Essensys (LSE:ESYS) — Full year results for the year ended 31 July 2020

0:05 Good afternoon, ladies and gentlemen, and welcome to the ESSENSYS Final Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Please just simply type in your question in the box beneath and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and where appropriate to publish responses. These will be available via your Investor Meet company dashboard.

0:37 I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. I'd now like to hand over to Mark Furness, CEO and Alan Pepper, CFO of ESSENSYS. Good afternoon. Thanks, Mark, and good afternoon, everyone. Welcome to our FY twenty twenty results presentation. So I just wanna cover briefly the headlines of our business. So we are a software and technology provider to the flexible workspace industry. That industry is a fast growing part of the real estate industry and is responding really to the changes in the way occupiers want to use and consume space, primarily office space.

1:22 It's now a world where flexibility, agility, and responsiveness is really critical, never more so than current clients. And so our technology, our software allows the operation of these spaces. It allows our customers to use our platforms, connect, operate to help solve the complex operational challenges of these spaces. Think about these as, if you like, hotels for business. And so high transaction volumes, lots of activity, being able to deliver services on demand to the occupiers within is critical, and our software and technology enables that. So you can run these spaces much more efficiently, use automation to increase your operational effectiveness, as well as your engagement with clients, as well as deliver those services, technology, IT services on demand and with very little manual intervention or overhead.

2:21 So that's briefly, our business. Fourteen years now. So this is 2006 we founded the business. And so now I'm just gonna cover our f y twenty highlights. We were asked during our IPO roadshows about the resilience of our business, and and f y twenty, is the perfect example of what would happen in a downturn as the question was posed. And the reality is is, we proved the quality, the resilience, the strength of our business in our underlying performance. So 9% revenue growth at the top line this year. More importantly, 19% recurring revenue growth year on year. And so 86% of our revenues now are recurring.

3:08 We have always focused on efficient profitable growth, and that's come through in in our 19% EBITDA margin again this year. So highlights are, you know, strong resilient performance of the business. We have for some time now really focused our expansion efforts on the fast growing US property market, and we had great success there again this year. And and and, really, that's allowed us to, in the last twelve months, accelerate our go to market investment to match the size and scale of the opportunity. This year, in light of COVID, we completed a £7,000,000 fundraise, and we sit here today debt free with a significant cash balance so we can take advantage of the opportunities the industry presents ahead.

3:56 And that industry is accelerating rapidly. I think COVID nineteen, for all the terrible impact it's had on many people and many lives, we actually, as a business and a census, will see a net positive to the market opportunity due to how people think about the future of work and how they they think about where and how they work and and how businesses react to that and also how the real estate industry at large reacts to that change in occupier demand. And also through the year, there are some significant operational highlights, and we've continued, to acquire new customers, new logos. Our high value strategic customers, have been, joining us again this year, which is really the key part of our strategy so that we build momentum in those high value accounts that give us long term opportunity, and that's a great foundation to compound for in the future. And those customers have also seen us and and taken us into new territories, so new customer wins in in Canada and the Asia Pacific region and across Mainland Europe.

5:09 And so a fairly straightforward go to market strategy. It's land. It's expand to with customers. So they expand in terms of taking new products, of which we've launched two this year. Expanded in terms of their their reach and their growth, so these flexible workspace businesses as they obviously increase in scale and size and footprint, we've expanded with them. And to support that this year, we've ramped up our investments in r and d. So post IPO, it was a key part of of the fundraiser at that point was to really ramp investments in our products and our services. And that ramping is completed this year, and that's really starting to pull through now in the deliverables when it comes to our software.

5:54 We continue to grow, so US sales headcount this year has increased 75% year over year, highly efficient sales process and and and sales team in the business, and we've increased that footprint. Across the whole of The US, we've actually increased now our reach and so not only do we have our our East Coast and West Coast offices in New York and Los Angeles, we also have feet on the street in Canada and also in the southern regions in Dallas. And and finally, the change of the the real estate landscape, so, you know, the involvement in the world of the both biggest real estate companies and landlords in the flex workspace industry has meant that we've had to develop and increase our reach into that traditional landlord arena. So we've been working hard to make sure that our brand is developed and is developed, continues to develop with that audience, and that's really pulled through in terms of the successes we've had with those major customer wins, in terms of what will provide us that future, opportunity and future pipeline.

6:58 And it goes without saying, obviously, that, COVID nineteen will be, one of the most memorable parts of of '20 for all the wrong reasons. And we saw the impact of that firsthand as the lockdown really began to take hold. And what did that mean for our business? Well, obviously, we saw some extended sales cycles in our connect marketplace, which is an element of our services, which are consumption based. And we saw a moderation of those revenues slightly as as some occupancy changes happened in these spaces. And also, you know, we look to to help where possible any short term support to our customer base as you would expect. So, you know, as those things happened and the lockdown started to take hold both in The UK and The US, we took some timely and pretty decisive action to make sure we were suitably responding to the seriousness of the situation.

8:02 And and that meant that, you know, from our business point of view, we we delayed or or we stopped any non essentials CapEx spend or development spend or operational spend, whether that be including recruitment as well. So senior team also talk significant salary reductions and where there was any operational overcapacity in the business caused by the downstream effects of COVID nineteen, we took measure we we took steps to reduce that operational capacity by, you know, reducing working hours and also looking to change those the way we did things to to support home working and much more flexible approach to people.

