Celebrus Technologies plc

Good afternoon and welcome to the D4T4 Solutions PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand it over to Bill Bruno, CEO. Good afternoon, sir.

Excellent, thank you and thank you everybody for taking the time today. Myself and Ash are pleased here to be with you and we'll walk you through a high level presentation of the results. As mentioned, please utilize the Q&A tab. We'll try to get to as many of the questions as we possibly can today, so feel free to utilize that. And so I think we'll go ahead and start off with the operational highlights. Ash, if you don't mind jumping through the disclaimers and everything. From an operational perspective, it's been another busy year for the business as we sort of transform into a sales organization and focus on standing up our direct sales capabilities. You'll also notice, and Ash will call attention to this when he goes through some of the financial results, but if you participated in this last year, we talked about how we were onboarding several new systems across the business from finance, HR, to sales and marketing, and recruitment, et cetera. And now that those systems are in place and the data is in a much more useful format, we're also starting to incorporate additional views So there's some pipeline metrics in the RNS, and as you'll find mentioned in the annual report as well, that start to bring some of this to light. So namely, that our pipeline value grew in the previous year by 27%, and the amount for the proposals grew fourfold throughout the year. Now, I know there will be a lot of questions, because we did get asked, how would you manage standing up a direct sales business? That can be a quite expensive undertaking. And one of the things that Ash will call out when he goes through the numbers is business as well being being flat and that's been through uh us taking a careful look at the business and ensuring that where we're investing is in the right places and also making restructuring and efficiency changes to the business across the board as well now from a direct sales perspective because i'm sure these questions will come top of mind in the in the pipeline as it currently sits today about 65 of our pipeline is direct with the remainder being through indirect channels and some of the partners that we've built over the years We continue to simplify our messaging as a platform, and you'll see this come to life quite a bit in this year's annual report. But we now refer to it as the Seller's Platform, and I'll come on to that when we get into some of the strategy, and I'll show you what that means, and I'll talk through a bit more about how we position and sell from that perspective. But that simplification and alignment of the platform is a necessary next step when building a direct sales business, because clients experience expect you to deliver on things that perhaps your platform wasn't asked to do before when you're solely standing behind an indirect channel for how you go to market. We do continue to not only acquire new customers, and we had several great wins in the previous financial year, but we also had some strong upsell. And Ash will walk you through a new breakdown of our annual recurring revenue as our contracts are focused on a term basis. Multi-year contract, usually to the tune of three years on a non-cancelable basis. And that's how we view annual recurring revenue. You also might remember that we acquired Prickly Cactus a few years back. And that was done to really start to stand up our customer success team and to start to drive growth from our existing accounts. Pleased to report that in this previous financial year, they met the earn out criteria early and they've now been fully integrated as our international customer success team. We've also stood up in this year customer success team for the Americas as well. And the driver of that is not only to have a target and incentivization to drive a target goal of average growth in each market for all of our existing customers, but it's also to free up sales so they can spend more time selling and less time managing existing accounts. Innovation also continued to be a key part of what we do as a business. You might recall from previous conversations that we generally do two major releases a year. We stay true to that. We have a release that is already in beta that will be going publicly live in terms of marketing and messaging over the course of the next few weeks. And another release that always happens in kind of the November, December timeframe. Some key innovation from this previous year included a new patented capability in Celebris that we're calling CX Vaults, which is a true cookie-less solution to deliver personalized experiences in a compliant manner for individuals who opt out of tracking. In addition, we further enhanced what we call our digital identity verification capabilities. And I'll just make note that of that, the majority of our pipeline is driven by that feature because it is a core differentiator of our platform. And it is the foundational element of every solution that we bring to market with our various partners as well. And just one final note on the pipeline outside of the growth. Historically, D4T4 has focused primarily on financial services. We've expanded our focus considerably with the growth of our direct sales channel and our business development routes to expand significantly into healthcare in the U.S., which is a massive opportunity for us as a business going forward and a significant contributor to today's pipeline, in addition to retail, travel, and insurance as well. So with that, I'll throw things over to Ash to walk through some of the financial highlights for you as well.

Thanks, Will. So on the financial highlights, I'll run through these very briefly and then go into a bit more detail further on. But in terms of highlights, the ARR annual recurring revenue is up 19% from 14 million to 16.7. And I'll go on and talk later about the components within that. Software revenues is a new metric that we're reporting on. I'll explain why in a few moments, but that's gone up by 9.6% to 19.1 million. And so this is essentially excluding third party hardware sales. I'll explain why that's important. Following on from software revenues as a headline, the GP gross profit percentage of software revenues has also gone up from 67.8 to 68.8 and again that's an important metric and again I'll explain why in a few moments. The adjusted profit before tax is up from 3.3 million up to 3.8 million. And the four-year dividend, following on from that, we're increasing by 3.8% this year, so paying out 3.03 pence per share. And then the final highlight is the cash balance. It's gone up from 11.4 million last year to 17.2 million, and we remain with a strong balance sheet and no debt.

