Mach7 Technologies Limited

Hello and welcome to the Mark 7 investor presentation for the 2023 fiscal year. My name is Rebecca Thompson and I look after Mark 7's investor relations. Today, CEO Mike Lampron will take us through the full year results and afterwards he'll be joined by Diane O'Hearn, CFO for Q&A. With regard to the Q&A, attendees can submit their questions via the Q&A text box at the bottom of the screen. Alternatively, you can email me on rebecca.thompson.com. at muck7t.com. I'll now hand over to Mike to take us through the four-year results.

Thank you, Rebecca, and welcome everyone to our call. I will start off by just going through some business overview, followed by our FY23 results and a brief outlook. I should be able to get us to the presentation in around 20 minutes or so, giving us plenty of time for Q&A at the end. So Mach 7, for those who are new to the story, we develop enterprise imaging software for the medical community. Our focus is really giving healthcare organizations the capability of bringing on their own independence. And what I mean by that is traditionally when hospitals have purchased an imaging system, They would go to some of the modality vendors who provided these software imaging solutions, and they would offer them the whole suite of software. And even if they only wanted one component, they'd have to buy the whole ecosystem from those vendors, giving the customers the feeling of being held captive by their vendors. because they could not transition off of their software very easily. So one of the values of Box 7 is offering that independence to the customers. We do that by being very innovative in how we produce our software and how we build our software and making it modular so that customers can take advantage of the components that they need to solve the problems that they have. and also have the scalability to solve problems into the future as well. So this is really important to us and sort of emphasizes the land and expand model we have from a sales perspective. So when it comes down to it, our business is really built off of three distinctive products. On the enterprise data management component, we have the vendor mutual archive. This is the hub of an enterprise solution. This is where All the data is stored and it's aggregated. This is where the workflow comes from. This is where really the customers get the biggest opportunity to reduce redundancy and reduce costs by having a true data management software package available to them where all of their data from across their whole enterprise can all be stored in one centralized location. and then served back out to the community in a more meaningful way. So that serving of the data back out can be through a third party, as an example, a third party PAC solution. It could be a third party AI product. We'll get into that in a little bit. But if somebody wants that data to be served back out, utilizing another Mach 7 product, we have the eUnity Enterprise Diagnostic Viewer. This is a zero footprint viewer, meaning there's no software to install You pull up a web browser that supports HTML5 with the proper credentials. You can log in. You can utilize the enterprise viewer. You can get to all of your patients' images. There's work list capabilities. There's hanging protocols. There's all the advanced features you need if you're a remote radiologist or a pathologist or any other clinician looking to access images across the enterprise. So this is really a product that offers the visualization of the images that are being stored in the VNA. A popular component of this is integrating it to the electronic medical record, and that's really the platform for which clinicians can access the EMD viewer most of the time. On the last component, departmental workflow applications, really this is our Universal Worklist for radiologists. This is our DICOM worklist for technologists. It's all of our 3D functions for the worklist. It's quality control modules so that you can modify data, tag morphing, and just manipulating data that's within the VNA. And the other thing this is really useful is this is the central communication platform for third-party integration. like an AI algorithm, as an example, or like a nuanced voice recognition system or something like that, would all come through these workflow applications into the VNA and then through to the EU. So to sort of understand where we really do come from the enterprise, we come at this problem of medical imaging with the idea of getting images out to all the clinicians throughout the enterprise is really important, rather than just a departmental solution that's really accessible for the radiologists and radiology imaging only. So when we talk about building on existing work, what we're talking about is there's been years and years of work to build out protocols across the medical imaging community, whether it's DICOM, whether it's HL7, whether it's FHIR, there's a number of different protocols. And what we want to do is We want to build our product on the existing work that's been done to make ourselves universally available to integrate to third-party capabilities that our customers choose to bring into their technology stack. We have the idea that we want any clinician to be able to join and any clinician to be able to take advantage of seeing images. As simple as that sounds, it's not always the case today. A lot of the clinicians outside of radiology don't have access to a lot of the images that are associated to their patients. They're in a silo storage, maybe even just on a CPU, on a desktop in dermatology. So these images can actually be really valuable to clinicians across the spectrum. We want everyone to be able to enjoy and utilize that information to provide better care for their patients. From a technology perspective, we're always keeping the technology and the IT focus in mind. We want to allow for new innovations. We want to allow for AI is just the thing that everyone's talking about right now. But there's other solutions out there that can build on top of our solution to