Mach7 Technologies Limited

Good morning, everyone, and welcome to the Mark 7 Q4 FY26 result briefing. My name is Frances Dixon, and I'm Head of Investor Relations for Mark 7. Today, our CEO, Terry Thomas, and Interim CFO, Shawnee Hadsfield, will provide an overview of our Q4 result. We will then open it up for questions. If you have a question, please submit it by the Q&A text box at the bottom of the screen. I'll now hand over to Terry. Thanks, Francoise.

Hi, everybody. Nice to be here. Given my propensity for bird analogies, I can't resist starting off by saying that this quarter has flown by. When you're this busy, quarters have a way of doing that. Let me give a little bit of quick context for anybody who's not familiar with Mach 7. We're a company of just over 100 people and our job is to get every medical image, whether it's x-rays or PACs, ultrasound, MRI, CT, mammography, whatever the modality, to be able to get that organized into one archive, served up very quickly through our zero footprint viewer, and then make those images even more usable through a growing set of new products. We help hospitals and imaging centers actually do something with their imaging data under the wings of our Flamingo set of products, starting with strong interoperability, some ingestion foundational components, hybrid cloud and on-prem storage, orchestration of those images, routing them appropriately, and workflow automation. So back to the quarter. Not a huge headline quarter. It's a proof point quarter. All year, I've called fiscal year 2016, The Year of a Reset, a time for us to reassess, adjust, design some improvements, and then execute. And we've done this. Better products, better revenue quality, tighter operating expenses, and more discipline across the board. We only announced this reset at Halloween, and here we are nine months later, and this is what we've actually built. Q4 is where the transformation starts showing up in the numbers instead of just in my talking points. So I expect some of you would rather I spend this whole presentation on Flamingo and AI and where we're headed strategically, and I would love to do that, but that's next month's conversation alongside our full year results. Today I'm going to focus very much on the quarter. And it was a solid quarter. It gives us increasing confidence that we are heading in the right direction with our strategy. Now, a couple highlights that I'll call out before Shawnee takes you through the details. I'm happy to say it's our third straight quarter of positive operating cash flow. I'll tell you it's a little bit like how I like to operate in general, spend less than you make. But I do want you to know the first quarter tends to be historically a top quarter for revenue and OpEx for Mark 7, so we are working on it. While this may not look super exciting, it is a strong foundation that everything else can build on. We have $19.9 million in cash. We have no debt. We're up from $19.2 million last quarter, which is some runway. It gives us the ability to invest and room for us to sell from a position of strength instead of a position of urgency. Our ARR run rate is up 7.6% in constant currency year on year to 23.5 million. Now, I do like to talk about commercials, so on to the commercial side. Flamingo went live in production for the first time at UnityPoint Health with orchestration. We've signed a five-year, $2.8 million contract with a prestigious U.S. customer. It's an expansion and building on an existing relationship. But it's important for you to know about this because it's the first step in us migrating to convert legacy capital customers to our now standard subscription model in North America. That's a higher quality and more predictable revenue stream, and it's the foundation for our future. Also, AmradNet, brand new customer. They went from contract to implementation faster than any other sale in Mach 7's history. And while it wasn't our biggest sale by size, it was one that shows that we can be nimble, we can be responsive, and it's the new Mach 7 way. Howard Medical gives us a connection into 3,700 plus hospitals, and eUnity is now listed in the Epic Connection Hub. For those of you who don't know, Epic is the dominant clinical systems vendor in the United States and globally, increasingly, even in Australia with New South Wales Health installing Epic. So, none of us individually rewrites the Mach 7 story, but together, there's evidence that our reset is turning into a pattern of execution. Now, I'm going to turn it over to Shawnee, our interim CFO, but before I do, Most of you haven't met Shawnee yet. She's not new to Mach 7. She was promoted into the interim CFO role after running commercial excellence and customer success. So she's seen our contracts, our renewals, and established customer relationships before she ever touched a P&L. That combination of financial discipline that you'd expect from a public company CFO plus fluency in the customer journey is unusual. And it fits the culture that we're building at Mach 7. Delight the customers, provide real value, and the business value will grow as well. So, Shawnee, please tell everybody a little bit about yourself and then roll on into the numbers. All you. Great. Thank you, Terry.

