of our suite. And obviously Git being safe. So that's where it really comes down to. The CIOs have experimented with AI They have been working in POCs and developing stuff themselves and bringing in consultants, some very expensive ones, to help them to get their heads around where they can use AI. And they're concluding that the data is the most important aspect of being able to drive AI, followed by a really modern workflow system which can be automated and indeed agentic can be implemented within the core to orchestrate the business. So it's a step-by-step process, though, because they obviously are in a regulated environment and they want to test everything. They want to be absolutely sure an agent couldn't go AWOL and do things on their core system, on their business, that would get them into big trouble. And so, you know, again, you know, it has to be done in a compliant way. But I think ultimately we all see the advantages of Phineas being a core system, a system of record, which is crucial to having, you know, the modern data set for a business like an employee benefits carrier but also crucial in terms of in a system of intelligence and in system of automation and orchestration. So that's where we're going. And I think what you'll find with the AI is that it's going to be a huge benefit. Honestly, I see the AI becoming a commodity. And you can see, you know, what's going on in the world on AI in terms of more and more models coming out and the competitive environment. So watch this space is my view. You know, it hasn't played out yet. But in the long term, where it will play out is that systems very much will be much more intelligent at the core. And indeed, you know, they need to be compliant. But it should leverage up time then for carriers to really focus in on their clients and change their business models. I'll talk about that in November when I come down for the events in Sydney. But I do believe that there's a huge opportunity and there's going to be big winners and losers in this market in terms of the carriers we have versus other carriers.

Okay, thank you very much, Michael. We'll look forward to seeing you in November.

Thanks, Jules.

Thank you. Your next question comes from Richard Harrisburg from Canaccord Genuity. Please go ahead.

Hi Michael, hi Ian. Congrats again on a great result and thanks very much for taking my questions. I just wanted to ask on the Guardian legacy migration and how that's been going. Maybe you could give us a bit of trailer. I wanted to ask you about the ARR number that you put out of €88 million. I'm assuming that that doesn't include the Guardian legacy aspect. So maybe you could just give us... Any color around when that starts to hit in terms of revenue and implementation timeline? Yeah, any detail, that would be great. Thanks.

Yeah, Richard, it's good to hear from you again. Yeah, sure. The first thing is the number doesn't include the legacy. Our guardian number hasn't shifted in terms of our licenses yet. They are driving all their new business onto the Phineas admin suite for the lines of business that we currently serve. They are going to expand lines of business and do more with us. and then the legacy side of things. We have been working with them and helping them to line up the legacy data in terms of it coming across the Phineas and indeed they're using AI on the legacy migration side, you know, on those old legacy, that old legacy mainframe. We've developed the Phineas Migrate product, which again is an automated product around reading in the business into our, and the employers into our suite. So again, we will be able to assist them and go. They're kind of lined up now to do it. And over the next few months, we'll start it. As in, we started it. All the prep work has already been taking place. And we'll start taking data across in the next few months. And it'll come across in increments. So we expect that that's going to pick up through 2027. And towards the second half of 2027, we'll start to see that legacy kind of data start to make a big impact on Phineas.

That's really helpful. So just to be clear, it is kind of an incremental over time. You should start to see revenue benefits from that sort of in the second half of FY27. It's not sort of a light switch moment where you flick a switch and then it's a big lump increase.

Correct. It'll be through, you know, second half 27 into 28, 29. And that should kind of conclude it. It's a big process. You know, they have a multi-billion book. So, you know, It's not a light switch, as you say, in a complex business like this.

That's really helpful. Thanks. And then I guess I just wanted to ask as well on the penetration rate that you guys have in existing customers just over 10%. Obviously, it would be nice to say you'd like to get that to 100%, but you guys sort of have internal targets, you know, the next two to four years. What's like a reasonable number of how you sort of start to think of the cross-sell opportunity and where that penetration rate might get to at some point in the future? Yeah.

Yeah, look, I couldn't give you a percentage, you know, in terms of penetration within that base. But what I can tell you is that each one of them is targeted. And Ian carries all the spreadsheets and it's in our Salesforce as well. But each one of them is targeted around admin suite and additional product, cross-sell, up-sell, more lines of business coming over, migrations and so on. So we have that trajectory, particularly with our big guys, you know, the six. We have two of them, as I said, as full admin suite users. New York Life being our original partner. We had an opportunity in a few years time to reprice that, but that won't be until just beyond five years time. But the others are all basically lined up. They don't have any other option except to look at us. It wouldn't make any sense for them to go off and try and buy a policy and billing system like over the last few years where a number of players moved in with policy and billing and tried to cut us off. Those days are over. Those companies have not been successful. And so we're back to a kind of a steady trajectory now where as we prove ourselves, you know, whether they use us for claims or claims in absence, they're thinking, you know, what are we going to do with the legacy and what's next and so on. Of course, we're having the discussions as well. So more lines of business, which is kind of going across our org. and then more product in terms of going end-to-end. That's the opportunity with these carriers. They've all got legacy in the backend and they all need to change. And they've all realized as well that the data is the key to the operational efficiency and customer success.