provide, again, more functionality. And from a long-term scalability perspective, really the capability of storing data, and it could be, as an example, non-DICOM data from, again, I'll use dermatology as an example. When we ingest that information, if it's in a a different format or a proprietary format, we can convert that to DICON so it can be stored and used down the road. Think of it like this, where back in the day, maybe we had a VHS tape or a Betamax tape. If you had that still, you wouldn't be able to access that data because it's in an old format that nothing can read anymore. A CD is almost to that point where who has a CD player anymore? And so those formats and those media types Those are the things we're trying to future-proof, and DICOM is the standard in medical imaging. So we do want to try to convert things to DICOM where we can. That's just one example of scalability for the long term, outside of just the next few years. So AI is a hot topic, and I just wanted to take this opportunity to present sort of our opinion of AI and where it stands in the marketplace. Look, we all know it's a growing industry. It's huge in medical imaging. It's growing astronomically. There's a lot of big drivers around why that's the case. We also know there's a lot of M&A activity where a lot of these new players are coming into the community, and then they're being acquired very quickly. You can see acquisition after acquisition in the industry around that. But there's also some barriers right now to AI really being popular and useful throughout the industry. In the US, reimbursement is limited. It's there in some cases, but it's limited. In some cases, there's a lack of evidence demonstrating the economic benefits. In some cases, clinicians will love the AI algorithm and it works great with someone else's data, but not so much with their data. So they need to have confidence that it's going to work with their data. And then there's just the regulatory process of getting these things approved. So there's a number of different barriers currently that will overcome over time. So everyone needs to be ready for this. And our take from a data management perspective is that with the V&A, we're going to create this data depth and the ability to manage the data and orchestrate the data And all those things are required for AI to be enabled in a workflow environment where it can be useful in a clinician's environment. One of the key things we hear from radiologists right now is that they love some of the tools, but they're difficult to access. So creating that platform, having all of that data and a capability for it to be stratified by the customers to make it meaningful for them to test for them, to do R&D for them, create their own algorithms. All that data can be meaningful to the customer. We store, manage over 30 million studies annually. Not collectively, just annually. We're adding a minimum of 30 million studies every year to the data that we're managing as a business. We have customers that range anywhere from 10,000 studies a year to 6.5 million studies a year. And that doesn't include any of the data that our customers have migrated into our solution. That's too difficult for us to really capture, but you just know that there's a lot of additional data. And we gave a few examples of how some people measure it, but we haven't offered that in yet. So when we think about the business and what we're looking at, we have 165 customers across 15 countries now, sort of really running the spectrum. of IDNs, public health, international hospital authorities like Hospital Authority of Paraguay, regional hospitals, academic research, teleradiology. We have a bunch of strategic partners, children's health centers. We really run the gamut from some of the very largest to some smaller groups. So it shows the breadth of our products capabilities, and that can be used in both the acute care market and the ambulatory care market, which also is sort of a unique value prop of Mach7. Not gonna spend a ton of time on this slide, but what I really wanted for people to understand is we did acquire Client Outlook, that's the previous owner of the eUnity software. We finished that in July of 20. And when you look to the graph to the upper right here and to the lower right, really what we're showing here is the opportunities that have been gained by the business post-acquisition of client outlook. In FY23 alone, we sold 17 contracts for the viewer, seven for the V&A, and we had seven that bought both products at the same time. And we had six clients that chose to cross sell. Either they had the viewer and they bought the VNA, or they had the VNA and they bought the viewer from us. So you start to see the impact in the blue lines here as we start growing. And you can see the value that this software has brought to the business and the growth that's coming into our funnel, into our revenue, just from that acquisition of client. That was truly a transformational acquisition for us that has been very, very positive for the business. Many of you have seen this before. Our viewer does very well in class in regards to end users feedback. And we've held the number two place for the last two years. On the VNA side, we go back and forth with reliable data in class. But a couple of things that have come now. People are looking for our latest and greatest software. We have released our new version 12 now. And we're working on getting all of our customers upgraded and on the latest and greatest technology. This was a massive release for us and was a slow roll for us while we made sure that the software was ready for prime time. So on to the good stuff. So the results look for the year. Record sales orders of 40.3 million. Get into that a little bit. We'll get into each of these a little bit after this slide. But really a great sales order year for us. It was fantastic. Record revenue, again, of 30 million. Again, every year growing and growing and growing on the revenue side. The contracted annual recurring revenue, we ended the year at 20.6, but I thought it was important to reflect