Thank you, Ash. So from a strategic perspective, our mission, the mission statement that we're aligning on as we're transforming into a sales organization focused on selling software is to improve the relationships between brands and consumers via better data. On the marketing side, or traditionally what we refer to as the CDP, that would be building better experiences. You come to a website or a mobile app and you're trying to perform a specific action, or perhaps you've looked at certain products in the past. And when you get there, you see a tailored experience based upon the seller's profile to make that more relevant for you. On the fraud side, the way we're bettering those relationships is quite simple. We're protecting people's hard-earned money and also protecting banks and others from being responsible to having to pay back for people that fall victims to scams, as an example, in the UK as a result of the payment regulators' decisions. But to us, it's all Celebris. And you will have noted in our previous year, we talked about Celebris Cloud, which is our deployment of Celebris on a single-tenant, private cloud-hosted basis. And it's, in essence, replaced what we've historically referred to as customer data management as a business. And Sellebras Cloud is how we deliver analytic environments to customers. It's just the reprioritization of how we do that. Focusing on us hosting or in a private cloud or a client using their private cloud. and having an on-premise installer in a data center install being the last resort as a business. Now, what we're choosing to deploy there, largely, ideally, is the Sellebras platform, which is our software and intellectual property that has several patents around the globe. And you'll start to see us be more modular in how we're presenting these things. So consumer insight has historically been what we would have referred to as the CDP. The fraud section is the fraud data platform and the capabilities therein. We're building very partner-specific solutions, so things like the CDI for Salesforce integration that we engineered with Salesforce and launched this year. CX Vault, more on the data activation side, but in this case, it's a cookie-less solution for personalization. And one of the newest sort of enhancements, if you will, is in web analytics or reporting. What we're finding, and this is expected and was all part of As we continue to move this forward, is when you start selling your software direct, customers start to perhaps understand the full breadth and depth of capability your platform can provide. And in a market like today, customers are not just looking to be additive, they're looking to replace other solutions or generate cost efficiencies by having one platform do more and removing other platforms along the way. For our direct sales team around the globe, the point here is to have a suite of offerings in a modular format that are easy and simple to explain to customers that solve for key pain points and allow us to sell on a land and expand basis to where the sales team can land that initial deal and that initial logo and the customer success team can then come in and nurture those customers and build a strategy for how we're going to get them to more globally adopt the rest of our features and capabilities on a year on year basis. And so this really does help simplify everything we do. You'll see this represented in the annual report this year. You'll see this in all of our advertising and all of our messaging. And you'll also start to see this represented across our digital channels like our websites as well. Next slide, Ash, if you don't mind. and i kind of touched on some of this but you know the theme of simplification continues for us you know uh and as a culture shift in the business as well i think first and foremost you know with partners we do continue to maintain our technology partnerships they are critical to our business we continue to grow them enhance them and find new ones And we build very specific solutions. So we're being very laser focused in how we do this. So the integration with Salesforce is a very specific use case that fills the gap that Salesforce has in their platform and provides a really great way for the two of us to sell together in an account. The same thing can be said for the integrations we have with Pega and with Adobe and Teradata and Snowflake and other platforms like that. And again, keeping it very simple, focused on the value, makes it very easy to sell and very easy to onboard partners into why they should sell it. and their respective sales teams. For us, at the end of the day, the only thing that matters is selling software. We have an internal services team. We've actually scaled that team in a very strong manner to support our clients around the globe, and particularly in the US and over the course of the past year, all while keeping the operating expenses flat. But the point there is to strengthen our employee base, to bring in the right people, to continue to restructure the business based on efficiency so that we can free up the right funds to invest in the areas of the business that we need to drive forward that are more core to our mantra of bettering those relationships between brands and consumers. The direct sales channel has been a success. I think at the start of last year, our pipeline was roughly probably only 10 to 15% direct deals. As I mentioned and alluded to earlier, our pipeline today is about 65% direct deals and the rest being through indirect channels and partners. We'll also continue to innovate. I've talked about some of the new features. We have some very exciting things planned to launch here any day now, as well as later this year, which will become part of a great topic of conversation for us at the Capital Markets Day, which we always hold towards early December, and that date is yet to be finalized. and then finally just the simplification i think i've hit this point home but everything that we're doing is to simplify how we're selling it's a lot of vendors out there that confuse things and prey on that confusion we're trying to be the vendor that that makes it very easy to understand what we do why we do it and why clients should care about it and why they should buy it all again focused on the seller's platform okay so let's talk about the financial results um

