Dubber Corp Ltd

Good morning and welcome to the Dubba Corporation Quarter 2 FY264C presentation. The presentation will be done by today myself, Matthew Belizia, the CEO of Dubba, as well as Prasad Kazi, the Acting CFO of Dubba. Prasad, please move forward to the key messages if you can. So obviously following the loss last year that we've talked enough about, we're targeting back to run rate break even in FY26. So we're making progress back towards that as you'll see through the financial slides. We're continuing a big investment in our AI R&D. That is going to be the future of the business. We're continually building out our call recording customer base, and that's a massive asset in that we have call recordings all over the world. But to really capitalize on that asset... is to build really smart AI solutions and more and more AI solutions across the top that don't just do AI for AI's sake, but actually help end customers improve, increase revenue, reduce costs or improve compliance. And I continue to talk about that. I see one of our shareholders on today, Chris Fellers, who gave us a very good idea a few months ago, which we've also got into R&D at the moment. So that's going to... We're really starting to work into really practical solutions for the end marketplace to capitalize on the asset we have, which is call recordings all over the world. We announced just prior to Christmas a large North America CSP signing. This is significant, and they'll be paying us, subject to exchange rate, close to $4.6 million in this quarter, which will boost it. It's a five-year network connection fee, and following that we'll have subscriptions, which I'll talk to on the next slide. The reason we haven't named that partner as yet is it's up to them to come up with a press announcement, which they're currently working on. In fact, we only had a call with them half an hour ago. and they will be doing a joint press announcement soon. But being a substantial business, they want to lead the announcement, and they're launching their product, which is incorporating Dubber to market, so we can't get ahead of them naturally. Some of the Q2 FY26 financial highlights. Recurring revenue of 7.8 compared to 8.2, and total cash costs again reduced by 12%. and we're continually getting costs trending down. So we've done some pretty steady headway on costs. A lot of stuff is contracted, so it takes a while to roll off, and we're continually driving our cost base down, and that program will continue throughout the year. Nick, obviously our pivot now is hopefully the revenue shocks that we've had, and probably there's consequences. There's some of the stuff that happened before us and did take a while. Hopefully that's coming to a level and we can start focusing heavily on product direction, sales, marketing. So that's going to be the future and the focus as we move into 2026, the year. Our CSPs are substantially unchanged and the recovery funds is continuing and we will talk about that in later slides. Next slide, please, Prasad. In fact, two forward. Into the CEO presentation. Yeah, so the large CSP in North America, it is a connection to their mobile phone network. We have hooked up to their mobile phone network. We've been working with this partner for about eight to ten months. We are in production in their network. So we're in production before we'd sign the contract. So we are getting close to a market launch. So the money which we're receiving now is for a five-year network connectivity fee and complying with SLAs and other related services to make sure the product stays on the network and reliable. Additional to that is subscription revenue. And they should be launching their product. And again, not getting ahead of them, but they should be launching their product at the back end of this quarter. and then we should see recurring revenue upside coming after that. The other probably big thing it does, it gives us pretty good validation in market that despite what happened in 2024, which is now two years behind us, that if these guys are prepared to back us, why wouldn't everyone else? So that's going to be a good thing that we hope to leverage as 2026 goes forward, that If one of the best brands in the world comes on board, well, that gives us a good story into the rest of the people. Next slide, if I can, please, Prasad. So some of the current operational priorities and updates, we continue to focus on revenue growth. So that's going to be so important, our product marketing revenue. We're still going to continue to drive costs, but we've got to pivot into growth, growth, growth into this year. We're always looking for operational efficiencies. We're still working on automating billing in this place. In theory, you add a license into here, we add a license that should automatically go into NetSuite and invoice the customer. We should be able to get that streamlined entirely over time. We have three products in the business now through acquisition. We have Dubber, we have the Ariandy product in the UK, and we have Coolant. We are continually working on integrating those all into Dubba. I believe they should have been done post-acquisition, but we're currently working on these programs now. Once we do