here to all of you that you saw the other releases around DIA and around NTP. We're now sitting at 24.8 million of contracted annual recurring revenue. as of July. And on the ARR side, 17 million at the end of June and 17.7 million at the end of July, adding in some support and maintenance that came through Trinity Go Live. New contracts in the high growth market, Acumen came in at the end of the first half, a very large ambulatory segment business. Novodia came into us. Novodia is a reseller of our products. And then, of course, the VHA contract and DIA contract, which came in actually Q1. But important to note, because when you think of Acumen, VHA, and DIA, they're all ambulatory market segment. So that's just an important note. Adjusted EBITDA of $2.5 million. a little lower than we would have expected. We'll get into that in a bit. But on the flip side, some great news in regards to our NPAT. Our NPAT is a negative 1 million right now, which represents a 75% improvement on prior quarter, prior year. And if you look at the NPAT-A, which is a metric that we're now moving forward with, NPAT-A and NPAT-A, we look at a $7.2 million positive NPAT-A. we're maintaining a strong financial position. We did have 23.4 million in cash at the end of June, and then 25.9 as of the beginning of July, really the beginning of FY24, we were sitting at 25.9 million. So we'll talk about sales orders a little bit first, that 40 million and what it was comprised of. You can see the chart to the right here. And one thing of note, our mix of deals now, on the revenue side, there's a bunch of things to take into consideration when we think about revenue, the biggest of which is which business model are our customers buying our software? Meaning, is it a capital license or is it a subscription license? A couple of years ago, we were really at the 50-50. Capital subscription has been slowly sort of moving more 60-40. It's certainly well into the 60-40 now with FY23. And as we start to think about FY24, we know NTP and we know DIA have already signed contracts and we know those are subscription models. As we look into FY24, I think we begin to see probably an even higher concentration of recurring revenue subscription orders rather than capital as we look towards the future. from the concentration of where these deals come from. Really, it's a split between, when we think of it from a dollars perspective, it's a split between new clients, 22, a little over 22 million representing from new clients. And then of course, our land and expand model, that's the renewals, the expansions and the add-ons making up the other close to 50%. Of that new Of course, Acumen would have been the lion's share of that, followed by Novodia and St. Paul's. St. Paul's is another private Catholic hospital in Hong Kong. Good add-on business from the hospital authority business. I really want to point out the renewal profile on the bottom right here, too. When you look at FY24 and you see that blue line there, representing annual support. We did that specifically because that is actually the support and maintenance agreement for the hospital authority of Hong Kong. Because of the size of it, I thought it was important that we pointed that out specifically. So you're not going to see that in the future years, but because that was a bit of an anomaly and because it has an impact on our sales orders for the year, I wanted to point it out and make people aware of that particular support and maintenance agreement that we'll be renewing here in Q1. So just the highlights from these three new deals, St. Paul's Private Hospital, like I said, Novodia. One of the great things about Novodia is they reach a different segment of the market than we typically sell to organically. So we've got a great relationship with them and they're a great IT service provider as well. So a nice addition to the partner program for us. And Acumen, of course, is a very large outpatient radiology service provider. a great customer, and we look forward to serving them into the future years. We signed a long-term 10-year contract, which is a bit of an anomaly for us, but happy to have them with us for the long term. Subsequent to that, I think we have to mention, so far in Q1, the Veterans Health Administration that we signed, $11.7 million. and we know that they'll be going live in June of 24. So we also know that we're not going to see revenue for VHA until FY25, right? It's a subscription model. If they don't go live until June, don't expect to see the software revenue, right? It's going to trail. DIA, again, teleradiology service provider, radiology group, another subscription contract worth 3.7, and that was a five-year term. So still talking a little bit about revenue here, and again, showing sort of that revenue composition and where it's coming from, from a product perspective, either the diagnostic viewer or from the data management side. It is, you know, getting kind of close to, closer to a 50-50 mix, just slowly. I don't know that it'll ever be a 50-50 mix really, but, you know, I think this, The composition from a product perspective, I think, is really nice. We're seeing more and more clients buy both products collectively together. So we will see some of the cross-selling go down and out years because more and more clients will be buying both products right up front from us. To note on the revenue growth side, though, the reclassification of the Acumen revenue does have an impact to the business. You see that impact actually on our EBITDA line. So, although it definitely affects our EBITDA line, it's definitely there from a fundamental business perspective. You know, the EBITDA actually, you know, having included that acumen revenue would have been much sharper than it is today because of that. And that is cash that we're still getting, right? That is cash that we're getting over the course of the contract. And of course, the concept that our revenue growth trails sales orders, right? revenue comes in. If it's a subscription deal, once we reach first productive use, if it's a capital deal, we have revenue