Good morning, everyone. Building on what Terry said, my background is in finance and business operations with experience in restructuring, M&A, and execution in technology businesses. I've spent much of my career working with boards and management teams through periods of change, whether that's improving performance, simplifying structures, scaling for growth, or sharpening capital discipline. I'm a chartered accountant and CFA charterholder, and before Mach 7, I was CFO of a lean, agile SaaS business based in New Zealand with global offices and sales, which gave me a practical grounding in scaling recurring revenue models. As Terry mentioned, Coming into this seat from Commercial Excellence means I already know our contracts, renewal, and customer relationships from the ground up. I've been involved with Musk Devon for the last 12 months, and so while I'm new in the CFO seat, I'm not new to Musk Devon's business operations, priorities, or value drivers. And now let me take you through the detail behind the cash number Terry gave you. We finished the quarter net cash flow positive, increasing our cash balance 4% from the end of Q3 to $19.9 million at 30 June, driven by positive net operating cash flow of $1.1 million. Behind that $1.1 million of net operating cash flow, cash receipts from customers were $7.4 million this quarter, down 7.9% on Q3's $8.1 million. That's timing of customer payments between quarters, not a change in collection quality. Operating payments came down too, 7.3% lower than Q3, mainly on reduced costs and lower staff and admin costs. This cost discipline hasn't come at the expense of growth investment. This quarter, we capitalized $260,000 of development costs in connection with existing R&D projects. which drove the overall cash outflow in investing activities. There were no cash flows associated with financing activities this quarter. One more layer for anyone tracking the cash balance closely. The move from $19.2 million to $19.9 million also reflects a $66,000 unfavorable currency effect on cash held during the quarter. Work flagging, given epic volatility over the last 12 months,

but immaterial to the overall trend.

Our ARR runway rate of 23.5 million at 30 June was up 7.6% in constant currency, driven by expansions and add-ons across our existing install base, which speaks to its durability, as well as the UnityPoint Health Go Live, which shows we're also converting new logos to recurring revenues. We also added two new contracts to CAR, totaling $0.9 million, the referenced U.S. Expansion Agreement, which completed in June, effective immediately, and the new AMRAD-NEF contract announced in May, taking CAR to $25.5 million at 30 June. And now back to you, Terri.

Thanks very much, Shawnee. All right, so we reaffirm our Fiscal Year 2016 guidance, We restructure our cost base and OpEx is expected to be down approximately 10% compared to fiscal year 25. While fiscal year 26 revenue is expected to come in approximately 15% below fiscal year 25 due to some historical customer losses that we disclosed earlier in the year and some delayed large capital deals primarily out of Asia and the Middle East. We would love to see that war end and business in the Middle East go back to normal. Now, none of this changes our strategy, and I'm quite happy with where we're headed. Twelve months ago, this was a company unsure of what discipline looked like, and today, our software shifts faster, deployment cycles are shorter, our sales and customer engagement models, people, roles, technology, all of it has been rebuilt. Watch for new branding and our new website going live in the next few weeks. Our support ticket volumes are down and our class standing has improved this quarter as well. Our engineering team is more productive, partly through AI-assisted development, but partly because we now bring customers in while we're building, not after we ship. And here's where that shows up commercially. Flamingo is live in production. Howard Medical and Epic Connection Hub. Both make it easier for the right customers to find us before we knock on the door. And that right customer part really matters. We are not chasing after every hospital in the world. We're focused on those that need to unify imaging across multiple PACS environments and are ready to build on the data and use the data, not just archive it. That's our ideal customer, and it's also a differentiator. Nobody else is doing the Flamingo orchestration layer with that same open approach to Epic, AWS, Oracle, hybrid, on-prem, and cloud, and zero footprint access. Being the easy partner to work with instead of the vendor everyone has to work around is a strategic choice. It is not an accident. Healthcare is changing fast. and AI is only as trustworthy as the imaging data that it's built on. And that's the bet that we've made with Flamingo. It's why we've spent this year on execution before expansion. We'll go much deeper on Flamingo and our broader strategy next month with our full-year results. But for today, the foundation is stronger, our execution is better, and the commercial wins this quarter are the beginning. Happy to take some questions.

