Celebrus Technologies plc

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

Hi, good afternoon, and good afternoon to everybody. Thank you for taking the time to join and listen in to our interim results presentation. I'm joined today by our CFO, Ash Mehta, as well, and the two of us will walk you through the results and some of the business strategy and hopefully provide you with some content that sparks some questions. So please feel free to interact with the Q&A tab. We've got that up here on the screen. We'll try to get through as many of the questions as we can here as we get to the end. So from an agenda perspective, kind of follow the same plan for those of you that have attended in the past. It'll look a lot like what we've done in the past with a few small changes. So we'll walk through a little bit, just a very quick reminder of sort of the celebrant's mission statement and values and the reason we're doing that. is uh as we're building out the business and we continue to sort of communicate with investors we communicate with clients and we set our various strategies across the business and business plans for each division we really try to align on those values and try to bring that to life so you'll start to see some of that coming through in all of the materials that we're putting out and so we'll just do a quick refresher of that i'll also walk you through some of the operational highlights that for those of you that had read the the rns from this morning would have picked up on on several of those um ash will then walk through the financial highlights and sort of review the balance sheets and several of the common uh common views that we walk through in these meetings and then i'll wrap up with uh with some just a view into some elements of the business strategy cover off on our uh competitors cover off on some of the how we sell how we go to market and provide some use cases as well and just give you a sense of what customer success has been doing globally with our customers and not only helping evolve how we grow those relationships, but also in helping us sort of collect all the stories from the field and make that readily available to marketing, to sales, et cetera, as we try to evolve the business and move forward. So from a mission perspective, everything that we do with the Selliverse platform and everything we do in terms of the services and the data and the technology that we provide to customers is geared around helping them just build better relationships with their consumers. As many of you are most likely aware, we sort of have two 40,000 foot view use case segments, one on the marketing advertising side and one on the fraud side. The Sellvers platform, the data that we create, the digital identity solutions that we provide in that marketing world are geared towards learning more about you as a consumer and then ultimately helping you do something, buy more products, get you to the content that you're looking for, make the experiences that you're having on that website, on that mobile app, on that kiosk in an airport much more eventful, much more fruitful, and much more streamlined. On the fraud side, it's about protecting consumers, right? And it's more about taking what Celebris knows about an individual on that particular brand website or your banking app, et cetera, and making a very quick decision based on the evidence that Celebris gathers. as to whether or not it's actually you before that bank transfer, before that purchase, or if you've fallen victim to someone gaining access to your credentials, et cetera. But at the heart of everything that we do, it's about being focused on our customers, helping them build better relationships with their customers, And then ultimately making sure that we're innovating along the way and keeping things simple. And I'm not going to read all of the mission and value statements here that we sort of hold true as a business. But ultimately, innovation and simplicity is what you're hopefully seeing. For those of you that have been following the brand during the time that Ash and I have stepped in and built the management team that we have today. Hopefully, this is what you're starting to see, particularly for investors. If you've been to the investor website today, as an example, you probably noticed some changes there as well, as we continue to sort of roll in the investor content with the larger marketing site and make it easier for investors to be able to digest not only what we're bringing out in terms of R&S and interims like this, but also making easy for you to dig into some of the case studies some of the marketing elements and some of the more sales focused elements that we're bringing bringing in through our blog posts etc as well so that you have much easier access to that as we've rolled it all together from an operational uh standpoint the the first thing that hopefully you noticed in the rns is that that is the broad sort of set of wins that we've chosen to highlight uh from both during and after the period including a large global airline A UK energy company, which was a new sector for us and was the utilization of our Salesforce application and the integration that we built with Salesforce to their marketing cloud and data cloud capabilities. A financial institution in the US who has been with us now for a year and has taken on multiple upgrades during that time, sort of validating The land and expand approach that that we've been building upon as we've built out several skills across sales, you might remember the last time that we chatted. We had vertically aligned our sales team, so that we had sales team members and sort of our core five, if you will, financial services insurance healthcare in the US retail and travel and hospitality. Now, we obviously have a UK energy company. We also have a telco customer. So there's some sort of burgeoning areas of interest, including the education sector. But those are largely the five. We brought on a fintech platform. We expanded our relationship with an existing European retailer. We added a bank in Poland, and that was our first time doing business in Poland, which was a fun process to go through, but one now that looks fruitful for us, given some of the partnerships that we've built in that market and several new opportunities sort of building in that region for us in Europe. And we also expanded one of our healthcare customers in the U.S. A customer that's been with us for a little over two years and has actually taken on, I believe it's three upgrades over the course of that two-year period. Again, showing the ability for us not only to sort of expand that sales capability, our ability to prospect and close business, but also for our customer success team to be able to work with those clients once they become part of the family and help them get more and more value from the Celliverse software platform. From a marketing perspective, we've really focused on aligning with the sales hunting process and bringing, and I'll come on to this later on, but really just helping align sort of an account-based marketing strategy. We've done a lot of fine-tuning, a lot of learning of what's working, what isn't, what's a target account and what isn't. And we've really brought the sales and marketing teams together through some recent summits that we've had to really align on that. We've also continued to innovate the platform. For those of you that follow our story, you know that we do two releases a year. We've extended some of our patents and capabilities significantly over the course of the past year with a significant emphasis on our analytics capabilities. not just reporting in Celibris Digital Analytics, which we talked about this time last year, but also now building out a self-service analytics application built around the Metabase technology deployed within all of our Celibris Cloud environments, which continues to be prominent in all of our deals. And every new logo that we've done in the past two years, only one of them was not a Celibris Cloud opportunity. And as a reminder, Celebris Cloud is something we started standing up a couple of years ago that we've put quite a bit of engineering and innovation behind. But it's a single tenant private cloud platform that we stand up largely with our partner AWS today around the globe. And we also continue to optimize the business. We've done a lot by way of new systems, new processes. One of the areas as part of this cloud transformation was that we took some of the data centers that were active on our side, and we've consolidated those down now to just a single data center. So we continue to find ways to optimize business, to optimize cost, and to make sure that we're able to free up that money to put towards the things that are more revenue generating. Ash?

