Qoria Ltd

And we're looking forward to talking you through some of the highlights and having some Q&A at the end. As normal, Q&A can be asked in the Q&A functionality, or at the end, I'll turn on the ability to raise your hand and unmute microphone. Over to you, Tim.

Thanks, Ben. I'm just seeing people still jumping in, so I might give it a moment. All right, cool. I think everyone's in now. Let's go. So let me just quickly start with the highlights and position it, and then I'll go through some of this. So it was a massive end to the financial year in so many different ways. Let's start with the top line. So we added something like just over $29 million of recurring revenue in the year, which is uh 50 more than the prior year and it grew our customer base our our ira by 25 year-on-year days are outstanding figures um massive contributions out of walmart particular us and the uk um and we added 14 million dollars of net ira in that course up 55 on the record of nine million dollars in the same quarter yeah consumer businesses is flying at 18 million dollars or more of ira i'll talk more about that moment cash collections um there's been movements given the sale of business and movements in our billing cycles but now underlying collections grew 24 against the prior year gross margins are now over 90 operating costs and despite all that growth their operating costs grew at less than which is an outstanding result The first time we've now started to provide guidance on some measures outside of margins, and we're expecting really based on the visibility that we have in the business, we're now providing, you know, we're starting conservatively, but we're starting to provide guidance on things like revenue at $140 million or more next year, over 20%, EBITDA margins of 20%, being free cashflow positive for the year and for the half. and we're expecting cash collections to be very strong particularly in this coming half and with the same year-on-year improvement at at least so they're the highlights um huge huge end to the financial year provided unordered accounts financial accounts in this this result as well which ben jenkins will go through in a moment okay so let's go through it a little So some big numbers here. We're now looking after 27 million kids. We have more kids on our platform than there are Australians, which is a huge achievement. Eight million parents use our services, and it's actually 32,000 schools are on our platforms. We intervene in a life-threatening situation every two hours with calls being made to safety schools, and that's something that we all should be acknowledging and being proud of. On the financials, said past $145 million revenue that was negatively impacted by the weakening US dollars. So we would have otherwise been just under $150 million of ARR, which we're close to that now. As I said, we added $14 million of ARR in the quarter, which is 55% higher than the $9 million we did last year. I mean, think about that, $14 million added in this quarter. It was only in 2021 when we acquired Smoothwall, our entire business was $14 million, and we added that in one quarter, adding $29 million off the base in the year. Now, something I really think investors need to look at is this new market's growth. It's probably a... probably a confusing metric but it's something that i look at deeply this is the amount of growth in our business that comes out of the it k12 ip persona all of our competitors are selling to the commoditized it buyer in schools and 50 of our growth is outside of that buyer that's the reason why we'll dominate this industry because we've got legs beyond just the commoditized side of our industry So, yeah, let's touch on guidance. We had an outstanding quarter. We've also talked to and shown, demonstrated the certainty out of our exit ARR and how that revenue and cash flow. And based on that history, that confidence inside our numbers, we're now confident to talk about the next year. And by extrapolation, I think you can start thinking moments where that takes us in the coming years. So for this financial year, we ended with 145 million of ARR, $117 million of revenue, which compares to $117 million of exit ARR last year. Now ARR grew 25%, EBITDA margins were at the top end of our guided range of 10 to 15. It would have been high, we would have been just up And if we hadn't made some extra investments in marketing spend, we'd got top down at the moment. And our free cash flow was negative over the year of 11 million. But a big chunk of that was our movement from multi-year billing to annual billing cycles, which cost roughly half of that. So all those numbers were on or better than any expectations that we've been given. We expect to be comfortably free cash flow positive this half, free cash flow positive for the year. Revenue will be north of $140 million and ARR growth of 20%, EBITDA margins of 20%. It means that we are comfortably a rule of 40 company from 1 July going forward with a strong balance sheet and that will only be going upwards from 1 July. So I feel very confident to say that we've turned the corner and we're presenting ourselves as a very different business than we were two years ago. Okay, so let's drop into the numbers. As I said before, growth in all regions, but in particular, very strong growth in our US K-12 business, which added, I think it was like $9 million recurring revenue on their own in that June quarter. They're growing faster than anyone in the States. So it's done a tremendous job. Custodio business is, I'd say, I used to say metronomically growing, but they're actually starting to accelerate. I'll talk more about them. UK business is doing okay. All the products will be available to the UK market in for bet in the January, in January next year. Actually, sorry, I think that's March next year. And Australian New Zealand business on a tear grew 41%. They're doing an amazing job. We've kind of reorganized our go to markets in these markets based on the success of the US model. And that's now actually exceeding, certainly exceeding