associated with support and maintenance. First productive use is anywhere between six and 18 months from contract signing date. Okay. Again, talking about just the difference of the car in the, in the ARR. This is something that we we've spoken about quite a bit in the, in the past. Um, Our ARR currently is sitting at 17.7, but it was sitting at 17 at the end of the fiscal. And you can start to see that gap grow a little bit. In July of 23, you see the gap grow. That's a good sign from my perspective. I like to see that gap grow. I continue to like to see our customers reach first productive use, but I always want to make sure that we've got more business that's already contracted and already in the backlog and ready for us to convert. So that's good news to see a little bit of a gap grow there. So I think just in sort of the end from a financials perspective, our revenue at 30 million was reasonably close to broker expectations. I think that our operating expenses um, or just a touch on the, uh, on the high side compared to where we really wanted to be and where we expected to be. We did have some, some expenses come in and Q4 that, uh, I thought were important to us. I think it would have been more expensive in the future if we hadn't incurred those expenses. So that sort of, uh, threw off our, uh, our OPEX a little bit in Q4, late Q4. Um, but otherwise our OPEX throughout the year have been pretty sharp, um, Our EBITDA is showing an adjusted EBITDA is usually what we're working off of 2.5 million, a bit off the mark on EBITDA. That's going to happen when our revenue numbers down a little bit and our OpEx is up a little bit. So really a direct reflection of those two business components. But pleasingly, we are making a lot of improvement on NPAT and on NPAT-A. But think about just NPAT right now with a negative 1 million, 75% improvement and getting us very, very close to being able to produce a positive NPAT for the business moving forward. So moving on from financials, just some updates for everyone. We have announced this and we have begun a board renewal process. David Chambers is retiring as of the AGM on the 16th of November. We are in the process of evaluating the board skill set and what we feel is appropriate and necessary for the board moving forward. Just take the advantage here of David's choice to retire and use it as a springboard to make sure that we have all the right board members to work with the company as we continue to grow. And the same is true with the corporate restructuring from a growth perspective. Diane was confirmed as the CFO. She's been in that acting role since January, and we're very happy to have Diane on board as the full-time CFO. And Dave Madaffrey, who was appointed as our COO The role of the COO has not been replaced since I took on this role as the CEO. So for several years now, we've gone without backfilling that role. We're at the point where the company is getting big enough from an operations perspective that I need a little extra help. Dave's been a fantastic leader from a sales perspective and a commercial perspective. He's got a great way about him that really resonates with the employees. And I think he's going to be exceptionally strong in this role. He does continue to manage the sales team as well directly. while he's in the COO role. And then one last thing from a corporate update perspective on the patent litigation. We do finally have a date of the 5th of October. I know many people ask about this. So October 5th is when the appeals court will be hearing this. And just as a reminder for everyone, they're not retrying the case and they're not hearing any new evidence and there is no jury. The court's simply reviewing the procedures and the decisions from the trial court to make sure that the proceedings were fair and that proper law was applied correctly. So it'll be great to get behind this. I would expect, and this is an assertion on my part, that the hearing is on the 5th of October. Within two to three weeks, we should give a preliminary hearing, and then it could take a couple months beyond that before you get the full legal reading. But we should get that preliminary thing that will alleviate anyone's concerns, usually two to three weeks from the month of October. So just as a wrap-up from an outlook perspective, when we look at this industry, we see a really fragmented environment from a vendor perspective. We have a lot of long-term legacy vendors out there who are losing market share. That dynamic continues to be skewed, and it's moving more and more towards that ambulatory space, the teleradiology space, the remote reading space is taking on more and more of a percentage of reads. Mach 7 feels well-positioned between the ambulatory space and the acute care space to continue to really grow as that fragmentation continues and as the market evolves. We are seeing, along with that, much more complex opportunities. It's no longer walking into a hospital and dealing with just a radiology department with 10 radiologists who sit in the same spot every day. It's a much more complex reading environment now. including a lot of third-party integrations to sophisticated software platforms. Interoperability is huge now. The ability to read from home is big. The ability to integrate to EMRs and get those images out to the clinicians is big. It's just a much more complex world now than it was even a few years ago. We continue to have a great renewal profile. That land and expand model, again, is working for us. And then our sales pipeline, It continues to be every year. It gets bigger and bigger, and it's the most diverse pipeline that we've had in Mock Summit's history as it stands right now. When we look at FY24, we look at about a 20% sales order growth, a 15% to 25% revenue growth, and definitely lower OPEX growth than revenue growth. Profitability is on the forefront of our minds. I look at OPEX growth somewhere in the 10% to 15% range, and we intend to be cash flow positive in FY24. So I think with that, Bec, I will hand it back over to you and see if we have any questions out there.