kick off with the key metrics slide and this is slightly different to the key metrics that you saw last year and as i mentioned uh in the meeting last year we're evolving our key metrics we're evolving our reporting of extra information and so for this year for the first time we've announced our pipeline growth and our opportunity proposals growth as bill mentioned And so as part of that process, we refined our key metrics. And so now we're looking at software revenue rather than the headline revenue. And the primary reason for that is that the headline revenues include hardware costs, third-party hardware sales, and these fluctuate year to year. So in FY22, the hardware sales were 7 million, in FY23 they were 2 million, and in FY24, the current new financial year, it'll be a different number again. It makes it very difficult to discern what's really happening below the surface. So software revenues will exclude those hardware sales, and this is the true revenues related to software, whether it's a licence, whether it's support maintenance or Celeris Cloud or some of the services work that we do as well. So with the software revenue as an investor, you get to see a smoother trend, upward trend. And so for this period, we've gone up 9.6% year on year. The other metrics we've reviewed and we've decided that these are the ones which are particularly pertinent in terms of shareholder value. So software revenue for obvious reasons, ARR clearly because it's a determinant of shareholder value. Companies are often valued on multiple of ARR. Adjusted diluted EPS, of course, along with adjusted PBC is important because that's an indicator, almost like a proxy, if you like, for cash generation within the business and how much of that is kind of attributable to each share. dividend very clearly attributable to shareholder value because that's what we're paying out every year to shareholders and then the cash obviously is a very important metric for a strong balance sheet that we need to have but also an element of cash there to pay dividends and also to take opportunities in terms of M&A if they arise so all these metrics as you see for the year have got an upward direction and I'll talk about some of these in a bit more detail in a moment So starting off with the income statement, as I said, the headline revenues aren't particularly helpful in understanding what's happening in the business. So the headline revenues have gone down from 24.5 million last year to 21.4 this year. If we strip out the third party revenues, we see that software revenues have gone up 9.6. So that's what we're using as a primary metric. You'll see also in the headlines that the GP percentage has gone up. from 51.9 to 60.2 now a large part of that is the mix so where you've got a high proportion of third-party revenues these are typically at a much lower gross margin typically of around 10 to 15 percent um the software revenues as you saw um if we strip out the third-party revenues um the margin is much higher so as i said 68.8 compared to 67.8 last year The operating expenses, as Bill said, have been stable during the year. We've been able to do that despite a number of very significant changes within the business. So we have invested heavily into new systems. These are intended to systematise and automate what we do. That allows us to free up headcount, which can then be reinvested into all key roles. And so in previous years, We've invested in a new sales and marketing system called HubSpot. We've invested in an HR system called HiBob. We've invested in a contract management system and a license management system. And in this past year, we've also then invested into a new finance system called Oracle NetSuite, and that allows us to have a lot more visibility and granularity into the business for our decision making. And we've also invested in an applicant tracking system, which right now is very important because that's all about sourcing candidates to join the business and also streamlining that process, taking out a lot of sort of HR and managerial time in the process. Those OPEX expenses probably will go up in the next year or so, but for the past year, we've managed to hold them pretty tight. But clearly, as we invest further into the business, we will see some increase in the OPEX. So moving down, the amortization as share based payments are broadly the same as last year. These are generally non-cash items. So the adjusted PBT, as I said, you can use almost as a proxy for cash generation in the business on an on-game basis. And then moving down into the tax line, we've seen the tax rate go up and the tax charge go up. That's because we've been more profitable, but also what we'll see in the coming years is that that charge will go up for a couple of reasons primarily. Firstly, we qualify for R&D tax credits in the UK. The regime is being changed by the government, so overseas expenditure won't be qualifying. So the qualifying costs we have will be only those in the UK, so our credit will be less and our tax charge will go up. And then the second element to the increasing tax charge in coming years is that the UK corporation tax rate is going up from 19% to 25%. So that will have a material impact on the tax charge. So the amount attributable to shareholders at the end of the day is 2.1 million compared to 2.7 million last year. And the earnings per share figures you can see below there. And of that, those earnings per shares, we're paying a final dividend of 2.15%. over last year, excluding the special dividend we paid in the last financial year. Moving on to the balance sheet, a couple of items, I think, to draw to your attention. The property plant and equipment has gone down from £4 million to £0.6 million. And the reason for that is that we've decided to sell our property in West London. That's our UK head office. So that's now on the market. So what you'll see is you see that go down into current assets. That's the figure there at £3 million revalued last year. And we're hoping it will be sold in the next 12 months or so. The other major item of change in the year is, if you remember at the end of the last financial year, so March 22, we had a very high trade and other receivables balance. That was on the back of a very healthy sales figure in the final quarter of the prior year. That cash has obviously all come in and the trade and other receivables balance you see there is like a more normalised number. And off that 7.6 million of trade and other receivables, Right now, as of the end of June, in fact, 4.8 million of that 4.9 million has been collected. You may know that we don't generally have bear test issues. We have customers who are primarily large multinationals. And so the challenge around those isn't so much whether we are going to get paid, but rather when we're going to get paid. And we have seen a bit of an increase in terms of when they're paying us. So more and more companies, large companies now moving to a 90 day payment cycle. The final item on the balance sheet, as I said, the cash, 17.2 million. That's gone up from 11.4, driven by the collections we made during the year, but also netting off the 6.2 million of dividends that we paid. So of that 1.2 million is the normal dividend, if you like, and that the other 5 million was the special dividend of 12.5 pence per share. Moving on to the cash flow, I think I've referred to most of these items actually, but if you look down, going for the £2.4 million of profit before tax, very positive movements in working capital, that's the collection of the debtors at the prior year end. Depreciation and amortisation fairly stable at around £600,000 to £700,000 per year. The share based payment has gone up. That's a non-cash item. There's no cash going out as a result of that, but that's a number relating to the number of share options issued in this year and prior years. And that brings us down to cash generation from operating activities of 13.7 million. As far as investing activities go, we have an ongoing investment of around 0.2 million in property, plant and equipment. The large part of that is IT equipment for internal use. One new item in the cash flow this year is the purchase of intangible assets. So all of the systems I mentioned earlier that we've invested in, many of those are being done on a cloud basis. So this is effectively the capitalization of the setup of those cloud systems and we are required to do this and those investments will be written off over a period of five years so this is a charge which will probably grow a little bit in the coming year but then stabilize at this sort of level for the next few years Capitalisation of development costs. So going through our income statement, we have around 2 million of R&D investment. Some R&D we're required to capitalise under IFRS. Frankly, we'd rather not, but we're required to. So this represents that element which is captured under IFRS. So it's stable at around 250,000 pounds per annum. And that then gets amortised over five years or so. So pretty stable for the time being. other item on the investing activities of the is the interest received now obviously we have a healthy cash balance and what we've seen over the last year as interest rates have gone up we've spent a bit more time just being prudent in terms of how we invest that in some cases overnight in some cases three months forward but obviously looking for the best rates and the large part of that is in gbp so we tend to hold only as much usd currency as we need to to meet our ongoing obligations but obviously the large part of our inflows in cash are in usd because a large part of our revenues are in usd as well but we've managed the usd really on the base that we need it and the rest is converted into gbp On the financing activities, I mentioned already the dividends paid during the year. The next item is all around purchase of own shares. So during the year, we have had a share buyback programme in place. The primary driver of that is to net off the potential dilution from share options. So we try to match the number of shares that we've bought back with the number of share options in issue. And that accounted for 1.5 million of cash outflow during the year. And obviously that's in all shareholders' interest because it means that shareholders won't get diluted when their share options are exercised. So that brings us down to the cash at the end of the year of 17.2 million. Okay, final slide on the finances. As I said, we're trying to be a little bit more open the granularity we're able to do that because of the new systems that we've implemented and so what this chart shows is how our ARR has grown from 14 million at the start of the year to 16.7 million at the end of the year. Now the biggest component of that increase is that third column the upsell of 1.7 million and that's significant because that's really a testament for our existing customers of the value they see so the Another important part of that is that it also takes into account the customers we've converted from being on a perpetual license and moving to a term license. So on a perpetual license, they'll have paid a large amount upfront and then they'll be paying a support maintenance amount on an ongoing basis. Obviously when we convert them to a term licence it's good for them because it gives them access to all of the recent features but it's also good for us because we get a term licence payable every year and we also get the support and maintenance on top of that as well. that's the biggest component um the other parts of that the new logos we've sold 0.4 million we've had a churn reducing our arr of 0.3 million that equates to around a churn of 2.1 on the opening balance of 14 million and then the final component you see there is the 0.9 million of the fx impact so during the course of the year we've seen the dollar strengthen And of course, having a large part of our revenues and ARR in the form of US dollars has had a positive impact. So if you're looking at this excluding the FX impact, you'd say that actually the underlying growth is excluding that 0.9 million, taking us down to 15.8. But with that FX impact, which will disclose every period from now on, gets us up to the ARR of 16.7. And then my final point, really looking at the pie charts below that, this is breaking down the opening and the closing balance between two numbers. One is the license revenues. The other is the support and maintenance and hosting. And what you see there is that the support and maintenance has gone down from 7.7 to 7.6. Now, there has been growth in the support and maintenance. but then it's been reduced by the fact that we've taken customers from perpetual licenses onto term licenses. And that's why you see the term licenses go from 6.3 to 9.1. And that's a healthy indicator because obviously the licenses have a much higher gross margin than the support and maintenance.