integrate all these products, we get down to one platform. We drive a lot of cost out of the UK data centre, which is probably going to be around the middle of this year. So we've currently got Vodafone, who's currently our largest partner in the world. currently migrating their customers each week from Ariandy to Dubba. So that's a positive move. That partner's moving their customers across to Dubba every week, and they're selling our product out to new customers constantly now. So as we move up the data centre, we'll do that and the call-in program, and then we'll get down to one product, a streamlined set of IP that we continue to invest in and get growth through. And I've talked about the recurring revenue focus, continually building the asset, which is voice recording. And you think about the wealth of knowledge we've got sitting in voice recordings. Right now, I think our product forces you to go into our portal and drill down to find that data. I want to start to pivot our product direction to start sending that data to you. People are busy. Do people really want to log into a platform and drill down to find this wealth of data? Or should we just send it to their emails and say, if you're a sales manager, this is what you ought to know this month. If you're a customer support manager, you should ought to know that. If you're a compliance manager, if you're a HR manager, what ought to you know that's going on in your business that we should bring immediately to your attention to drive deeper value into your business? So a little bit of pivot into more proactive reporting through our product direction. Next slide, if I can, please, Prasad. We're rebranding our business, not the legal entities, but you'll see all of our branding changing to AAI. The slogan, Unlocking the Power of Conversations. There is a wealth of information in people's businesses in their conversations. Staff talking to staff, staff talking to customers, staff talking to suppliers. to know what's going on in your business. And we've got all that buried in data all through our systems. So if we can pull that out and automatically drive to people outcomes that this is what's going on in your business, this is what you ought to know, this is what you ought to act on. So we're going to rename ourselves AAI with this slogan, the little voice bubble at the end, Unlocking the Power of Conversations. There's two core purposes of why we would do a rebrand. One, People believe that we are just call recording. Dubber in 2021, 2022, probably spent 20 or 30 million on marketing around the world. Crazy money, crazy spends. But one thing they did do is get the Dubber name well known globally. All over the world, people know Dubber as a call recording product. We want people to know that we're not just call recording. People walk up to our booth, go, yeah, you're a call recording company. Well, we were just, we are call recording, but we're also substantially AI now. So, and real business solution AI. So we want people to understand we're no longer just call recording. We are call recording and AI. It also gives us a little bit of divorce from the past. The dub up that does have a little bit of tarnish from what happened a year or two ago, 2026 with dubber AI to new boards, to new management. We're a clean business. We're moving forward in a positive and constructive manner. Next slide, please, Prasad. Our go-to-market strategy. We've hired a new head of marketing, Rob Weiss, who we're pleased to get on. There's going to be a lot more marketing, a lot more exciting marketing for our business. Marketing should drive 50% of our leads into a channel-based business if we get it right. So we're looking to be a lot more strategic and a lot smarter with our marketing. So Rob's now joined us. He's in head office with me every day. We'll be driving what we do there. We're going deeper into verticals. We're going to target some certain verticals and actually drive real business solutions and own those verticals. The Microsoft call recording, the WebEx call recording, they're just a general mid-market product. If we go deep into verticals and drive real value to those verticals, we want verticals to start to understand that you can't operate without W because we're driving solutions that help you drive sales, reduce costs, or improve compliance in certain verticals. Continue to drive more CSPs, there's more ways to market, particularly recording as a service where they make it a joint product with other products that the company's offering. We're also trying to demonstrate more value to people. We are a feature-rich product. We are going to build more products that come with that, things that compete with other larger products in the world and bring more value to our customers by proactively doing... I don't want to release all our product ideas now because we're in the public domain, but certainly we're investing heavy in R&D to get smarter with driving AI solutions and bringing more value to our SKUs. and optimising the sales motions, driving more promotions, differentiating through high value and AI, and upselling through different tiers through this fuse stepping forward. I'll now hand over to Prasad to handle our financial update.