our budgets. So where are we at financially? We've got more than $15 million in the bank at the end of June. As I said, that number is only going up. So a net debt position of $37 million negative will never be as that low again. As I just mentioned, we're expecting cash collections to be well north of at least 20% higher than what they were last year. And in this half last year, if I recall, we collected just under $70 million. So we're in a really good position from cash flow. I saw some commentary about capital raisings. That's ridiculous. We're not doing capital raisings. So balance sheet's good. Cash flow's in a really good place. And in a place where we can actually start making some very sound decisions around where we allocate capital to maximise growth. and make sure we achieve these strong guidance numbers that we've offered. Now, our growth, again, not only by the regional store, so we're now getting serious contributions from things outside of new logos. We've very much been a new logo sales business, but now we've got significant contribution from cross-selling new products. That's only going to accelerate as, in particular, our insights and content wearer products become more well-known in the market. and then the custodial growth is is outstanding and this is the key selling period for custodial you'll see big selling in this half of the custodial consumer business we were negatively impacted by fx that that you know goes both ways we have guidance at the back of this slide which ben might touch on which shows that whilst the ax the fx movement cost us in top line ira by four million dollars and has a revenue impact it also has a cost impact because a lot of our cost of sales data and hosting of course and a lot of our big chunk of our staff about 90 staff that's dollars so the net effect of that isn't massive but it doesn't doesn't does does impact our headline ira number all right kristen swan's on the call who runs our k12 business he's available for questions And we are literally killing it, as they say. The US business in particular has an immensely successful period. Not only the highlights of the ARR growth of $12 million in that business, which is astounding, some really key things. We've won our first district in some of the top 10 school districts in the US by student number. That's huge. We added 1.5 million students, more actually than in the quarter, which is amazing. We grew our average order value or average sales price we described here by 20% in the quarter. So that means that we are building a reputation and selling it to bigger and bigger school districts. Enormous figure. We're maintaining our net revenue retention and keeping our churn under 5%. um and we've signed another state deal which um which i'm really excited about so pennsylvania has selected us as one of their preferred partners in that region which is a huge achievement so all metrics in in our education business are doing very well particularly in the states and australia new zealand as i said we'll have the entire core platform all of our capability will be available in the UK in the first quarter of next calendar year. And so Gab who runs that business there will be actually start to accelerate across selling into 26. So that's super exciting for everybody. Consumer, we tried some investments. I think we invested about $1.5 million above budget, given the kind of, our understanding of and so on into that custodial business and achieved unbelievable results. Cost of acquisition of less than the average order value, especially cash flow creating growth, albeit it costs us in our P&L sense because we have to write off the cost of acquisition and we take the revenue over time. So, we cut that back, we pulled back on marketing investments in the custodial business to hit our EBITDA guidance, but from 1 July that's now taken off again, and I'm sure you'll see very exciting results in that business. Now, just to put it in context, Life360, which people often compare us to, they spend $90 million in marketing every year, and we spend, in the consumer business, I think five or six. If we spent like 360, we'd be a multi-billion dollar business. And I think in time we'll get there because of the performance of this business. And you see here the evolution of the product, the experience of that product is evolving rapidly and is without question the best parental control product. And it's now becoming much easier for non For the users who are kind of less anxious about controlling their kids, and these are the parents that we're now trying to target through our schools program in the US, which is clearly making an impact on our cost to acquire, which is coming down very, very fast. So outstanding business. You'll hear a lot more. You'll hear me talking a lot more about custodial business in this half, which is their key selling period. So I think these are really interesting slides to highlight the efforts that we've put into maintaining our cost structure. Fixed cost percentage of our ARR is falling very nicely. As I said, our service margin or gross margin excluding marketing costs. is over 90 percent now there was a three-point increase there in the quarter and our sorry in the year and our net ar so essentially our forward cash collections right the next 12 months collections which net ar is essentially analogous of as compared to our cash costs is showing heavily positive figure so unquestionably we're at that inflection point or through the inflection point um the predictability and i know i'm probably going to get a question from owen about this the predictability of our sales from pipeline to converted deals to revenue and collections is a feature of this business and so we've um obviously reported 145 million dollars of ar uh at 30 june and so if you look at the the chart at the bottom our ar highly correlates with our next old ones revenue so you know that's why we're now confident giving guidance of 140 million dollars of revenue in the next year And we've also given guidance on growth that we're