Qoria Ltd

I think we've got enough in now, so we might as well kick off, Tim. So welcome, everyone, to our March quarterly results for FY20-25. Running the presentation as normal, Tim will kick off. With his presentation, I'll do some financial pieces in the middle, and then at the end, we'll turn over to questions. So as usual, you can ask questions through the Q&A functionality, or at the end of the presentation, I will unmute people's microphones. If you raise your hand, join the queue to ask a question, we'll unmute you one by one, and we'll go from there. So handing over to you, Tim. Great. Thanks, Ben. Thanks, everybody, for joining.

Hopefully everyone can hear me. So we also have Crispin Swan here who runs our revenue operations for K12, part of our business. So he's available for any questions you may have as well. But look, in summary, it was a pretty solid quarter, actually, and really the focus of the March quarter. given that it's not the biggest selling period in our K-12 business or the consumer business that's really about to close up for the key selling periods of June and into July, August. And without question, we in particular Christmas team did that fabulously well. We do like to highlight this slide at the beginning because obviously our business is a purpose-driven business where we're trying to support children's journeys, online journeys. We're now looking after more than 25 million kids and 7 million parents using our products every day, and that's pretty substantial growth. But what you'll see here is our financial growth is even stronger still. Our ARR is growing. I think we've added $25 million of recurring revenue in the last 12 months organically, which is an amazing result, more than 25% year-on-year growth. So we've added $18 million in this financial year to date, coming into the biggest selling period. I'll talk more about that in a moment. Ended the quarter with $137 million of ARR. Our balance sheet's in a great position with net debt of just over $22 million. Operating cash flow, massive surplus so far this year of nearly $20 million and less than half a million dollars for the financial year to date. So we're delivering very, very strong top line growth, maintaining our costs structure really well, improving our gross margins really well, and most importantly, setting ourselves up for the killer end of the financial year. um here's the arr of the last quarter in uh waterfall and you see the both parts of our business the consumer and k12 business group gross revenue really well we were impacted by a little bit of um positive effects movement and of course as any enterprise business does you have a bit of churn but over overall added five million dollars per quarter which is on on target and as i said 25 year-on-year growth Again, coming into, I'll keep highlighting this, coming into the biggest quarter that we have every year, and I'd expect to substantially improve that year-on-year growth through the family. As you can see on the regional splits, the US is obviously the huge market, the standout market, I think, where... We're becoming, if not already, being seen as the leader in that market where we're starting to dominate 30% year-on-year growth in a very mature market is amazing. Custodio, I think that understates the performance of the custodio business. I think you'll see, certainly in the back half of this calendar year, very swift acceleration of that business is doing brilliantly well. ANZ is, again, I've touched on this a couple of quarters, a highlight, a standout for this business. We've kind of retooled the business model in K-12 in Australia and New Zealand, and I'll highlight something in a moment. Some really amazing progress that we have in these markets, and as you see, 33% year-on-year growth, is pretty good. The UK, I think the UK teams should be applauded for what they're doing there. We don't yet have all of our product developed in that market. That's some content-aware filtering, classroom management, and some data analytics tools. That's coming, the cavalry will soon arrive. So we're expecting the 26th calendar year to be a growth year substantial growth year for the uk so that's probably the only thing that i'm i'm i wouldn't say disappointed because i think the team are doing an outstanding job but i think there's room to significantly improve those numbers next year um yeah this this is a new chart we've put in and really the purpose of here is to highlight uh how strong and reliable our business is. What you're seeing here is a chart showing the weighted value of our K12 pipeline over the last three years, split by quarter, in comparison as to how much of that pipeline is then converted into actual gross ARR or contracted ARR in the next quarter. And you see with a band that there is a reliability, a very much predictability in the numbers that we provide to the market in terms of pipeline and then the dollars that it turns to in exit ARR in the subsequent quarter. Now, the quarter three is the quarter that we're in at the moment, also that we just reported on. Our baseline pipeline was nearly $20 million. Our unweighted pipeline was over $43 million. That's an extraordinary figure. The marketing team in the US, the sales team in the