Good morning, everyone. Reported revenue by quarter. So the reporting revenue for quarter Q2, FY26 was $9.3 million, broadly stable, down only one percent compared to the prior quarter. Recurring revenue was $7.8 million compared to $8.2 million to the prior quarter. The reaction is reflecting mainly the residual impact of change in Cisco invoicing. But the underlying customer base remains stable, and we are focused on stabilizing recurring revenues by retention initiatives and targeted customer engagement. Operating cash flow run rate. So the operating cash flow run rate has improved substantially compared to the prior quarter. So the current operating Q2 cash-based cost is $9.5 million, which is 12% down compared to the Q1 F526. And the total annualized cash-based costs are at $38 million. This is like $5 million saving compared to Q2. And this is mainly due to the exit of surplus UK property lease, workforce optimization, automation, and SaaS vendor rationalization. The cash flow is also further improved by additional 4.6 million AUD, which we're going to receive in Q3 from the TA1 North American CSP. So this will make our cash position really strong for Q3 and further. And as you can see, the trend, both the lines are getting very close to us, the cost and the share revenue. So the direct cost. As you can see, the gross margin for Q2 has come up to 70%. which is a one-person increase compared to Q1. This is due to the ongoing reduction in underlying platform costs, like our AWS and Azure costs, which are coming down. So this also includes the cloud platform and AI service consumption across the board, and then the cost offset decrease by revenue in the quarter. So the operating costs continue to decline. Operating costs is the total cost-based cost less the direct cost. So this is now at 26.8 million annualized for Q2. This has come down by 15% when compared to Q1. So Q1 was 7.9, Q2 is 6.7 now. So the group has begun to realize a cash savings due to the exit of leases, workforce optimization, and other cost optimization initiatives, which we continue to focus and tightly manage our cost base. So the cost-cut program is going to continue further into Q3 and Q4, and we're going to see more benefits through it. So the actual cash flow for the quarter. So the receipts that we have is 8.6 for Q2, which is a little bit less than Q1. This is mainly due to the timing difference of receipts due to the customer shutdown during holiday period. The total operating cash outflow for the quarter is 11.2 compared to 13.1 in Q1, which is 15% down. And this is due to the cost saving measures put in place and reduction in wants of payments which were made in Q1. So the overall cash outflow for the quarter is 2.6 million. And once we normalize this, this has come down to almost like nil. The cash inflow was due to the director's capital raise, which is around $765K for the quarter. We also have further $5 million loan facility, which has been undrawn as of 31st December 2025. So the normalized cash outflow, the 2.6, if you normalize it, we have like 1 million, which is like abnormal items, which are like the legal cost for term deposit recovery, and also once-off restructure cost, which is around 920K. And we also have working capital timing differences of about 1.6 million, where the payments were received during the first week of Jan because of holiday shutdown. So if you normalise these cash outflows, the abnormal items, the net cash was like nil for the quarter. Okay. Matt, I hand back to you.

Okay. Thank you, Prasad. The legal cases in going... So the ASIC investigation, which we provide assistance when required, we don't really know where that's up to. That's ASIC's business as to how they're going and who they're pursuing. What was certainly interesting in December, I'm sure everyone's aware that we've taken action against BDO Audit WA, pursuing them for $26.6 million based on their failure of audit, which is in the public record. ASIC has also proceeded action in December against BDO Audit over failing audit processes for Dubba. It probably tells me that it reaffirms our case, that ASIC also believe we have a strong case against BDO audit for not detecting that. So I think it gives us further confirmation that we'll do that. But as per the disclaimer, all proceedings and recoveries remain highly uncertain. We also have a claim against the Victorian Legal Services Board Fidelity Fund for the loss of monies. I think some of the things in the ASIC case probably further support our claim there as well to be honest. So there's a number of things going on in the recovery efforts and under the board subcommittee which is managing that. I don't really have any further updates because we can't talk about that substantially. Moving forward to the focus areas of FY26 and then we'll go to questions. So again, we're targeting the underlying cash flow break even of FY26. So you can see that the lines are coming close together. Just reiterating, moving customers to AI, driving increased ARPU per customers, improved marketing and growing sales, continually driving business automation and streamlining the internal part of our business, rationalising three systems to one, a product evolution strategy, focusing on end customers and really bringing value to end customers, bringing information to their table and driving deeper into verticals. So that's the focus as we go forward to finish this financial year. That's all we have. I'll throw open to any questions now. So do you see the commencement of ASIC's separate proceedings against BDO as a good sign of validation for Douglas proceedings against BDO? Yes, I do. And I also think there's potential that they might fight some of the costs. They