Dubber Corp Ltd

Okay, we might start now. It looks like we're stabilising on the list. So good morning everyone. Welcome to the Dover Corporations FY26 Q1 update. Andrew, if you can move on to the key messages please. So we did report positive net operating cash flow for the first time in history. excluding the exceptional cash flow items, which Andrew will talk to. Whilst there is a chunk of money in the quarterly, in the one-time exceptional cash flows, most of it's not continuing. So we don't expect that to, we expect this to be a little bit abnormal, the cash out for the quarter, and that should stabilise going forward. The group remains well capitalised with over $14.5 million of working capital. With a cash balance, it's at 30th of September of $9.5 million and our $5 million undrawn facility. During the quarter, we exited our UK property leases, finding an annual saving which will start flowing through of $2 million per annum. Cost us $300,000 to exit those leases. Our underlying recurring revenue for the quarter was $8.2 million, which is flat month on month. with the previous quarter. Now we've excluded VMO2 from that. We do still have some VMO2 revenues, but we're not going to call that recurring revenue on the basis that VMO2 are still planning to move their services away. So excluding that, we were flat and we had, and we probably, our growth has been washed a bit by another change that I'll talk about coming through. The group has signed a new partnership with Crescendo. Crescendo, why this is good, and I'm going to talk about this on a slide, but Crescendo is the third biggest UCAS provider in the US. So Microsoft Teams, Cisco, WebEx, and Crescendo is number three. That gives us a whole new market to attack and grow our business. Our communication service provider is still increased again. We're still focused, consistent with what we told you last quarter and the quarter before, to get to cash flow break-even during FY26. And the recovery of the funds continues. Moving on to the CEO presentation. Just reiterating that, to hit operating, normalised operating cash flow break even during FY26, a lot of it is driving revenue now. It's all about sales, marketing and growth in this business. This is what's going to dominate our journey going forward. We are continuing a cost-out program. We continue to look for efficiency gains within the business, and that is anything we can do to automate the business, such as right now we're working on automating invoicing. So when someone subscribes to our service, it adds a licence into our system, it flows straight through our billing system, straight into NetSuite, invoicing straight to the customer. So as much automation we can drive through the business, so we're a real simple automated system SAS Business is what we're driving for to continue to optimise our costs. We've covered the real estate leases and we're also working on decommissioning our UK data centre, which will result in probably somewhere between a $1 and $2 million saving. This is a data centre that came through acquisition with Speak and Ariandy. We're moving Vodafone from Ariandy to the Dubba platform As you know, VMO2 intends to leave. We've got our payments customers being migrated across to the Dubber platform and our archive customers. And once that's complete, we'll save another chunk of costs through the business. I'll move to the next slide to talk about revenue growth because it's a bit more focused on revenue through that quarter. Our strategy to grow our revenues... It needs to go a bit deeper into some verticals, deeper in that specialising in verticals and bringing real value to some of those verticals, financial services and other verticals where we can really get really good revenues. Being a bit more specific about the value we bring to them so we can charge a bit more and get more content through that. We're also finding more CSPs. There's some telcos that got a focus on driving recording as a service products. We're talking with multiple telcos now about being the partner with them for recording as a service. And we're concentrating on partners who bring real value, such as Crescendo, and open up new markets so that it helps us, not just a partner for the sake of a partner, but a partner that can really bring true revenue and a whole marketplace with them, a whole new platform of technology that we can integrate with and bring through. Our product is a very feature-rich product. We've actually invested, again, a lot more in R&D this quarter. We need to continue to drive that value through our sales and marketing message to get people to understand the value of moving from recording to our entry-level recordings plus trends through to our full AI SKUs and the benefits they bring to our business. This quarter, we've released two more features, which I'll talk about more in the later slides, but a new signals feature which listens to all your voice recordings across your business and tells you all the key topics discussed in your business, not just those pertaining to sales or complaints. It does a broad brush of your entire business. We've also brought in our new natural language search with Agentic AI, which we'll talk about in the same slide. The sales promotion, we are driving promotions, particularly into the last quarter this year. With a number of partners, we are running promotions in the last quarter to drive AI uplift and AI sales. We are going to continue to differentiate our products through the greater value that our AI brings. And I've talked about, and of course it drives sales. increased ARPU. We're also looking at bringing through partner training programs. We're talking with a company right now that's looking at bringing specialised training programs so that our partners have got a better skill set and better understanding. They've got to get certified to sell our products. So we think in a 30-minute-hour training session, understanding the value supported by partners will help drive... better uplift, as well as I think I mentioned last quarter, the training videos and the promotional videos that we're bringing through embedded into our products so people, our existing customers, can see all the benefits really simply of the AI SKUs and what they bring for their business. Moving to the next slide, if I may, Andrew. On the communication service provider updates, I've talked about Crescendo's NetSapiens. In terms of Cisco, Cisco is changing the way they engage with us. Instead of paying us for double go, we still have the double go SKUs. Nothing's changed with what we supply to Cisco, but we will now be remunerated by the end customers and selling them trends and AI SKUs and working on that upsell. When Andrew presents to you in a little bit to show you the numbers were flat quarter on quarter, This is the change that flattened our revenue for this quarter, but we hope to be able to get some growth back to replace this revenue by selling directly through a new motion in the Cisco environment, replacing this revenue in a different manner. We continue to see good engagement from Cisco partners and for the Dubba premium products for the Cisco marketplace. But the change we're talking about pertain to the 30-day recording product, not our core products. Next slide, if I may. We've launched our first agentic AI product called the Insight Agent. The next slide will give us a better understanding of the agentic agent, so I might step onto that. But this is now allowing you to ask natural language questions, any question you like, across your entire voice recording platform. in your business. What was our best-selling product last week? Our agentic AI will have sub-agents which will then analyze our offer expansion moments and information, our offer accepted moments, different moments, and there's 10 or 20 different agentic agents that operate and go back up to a key decision maker that come back and give you the outcome about what was our best selling product last week. So in this case, it comes back with Smartphone X2 was the top selling product with 300 sales related mentions across 77 conversations. Naturally, like all our products, you can quite easily drill down to hear those conversations and see what's going on. But there's a lot of conversations that happen in business between staff and staff, staff and customer, staff and suppliers. This agent now is going to allow you to delve into these conversations and find real value. Again, as a business, I still think we have to improve the way we get this messaging. to our resellers to unlock the value of this business so it's better marketing, better information to our sellers, better training for our sellers so that they understand the values our products bring in order to boost our sales going forward. And another example is the next screen of the same one, what were our most exciting negotiation techniques last year. Last week's volumes discount achieved higher acceptance rates than percentage discounts. Marker C achieved the highest negotiation rate at 94%. So I hope that gives you an understanding of what the inside agent that we're launching with Agentic AI, and again, the company continues to spend strongly in R&D. I'll now hand over to Andrew to handle the financial update.