Thanks, Mike. Yes, there's a few questions that have come through. I'll start first with some via email, firstly from Ivan Tanner. When will Mach 7 start portraying operating leverage in terms of cash flow? That is to say, is the current employee and business expense the right fit and level to handle the announced and expected larger future contracts, i.e. expansion of V&A contracts? I note that ProMedica has generated $127 million of revenue with a $24 million employee and benefit expense line.

Yeah. Look, we continue to make progress on this front. And although our EBITDA line, this particular year, may not look as productive as it was last year, there is more to the story, as I alluded to. Our expenses did go up, but I think it was important that they went up. I think it was a one-time thing that we had to deal with. And I also think we have timing issues. When we look at our results, we're thinking of things at a spot in time, not taking into account a few days past a quarter or a few days past a major milestone date. But our ARR is catching up and you're seeing our car number grow. You're seeing our ARR number grow. You're seeing our sales order growth. So I think that the business is starting to open up to become more profitable. You see good improvement in our NPAT number right now. So we're doing the right things fundamentally to grow the business and open up the jaws of revenue and the margin in regards to EBITDA. It's definitely a concentration of hours. It's definitely something that we're thinking about every single day. We do intend on being cashflow positive in FY24, and I think you'll see some good improvement as the year moves on.

Thanks, Mike. So I've got a question which sort of relates to that as well. Why is the company not being more ambitious in achieving greater operating leverage in FY24 from Xue Yang?

Look, you know, we maybe were a little conservative, but at the end of the day, I think, you know, we've got good visibility to 20% growth on sales orders. And one of the things you need to be careful of with our business is that time has shown that it's still a bit lumpy. And when we think about revenue, the type of revenue that we're bringing in, the type of orders that we're bringing in could vary. And if we bring in more subscription deals than we do capital deals within FY24, it will have an impact to our revenue. It doesn't have an impact to our expenses. However, our expenses are going to be what our expenses are going to be to support the number of clients we have, which is 165 clients. you know, sometimes there's a delay between sales orders and revenue. Sometimes there's a delay between revenue and cash, but still doing the right things. And so I think that we actually are being pretty ambitious in regards to delivering for our clients and bringing in the right amount of sales orders that shows good growth for the business.

Thanks, Mike. And look, a related question, but just posed a different way from Peter Cooper says, Will MAC7 be EPS positive in FY24 and will MAC7 generate positive operating cash flow in FY24?

To answer that, I guess, a little bit backwards. Look, yeah, we fully intend on being cash flow positive for FY24. And, you know, in regards to EPS, I think I've talked about this a little bit already tonight, just in regards to we absolutely have a higher expectation of revenue growth than we do our OPEX growth, right? So you're going to start to see better and better improvement on that margin, which of course will affect EPS.

Okay. Thank you. And now I have a few questions from Indy Rajakaruna and also some questions within those questions. So bear with me. So hi, Mike. Congrats on the FY23 result. FY23 costs were higher than we thought. Any comments? and I think you've largely answered that previously, where we see the same trend into FY24?

Yeah, our costs were a little higher than we would have liked them to be. We did have to make some investment in a few parts of the company in the late part of the year, which I think were important. And I think that, at least from my perspective, it was something I felt that we needed to do for growth. I think our OPEX grew at around 19%, and that's definitely higher than I would have liked to see it. And when I look at OpEx for FY24, I think more from the range perspective of 10% to 15% OpEx growth, certainly not 19% like we saw in FY24.