Okay, Bill. Yep, so jump into, so I thought we'd just walk you through If you've got questions, I see some people utilizing the Q&A tab. But don't forget it's there if you want to submit some questions for us to review at the end here as we're nearing the completion of the slide portion of the presentation. So the first is from a health client of ours that we actually host in Celebris Club. It's a large healthcare insurer. And there's two stories here, actually. One is the value that they're getting from Celebris data to build better experiences for their consumers, going back to the mission statement I gave you before. But the other is in the reduction of the number of people picking up the phone and calling. And we're finding a lot of this. And actually, about a year and a half ago or so before We decided to adjust the sales approach to not just focus on the use cases and the value we provide, but to also start to identify the cost savings that we can generate as well. We wanted to get out in front of that, and that's worked quite well. And you can see in this particular use case, a call center being such a large fixed cost for a lot of our customers, having a reduction in need there is very beneficial. Jump into the next use case. This is an interesting one because this particular retailer has several brands. They've been using Celebris for consumer insight or what formerly we'd refer to as a CDP for quite some time. But they've now also started to leverage the fraud features to identify and save the customer's money from identity theft fraud or things like account takeover. And then finally, this one at the front of it, when you read from this banking customer, you'd read this as a marketing use case. They're increasing click through, they're having a savings generated in their cost per acquisition from a marketing perspective, which is a common metric. But there's an underlying piece to this, because this is actually marketing and fraud as well. Because in this space with click fraud and things like that, there's a lot of waste that organizations have very difficult time identifying. And that the machine learning and celebrates can provide things like bot detection to a to a much higher degree than any other application can. And that's really been the sort of beginning of our journey over the last couple of years and using our data to build better machine learning or generative Ai to use a buzzword. But to basically bring the data to life in a meaningful way that not only helps them achieve better success, but also reduces the money that they're spending by not spending it on fraudulent clicks. And so finally, just to kind of wrap up before we open things up for questions, from an outlook perspective, you'll continue to see this focus on new logo sales and maximizing our existing customer base. That's why we've stood up the customer success team in international and in the Americas. We continue to find ourselves on the forefront of really three common gaps. that customers come to us with. Either the data they currently have is bad, inaccurate, or has gaps. Their digital identity solution for anonymous consumers, whether that's for marketing or for fraud, is heavily broken and unable to be fulfilled by their existing technologies. And they're worried about compliance and they want to be able to capture data in a true first party manner in a way that allows them to own and control the data versus sending it to a third party. And that's the continued mantra. And every deal in our pipeline continues to evolve around one or multiple of those three gaps as we've simplified our messaging. We'll continue to invest in our marketing and sales to bring that message to bear, to be even more aggressive in how we're bringing that message to the market. And given the existing pipeline and given the diversified pipeline that I've alluded to before, where it's not just financial support, services, it's travel, it's airlines, it's healthcare, it's leisure, it's retail, et cetera, in addition to the traditional financial services model. We believe we have a seller's platform that can be easily tailored to any customer in any vertical. And that's where we're testing and learning in different conferences and different verticals and different sales cycles as we've stood up that direct business. But given the view that we have today and the pipeline that we already have in motion where we're confident in our ability to deliver this current financial year's expectations that you would have seen published earlier today from the analyst community. So with that, that brings us to the end of the presentation and we'll turn things over to the Q&A portion of today.