Thanks, Terry. We've received a couple of questions by email, so I'll start with these. Okay. The first question comes from Matt Gardner, and he asks, can you comment on the CFO search process?

Oh, absolutely. So we're not running a process. We are fortunate to have, as we mentioned, an experienced CFO already in our leadership team, and she stepped seamlessly into the role. She's doing a great job. We will update the market once management and the board determine that it's the right time to confirm a permanent appointment, but there is no selection process underway.

Thanks, Terri. And we have a follow-up question. Could you comment on the latest class scores?

Absolutely. We watch it carefully. It's part of our metrics. It's part of what we report to the board regularly. And I'm happy to say... A year ago, Francoise and I were talking about the class scores, and I acknowledged that they sucked. They're sucking less over time. And eUnity in particular is absolutely market leader, doing really well. We've had minor upticks in both of our products, improvements in money's worth, likelihood to recommend, partnership. And both of our products are really strong in the fair and transparent category, well above segment averages. even though segment averages have improved. eUnity is well above market average. It's staying strong. We're looking closely at what's different in our engagement with the V&A, and we've made some significant adjustments in how we engage with our customers on the V&A with an expectation that we will raise those scores to the same level as eUnity. As the insights we've gotten from class indicate, these are very movable. Less related to the product, more related to the support model, and how we engage with our customers. But I will share, we brought our leadership team to class. We engage with them regularly. We get detailed input from them. But we've also engaged in a much more direct and solicitation of feedback from our customers as part of our support process. In the past, Getting feedback from them wasn't embraced heavily. It was a little bit cumbersome, and we've changed how we engage with our customers to make it easier and easier. And so we expect that we will know way ahead of the, on average, nine months it takes from when we make a business change until it flows through the class scores. So class runs on a rolling 12-month schedule. So they told us, expect when you make a change, About nine months later is when you see it in their scores, 12 months to be fully taken up. We've made a lot of changes in the last nine months. We're starting to see the impact and expect to see more positive class scores coming up in the next couple quarters.

Thanks, Terri. I'll now turn to the live chat. We've got a few questions that have come in. The first one is from Juliana Salatena. Can you please comment on the sales pipeline with some specifics? To date, the new contracts have been on the smaller side. Are you seeing larger potential contracts in the pipeline?

Our pipeline has gotten healthier over time. We did do a lot of cleaning up of our pipeline over the course of the last couple quarters and the last year overall. We have a mix of large and small contracts. Now, Flamingo as a strategy is meant to be modular and enable us to land and expand. So, customers like UnityPoint, we expect in the future we'll add other modules and we'll grow into a bigger contract over time, but it enables us to start new relationships with customers in a less traumatic, easier to install, faster to install, and and entry to make those stronger relationships that we can build on going forward. So our overall pipeline, our health has improved, but the mix of size of contracts is quite broad at this point. And I expect that will continue as we get the Flamingo modules out there and sell more of those leading up to and beyond RS&A. The other point in the pipeline is we're doing much more of an emphasis on that recurring revenue model and really not focusing on capital deals that looked like really big contracts when you announced the total amount, but provide a little bit less visibility in terms of that recurring revenue base over time. So Asia and the Middle East has some sizable capital deals on our standard within North America. is for the recurring revenue models. Anything that you want to add to this, Shawnee?

No, I was just going to say that your point around the contract mixing from a more capital-based, as it was in the past with MarksDev, into more of a focus on annual recurring revenue and subscription-based contracts will change what the pipeline looks like over time. Okay?

