Crimson Tide (LSE:TIDE) — Interim Results

0:01 Good morning, and welcome to the CRIMSON TIDE PLC Interim Results Investor Presentation. A. Before

0:24 we begin, I'd to hand you over to Jackie Daniels, CEO. Good morning. Good morning. Good morning, everyone. Thank you very much. Well, welcome to our interim results presentation. We've had a very good, excellent first half. This morning, what I'm going to do is I'm going to ask Sean, the finance director, to reiterate the headline numbers. He'll also take you through some key metrics Mhmm. And some of the more pure SaaS metrics so that you'll be quite clear on where we stand today. I'll also then give you an update on marketing. We'll talk about the product and the impact of the investments that we've been making on on both of these. And then a couple of corporate things, and then perhaps a pertinent look at the outlook and the forecast.

1:21 So I'm gonna hand over to Sean Mullen, who's gonna take you through the headline numbers.

1:26 Sure. Thanks thanks, Jackie. Let me just move to the next slide. So financial headlines. So starting with turnover and gross profit, it's been a very solid period for us. Turnover was 3,000,000, gross profit 2.6. So that is an increase on 31% in the same time last year, which is a which is a very good result. Admin expense is a slight increase of 9%, although that is not really in line with turnover and gross profit. And we have managed to control costs quite substantially. So this increase is to do with inflation largely and some strategic hires. It's important to note, sort of the main consideration really, is that we have returned to EBITDA profitability.

2:15 So this time last year was 300,000 loss, and now it's a 100,000 gain, which is which is positive. Has translated to a loss before tax, which has improved on the same period last year.

2:33 So moving on to KPIs. This has also translated to higher ARR. So our annual recurring revenue was 5,900,000 in the period. The same time last year was 4,400,000. So this is an increase of 35%, which is which is great in a in a soft market. Margins have remained stable. Cost of goods are largely our hosting fees for Microsoft Azure and also some rebates from partners, but that is stable.

3:02 Cash is at 2,900,000. It was 3,700,000 this time last year. We believe that it has plateaued at the between the 2.7 to 2,900,000 mark, which is which is pleasing to see. So revenue churn is higher than the same period last year, but it is still low in the context of things. 5.5% is is as low as an industry average. It's it's important to note that a significant percentage of this churn is is devices, which is an area that we're trying to move out of. So we are just focusing purely on the on the SaaS element of it. The next slide, SaaS metrics.

3:48 So there are two new metrics that we've been introduced this this time period, which we think are more reflective of our business in general. So the first is net revenue retention. So this is how many customers were actually returning retaining. So it's new MRR over churn using the beginning of the year as the base period. So the average is 98%, which which is fantastic. Industry average per TechCrunch is in the region of about 75, 76% with a top of 82%, so we're well above that. The other new metric is average MRR per customer. So this reflects our strategy of moving away from lower MRR customers and focusing on on the larger customers, Wales, etcetera.

4:39 Customer lifetime value and average customer life, you will be familiar with from the last presentation. This hasn't really changed. We still have very long term relationships with our customers. The longest is nineteen years, and the average is fifty four months. So that is very stable from a recurring and SaaS revenue basis. Jackie? Thank you, Sean. Okay. Turning to marketing. So we've gained a lot of confidence in our understanding of the correlation correlation between the investment that we're making in marketing and revenue. So we're continuing with our awareness activity. So that's the social media platforms that we use, the thought pieces, the newsletters, etcetera, and then our digital, so all our SEO and the like that nurtures the resulting inbound inquiries from our awareness programs.

5:38 And then we're also continuing with our very targeted campaigns that keep that pipeline, the sales pipeline very well fed. Now over the last five to ten years, we've always had a moderate partner ecosystem. But in the last six to twelve months, we have signed around a dozen new partner arrangements, particularly in The US. Now, initially, these have mostly been what we would what you would know as introducer partners, so referrers, but they've already started to perform. And we are confident that we can now progress many of these onto proper resellers.