US have done an outstanding job building that pipe into this quarter. And historically, we've been converting somewhere around 70%, 75% of that pipeline. Now, timings are always hard to predict within a tolerance, but that gives us a lot of confidence that Crispin's team have set us up for outstanding into this financial year. And remember, whilst the main fiscal year end in the US is the June quarter, there are some states, Texas in particular, which is the second biggest region in the US, their fiscal year ends in August. So there is a sell through to really kind of end of August, early September, So yeah, we're set up in an amazing position and the pipeline's still growing, I might add. So incredible, incredible result. These SaaS metrics haven't really changed since they were last reported, except maybe the value of this business at about 3.3 times revenue is very much underperforming. Certainly when I look at our private equity backed competitors, I was in the US recently talking to private equity groups that are in our space and edtech beyond and you know typically they're talking eight to twelve times revenue multiples and yet we're currently trading at 3.3 times revenue multiple so you know i've got work to do with our leadership team to explain our story to the capital markets and and hopefully lift that in the in the coming months but i'm very confident that what we'll deliver through june will give us an outstanding story july and um hopefully we can all see some appreciation in this um in this this valuation Another new chart that we decided to put in this quarter, because I think, again, it speaks to the reliability of this business, that we're an ARR business. And what I think the market doesn't understand is how visible our business is. So we have, for instance, in the US, we have access to, for the most part, details on what all of our potential clients, all school districts, who their providers are, what they're paying. the kind of general contract terms and we can there load that into our crm and then we can allocate those opportunities across ourselves and give them targets and we have enormous amount of predictability in terms of the opportunities that we get when they come through the pipeline and how they convert and then when we invoice and when it turns into cash flow and the idea of this chart is to show you from the reported recurring revenue and how that converts into cash and revenue i think the best chart to look at that is the chart on the bottom left what you see here is our reported arr what we describe as exit arr and as i said before our exit arr at the end of march was 137 million dollars And what we're seeing in the last two years is our exit ARR has almost to the dollar turned into the subsequent year's revenue and the subsequent year's cash collections. So again, very, very predictable. So I think within, again, on subject to FX movements, I think investors could probably have confidence that from 1 April, through the 31 March next year, we should be collecting more than $130. Remember, that figure is net of reseller commissions, and reseller commissions go through our margin. So I think that very quickly you can calculate that these businesses can be generating serious profits and cash flow in the next 12 months. So we have turned that corner again. This is highlighting how predictable this business is and that inflation point. This is looking at our cash flow, and again, adding another piece of insight, which I think the market has been asking us about for a while, which is how cyclical are your cash flows? What you're seeing here is our quarterly cash collections over the last three years, split by quarter. you can see on average in the march quarter we're collecting around about 20 and that's the reason why we we burned cash in march burned less cash cash in june but that's that's the cyclicality of this business the majority of our cash flow comes in that september quarter followed by december not far behind and as i said in the march quarter that's cyclical our low point so totally to be expected that this business burned a bit of cash in in the march quarter That will be less in the June quarter, and then this business will never burn cash in our modelling from 1 July onwards. Okay, Crispin's on the line, but look, I'll speak on his behalf, but feel free to ask questions if you'd like. But the K-12 part of our business is doing exceptionally well, particularly in the US, where I feel like we're, I mean, we're certainly dominant in the UK, but in the US we are without question dominating. And all the kind of key things that we look for in our business are going the right way. You know, the kind of lagging metrics of ARR growth, of churn and, you know, renewals and products per customer and average revenue per student and average sales price. They're all going the right way. But what we're also seeing at the coalface is outstanding MPS scores and customer satisfaction scores and even things like the ability of our team to respond to customer service requests inside 30 seconds. We're way ahead of everybody in the market in terms of our ability to understand customer needs deliver products to them understand expectations so all of our kind of leading metrics are