Yeah. Thanks, Phil. So let me just run briefly through the financial highlights. But many of these points will come up in subsequent slides. So I'll get a bit more detail on those subsequent slides. The key overall message from the financial highlights is that all of the key indicators are up compared to this period last year. So annual recurring revenue is up to twenty six point two million. total revenues are up but more importantly underlying that the software revenues are up and if you've been following us for the last couple of years you'll know that for us software revenue is really a very key indicator and the gross profit margin is up and i'll talk through why that is and also i'll talk through what is more important which is a software revenue gross profit percentage and that's also going up in line with previous periods PBT, we focus on adjusted PBT, which is effectively a proxy for cash. So that's up. I think that's our highest H1 PBT we've ever reported. And along with that, the EPS is up. Our cash position is healthy. We have no debt. We're paying an increased dividend for this first half as well. So let's go through the income statement. As you know, we split out the software revenues and the hardware revenues. And the reason for that is that the hardware revenues are generally low margin and they're also very intermittent. So we still have some legacy customers for whom we supply hardware as part of an overall installation package. But this isn't something we do any longer. In fact, there's only a handful of customers for whom we do that. So we separate those out because the real value creator in the income statement is the software revenue line and what you see there compared to this period last year is that those software revenues are up 22.6 percent up to 11.2 million dollars now and moving down the income statement we see a gross profit percentage which is also up so let me just talk about some of the dynamics behind that so our software gp percentage is up to 56.2 percent And the reason for that is twofold. Firstly, it's about scale. So as we scale up, as we keep growing our software revenue line, there are efficiencies and economies of scale that we benefit from. On top of that, when we add on new customers, whether it's a new logo or whether it's an upsell, the large part of that contract value is licensed. So typically around 80, 85% of that contract value will be licensed. And you will know that from our various revenue streams, licensed revenue is the most high margin, typically around 85 to 90%. So again, as we grow the business, You also expect to see that gross profit percentage for software going up period on period. There is a first half, second half element. So it's best to look at it on a four year basis. So whilst we're higher than this time last year, we anticipate that the four year gross profit percentage for software will also be higher for the four year as well. So it's about scale, but it's also about some of the work that we've done. So as Bill was referring to on a previous slide, we've done a lot in terms of moving our infrastructure into the cloud, and that has helped by lowering costs. But on top of that, as we add on more customers, and almost all of our customers now are on Celibris Cloud, we're able to extract a lot of efficiencies and automation from the Celebris cloud environment. And that also then contributes to our software gross profit percentage. Moving down the income statement, our operating expenses are up quite significantly against this time last year, but that's really a carry through from some of the increases we made in Q3 and Q4 last year. So of course, as we're going through a year, We're not only looking at delivering the numbers for the year, we're also looking at what we need to do for the subsequent year. And so on the 1st of April for the next year, being able to deliver the numbers for that year and being ready to be able to do that. So we made a number of investments, principally in customer facing roles around Q4 last year. We saw the costs go up for the full year last year and we sort of carry through that into the first half of this year. Headcount currently is just over 160, but a headcount we're adding are principally customer facing. So we've talked previously about how we've built a direct sales team, we've built a customer success team, and how we've invested further into marketing. So these are the main contributors to the operating expense line growth. Finance income net, we have healthy cash balances. I'll talk about those on the next slide. But not only do we have those, but we also manage them very well. So we have converted our cash balances from GBP into USD. We did that in the early part of this financial year. And that's all part of the change to reporting in US dollars rather than GBP. um but we manage those well so we manage them really looking at the interest increments between investing for it overnight or a week or two weeks or a month and so over the period we've got uh 658 000 of interest income so that brings us down to an adjusted pbt of just over a million dollars again higher than last year and the highest we've ever reported for our first half Moving down, we've got amortization and share-based payments, and those are typically non-cash items. And that's why we focus on the adjusted PBT. That's effectively a proxy for cash generation. Below that, as I said, the amortization, non-cash, share-based payments, cash and that brings us down to a profit before tax of $250,000 no tax charge for the period you may remember we had a high tax charge for the previous year and I did talk at that point about our tax charge