Thanks, Happy. So, yes, revenue for the quarter was $9.4 million, so that's down 7% on the equivalent quarter last year and 12% on last year. Q4, that's really reflecting the reduction in the BMO2 revenues as that process is sort of started in the quarter. If we exclude BMO2 from both Q4 and Q5, And Q1, our recurrent and many one-off revenues, Q2 31 was 8.2 million, which, as Matt said, was consistent with Q4. So that's a like-for-like comparison. It's looting BMI, too. So, yes, we saw some growth. That changed to Cisco as well. has impacted the quarterly revenue growth, so it's offset that, as well as I think we talked last quarter a little bit about some of these long-term deals that were sort of rolling off towards the end of last year for archive services and so forth that have been renewed, but at different rates. So they're largely done last year, but we see a bit of an impact quarter on quarter, obviously from the full quarter's roll-off of some of those deals. So Yes, reasonable underlying growth has sort of been just offset on a recurring basis, quarter and quarter. So, yeah, there's still a good growth prospect going forward as much talking with some of the new products coming through. And, yeah, we continue to add partners to the group. Again, that's not a primary focus, but, again, we're still seeing the demand from new partners to take the double suite of services and add up to their portfolio for their end customers. So this chart's really a reflection of what we've been talking about for a while. We got to cash flow run rate break even at the end of June. Obviously, the reduction in revenue resulting in BMO2 hasn't been offset by cost reduction, given the nature of our margins in the business. So that gap's opened up a little bit. In this quarter, we've got $2 million of annualized savings coming through from Q2, as we've interested our surplus UK lease portfolio with all the ancillary costs that sort of go with it as well coming off too. So we'll start to see a benefit on operating costs for that coming through in the coming quarter that we're in. So just touch a little, sorry, touch a little bit more on that. Yeah, obviously our gross margin impacted by that revenue reduction, direct costs continue to come down a bit as we continue to get those operating efficiencies and improvements that we've been delivering over a a long period of time now I think it's not torture the next big lick in indirect cost is the exit of the data center which will go hand in hand with that with the customer migration and exit and in the UK at the moment so there'll be another sort of step change in the an improvement in margin at that point underlying for those customers that once we're able to execute on that over the coming year and operating costs continue to come down. You'll see more of that obviously as we said from the leases and other cost saving improvements a bit more weighted towards the second half, second quarter of the of the year rather than Q1 and so yeah we'll see some continued savings in operating cash based costs as we come into the next quarter and over the rest of the year. If we look at the statutory cash flows, we had record receipts, about 12.4 million in the quarter, which was good to see, up from 11.9 last quarter. Again, that's largely around timing of receipts from customers, but we're all over that at the moment, which is good. I'll talk a bit more about the operating cash outflows on the next slide as it's probably a better representation of that. Net cash inflows from investing represents some payments we received on the exit of those leases for some of the surplus assets that were in those leases at the time. So we've got a little bit of income there. We had some outgoings as well. which we'll talk about on the next slide as well. But as Matt already touched to, we've got 14.5 billion of available working capital at the end of the quarter, so remaining really well capitalised as we sort of go through the rest of the year. So just touching on, if we look at the normalised operating cash outflows, there were 11.7 million down from 11.9 and 12 previously. So they're, again, continuing to reduce. So we had, as Matt touched on at the opening, we had a positive 0.7 million increase in operating cash, which was the first time we've had that as a business, I think, ever. So that was a good result. We spent about 1.4 million. million abnormal items, so a bit bigger than last quarter. It really is starting to come down, even though it doesn't look like it. So I'm just giving you a bit of detail on the slide about where some of those go. So legal expenses for directors and the companies, they're all related to things that were done last year, paid in this quarter. So they are largely... non-recurring going forward. We obviously filed some claims for the historic term deposit matter in Q4, which we paid for this quarter. So again, there's some costs around that. We had some costs for the external leases that we paid out in that cash flow as well. So again, they're definitely non-recurring. Our historic tax repayments are now effectively done, so they shouldn't recur and we had some redundancies as well. So those numbers will absolutely be reducing in general into the coming quarter, substantially lower is what we expect. So the reported operating cash outflow will look much closer to the true operating cash flow going forward.

