Firstwave Cloud Technology Limited

Good morning, everybody, and welcome to the First Way Shareholder Update. Our presenters today will be Roger Buckridge, Danny Mair, and Sharon Honeybill. I'll now hand over to Roger to open the call.

Good morning or good evening to all members of the First Wave family, both staff and shareholders. This is the regular quarterly update and I'll hand over straight away to Danny who is appropriately speaking from Mexico City. in the geography where more than half our cells originate. Danny. Okay.

Thanks, Roger. All right. I'll get straight into it. Good morning. Buon dia. Buenos dias. Good afternoon, wherever you are. So yeah, as Roger mentioned, I'm in Mexico at the moment, so pleased to join you all, and I'll get straight into the updates. So next slide, Ruth. Okay, so Q2 is what we're recapping, but of course looking to the future as well. And Q2 was very much focused on a restructure of the business, a capital raise, and a pivot of the company towards AI power compliance management. As we all know, a focal point for that. is the monetisation of our open audit user base, but it is not the only thing that we're doing to pivot the company towards compliance management. All of our products are involved in that. So a summary of what happened in the quarter, which would be of note, was we had key renewals of key agreements with NASSO, Clara, Dominican Republic, Telmex and other renewals as well. All those ones had increased revenues. As I mentioned, we did have further restructuring to align our resources with what we want to do. and where our revenues are. That restructuring is $1.8 million per annum in savings so it was fairly large and of course there's on costs on top of that which are further savings. We released very pleasingly the first version of Open Audit with AI-powered compliance management and I know you're all keen to hear how that's going and Sharon will update you on that later. And we've been working on evolving the relationship with AWS and Ingram Micro. I know we can't get out of this call without commenting on the share price. So it's been an interesting quarter for the share price, which for all of us as investors investors and shareholders, it's painful to watch share prices go backwards. For me as an invested CEO, it's painful for me from an investment perspective. It's also strange to see a business improving with a share price declining. So we're trading now at basically one times ARR plus our working capital which being our receivables plus our cash. which is just extraordinary I believe. So I just did want to let you know that obviously we're not in complete control of the share price but the board is considering actions on how we should support the share price, how do we get our news out there, how do we get more eyes on the stock, that type of thing. Definitely number one is we want some key news and sales from the business to announce, but these things can change very quickly. I am in North America for February and March, so Mexico City where I am at the moment and the US to try and help with our sales and planning and general business as well. So looking forward to that. bringing you some news, working with the team. Of course, the teams have been working these geographies already, so hopefully they can help me bring some news while I'm here. In terms of financial performance, so we historically have... So historically we provided information on our ARR revenue and GP, so we'll simply continue this format for Q2. And you can see the data here. The company's ARR increased 2%. Nice to see an increase. Of course, we all want to see a higher increase. This just came from Uplift. So obviously it's increasing above any churn, and it's mostly from Uplift from our existing customer base and a few small new customers. I do want to mention that we no longer see material churn in the cyber business. As the previously disclosed Telstra closure of their CSS2 platform has all materialised, as have other changes in the Telstra contract, and we now have a new 1 plus 1 year agreement with them. So that business has now stabilised, and that's been where we've seen reductions in our RR previously, and we've just seen the last changes come through in the first half of this year. In terms of the revenue reduction, it's simply due to a large one-off perpetual software license sale. It was 380K in Q1. It's the same with the gross profit. It's just because we had a one-off deal in Q1. As we can see, it's not our recurring revenues because they've increased. We can see that our growth profit margin is at 95%, so that reflects both the high margins in our MS and Open Audit businesses and the increased profitability in the Cyber City business. So a lot of the ARR that's gone away there was unprofitable business. So on the next slide, looking forward to the highlights for Q2, Q2 was a down cycle in our cash usage, but that is completely in line with our expectations. It's always a down cycle. Q3 will be cash positive. The company's cash is cyclical and predominantly customers renew their contracts at either calendar year end, which is the financial year end in most countries, or in Australia, our financial year. So June and December are our big months for renewal. So taking that into account, when you have the renewals come through in December, as we did, it brings the cash into Q3, which makes Q3 a cash-positive quarter. So as at December 31, we had $2.5 million in receivables, and we expect to receive all of that in Q3. We've already received over a million of it. The company raised some money, $2.6 million, as you know, net of costs. And we secured a $2.5 million loan facility with Partners for Growth. This is a three-year facility with a loan maturity date of 17th of December, 2028. So it's a longer facility than the one we had with FormuNord, and we used the funds primarily to repay the FormuNord convertible note. So in summary, Q2 was a quarter of restructuring and capital raising, an exciting new product launch and enabling us to invest in the future of the business. I'll come back with a little bit of an outlook at the end, but for now I think the thing most of us want us to hear is a bit of a product update from Sharon, so I'll hand over to Sharon.