6:28 And the work and the investment that we've may been making in our product is really going to support this partner program. So now we have this laser focus on our partner program, which we're going to be able to replicate in The UK and other territories as well as in The US. We have our anchor partner in The US, Cisco Meraki, and we will be really capitalizing on that partner ecosystem. That also ties into the work that we've been doing on the product. So this time last year, I was talking to you about the new website release where we were moving to the very latest and greatest web technologies.

7:15 And the result of this was really much behind the scenes, but it was about greater speed. It was about the better UX than ever before. And it's fair to say, I think, that the shackles were really well and truly off, and it gave us greater huge possibilities, and a much greater opportunity for us to deliver very compelling user experiences using this new tech.

7:41 We also, at that time, started the work on the IoT, both the back end and the front end. What does that mean? Well, it's given us greater ability to connect to millions of devices and service billions of readings every second, So much quicker alerting of IoT events. It's also supported our our partner network because it's really given them the the ability to configure their IoT devices at scale. So you'll remember announcement earlier this year on Kingston NHS. So that's really shortening the implementation time scale for them. This year, it's all been been about the out rollout of the mobile application.

8:32 So we've taken a very managed approach again. So first of all, using our first big big five clients, our top five or big five as we call them. So that is TESCO, Morrison's, Aspen's, Chartwell's, and Booker's. And there's been a series of workshops, and all the feedback from those big five has been excellent. They say things like it's very intuitive, it's much easier, it's much quicker, etcetera, etcetera. So that's been, a huge success. But also now what's starting, at the end of this half and the and for the rest of this year is the rollout of TIDE PLC. Now TIDE PLC is the internal project name for scaling our automation automation engine.

9:23 So, basically, we are that's the tooling that will allow our partners to use a drag and drop facility to create their own end to end business workflow. So this has been a little bit of an inhibitor to scale in the service side to date, so all that will be taken away now.

9:45 And the really clever bit in the IoT is what you would call the AI part, I guess, is what we're calling anomaly detection. So when you are programming a device, we are not just setting the rules and letting it run. We are actually allowing that device to learn. So you set the initial parameters, and then then that device will learn what is normal for that particular sensor or camera

10:17 or whatever it is in that location and in that environment, and then it starts to flag up any anomalies. So that's really quite groundbreaking and very, very exciting. I'll go on to some very brief management and corporate updates. So we have two new nonexecutive directors, both with a significant track record in marketing. The one in international marketing across many sectors and across many, many territories. And the other specifically in tech, he founded and sold the first company that introduced Apple into The UK and then sold it back to them. So we're talking about quite big name droppers here, friends of Steve Jobs, etcetera. So huge support for marketing coming in at nonexecutive.

11:13 We've also hired a chief marketing officer and a chief operations officer. The chief marketing officer is bringing the two marketing teams, so The UK and The US based team together, And they are focusing on the same strategy utilizing our partner network and our partner program. And that's going to really deliver the scale, not just the growth, but the scaling and the repetition that we've been looking for. The COO is in place, and that's really succession planning, but as well as that is really scaling that service element and getting all our operations into a position that we can scale infinitely without having huge sales teams or or anything else.

12:01 The share consolidation exercise is well underway and is due to be completed towards the end of this month. Yep. We're moving from a 100 to one. And, basically, the company has grown up, and this will you know, there are too many shares in issue currently for the size of the company since it's grown, and this will really consolidate that, no longer be seen as a as a penny share, and really reduce that that spread, that market maker spread. I don't know if there's anything you want to add on the consolidation exercise, Sean. Probably not. I've probably covered it. I think I think you've covered that. There's not really anything to mention. It's gonna be completed October, November time. So, yes, everything in order.

12:49 That's great. Thanks. So turning now to the outlook and forecast. Well, there have been two exceptional events that we've had to address in the forecast. One of them has been McColl's going into administration. And although much of McColl's outlets were taken on by Morrisons, Morrisons are an existing customer of ours, and therefore, the potential upsell that we saw going forward, we have necessarily taken out of our forecast to be conservative. The second one is the halting and pausing of b pro marketing.