Matthew over to you. Okay. Thanks, Andrew. Again, this will be frustrating for shareholders because due to the legal nature, we can't disclose too much, but we continue with the investigation and recovery of funds through the board subcommittee that we appointed in January to run this. There are still three cases underway. The Victorian Legal Services Board Where our argument really is, the money was taken en route to a trust. The cases against the former CEO and Mark Madaffari, the lawyer, as well as the case against BDO. So again, we can't provide much detail on that, but these claims do continue and hopefully they do result in something for the shareholders in due course. Finally, wrapping up into the last slide before we move to questions, this business now is all about growth. We've reset our cost base. We've done a number of changes. We've cleaned up properties, other bits and pieces. We're driving automation. And obviously, we'll continue to have a lens on cost. We're still negotiating some vendors such as Salesforce and others into new deals and new prices to help drive down costs. But essentially, the way forward for this company is growth, growth, growth. I think we've actually got a really good product range. I think, again, we've got to get really better at our marketing. We're going to reset that. I'm going to bring that back home to Melbourne and reinvent our marketing team going forward. But it's really getting the messaging out, driving demand through effective marketing both to end users and to partners, bringing in partner training to drive them to have better knowledge of the value proposition of our higher value SKUs. and continually improving the way our partners understand and sell our value propositions. We believe we have a good value proposition. We've just now got to get on to better execution at sales growth and that will be where we spend money, invest money and grow this business. Now we're levelling back into a more stable position and get ourselves hopefully cash flow break even as well as moving into a growth trajectory. That's all we have this quarter. We'll turn to questions if we can. If excluding BMO2 from both quarters, what's the percentage and dollar increase or decrease in sales? I might throw that to Andrew.

Yeah, so that 8.2 is the same number for both quarters. VMO2 is not in either of those numbers that we sort of restated. As Matt says, we're sort of considering VMO2 non-recurring from now on as what's already been used in the quarter for that, and that will be in Q2 as well. Ultimately, there'll be an end date on that. So, yeah, it was flat quarter on quarter for the reasons I talked about.