Bill, Ash, thank you very much for your presentation. What I'll do is I'll just bring your camera up to full screen now. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by your investor dashboard. Bill, Ash, as you can see, have received a number of questions throughout today's presentation. If I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you at the end.

Yeah, absolutely. So there were a couple that were pre-submitted. So someone was nice enough to give us time to prep. So thank you for that. But the first question was, we announced the delay in two contracts at the end of the year. Is there any update to those? Yes. So both are actively being worked and both are actively on the goal line at the moment and in legal negotiations with sourcing to finalize. So while it was as we outlined in the trading update on, I believe it was April 3rd. We're happy to announce that those do continue to move forward, one of which is a Sellebris platform software deal, and the other is a mix of software and hardware. So that's kind of the general update from that perspective, but hopefully answers your question. The second pre-submitted question is that we've made significant investment in bolstering direct sales. Could you tell me what percentage of sales is now direct in comparison to a year ago? So I mentioned this earlier, but just to make it clear again, the pipeline started last year around 10 to 15% direct sales. Now the pipeline is about 65% direct. So we've In a very short period of time, without a material impact to our operating expenses, as we've outlined, we've been able to stand up a direct sales staff. And now we're just testing and learning as we go. Same to be said with our marketing investments. Let's see. Next question. Can you put a value on your pipeline? We can and do. We don't disclose that yet. I'm not being cheeky about it. We do actually have a significant number of reports that we look at on a weekly basis and that we review at the board level on a monthly basis, but the system's still new as we're vetting out all of the changes to that and getting that linked with our financial system and some of the integrations that we're doing. You can expect to see more from us in the future, but hopefully you found that to be a good first step of us at least discussing discussing the growth in the pipeline and the stage and the amount of, in the proposal stages as well. But you can, as we find the opportunity and Ash has got burning all of these numbers, you know, as we get more comfortable, we'll continue to disclose additional numbers as we get comfortable with those. If there's certain things you'd like to see, feel free to funnel those through FinCap or Canaccord and we can look to see how we might include those over the coming years. Let's see, the next one. Do you have one you want to pick from here? Yeah, I'll take the next one.

Okay, go for it. So, question, you talk a lot about becoming more sales-focused. What prompted this change and why was it required and how has it been received by some of the more long-standing staff? Would I be correct in the thinking that the company is becoming more American in its marketing sales approach, if so, is that by design? You want me to answer that one?