might even drive some of the case for us. So I believe it's a good sign and further validation that they've launched separate action. And ASIC have obviously got more information available to them to us. than us because they've got more powers to go and ask more questions and do further investigations. Next question, can you comment on the status of your new current contract pipeline? My issue with pipeline in an indirect channel is it's often very large, but it's not very well qualified because we are not selling. It's the indirect channels that qualify. My issue really is whilst we see these big pipelines all the time in Salesforce, it's not as well qualified when you have a direct channel, a direct Salesforce as opposed to indirect because we're reliant on what partners tell us is a potential prospect. So I can't really give you a strong answer on that. Are there any further questions? How much more revenue from VMO2 to still roll off? There is still some revenue from VMO2 to roll off. Obviously, they thought they'd roll off in a month. They still have revenues on us. And we're still having conversations with VMO2 about potentially whether we can retain some. There's obviously no guarantee to those. I don't really want to quantify that as to how much mortars to roll off because it's confidential information, but there are still some rebate years to roll off. Just with the timing of cash payments, fair to say next quarter should be particularly strong with catch-up payments and receipt of North America contract type. Contract payment, yes, providing that contract payment's made in this quarter, which it should be, and there's no reason it wouldn't be, it'll be very, very strong, probably a record, or it should be an absolute record for the company's history in terms of cash payments in this quarter. And we did get a very big payment in week one of January, which had it been paid a week earlier, obviously due to the Christmas break, it would have normalised last month's cash payments. Are you planning to stay as CEO and drive the company forward as it appears you are? Yes, I've actually invested a substantial amount myself, which I think people can see my shareholding. You're on just under 5%, so yes, I am planning to be CEO. Unless the shareholders have a different opinion. Are there any further questions? If not, we might wrap up in 30 seconds if there's no further questions. What are the key trends in regards to competitive landscape for recording as a service? Obviously, we have competitors in the market. We took some hits during last financial year, both on the loss of VMO2 and Cisco putting out their product. That should settle because what the pain we've seen should start to settle down that we had to withstand. There are other products often recording as a service. I think we're going to be in a good place and I'll certainly be trying to get a lot of leverage off this one once we announce who the one we've signed up is around the world for other people to say, well, If they're going to buy it, why wouldn't you? So I think it should give us a fairly good strength in to continue to grow our position in a new brand and a new way forward with this recording as a service. Does Dubber foresee any further capital raising before the positive cash flow position? No, I don't, and I hope we don't have to capital raise again. I'm pretty keen on Retaining cash, you can see what are we now, seven something, whatever Prasad gave us. We're going to obviously get a big influx again this quarter. My intention is to run the place in the profit. I don't like running not for profits. I don't like running not profits. So the best we can, I want to run this place break even and then growing into positive EBIT and then proper not net profit whilst retaining a strong cash position is the focus of what a good business does. In terms of gross margins, where should we expect this to trend over the next few years? I think around constant, in that 70s mark, we are driving costs out of our gross margins. We're constantly renegotiating some legacy contracts that we're... we're dealing with as they come up. We've obviously got the cost of the data centre, which we're going to get some direct cost savings when we bring that, close that mid-year. So combined with direct cost savings and some renegotiations, we should be holding where we are for the gross margin perspective. How close are you to announcing a new CFO? Ongoing, so don't have anything particularly to give you right now other than... We're in good hands still with Prasad doing a good job and our former CFO still in the wings helping us out. Here we go. What's the update on the money stolen by the last CEO? That was a question, not a statement from me. I gave you an update on where the recoveries were at. Obviously, the ASIC investigation of where that money went is between ASIC and whatever happened to those monies. I've provided an update already on the fact that the BDO recovery, Victoria Legal Services Board Avenue, and obviously we've got action against Mr. Madaffari and Mr. McGovern. The last one's less hopeful, of course, because of the ability to recover those amount of monies out of individuals, but obviously BDO, ASIC pursuing BDO, you would suggest would give you some endorsement. They have a similar view to us that there is a case to answer. Any further questions? I think we're getting to the end. I'm conscious not to keep running these past 30 minutes because people are giving up their valuable time. So on that basis, we might conclude now. Thank you, everyone, for attending. I hope we gave you some information about your investment and where you were taking your company. Thank you for your support and good luck. Thank you.