expecting the next year. And then you can start doing your sums about where revenue will go going forward. So, you know, as I said, every dollar that we add is adding 91% to the bottom line. We grew $30 million last year. We're expecting to go higher than that in this coming year. So you can do the math and see that we're not only free cash flow positive, we're paying down our net debt very quickly from the 27 financial year and there on. I won't dwell on these metrics because the Aussie investors don't seem to be that interested. Our SaaS metrics are, without question, industry leading. And this is a really important chart. I know people kind of flick to the back of our call the update and look at the 4C report, but what's missing is the nuance of understanding what's transforming and how During COVID, many schools were paying multi-year funds. The money was a plenty. And so they would commit to three-year contracts, even five-year contracts to get filtering and firewalling and so on. That's not so much the case anymore. And obviously to get those multi-year deals, you discount in the order of 15 up to 25%. And so now our business is moving away from these multi-year billing into annual billing cycles. And so that kind of working capital, sugar hit that we've been enjoying to help fund this business going forward when moving away from. So our margins are improving very rapidly, as I said, into the 91% range. But it's impacting working capital now. And you can see it clearly on the June section of this chart, the right-hand three columns. So June 23 to June 25, we've seen a very significant fall in the amount of multi-year upfront cash collections that we're getting. Essentially, we're borrowing less money from customers, but it's translating to higher margins. And so that had a big chunk, that and the loss of, and the sale of the McGeary business last year. negatively impacted our cash collections this year by 4.1 million dollars on a per comparison comparative period basis so if you do the sums actually billing underlying billing and underlying annualized receipts were 24 up year and year which is exactly what our ARR growth was the year so the underlying business is is only strengthening and that is translating into cash flow Pipeline, obviously we emptied the pipe surprisingly well in that June quarter. And so you're seeing our red column here shows that the pipeline's come off a lot. but it is still a record pipeline into the December half and our marketing team who are exhausted and they're coming back to work now. They're kind of busy again, back to work, trying to refill that pipe to make sure that we're kicking goals and hitting records again this quarter. We're in a fantastic position with nearly $9 million of weighted pipe into the December half. Remember a big chunk of US sales are still in that September quarter, albeit we did do a cracking job at converting those in June. And the Australia and New Zealand team who are on a tear, as I said, their key period is the December quarter. Some good things happening for the December half. Generally, though, the US and UK teams are focused on back to school, delivering outstanding experiences for customers, and the custodian business will be a big revenue growth period for us. Okay, less financial. I think it is worthwhile that investors realise the impact that we're making or from time to time hear about it at least. So in the last year, we flagged 26 million risky behaviours by kids on our platform. 26 million times kids did something on a platform that was so notable it had to be flagged for further analysis. Of those, 2 million of those concerns, so no, 10%, just under 10% of those concerns were handled by our human moderation team in the UK who deal with some very harrowing moments, life-threatening often and sexually charged frequently too. And of those, 4.4 thousand, four and a half thousand had a call, required a call to be made to a safety lead or the authorities. That's a call every two hours to deal with a child who's at imminent risk to safety. That's an extraordinary achievement. These pie charts in here, these circles in there, show something that's quite intriguing, which is the distinct difference in level five, which is the most serious concerns that we capture, the distinct difference between UK and USA toxicity. porn sexualized content in the us is the dominant concern that is is raised the the configuration the tools are the same it's just that the incidence of of highly concerning uh access to pornography in the us is you know was it two times twice as big as the uk and australia new zealand and australia new zealand is much more about kids at risk of self-harm, and that's the purple parts of these charts. So we're seeing remarkable data now, and we're actually also starting to see clear data that shows the efficacy, the evidence of the safety outcomes, and soon to show the learning outcomes adjacent to the things that we do. So I'll be reporting more of that coming soon. I'll just mention that we won this deal. So this is the third state that's picked Coria, or line-wise is the name of our product set in the UK, as a preferred partner. So this is an outstanding achievement. US team, this gives us access to preferred access to 1.7 million students in that market, in a market that's essentially half the size of Australia, which is, so it's an outstanding achievement. And the agreement encompasses all of our products, including EdTech Insights, which is our brand new product line. So that's the high-level overview. I think it's an amazing result, both in top-line growth maintaining our cost structure where it is, improving our gross margin, improving our underlying cash collections by 24%. So every single line was an outstanding result. We're now cash flow positive into the future and growing strongly. So I couldn't be more proud of the team. I think we're set up for success and continued domination of this segment. I'll now hand over to Ben who will go through the numbers and we'll then hand over for questions. Over to you, Ben.