Yes, and the board was quite happy to take a much more American approach to how we sell and how we market the platform. That's probably the easiest way to do it. That's why you've got me with the funny accent now running the business. From our perspective, the U.S. market is a massive opportunity. When I joined D4T4 about five years ago, I'd starting to grow that in a significant way. So it's a marketing and a mentality as a software business. And it is a lot of change. We have become, obviously, more sales-focused, as you rightly called out. But that change was required because we want to control our own destiny. And the Celebris platform deserves to be in the hands of many more brands. I've had the pleasure of working with Celebris through many names going back almost 20 years when I was running a consulting business at the time. In the US, it has been a transition. It continues to be a culture shift. We have had to make unfortunate changes in structure in the business. We've moved away from projects that were not profitable so that we could instead focus resource and investment on the core initiative, which is selling more software. And we continue to monitor. We've invested in a global HR team. We've got a strong team and systems now in place to monitor employee satisfaction and concerns and to create a much more open and communicative dialogue across the business. And we continue to make sure that we're we're making the best use of our staff around the globe and that we're continually looking at how we apply our resources in the right ways but also how we openly communicate that to the business so everybody is part of the journey they're not just being hit with hey we're making this change these are conversations that we're having now on a on a quarterly basis in town halls and on a more regular basis in one-to-ones and we've also established a strong management team of 10 people across the business that represent all of the areas of our business that meets on a weekly basis and we make sure that we're addressing that appropriately i don't know ash if there's anything you want to want to add to that no no so you said it all

Okay, where should we go next? So the question from Malcolm, I'm not sure I understand it, Malcolm, 3.8%. So software sales up 3.8%. Perhaps you can just elaborate on that if you don't mind in the questions. Let's go on to the next one. Please could you comment on the maturity of the acquisition?

So for acquisition, Lawrence, if I don't answer this correctly, please feel free to write a clarifier. The acquisition pipeline, I'm assuming you mean new business pipeline. So the proposal value over the course of this past fiscal year increased fourfold, which means that we're moving more deals more quickly. I'll be very candid, we're still learning. Ash and I have been in businesses that have sold in a direct capacity, so that mantra's not new to us. And so there's a lot of learning. There's a lot of events and things that we've gone to. Some have been good, some have been bad. But for us, it's all about learning quickly, using data to drive decisions. And when we find something that's working, we continue to invest heavily in that. And that speaks to our partners as well. So I know we spend a lot of time talking about direct, but with our partners, we've changed that engagement model as well. And we, again, the partners where we're having more success are going to be the partners that we invest more with. It's going to be using that data to drive where we're investing and how we're building that pipeline. Now, acquisition can also mean M&A. So just to touch on that, because I'm sure we'll get some questions in this list, but for us, there is nothing imminent, just to be perfectly clear, but we do have in mind what we would like to acquire if we can find the right scenario, and it'd be more on the data activation side, so what you do with the data. And we've done a lot of development on our own here. We've launched CX Vault, we've brought machine learning and things like bot detection on a subscription basis into our platform. We've launched what we call our Cellverse Analytics platform, which is all the reporting and dashboarding for customers to use our data in real time from a marketing and business perspective. And we've built some pretty great integrations from a fraud and case management perspective to do more end-to-end fraud detection and prevention. So there's a lot that we're doing on our own, but there are things that we've been actively exploring, given the cash that we have on hand and what we might acquire that might make sense to be additive as a module to the Sellerverse platform.

That sounds great. No, that's fine. So what is the rationale in selling the building is you obviously don't need the cash. John, you're absolutely right. We don't need the cash. However, the building is 17,000 square foot. We did make a decision last year to move to a hybrid working model. so teams are coming into the office on a regular basis but not every day but we do want people to get together and really 17,000 square foot is way too much for an employee base in the UK of something around 70 75 or so so we will sell the building we've already identified an office not far from where we currently are that would be a leased office of around six and a half thousand square foot which I think will work better for us and also I and the culture and look and feel as well so part of the journey that we've been on over the last 18 months has been around changing the culture and Phil's talked a lot about accountability and investment so the building is an opportunity to kind of reinforce that. With the 3 million that we'll get, or hopefully 3 million we'll get, that will stay on the balance sheet and again reinforces the strong balance sheet that we have and assists also in the previous question in terms of any M&A opportunities. Question from Lawrence, is there any update on NESG? No, good point. So ESG initiatives, there is a slide in the appendix if you'd like to have a look at it. There is again an ESG report in our annual report, which is now live on our website. So what have we done over the last year? Well, we've reduced our carbon emissions it for calendar year 22 it showed emissions lower than calendar year 21 in this forthcoming year we'll be doing two very important things obviously the office move in the UK is key moving down from 17,000 square foot to six and a half and then the other high polluter in the group last year was our India office so we will now be moving our India office as well Sometime calendar Q4 this year. And Lawrence, if you're interested in this, if you look at how the split is in our carbon emissions between scope one, two and three, really on scope one, we're very low now. We've done as much as we can. So now we're pushing down on scope two and scope three. And another question out here, please explain the value of proposals out increased fourfold in further detail. So Martin, this is essentially literally the value of all the proposals we put out to customers. And that could be at a stage where we've had the meeting, we've done some scoping, but there might still be some more scoping to do. So we use that as an important metric internally. externally now as well, because the value of proposals is quite important when you look at what the conversion is going to be and what your, it's a leading indicator, obviously, for the revenue for the coming year or the coming years. So that's essentially what it is. So what's the value of all the proposals currently with customers? Also, when a customer signs up, that comes out of that value of proposals because it's no longer a proposal, it's a win. But as we get through meetings with customers and we get to the point where we have a solid proposal, proposal, that value then comes into that value of proposals number that we're counting.