All right. Thank you. The next question is from Sean Kennedy, and he says, good result, Terry and team. With respect to the $20 million cash holding, will you consider M&A to bolster future revenue and earnings?

M&A is always one of those things we look at opportunistically and only if it's accretive. And so there's always a list of potential possible acquisitions that we keep an eye on. There's nobody that we're imminently considering. Our main focus is executing according to our strategy. But if there were something that we thought would accelerate our ability to drive growth and revenue, we certainly would consider it. On the question about sales, We are recruiting for sales. We've got a sales team right now of 11 people, but we expect to add a couple people in the next couple months. We're looking for people who are humble, hungry, smart, and building because we as a company are in build mode. So we do expect that we will continue to grow the people that are out in the field helping sell our products. There's been a lot of focus in this last quarter, last couple quarters, on the partnership strategy. but a number of those partner arrangements really increase the pipeline so the pieces fit together.

Thanks, Terri. That second part of Sean's question also aligns with Giuliano Salatena's next question where I think you've got the answer. So just add any colour that you want to that you feel would be helpful. Giuliano asks, can you please comment on any new hires in the sales team and what your intentions are in relation to the size of the sales team over the next 12 months?

We expect to add somewhere in the two to three more people to sales over time. We also have a little bit of a different strategy. Our culture code spells the word clients. It starts with customers, best interest, drive, all of our decisions. So C for customer first, but the S is sales. Everybody sells. And so we are opening up so that we have the ability for people to do sales in areas that they have specific expertise and match people who are both selling within our current customer base and selling new customers, but making sure our incentives don't align behind people just focusing on renewals. So we've got some expansion opportunities within the team, but we've also got some opportunities within our current existing staff to be able to get people doing some sales activities as well. So it's a multi-pronged approach as sales is very strategic for us going forward, especially with these new modules coming out.

Thanks, Terri. Our next question comes from Andrew Hewitt. He says, I'm interested in the AI base in Flamingo. Is the AI component learning part of Flamingo or is it allowing third-party learning? Does Flamingo assist in diagnostics?

So the answer is yes. See, the first component, there is, in the scope of Flamingo, we've got a number of different modules. We've got three modules that we will be selling at RS&A. One is already released and live, two others that are in development. And there are some elements in those to enable our customers to use third-party AI or to even create their own AI. What we don't have in our own Flamingo modules is providing diagnostic AI directly. That is a heavy lift. I know this from my last job with Lunit. You have to go through a fairly rigorous and lengthy and expensive FDA approval process to be able to provide diagnostic AI directly yourself. It is quite expensive to do. However, within the United States, healthcare organizations... can actually use their own data to create their own foundation models and generate their own AI. So that's the angle that we're leaning on for Flamingo is enabling our customers to be able to use their own data to create their own AI versus us delivering diagnostic AI directly ourselves. That said, we're quite great partners with a number of different AI providers as well as AI marketplaces. For example, within our eUnity viewer, we can support when people are viewing images, actually seeing the AI markings on those images. So there is an opportunity for us to be able to leverage the technology that's out there to help our customers do better, both creating their own and embedding others, but we're staying out of the very expensive, time-consuming, and difficult process of getting FDA approval for direct diagnostic AI.

Thanks, Terri. Our next question comes from Giordano Salatena. He says, it has been difficult to track the momentum in the business in recent years. Will you start to articulate at the quarterlies the size of the pipeline and how many live tenders you have ongoing at any point in time?