going the right way and as a consequence you're seeing what you see here which our lagging metrics are showing outstanding results the highlights for me i guess are the two charts at the bottom the average sale price is going up which means that we are layering additional products and going upscale, selling to bigger and bigger school districts. Big enterprises, we're talking about schools with more than 100,000 students are now regularly interacting with our business. But whilst doing that, we are also increasing the price points of the student licensing, which is a very hard thing to do, and we're doing it really well. And I think that is a trend that you'll see continuing Very excited to see what the sales team does in this June quarter, where you'll see that continue, but you'll also see us having a crack at a lot of renewal opportunities. So the kind of products per sell, the cross-selling, the net revenue retention figure will be a key thing that we look at and we'll be reporting on in that June quarter. So again, Kristen's on the call. Oh, there's a couple of things to highlight. We've launched the EdTech Insights and CloudScan products, which we promised last quarter. And they've now generated more than $3 million of pipeline that I just spoke about then. We've already announced this, but we were recently appointed as the preferred provider in Ohio, which is a very significant state, 1.8 million students. It's nearly half the size of Australia. It's massive. We've nearly reached 25% of Texas students on our platform and our Texas preferred partnership with TASI, an organization called TASI, has now been extended for two years, I think it is, which is a huge pat on the back of this business. Texas is now our fastest performing region. And we've recently deployed our technology into a school district with 400,000 students, and it worked. And so we are incredibly proud that our business, which literally four years ago was selling into school districts with 4,000 students, we can now reliably deploy into school districts that are bigger than Adelaide and South Australia, sorry, South Australia and Western Australia combined. That's the scale that we can now sell into, which is super exciting. All right, so a couple of highlights. I'll just touch on it then. TASI is the Technology Alliance for Statewide Initiatives. It's essentially a cooperative of all of the Texas education regions, 20 regions there. All of the CTOs of those regions got together and formed this alliance and they they worked collaboratively together to get better technology outcomes for Texas students. And a few years ago, they went out and scoured the market looking for the right safety and wellbeing products set for that market, and they selected us. And we're really proud to announce that that's been extended now for a couple of years. It's our best-performing region. We're getting close to 25% of students in that region on our products. There's 5.84 million students. It's bigger than Australia. It is an outstanding opportunity. And as we say here on the last point, Texas is very pro-parent, as you can imagine, and it's very much oriented towards empowering parents and empowering schools to keep kids safe. And the implications of that pro-parent, pro-safety approach is really driving business to us. Their regulatory environment supports many of the things that we can uniquely provide, particularly the belief of parents and schools to share control of those learning devices. So we're in an outstanding position to service that market, and I think that market is a great example of what is possible, and I think you'll see similar regulatory moves, not only in the US, but outside. Actually, Chris, could I get you to talk about the New Zealand Trust? Because this is an amazing achievement for this business, and I'm super proud of you on the team.

Yeah, thank you, Tim. So what this talks to is a partnership that we formed with the West Auckland Trust. Now, the Trust, as it says there in the bottom left, received their funding through alcohol and gambling taxes, and they're... their sort of MO in life is to invest in projects that deliver good to, you know, to families. And what we've done collectively is work with the trust to fund Pulse, which is the student checking tool for a large number of schools within the West Auckland purview of that trust. And really that just opens up the opportunity for students that are looking at a way to have a voice and reach out at times for help. can actually get that through the funding to the trust rather than the schools having to fund it themselves so and we as it says in there have integrated this cultural uh localization with uh tamari the local language so that it's very unique to to the new zealand market and what we now expect and are seeing with other discussions is that this model with other trusts and there are multiple trust trusts across new zealand and also communities of learning that are all interested in investing in children and they see not only pulse but we're in discussions to expand that out to our other offerings as a very um worthwhile investment of their resources so yeah a lot more to come out of this and i'd love to see this uh replicated in other regions in the future as well