Yes, I'll take the next one from Martin, because this one is one that I'm quite passionate about. So Martin asked to explain the Security Operations Center, or SOC. management team and we've expanded that team and capabilities because candidly, that our systems, you know, whether we're hosting it in Sellerist Cloud or just simply working with customers on a daily basis, we are helping them capture and contextualize some of the most important data for their businesses. So security has to be at the forefront of everything that we do. That goes to not only what we do with independent audits of our code and platforms and independent security audits, but also the ongoing monitoring. So this is actually a system we subscribe to. to monitor our internal systems as well as all of our external customer hosted environments to monitor and spot weaknesses or issues so that we can address them before they become any a larger issue so it's a much more proactive approach to what's important to us as a business if customers are going to trust us we have to invest appropriately to to warrant that trust your test folder my eyes are huge competition in fraud cyber security how does your solution different differentiate is there a usp yeah so we've actually divided it into uh two main conversations when it comes to fraud so there are organizations that are very data mature they have did models in place that they're using for fraud detection they have potentially massive data science teams engaged The USP in that is that we provide behavioral biometrics and a data model that can easily port into what they're doing today, but gives them a bunch more information than they're used to having. Now on the flip side, you have organizations that are in like that tier two and beyond level that don't have very mature teams that are just trying to get started. And for us there, the USP is more end-to-end. So what we're selling there, in some cases even linking with other case management systems that we offer to the client, is an end-to-end service where we're capturing and contextualizing the data for them, helping them identify what is fraudulent, and actually letting them use our platform to intervene in the moment. and try to stop the fraud before it happens. So that's kind of the two swim lanes that we find ourselves in with fraud. With a lot of our more mature banking customers, it's that first one. It's us providing the data as an extension of what they're already doing today that's filling some gaps that they have as a business. And then for some of our more mid-market customers, and newer logos, it's more end-to-end where we're playing that entire fraud journey for them, where they're actually using Celebris to intervene and actually be more automated in how they're responding to things because they don't have the team and the ability to invest to the level that perhaps some of the larger organizations do.

Okay, I'll take John's question. As the majority of your sales come from two clients, are there some of those sales classified as direct sales? So an important point to clarify here, John, is that we are required to disclose our two largest clients. However, those clients are partners uh through who we sell to a lot of different end customers so in that sense it's not really very helpful uh from a regulatory accounting perspective um so as you know a lot of our sales come through uh partners so the numbers you see in the note in the r m They're not end customers. In terms of, are there some of those sales classifiers, direct sales? No, those are all partner sales because those two largest clients are partners. We're required to count them like that because that's who we invoice. So technically, they're our two largest customers. Phil, do you want to take the BDR one?

Yeah, I can take that. So please explain for Martin, please explain the new BDR role. That's business development rep for everyone on the call and tasks to help generate leads. Are these employees or part-time? Are they freelancers? So on the sales organization, everybody is full-time. The business development reps, are in many ways, Martin, doing the old school thing of picking up the phone and making phone calls, which I know sounds silly, but honestly, it's working. We're getting a hold of people, starting conversations, and the BDR is incentivized to do one thing, qualify a lead to throw into the pipeline and basically works for a subset of the sales team. So we have a BDR in the US who basically works for our sales reps in the US, and his goal is to just opportunities. He's using every channel available to him. We've invested in technology there to help with that. And he's making phone calls on a daily basis to get ahold of people. We do use, I know you didn't ask this, but just to clarify, we do use a few contractors on the marketing side for some of our video development and some of our content development and things like that, just to help streamline things. everybody is full-time and candidly at the moment it's because they have to be we're made we made a prudent decision to stand this team up we need people that are invested in the success of the business that are part of the business that's not to say that at some point we might not try you know something external when it comes to business development reps but we need to solve it on our side first before we can ever expect someone in an outsourced or freelance role to be able to actually understand what we do now that being said we've significantly simplified how we message and how we sell even how we of the product and how we set clients up for success and even we've even templatized all of our services to a 60 or 90 day quick start for how we how we actually get them stood up in sellover's cloud so i think we're getting there but i wouldn't make that investment yet i think we're doing just fine with the with the full-time resources we've brought on board yep okay i'll take the next question from john is there much staff turnover is recruitment a problem

um there has been staff turnover um if you look at the annual report you'll see that the number of employees is 150 uh during the last year which is the same as the year before and that's despite all of the investment we've made into sales and marketing uh into the management team we've taken on board um and that's been done through really kind of refreshing and renewal so there have been people um who have left the business as a result of also the systems that we've implemented which have automated and streamlined our activities. So, yes, unfortunately, there has been some staff turnover. We haven't lost anyone key from the organisation. I think what we're generating now is a real kind of a buzz within the organisation. And I think the cultural change we've made in terms of being more of an empowered environment and culture and more accountable has been very effective in generating that buzz and that culture. And in terms of this recruitment of problem, it really isn't right now. We recruit really high talented people. They see what we're doing, they buy into it or they don't, but the ones who buy into it join us. But it is a good point, John, because actually if you look at 18 months ago, we did have concerns. I think like a lot of companies actually, as companies were coming out of lockdown and going into hybrid working. There's a challenge behind that and the challenge is that by having remote working people, you have a greater access to people across the country, whether it's in the US or in India or in the UK. The downside of that also is that it's easy to lose people because they're not limited to taking jobs on in their locality. So right now we don't have a recruitment problem. We did have concern about it 18 months ago, but that didn't arise actually. So we're pretty happy with how things are going.