That's a good question. I'll take that as a suggestion. And we will take it under advisement. I have heard from a couple investors that you would like us to articulate a little bit more about the pipeline. One of the reasons I haven't done that thus far is that we've been implementing new technology, including HubSpot, Insurance Zero, and overhauled our pipeline. So the numbers were changing all over the place, especially in a reset year where you fully rebuild the commercial team. We needed to validate that everything that was in the pipeline was was a good fit for what we provide, and the numbers changed a lot, and they're still changing a little bit as we establish that sales team that's growing and get people going in their territories with more direct engagement, especially as we go into the biggest pipeline generating opportunity of the year, which is RS&A. So I expect probably not in the next quarter, but it's something that we might consider as we get to that regular cadence of New sales coming through each quarter and a little bit stronger data in the new systems that we have underlying the work that we do in sales. The question about like number of tenders doesn't apply quite as well in the United States as you might see in Australia or in the Middle East. A lot of the processes for Flamingo modules are not going to be formal tenders. If you do a procurement for a very, like, big, full, top-to-bottom PAC system, which we're preparing to be able to offer but aren't there yet, that might be more likely, and then also government procurements. But the Flamingo modules that we're providing often layer on with Visage or Spectra or a number of different PAC systems and provide the ability for are customers to ingest data from multiple systems and make sense of those. Those are often not formal procurement processes with a tender process, so it's unlikely that we would communicate quite at that level. The other thing is we always have to maintain confidentiality of our customers that are in selection processes, and sometimes it's even hard to get permission from our current customers to share what's going on, including what we shared this morning about a big current customer signing a significant contract. So we will seek to give more visibility as the sales organization matures. But for now, we're going to have to focus on sharing results.

Thanks, Terri. Our next question comes from Madeline Williams. How is the sales team approaching contract wins? Is it RFPs, conferences, inbounds? Some will cover regarding how you're approaching different opportunities.

All right. I'm going to interpret that as more of what is the source of our pipeline because we approach contract wins with great celebration. But the ability to get new customers into the pipeline and possibilities to engage with is something that we're broadening significantly. Previously, Mach 7's approach to pipeline building was heavily oriented to two different conferences that we attended in the year. A pretty weak website, not a lot of outbound marketing, and we've changed that significantly. We are actually doing some analysis, but we're still finishing the bits of the commercial reset associated with marketing and a lot of our pipeline generation so that in the future you'll see partner-sourced leads, website-sourced leads, Account-based marketing and outbound leads, and we've increased our outbound marketing significantly in the last three to six months, and supplement the traditional lead generation that Mach 7 has done, which has been primarily RSNA and SIM. The other areas that are interesting opportunities for us include, now that we're on the Epic Connection Hub, there's some potential interactions related to Epic and regional Epic user group meetings, for example. So we're testing the net far wider than we've done in the past. The other thing that we're doing is we are identifying much more a value-based approach that's speaking to our ideal customer profiles. So instead of communicating, here's a bunch of capabilities, we're going into what are the problems that people are trying to solve and who's talking about those problems and let's get to those tables. So it's a very different way of engaging customers. One of the things that's less common in the Flamingo module approach is, like the tender process, a less thorough, less detailed, less high overhead RFP process. So this enables us to do a more rapid sales to conclusion cycle than what Mach 7 had participated in in the past. So, yes, we're still attending conferences, but we're expanding the numbers. We do have a fair number of inbound, and we expect to expand the inbound through those partnerships, as well as improved outbound marketing and an improved website. And then we're engaging with opportunities in a collaborative way through a number of expanded partnerships as well. And this is something I expect we'll go into in more detail in our year-end strategy update.

Thanks, Terri. Our next question comes from Blake Talbot, who asks, can you add more to the status of the Middle East engagement? And what do you mean by engagement? When do you think the Middle East will turn into new sales revenue?

We have a couple large opportunities in the Middle East that are run by our team in Asia with a couple people that are on the ground in the Middle East. And those opportunities are still quite active. There's a lot of regular communication happening. There's a clear business need. And the challenge that we've run into is, again, in the Middle East, significant disruption due to the war. Like disruption literally to the point that calls are interrupted because bomb sirens are happening. Data centers have been impacted and budgets have been impacted. It's difficult for people to make decisions about spending when a number of the dollars allocated traditionally to healthcare technology and healthcare overall is being diverted to war-related efforts. So we do see healthcare still goes on, healthcare needs continue and even are growing in the war situation, but it's very difficult to get procurement done. to proceed in a way that these customers are committing to long-term payments with the uncertainty about the war. I wish that I could answer the question of when do I think this will happen. We're on a bit of a roller coaster there. We keep hearing, okay, things are going to improve. We think the war is on, and then it's not. And so I keep counseling our teams. Keep going, do the right thing. Healthcare is as important in peace as in war, and war is in peace. And so I'm hopeful that we'll see some of the fruits of our labors coming through in the coming months, but I can't really comment exactly when. Thanks, Terri.