Okay. My second question is on contract renewals. How much renewals are there in the FY24 sales orders? Do you expect 100% retention?

I do expect 100% retention, and I hope to get it. I think, you know, we typically talk about around a 2% or so attrition rate, and I see the renewals. I don't see any renewals that I think are of high risk to us renewing in FY24. I think... If I go back to that slide, I think if I include capital, subscription and support and maintenance agreements, I think we're at around 30 million in renewals from a total contract value perspective for FY24.

Okay, thank you. Now, I might address this next question from Indy to Diane. Regarding the Acumen contract, how much revenue was recognised in FY23? The original announcement stated $7.5 million to be recognised in FY23. Right.

So the announcement indicated $7.5 million. And then when we went through our December review, we had to defer $1.7 million of that to be recognised as interest income over the life of the contract. So we ended up recognising $5.8 million revenue as software revenue.

Okay, thank you. And, look, I have another question. I'll come back to Indy's other questions, but a related question here I can see from Stella Wang. Please help us understand how the acumen contract in the P&L and cash flow, how much is the annual interest income from its capital sale revenue that's received annually? The original contract mentioned annual billing in December. Should we expect one receipt per year in the March quarter? That's about $1.5 million for the recurring service. I think that hasn't been spread over the full 10-year term, but I'll leave it to you, Diane, to answer.

So we do expect an annual payment from Acumen each year to be invoiced every December. The payments that are coming in have been structured to increase each year because based on their usage and as the project progresses. And then obviously with the interest component, that'll decrease year on year because less interest over what's outstanding.

Okay. Okay, so back to Indy's other questions. Back to Mike, I think, are you looking at M&A as a growth option? Any comments and timeframes and what areas?

Yeah, look, we always are keeping our ear to the ground in regards to M&A. I wouldn't say that there's anything imminent, anything that I think, I don't feel that we have a specific product gap that's holding us back right now. I think if we were to find the right M&A opportunity, it would have to be something that I thought was going to bring a lot of value to the, to the company, similar to the way client outlook has, it would have to be, it'd have to be make a lot of sense because just given the current environment and current share price, if we were to go out and raise, I wouldn't know if we have, you know, 25 million in cash, it's not enough to do an acquisition. So it would require a raise. And, and I really don't want to dilute the shareholders unless it's something that I think is, is really going to be a powerful additive to the company.

Okay, thank you. And just on that capital management discussion, I think I saw a question in regard to that. Except there are so many questions that have come in, I've lost it. Ah, here it is. Carlos Gill has asked, The company's mark-to-market pricing is distorted from its fair value. It also holds $25.9 million in cash. Why not use these holdings to buy back shares and improve EPS, ROE and add a lot of value to shareholders?

The board has discussed buyback options historically. We've looked at that almost annually for the last couple of years. It's something that we typically talk about a couple times a year. To date, the board has made a decision that they didn't think that was the best use of our cash. I think that as our cash holdings go up, there could be a greater opportunity to do something with that cash. But for right now, the decision has been made that we'd hold on to the cash rather than participate in the buyback.

Okay. Thank you. Okay. Now back to Indy and probably a question for Diane. How has the Aussie dollar movement impacted your result?

Well, fiscal 23, it didn't have a significant impact. Most of our business, we operate in US dollars across globally, right? And so the exchange rate with USD versus AUD, it was pretty much in line at the beginning of the year. During the year, it did fluctuate a bit, but quarter and quarter, the average was close. And we ended up close to where we started for fiscal 23. And on note four, in our audited results, you can see the split between realized and unrealized foreign currency gain. Fiscal 22, obviously, the exchange rate had a bit more of an impact on us, but fiscal 23, it wasn't a significant impact.

Okay, thank you. Now, another question from Stella. With regard to the 3.7 million diagnostic imaging associate contract already booked in the first quarter of FY24, representing 12.3% of revenue, the 15 to 25% revenue growth looks conservative guidance. What's your assumed retention rate for the 14? Oh, sorry, that's a separate question. So I'll just go back to that one. So the DIA, look, I think that's referring to the total contract value, 3.7 million. It's not actually revenue that's spread over the

That was a subscription agreement. So again, like I said earlier, I think with most subscription agreements, don't expect to see much revenue from them in the year that they're signed, just given the typical length of deployment. So I wouldn't expect to see a lot of revenue coming out of DIA and FY24. Similarly to NTP, I wouldn't expect to see much revenue coming out of NTP and FY24 either.