I think I'd also just add one of the systems that we added is a system called TeamTailor that we use for recruitment, and it's phenomenal. It's so easy to use, even I can use it. So it's really streamlined our entire recruitment process, everywhere from budget approval to actually interviewing the candidates and scheduling them. key talent, and some of that talent that we brought on is actually how we've been able to advance the Sellebris analytics platform that I mentioned before so quickly, because we brought on some strong data folks to help drive that product development. Yeah. Can I take Simon's question? Sure. Are you able to sell the fraud product as a standalone installation or does it have to be sold via the seller's platform? So customers can come in today like they are right now and there's active conversations and they can just buy the fraud features. But at the end of the day, it's all the seller's platform. So if they decide to buy fraud to start with and then six months from now buy some of the marketing features, they're more than welcome to do that. It's just an update to their license and an update to the commercials. And that's the it's just about streamlining. We want to make it as easy as possible for customers to adopt the features and functionality that we bring to the market. It shouldn't be a burden. It shouldn't be confusing. It needs to be very straightforward. We don't really care what a client starts with. We've got clients all over the board starting at different areas of the platform, anywhere from the Salesforce integrations to the CX vault to the consumer insight, formerly CDP to fraud, et cetera. And that ultimately for us, it's what's your pain point? with the benefit of our platform also used to be a curse, right? It's that it's a Swiss army knife. You can do a lot of things with it. But the fact that we've now gotten the stories down into these significant, into these pain points and gaps that we solve for makes it a lot easier to qualify a customer in or out as to whether or not they're a good fit for what we bring to the market.

And on that note, Bill, do you want to just talk about some of the fraud examples that we have with customers?

Yeah, yeah. So I touched on two of them in the use cases I showed you, although I might have breezed over them a bit, but the retailer using it for account takeover. So basically, is this actually you that's logged in or has somebody gotten access to your account through nefarious means? It's things like bot detection, which has been very big in fraud. If you do some Google searching on that, you'll notice that bots have become sophisticated. For example, and and we show this in actually a demo. You can go to chat GPT right now and you can ask them to build a bot and that it will write it for you. The problem is they're very difficult to identify as not being human. And that is an area of fraud, particularly in the advertising world, as well as in things like quote fraud and stuff like that in the insurance world. So those are just a few examples. The list is actually quite long these days in terms of the conversations we're having with clients. But at the end of the day, a lot of it comes down to, is this actually you? And that's the root of behavioral biometrics and what our platform brings to market.

And sticking on forward, we've got a question from Vivek. He's talking about the ROI. I think we've shown that in the slides in this pack. But the question is, how good is FTP at preventing false positives?

Yeah, so I can give you a very real example from a phone call I was on not too long ago, I think about three weeks ago, where a customer intimated to us that they identified 30% more fraud in a given month with the addition of our data. And that company was using quite a few different fraud solutions. And the reason for that actually comes down to digital identity verification. you know it's quite ironic actually the conversations that we're having in marketing resonate in fraud because at the end of the day if you don't have a solution that can build a profile of an anonymous individual for the reason that the reason being that you will go to a website perhaps four or five times to a brand you're used to working with and you won't log in unless you go to make a purchase or perhaps to go actually formally do whatever it is you've been researching Most solutions will only track you from when you log in. But what about all those behaviors you showed all the times you didn't? Sellers being able to package that up and say, hey, this is Bill. He just logged in. But by the way, Bill's been here four times in the last month and his behavior is not the same. And this is not what we're used to seeing. You know, you should intervene, make him jump through another hoop, hit him with a push notification, block the transaction, you know, things like that.

Okay. I think we're running out of time now. We're just coming up to the hour. We are.

Bill, Ash, thank you very much for that and being very generous with your time there. I think you've addressed those questions as you can from investors. And of course, the company will review all the questions submitted today and we'll publish those responses on the Investor Meet Company platform. But just before redirecting investors, provide you with their feedback, which I know is particularly important to you both. Bill, could I just ask you for a few closing comments?

You could, sure. So I'll just say thank you to everybody for your time today. Thank you for the questions as well. There's a lot of them. So we will go through them, and anything that wasn't answered, we'll put all of that up on the investor site and make all of those question and answers available for all of you as well, like we did last year. Hopefully you're appreciating the transparency that we're providing, and hopefully you're just as excited as we are about the potential of this business and where we're taking it from our perspective. We've got all the foundation in place. Now we have to execute. So we're quite thrilled with with what we accomplished in this past year, albeit frustrating that those two contracts didn't didn't cross the line when they should have. But we're very excited about this current financial year and where we're taking the business. And we appreciate you going along the journey with us.

Bill, Ash, thanks once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of D4D4 Solutions PLC, we'd like to thank you for attending today's presentation and good afternoon to you all.