Thanks, Tim. We decided to include an unaudited panel to show people where we landed, again, on an unaudited basis for the full year against the guidance we provided. And so looking at that, we landed at about 13% EBITDA margin. And with Tim's talk about the custodial investment, that was a conscious decision to make. You would account for that and adjust backward about 14.4, so towards the top end of the guidance range that we're given. And as I say, it was a very conscious decision. It wasn't something that was out of our control. So it's an easy one to, I guess, isolate and identify as a normalisation. And in the months where we made that commitment, or made that spend, the ARR added in that custodial business was more than double what it was in prior months. So the impact it had was really significant. And I think I just take the opportunity as well to reiterate Tim's point around capital raising and marketing custodial because we've had a few questions on conferences over the last little while. There is zero intention to raise money to fund custodial marketing. It'll be funded out of excess cash flow. And we can tweak it up and tweak it down within a day's notice if we need to, depending on how the business is operating. So we will manage that spend through the financial year with the guidance we've given around FY26 in mind. So I think it's just an important thing to reiterate. The really pleasing thing outside of our ability to keep costs under control throughout the financial year again, I think it's been a really big achievement and just shows the leverage that's within this business. Quarterly cash flow, Tim's touched on the customer collection, so I won't labour that point too much more. We split out the data in the chart earlier in the presentation, so you guys can see it really clearly as to how we've performed there. Obviously, on face value, cash collections looking flat is something that might raise questions, but when you dig into the detail, you can clearly see that the annual billing has increased significantly year on year. broadly in line with revenue. I'll jump more into the detail on the next page. So again, touched on cash collections, direct costs obviously out there, but that is largely the marketing spend. You strip the additional marketing spend out of that and direct costs are well under control. and being managed excellently by the team on a per unit basis. It's continuing to come down. We've touched on the direct cost before and that it is a variable cost and will increase as the business grows. But the per student number will continue to come down over time. So we'll get efficiencies out of that piece. Staff costs. broadly in line with what they've been for the last couple of quarters, notwithstanding pay rises that have come in in the October month and the April month. I'd expect staff costs over the next financial year to be somewhere in the sort of 5% to 6% increase range, accounting for CPI and some growth heads. Maybe it's slightly higher than that, depending on what FX does, but it should be broadly in those lines. No dramatic increases needed in staffing levels to justify or to deliver the growth that we're talking about from a revenue perspective. Fixed costs, it can bounce around a little bit, and it looks like a big percentage, but it's a small number. So again, broadly in line with March quarter, and we expect that to continue on. There's nothing significant that we need to invest in in that sense. Hardware costs are largely seasonal in the increase from March quarter to June quarter. They're in line with last year, in fact, slightly down. trending in a good direction. And for the purposes of the normalization of the June quarter, I've actually split out the detail there so everyone can see it really clearly in the bottom quarter. Tim touched on the FX exposure previously. You can see from an ARR perspective, the one cent movement is reasonably significant. But from a net cash flow perspective, it's much, much smaller. So we're reasonably naturally hedged as a business due to the US dollar and the pound cost that's going out of the business. FX has moved slightly favourably to us in the last couple of weeks as well. But as I say, the net impact of the bottom line isn't massive. So we're relatively comfortable there. And on that basis, we'll jump to Q&A.