coming down, principally for the fact that we have some tax losses in the US and those will be used up this time around. And also through our further investment into R&D, the utilization of the patent box regime on top of the R&D credits regime will bring our tax charge down quite significantly this year. So that $250,000 for the half year translates into an adjusted diluted earnings figure of 2.55 cents per share. So all of these numbers are in US dollars and in cents. And that, again, compares favorably for this compared to this time last year. Thank you. So on the balance sheet. Not a whole lot to say. I mean, other than the fact that it's a very strong balance sheet, we have a healthy cash balance. We have no bank debt. Of the movements that are up there, let's look at the property plant and equipment. It's moved compared to this time last year. But you may remember from the final results, this was really as a result of entering into two new office leases. And of course, under IFRS 16, we have to capitalise those and put those on the balance sheet. So that's what that two million dollars is. And that will run off over the course of the leases. We had some inventory at the full year end, and we have some of that still at the half year end, and that will be, well, that has already moved off the balance sheet now. We don't hold inventory. We don't have a warehouse. So this is typically goods in transit or goods in advance of a particular customer sort of hardware deal. Trade and other receivables have come down since the year end. We continue to collect our cash very effectively. Typical payment days by our customers are 45 to 60. We have very little age debt and we have no bad debt and we've not had any bad debt for some years now. Moving on to liabilities, trade and other payables is down from the full year end. If you remember, we had inventory on the balance sheet. That was for a particular customer contract. And allied to that, we had the payment that we needed to make for that hardware. And that's why the cash balance also the full year was so high. So that is now unwound. And what we see now. in the balance sheet is much more kind of typical and normal kind of balance sheet if you like and you'll note within that also the deferred income line of around 12 million dollars that's fairly typical so we build customers in advance of their sort of year of services and license and so we collect the cash in advance and that's what that figure there represents it's people who've paid us in advance of the recognition of the revenue So that brings us down to $37 million of assets, of which 26 million roughly is cash. Let me say one thing about the freehold property. It was one of the questions already posed. So in the assets held for sale line, you'll see there a figure of $4 million. That is the property we have in West London. That's our UK office. We have had that on sale for some time now. We have an offer. The buyer has put in planning permission and we're waiting for that to complete before we then get into finalising the legals. But we anticipate that happening hopefully in the next few months. Okay, thanks, Bill. Okay, and finally on cash flow. The major point here is really the unwinding from the full year. So at the full year, we had a high level of inventory. We had a high level of cash. We had a high level of trade creditors. And those are now pretty much unwound. And that's why you see that movement in working capital, which covers the inventory and the debtors and creditors outflow of just under $10 million. We had a high tax charge last year, as I said, and so we paid that tax. That's around $2 million. And then the other items of note here, probably the capitalization of development costs. So historically we've had around 0.4 million capitalized. We would rather not capitalize development costs. So most of them run through the P&L, typically around 2 million pounds per annum. However, there is an element which we are required to capitalize under IFRS. The amount has gone up in this period, and that's as a result of certain investments we've made into more the development side rather than the research side. This is all related to utilization of our software for mobile apps. Lower down dividends paid typically in a year, we'll pay around sort of $1.8 million. So in the first half, we paid the final dividend, which was $1.1 million. We did have a purchase of some shares. So you may remember, we had a share buyback scheme. The purpose of that was really to negate the dilutive impact of our share options. It's not for earnings enhancement and we don't anticipate doing a share buyback scheme in the near future. We have enough shares in Treasury which will cover the dilution from options. So, again, as you look at the figures and you look at the adjusted diluted earnings per share, you also need to bear in mind that actually that dilution won't happen at this point in time because we are fully covered for that dilution. Okay, and one final point I said at the start, but just to reemphasize in terms of what our key metrics are, ARR is a key metric. That's a figure which went up in the period. Software revenues is a key metric for us as well. Adjusted PVT is a key metric, but probably secondary to the others. So we have a profit target we aim to make, but we remain flexible. And if we did see opportunities to invest to accelerate organic growth, whether it was a particular vertical or particular geography, that's something we would consider with some impact potentially on profit. But right now we're geared towards delivering that profit figure and consequently also paying a progressive dividend period to period.