Our next question is from Andrew Riviera. Terri, where do you see the business in the future?

Oh, that's a really good question. That's actually a good question for our fiscal year results as well, and I'll go into more detail. But in general, where I see the business in five years, my goal is for us to be the imaging EMR, where we are an indispensable component of an imaging strategy that helps enable large healthcare organizations of all different sizes, large but also all different sizes, to be able to use their images effectively in a way that facilitates an AI-enabled workflow future. I think that AI-enabled component will happen quite quickly. Healthcare and healthcare imaging has traditionally lagged a little bit, but we are seeing especially the idea of people being able to use the images to create their own foundation models to drive a need for what Mach 7 does. and so in five years I expect our business to be significantly bigger and healthy and thriving.

Thanks Terri. Our next question comes from Frank Patil who says over the past 12 months there's been a difference in deal velocity between Mark 7 and another ASX listed peer and he says even allowing for the reset focus over that period What is driving that difference, and how many labels do you have in late-stage negotiation right now that give you confidence that you can improve the number and frequency of new label wins?

Okay. So, yeah, I'm fairly certain I know who you're talking about. And even though they're not a lot bigger than us, in number of employees. Obviously, their performance and their revenue is significantly different from us. Their footprint, their marketing spend, also significantly bigger. The reality is they're just far more well-known than we are. So when I call and speak with people in the industry and help support our sales team, I'm surprised how many CIOs haven't heard of Mach 7. So we've got work to do there. I think that the market just doesn't know enough about us yet and our unique value proposition. And so when you look at the size of their booth and the size of our booth, it's far bigger. They show up a lot more, and we expect to catch up to them in terms of market perception and knowledge over time. They're also approaching it from a little bit of a different place. They've executed better than us, and we're changing that. As an organization, we are a very, very different company than we were a year ago. The reset takes a lot of time. It's hard to be able to completely change over your sales organization, your marketing organization. More of our leaders have changed than have stayed the same over the last year. The company is something that is very, very different from who we were 9 to 12 months ago. And so, I don't think we were known to be really innovative. I don't think we were known to be a company that's customer focused and executing at the same kind of level as other ASX well-performing companies in a similar space. That said, I set my sights on becoming just as strong of a reputation or better over time. And so, I respect that company very well, very much. And Right now, I'm happy that we peacefully coexist in a number of different accounts, and we can supplement their offering, but we're increasing our offering, so let's just see what happens.

We have no more questions in the chat, but I'll just pause for a moment in case there are any final questions that people want to ask. No, no questions are coming through, so I'll hand back to you now, Terry, for closing remarks.

All right. Well, those are some good questions. And that's the quarter. Next month we'll be back with full year results, and that's when we'll go deeper into Flamingo, a little bit more about AI and where we see ourselves heading over the next few years. You know, today really focused on the numbers. I do want to, as I like to before we close, just send a couple thank yous. I want to acknowledge the Mach 7 team for stepping up with a faster pace More urgency, more deep customer focus, and I want to acknowledge Shawnee specifically. Just a few months into this role, and she's running a financial narrative like she's been doing it for a year or more, and that's not nothing. So thank you also to our investors for sticking with us through a rebuild year. I acknowledge that's tough, and it's been a bumpy year. We've made a lot of changes. We're working really hard, and I appreciate your patience. and buying our company the room to do the reset properly. We're not faking it. This is real significant changes. But I am incredibly optimistic that each of these quarterlies is going to be more positive over time. So thanks for your patience. Thank you for your support. And I look forward to talking with you with our end of year results.