13:34 That was a good business decision. At the time, this is a brand that was being marketed to the trades. At the time post COVID, the trades were booming, and then the cost of living, rise hit them quite badly, and they react in a very typical way. I know that market inside out, And what they do is they cut their costs. They don't look to invest in any way for the longer term. So we took the decision to cease the marketing on that brand. We continued to use all the engineering and all the development that we have done in it. It was just the marketing wrap that we're not using currently. It will be eventually. And it's being replaced. It's being taken out. So what that was going to produce in revenue has been taken out of the forecast and will be replaced in due course with the partner program.

14:30 So it really is about a rearrangement in the areas that we're going to increase our revenue from, and it's gonna make it much more sustainable in the longer term. The pipeline is as strong as ever. In fact, it's even stronger because now The US is making a very significant contribution through that partner acquisition and that partner development. And that's being accelerated by that upgraded product. We have a very strong operating board that's completely aligned with our business model of creating the value, distributing the value, and delivering the value. And I've outlined the two new positions that are on that operating board.

15:16 And as the management have been implementing that program, you can see already that we are EBITDA positive, actually ahead of plans, so at the half year rather than during the year. So we have a very robust product that is performing well, and we're likely to hit above forecast and look forward to then upgrading. I'll hand you back to our presenter now. Thank you very much. That's fantastic. Thanks very much indeed, Jackie. That's a great presentation. Ladies and gentlemen, please continue to submit your questions just using that Q and A tab situated in the right hand corner of the screen. I'd like to remind you that recording of the presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

16:05 Jackie, Sean, as you can see, we've had several questions coming in from investors. If I could just ask you just to click on that q and a tab, and where appropriate to do so, just read out the question and give your response. That'd be fantastic. Okay. We have a question here. How are the partner deals stuck to stuck? Do they have minimum targets? Yes. They will have minimum targets. It depends on the class of partner they are. I referred to referrers and resellers, and eventually, they can be upgraded through a partner accreditation program where success criteria will be listed. It will be different with each partner arrangement, whether they are Cisco Meraki partners, whether they are SAP partners, or whether they are systems integrators partners.

16:57 So the criteria will be different for each type of partner. There's a question for you there, Sean, about cash burn. Do you want to address that one? Cash burn. Can you tell me what the cash burn of the company is at the moment and how long you expect the current cash balance to last before you need to refinance? If you do need to refinance, what are the plans for that? That's a good question. So cash burn has improved, as I alluded to, with the cash position. We believe that at the current in the current trajectory, the the the lowest cash balance is 2.7 to 2,900,000. So we're at a we're in a good place as far as that's concerned. There was another one previously talking around operational gearing and profitability.

17:46 So we are at that point. So we're at the sort of trough of cash burn profitability turning to to to net profit. So just to be clear, that question was at what level of ARR do you see the operational gearing really drive the bottom line while Well, we're at it. Yeah. We we are at it. So you can see we've had the latest brokers report that's released, and we we're having discussions with Cavendish on that. So it's it's the the the numbers are out there. Okay. What what was the fact that supporting individual traders in using the b pro app is a time consuming expensive business part of your reason for pulling the product? We haven't pulled the product. Like I explained earlier, the product still exists.

18:31 We have halted the marketing of that brand. If you think of it as a brand wrap, the actual product itself is being used. It's part of mPro five. If you remember when we invested in the, website release, that was all about a single platform product. So the product exists. It's being utilized. It's being marketed, just not in that marketing wrap trades at this stage. And that's a business decision that we have halted that, and we will come back to it when the time is right. There's one from Thierry about NRL, but, I mean, that's great. We'd be happy to share market data from broker reports. That that would be thank you very much. Appreciate it.

19:22 Okay. I think that's all of the questions there. I'll just sum up this morning, I think, by saying, you know, we having got to a a positive EBITDA with cash settling at around 2.8, we feel extremely well placed to prosecute the 50 plus deals currently in the pipeline, which include fast growing opportunities in The US. And I think that just about sums up where we are today. Fantastic. Thanks indeed, Jackie Sean for updating investors today. Now please ask investors not to close the session. You'll be automatically redirected to provide your feedback in order the management team can better understand your views and expectations.

20:10 This will only take a few moments to complete and that is greatly valued by the company. On behalf of the management team of CRIMSON TIDE PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good morning to you all.