Right. And then Stella's second part of that question, I think you've already answered, what's your assumed retention rate for the 14 million plus of subscription renewals in FY24? I think you're hoping for 100%, aren't you, Mike? Yep.

And look, I'll say this about renewals as well. The one thing renewals does not take into account is any kind of price increase. We are using this as a metric. It's a dollar for dollar because it's the contract that we have today. So we're expecting to renew it at the same price as we did today. Now, every opportunity for renewal is an opportunity to reprice. So hopefully there's upside to these renewals as well. But just from a reporting perspective, I thought it easier just to produce this report at a dollar for dollar assumption.

Okay, yes. Another question from Carlos Gill. Has the company undertaken a comprehensive review of its structure to optimize efficiency and improve operating leverage?

I mean, if we're referring to the actual management organization in regards to how the company is performing operationally, We have spent a lot of time on our organization and the way the organization is laid out. There are hopefully always going to find some efficiencies, efficiencies in how our R&D group is performing, efficiencies and how we can use different tools to continue to grow without having to add headcount, efficiencies in IT and cybersecurity, efficiencies in how we're using our CRM and marketing from a sales perspective. Those are all areas that we have to look at constantly to make constant improvements. So I wouldn't say that it's a review, it's a constant review and it's constant improvement throughout the organization. I think the focus of the organization right now is really around customer experience. And it's around developing the best customer experience we can, because we've seen that our customers are so important to us. And the install base is so important to us that our focus is really external, making sure that we have really happy customers. And that's what's really going to help us from a land and expand perspective.

Okay, thank you. And look, related to that, a question from Lachlan Rogers. In the fourth quarter result presentation, you mentioned there was some discussion about ongoing headcount needs. Can you please give an update on this process?

Yeah. Again, when we look at headcount, the two primary areas we look at headcount are service and support, right? We need to be able to deploy our software in a timely manner, and we need to be able to support our customers in a timely manner. And support is oftentimes a function of a number of users that you have, right, a number of cases that are coming in that you have to answer, a number of phone calls coming in that you have to answer from end users. So those are two areas that we think of when we think of do headcount in FY24. We're not thinking of a significant growth in headcount for FY24. There'll be a few areas that we'll have to shore up and potentially, if the right contract comes through, which requires us to hire for that particular contract, then we absolutely will. I think it's well worth it if that opportunity comes up. But we shouldn't see significant growth in actual headcount.

Okay, thank you. Now, a question from Darren. The focus of so many is cash flow positive operations, but for you, what is the most important thing for your business right now to focus on in the future?

Yeah, the two things. The two things for us. It's sales orders because everything trails from sales orders. Revenue trails, cash trails, everything trails. Market, market share, right? We're not going to get market share if we don't have great sales orders. We need sales orders. We need our sales orders to grow. Everything else will grow as the sales orders grow, as long as we produce good software and we can deliver it. And the second component is the customer experience. We need our customers to truly be advocates of our company. We want them to be thrilled with our company. We want them to love the service that they're getting, and we want them to think of us as trusted advisors for their business. That's going to help us in the land and expand. So For me, those are the two areas and the two areas that I spend the most time making sure that we're making improvements in.

Okay, thank you. Now, a question from Tony Schiavello. Is the company's pipeline more skewed towards capital or subscription deals?

Yeah, I think it's oftentimes difficult for us to tell when deals work into the pipeline. We don't know exactly what they are yet. And it's not until some of the later stages that we actually get to whether they're going to be a subscription deal or a capital license. But I think that right now I'm seeing more and more of a skew towards the subscription operating model than I am towards the capital model.

we've gone from 50 50 to 60 40 and you know we'll probably start to see more and more of a transition to even 70 30 in the coming years okay now a question from chad somerset to grow revenue aside from contract renewals we need to see more new contracts we are already nearing the end of q1 what are the expectations for new contracts during the first half of the year

Um, yeah, look, we, we don't have a specific metric on number of new clients that we want to bring in to the business. Um, I get one way of looking at it. If we look at our FY 23 numbers is that about 50% of the new revenue that we brought was from a new cost and customers. Um, but from number of customers, um, you know, yeah, net new logos are important for the business for sure. We don't have a specific number we're targeting. But so far, as we look at Q1, NTP was a net new logo, and DIA was a customer already of the Unity. So right now, it's one net new, and I would expect that we would bring in at least three to four net new clients throughout the fiscal.