Yep, absolutely, good one. Maybe I'll just ask one more question. Just around the AI and the capabilities you're putting into the product, and obviously I understand there's a slow process of customers being very careful and cautious in how they implement that, but have you started to have discussions around pricing of the AI element specifically? um you know is there going to be sort of a price for AI usage within the modules um is that going to be sort of all inclusive is that coming into contract negotiations as well which we kind of touched on earlier today um that would be great as of 25 uh our release 25 which is 2025 release 4 25.4 all our clients

can easily move to the full admin suite. So as I said, most of the clients are still using claims, you know, 50, whatever it is of them just use claims or claims in absence. Also, as of 25.8, they have the AI core at the heart. So that release of our platform has the AI built in. So we can start to open that up to them. And as I said, they are very cautious and they want it all tested and so on. So yes, is the answer. Now, as I said earlier in the answer to Jules, I do believe that it's going to become an expectation that a system like ours is driven by AI. So as we move forward, we do price today by usage and we put a margin on that. But look, as time goes on, as I said, as these things become more and more commoditized, and I do see AI like something like workflow was 25 years ago. And, you know, I think that over time, We will build all that pricing in. Yes, we'll see uptick in our numbers through the AI, but as we sell new deals and we're, you know, we will be expected to have the AI embedded and we will be able to, you know, we will be expected to show AI and the automation and also the insights in the system. So I see it very much as a competitive moat expander for Phidias to drive ahead and to go hard at the market. And let's face it, we're dealing with clients that have been abused and really some of them have spent hundreds of millions going down wrong roads and continue in some cases. So really we've got to prove to these clients that we have a better approach and we're trustworthy, long-term, good partners for the industry. So look, we do see pricing increasing, but It's probably not the most important thing to me. The most important thing is that we get the product right and that we use it to pull more business into us, you know, totality-wise, get rid of that legacy.

Great. Thanks for that, Michael. And, yeah, well done again. Good momentum heading into next year's targets. So, congrats.

Thanks, Richard.

Thank you. That's a great way to come from. Thank you. The next question comes from Max Moore from Veritas Securities. Please go ahead.

Mark Lanane, I hope you can hear me okay.

Yeah. Yeah.

Well done, firstly. Just a quick question, maybe a follow-up on the pipeline. MSL, something we might have seen with other software companies and after the impacts of the Middle East war and AI just generally, that customers are potentially sitting on their hands a bit more. Have you seen that trend? Or you see that maybe normalised to sort of last year where, you know, the nature of netting to... migrate from their legacy systems is forcing the process?

Yeah, look, I think the war side of things has settled down. You know, strangely enough, I think we all feel that it's kind of a weird place to be globally in terms of the geopolitical setup. But I think that's settled down. Our clients are really fighting for business, continuing to try and drive their OPEX and, you know, growth. And, you know, they're they're just as aggressive and focused on modernization as they've always been. I think the AI has been a disruptor and it's probably the biggest technology change since the World Wide Web. Let's face it, it is a complete game changer. And I think that it has been a disruptor because the usual thing happens, big consultants go in and tell them that they can build new systems for them around AI and whatever else and PLCs have begun and A lot of that is starting to kind of be put away. So if anything, I see that they're kind of getting sensible now around the focus. And so, you know, I think we probably see a better, you know, things calming down in terms of back to, yes, you do have to replace your legacy. You'll get the AI in there and you'll be better off doing that than spending lots of time and money on different point systems and various technologies. And so it's been a learning curve and you know IT teams have been very keen to get out there and do things on AI and show what they can do and you know as they've kind of done things and then they see the kind of complexity and the risks and they see the maintenance factors and the costs they're kind of coming back in a little bit because the business are saying okay what's the benefit of what you've done yes you've been a year doing this yes you've been able to do that a little bit faster or whatever but what's the ultimate benefit what are we getting out of this what's the bottom line so the business are actually starting to bring the IT people back in and really focus on the strategic focus around AI.