Okay, does the change to Cisco's commercial model with Dubb adversely affect the timing and dollar value of Dubb's cash flow from Cisco? So the answer to that, and I think probably summing that up, the answer is yes. We would have shown growth other than the Cisco not paying. This does obviously impact cash flow in the first instance until we replace it back through customer growth. So there would have been normalised growth, but the Cisco is why we levelled out. And obviously now we've got to get the motion going with Cisco to replace that and get growth there as well as our ordinary course growth. I hope that answered that question. Given the spend on legal costs was over $700,000, can we read that the company believes a recovery of some sort? Otherwise, why is the spend so much? I think the slide presented $172,000 on current spend, Andrew, for the quarter. Some of those payments and the stuff in Andrew's slide went back six months, Andrew, and beyond some of the costs incurred and some of that was pertaining to ASIC investigations and other fees, was it not?

If you split that 700 up, yes, the 172 number was the company seeking to recover. The other fees were a generic bucket of fees where we've had to respond to asset requests and a variety of other things. And that's over a year. this quarter. So yes, some of it's responding, some of it is on the offence that way. So yes, we're being careful and cautious with the spend that will go to recovery. We need to make sure there's an ROI on that. I think the questioner is pointing out.

How are Dubb going to compete with the impending avalanche of customers talking to people, to customers, to AI service agents and which already have inbuilt recording, rightio. I think your question is... You have lots of individuals, so you have a lot of products out there today that offer recording for individuals. Microsoft Teams you can record and so forth. We don't play in that space in those individuals where I want to record my one-time conversation. We are much more in company space, compliance recording and then AI across that where the intellectual property of the conversation is more owned by the company than it is an individual and just an individual using conversation. So in the consumer space where two people can record a call on Microsoft is not really our space. We are in the space where you need to have compliance recording. It needs to be saved in a compliant location, captioned in the right manner, and then AI across that space. I hope that answered that question. When you achieve, say, $1 million in positive cash flow, what are you going to do with the cash? The cash here is... invested very tightly and very wisely nowadays. We're very frugal with what we spend and the money we do spend will either be invested in the R&D of our product or the growth of our sales and marketing, which we intend to get return on investment. So any cash that this company has is all about spending and either improving our service or improving the revenue growth of the business. You said, if I heard correct, bring back home to Melbourne regarding marketing. Can you elaborate, please? Yeah, the marketing currently function runs out of New York. So it's just a bit difficult time-wise to get as much marketing and effectiveness as I'd like. So I want to get more senior marketers based in Melbourne next to me so we can have a real impact on what messages are going out, what marketing activities have been driven and how we're going to grow this business. That's all the questions we have at the moment. We'll give another 30 seconds or so or a minute to see if anyone wants to add any questions. Okay, the clarification on one of the questions. Corporate customers who implement their own AI customer service agents with inbuilt recording which replace human agents. Okay, that's essentially... That's in the contact centre space a lot more. So there's a lot more... agents typically going in, this is AI agents bots, they're typically replacing things in contact centers. Again, it's not really a space that we've played. We have a little bit of contact center stuff, but not much. So again, it doesn't have a substantial impact on us now. There is also a need to record agents. In fact, there's also an AI need to record what the agents say because agents get stuck. This is robotic agents. They get stuck at certain junctions as well. So there actually is a market where even though you've got robotic agents, you still need AI to make sure they're performing and doing what they should do as well. So it's not really our space, but I understand. Hopefully, again, I answered that. Any guidance on revenue growth for the next 12 months? Andrew?

No. I think we'd expect to have underlying Underlying revenue growth, obviously, you know, we're not providing any specific guidance aside from, again, the key is to get the business back to the operating cash flow break even. So that'll be through a combination of the ongoing efficiencies in the business and growth. Yeah, there's a number of uncertainties around it being, for example, in terms of how that goes. So, yeah, we don't specifically want to pull out any. forecasts at this point.

Surely there's sales targets for the teams. Absolutely there's sales targets for the teams and KPIs and what they do. But I don't know whether... we intend or want to give guidance to market on internal sales targets and where we're going. But absolutely, we're running the sales teams tightly and professionally, as you should expect. Are there any remaining major single partner exposures like BMO2 or Cisco that can upset the growth trajectory going forward? Don't believe so. The other substantive customer is Vodafone, who's migrating from Ariandy starting on the 16th of November across to our Dubba platform. And there's lots of promotional stuff showing that Vodafone is going more into Dubber, but we've been visiting all their customers, showing them the value proposition of the Dubber AI, and there's a migration commencing out of the data centre across. So that gives you a fair bit of assurance that our substantive revenue partner is vesting in with us, not moving away. Okay. Are there any further questions? Well, if there's no further questions, I'll wind this up because I have been told I'll let these go too long previous quarters. Thank you for everyone for joining. I hope we provided a reasonable update to you so you understand where your business is heading and look forward to a further update in three weeks' time at the AGM. Thank you, everyone.