Okay, thank you. Now, this next question, next few questions, I think, back to Diane and relate to Acumen. So I'm going to jump around a bit here, but they're all related. Firstly, from Stella Wang, to show investors a fair EBITDA view, could you please tell us how much interest income is from Acumen, please? I presume that's in the FY23 period.

Correct. So the interest income from our acumen for this fiscal year is just below $200,000.

Okay, thank you. And then related to that, Indy has asked a couple of questions. Just following up on the acumen question before, that $1.7 million of interest income that was taken out of that revenue that we had expected to recognise in the FY23 year, that's to be spread over the next 10 years. Is that correct?

That's correct.

Yeah. And then he also mentioned that in note six, interest income is $400,000 for this financial year. You've just mentioned that $200,000 of that was related to acumen, so the balance is on the cash note. Is that correct?

Correct. The balance is from the bank, right? Yeah.

Yeah. Okay, thank you. And then a question from Ross Marples. Are you expecting any acquisitions over the next one to two years? And if so, how would you intend paying for this? Cash, debt, equity raise? I think, Mike, we touched on that earlier.

Yeah, look, there's nothing imminent that's on our plate. And if we were to find the right opportunity, then we would evaluate what the right –

vehicle would be to do that acquisition would totally depend on the price right yeah okay um follow-up question from ross um have you had any customers leave the platform in the last 12 months we did have a couple in that we referenced in the q4 release i think we've had um we've had one or

Yeah, a couple of small, small customers that I think were routing customers that did not renew.

Thank you. And then another question from Stella. FY23 signed 35 million TCV excluding renewal with 20% growth forecast for FY24 and 30 million in renewals. Are we... only assuming that 18 million of new TCV to be signed. And is that too conservative?

Um, well, um, I don't, I don't think 20% growth on our sales orders, actually all that, all that conservative. I know that that renewal number looks, looks large. Um, but, um, but I also think that, um, you know, there's work to be done there. Um, and, um, And look, I hope that we absolutely bring in more than 20% of growth on the sales order front. But when we look at the funnel, we think that 20% growth. And look, we've been saying that for a few years now, right? That we've been sticking to a 20% growth of sales orders year over year for the last few years now. So I think that's a number that we're comfortable with.

Okay, thank you. And now a question from Ian Wilkie from Morgan's, just on that FY24 renewal profile. Do we have the detail on how this is split between the viewer versus the V&A?

I do not have that right now, no.

And also if you can make a comment on the opportunity to increase prices in each of the products.

Yeah, like I said, whenever we have a renewal, we take the opportunity to review the pricing. In some cases, the pricing can go up considerably. In some cases, they're already at market value and the price is not going to go up maybe incrementally or maybe not at all. Totally depends on the customer, depends on their use case, depends on the value they're getting out of the product, and it depends on when they were signed and under what conditions, meaning did they get some enormous discount for some reason or another? And we can correct that. Unfortunately, it's no rule of thumb there. It's really a case-by-case basis.

Thank you. And a question from Rodney Studdenberg. Can you be more specific about the expenses that you felt necessary to incur that increased OPEX more than expected?

Yeah, look, there were expenses that we incurred around cybersecurity and expenses we incurred around labor.

Okay, thank you. And a final question here from Darren. Have there been any significant changes or improvements to software from working with clients and fixing of issues?

Yeah, yeah. I mean, it's like one of the greatest things, right, is we have a lot of partners as clients. And every user that comes onto the platform is another opportunity to make our software better. So we absolutely have a nice backlog of feature requests that come in from our clients, as well as new customers that are coming in with feature requests. So, yeah, they're a huge, huge component of helping us build a better product for the future.

Terrific. Well, that concludes the questions. I'll hand it back now to you, Mike, to close the meeting.

Yeah, thank you everyone for attending. We're just a touch over. I apologize for that, but lots of questions there, very good questions. And I look forward to my trip out to Australia here coming out in October, and I hope to be able to see as many of you as possible when I come out. And again, just thanks for attending, and we appreciate your