And just one more quickly, just interested in how you're using AI to speed up and migrating legacy books and then maybe also onboarding customers. I'm interested to see if there's anything you can reference how as your product becomes a bit more off the shelf and more developed how quick you can onboard a customer now versus maybe 18 months ago?

Very good question. You know, if you look back, like it took us seven years to build the admin suite, two years to onboard and bring New York Life's $4 billion book over to Phineas in terms of migrations and everything else. Guardian went live in a year. Then, you know, they basically got it fully rolled out and connected up everything in the second year and we're doing the migration now. One America will go live within a year and they're going end to end in terms of quality claim and they've basically got the AI core in there. So effectively, as we move more towards more new deals, they get the latest version of the product, which is kind of easier to start on and faster to go on. So there's that kind of natural trajectory that's making it easier to onboard, do upgrades and do the migrations as well. So yeah, we do see a momentum picking up and a lot of, because a lot of our clients have already upgraded to the platform as in Phineas admin suite for claims and they're well positioned now to do the upgrade to the admin suite and take on the AI core. Some of them may stay on claims and they can have the AI core there and we can do the document summarization, case summarization, all the things we do around insights and automation. And that's just going to make them feel more that they need to leave the legacy behind because the gap will grow between what they've got in their hands on Phineas and what's behind. The AI gives us a really strong opportunity to completely rewrite the whole of the UX, the user experience, the customer experience, and gives us that opportunity to drive more margin for them and leverage our business as well. Internally, we're getting some great results with the AI as well. And again, you know, we are really focused in now more and more on innovation and you'll kind of see that coming through in the next few months. We may make an announcement or two during the next few months that will show you that. But as I said at the start, we're a North American, you know, high tech, core system that's very focused on a niche space and that gives us those competitive advantages that we talked about over the years in these updates.

I appreciate it guys and well done again.

Thanks very much.

Thank you. Your next question comes from Sinclair Currie from Emma Wells Australia. Please go ahead.

Hi, thanks for taking the question. Sorry, I know it's late. Just one question around the new business underwriting and quoting. Just be interested to understand how you see the scope of that as an add-on or a cross-sell to one of your large clients and what do you see as the sort of, you know, sales cycle with that? Is it something that you can, you know, get in people's hands relatively quickly, a quicker decision for your clients to make?

The new business quote and underwrite is a crucial part of the business. Most carriers are really big into their customer service and their claim service. Obviously, they make their money through the claim service and really being efficient around that. But they get the growth from the quote and underwrite and how that integrates into their new business environment. So again, it's a very hot area. So we do expect we'll be selling that standalone and obviously as part of the full suite. As part of the full suite, it gives a carrier real benefits in that the quote on the right and the rating kind of, you know, go straight into the billing and onto the policy admin. So there's massive benefits. Today they don't have that. They've broken up kind of core systems and the quote on the right rate is usually separate. They do put a lot of investment into that because they're looking for that frictionless new business coming through. Again, we're putting a lot of focus into it now to cohesively integrate it into the suite, which we've done, and then look for those differentiators that we have as a full suite for that quote on the right rate. So we've kind of got this book-ending approach that we can easily do with clients. We've obviously got the strongest claims and absence system in the carrier market in North America. And now the quote on the right late is coming hard and fast on our new technology platform, which is true SAS and really, you know, very lightweight and has the AI and everything embedded. So, so I do think that's going to be a grower for us. Um, and you know, it's a Trojan horse type approach. You know, you, you basically move in and say, where have you got your problems in the claims area, the underwriting area, or should we just take the whole enchilada? What do you want to do first? Is it a line of business you want to go into the full enchilada on? Or do you want to, you know, where are your pain points? Where are your problems? And most carriers have a few of those and then they start prioritizing. It all depends on budgets and return and so on that they can get. So it takes time to set up a deal, as you know, because they have to get budgets. And because these budgets need to obviously take into account their own work and retirement of legacy and everything else and the cycles around that. So we do see the quote on the right as very much a compelling proposition going forward.

Thanks a lot. Appreciate your time.

Thank you. There are no further questions at this time. I'll now hand back over to Mr Kelly for any closing remarks.

Yes, so thanks very much and I appreciate everybody staying on. I know we've overran a little bit. We're pretty passionate, as you can see, about this business and Ian is travelling down tonight to talk to investors and analysts over the next week or so. We'll both be down in November and we'll be running an event as well, again, similar to what we did before earlier this year and we're also running a customer event in Sydney. So, Looking forward to that and very happy to have any follow-ups or whatever either of the two of us are available for investors and analysts. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may now disconnect.