8:53 And now, we took those steps and they were the right things to do, but obviously we've started to see a recovery happen in both our customer base and in the markets at large. And you can see actually our platforms give us amazing visibility into the occupancy of these locations, so our customer locations, and and to really be able to see what's happening with amazing, really high resolution through the lens of our software. And so you can see that our business, our customers, their occupancy has been tracking back up over time. So, you our spaces our customer spaces are roughly around mid forties in terms of how how much percent they are occupied right now, and we see that trend continuing over time. This year, so we've really ramped up some of the product development and new product capability, which has been timely and also has

9:47 very much and are very much of the moment in terms of the impact for our customers in terms of COVID. And just as we sit here now, we've seen new business activity really recover now to about three quarters of the levels it was pre COVID in h one of this year. And so increasingly optimistic for the outlook and increasingly optimistic for the for the future of both of our new sales and our customers. So I'm gonna hand over now to Alan who'll take us through the numbers. Thanks, Alan. Thanks, Mark, and good afternoon, everybody. I'll I'll I'll do just cover off some of the key financial highlights and touch the some product split and then some KPIs in a moment. So as Mark said at the outset, pleased with the overall outcome for the year with revenue up at 9%, so from 20,600,000 in 2019 to 22.5%.

10:45 Recurring revenue run rate, which is the as the key metric that we measure future growth by, was 19,700,000 at the end of July. That's the annualized recurring revenue for July. That was up by 2,400,000 from 2019, so up 14%. I'll touch on the product split in a moment. And EBITDA for the year at 4,200,000 was in line with last year and as we sort of set out expectations for FY '20. This being the first full year of ESSENSYS being listed and intended along with next year to be investment years as we grow capacity in the business, and I'll touch on key element of that in a moment.

11:32 86% of revenue is recurring. As Mark mentioned, that's up seven percentage points from last year, and that's flown that's thrown have gone through into increases in gross margin, higher proportion of higher revenue, higher margin recurring revenue driving that increase. Recurring revenue gross margin down very slightly, and that's driven by the split of the business between The US and The UK and the increasing proportion of our business that is driven out of The US, currently US. Now 46% of the business will be up to 50% and more through 2021. Net retention for the year, a 100%. So that's the revenue we got from our customers in July.

12:20 The the customers we had in July 19, the revenue we got from them in 2020. So which is very positive in the current environment. And then the final thing really to to highlight there in terms of those statistics increased a UK based development resource as we rebalanced our software development activities from an offshore base scheme that we had set up prior to the IPO on top with a more agile UK based. We retain the offshore development capability to provide support of industrialization, but it means we've got more agility in terms of product development. Mark will talk to specific example of that in a moment. Just covering off finally on margins. UK margins continue to go up. Lower margins currently in The US driven by a sort of mix of sub products within Connect primarily, but we would expect over time and have seen and we would expect over time US margins to increase towards The UK level.

13:23 In terms of the individual product splits, Connect accounts for 92% of our overall revenue, and there are there's an element of nonrecurring site establishment charges and which I'll I'll highlight in a moment, which which part of that, we continue to add customers throughout 2020 and sites. Key metric for us is connect sites. We added 35 new connect sites in the second half of twenty twenty. A 100% net retention again for connect customers throughout the year, and that margin movement, as I say, to go driven by reduction or mix of UK to US business. Operate a smaller proportion of the overall business, but nevertheless, a good proportionate revenue increase. And that revenue increase is driven by a strategy that we've been employing for the last two, three years to actively manage the customer base of that business towards our more target customers that across the group sell higher value multisite ambitious scaling customers, and that's driven that pricing growth. That process came to an end primarily with our existing customer base throughout the second half of twenty twenty, and that's with a final customer that was in a much lower value category, which we ended up or we stopped dealing with throughout second half, and that accounts for the more than the reduction in sites. That increase in revenue and values, therefore, driving

14:54 margin increases on operate as well and notwithstanding those changes in sites, 101% retention. So growing the revenue with our existing customers through the year as well. In terms of some specifics, so the the p and l here, I've touched on most of this. I'll just highlight that that sort of revenue mix there. So connect recurring 17,500,000,000. The connect nonrecurring elements of our revenue, that is site establishment charges as we set up new connect sites. And then the operate revenue, therefore, up 500,000 from 1.4 to 1,900,000 last year. I've talked to various other statistics and and elements that we've highlighted there already. The only other thing that I would highlight at this point in terms of the EBITDA being in line with last year when we IPO ed, We we were building capacity for growth in the business. That building of capacity has carried on through 2020 as was originally planned, particularly with investment in go to market.

15:54 I've highlighted also some dev growth. So that's that's sort of driver for the overhead movement through the year. In terms of cash flow side of things, business was cash flow working capital neutral through 2020 in 2019, the business 2019 versus 2018, the business had a significant growth, particularly in the second half of 'nineteen compared to what it had in 'eighteen, and that resulted in that working capital outflow this year, though we've maintained neutrality. A couple of other things to highlight on the cash flow terms is our the amount of our software development expenditure. So we invested 2,300,000 in software development, so we'd anticipate that continuing for the next couple of years as we accelerate our product development activities post IPO and into the couple of next couple of years. We continue to invest in expanding the geographical reach of our connect, the infrastructure that sits behind connect. So that's most of the million pounds. That's with additional base center capacity in Toronto, Seattle, and Dallas primarily.

17:06 Final element to have highlights on the cash flow was the the impact of the £7,000,000 fundraiser we went we undertook in April. So that was obviously, there was an element of COVID related contingency we were looking for, but the vast bulk of that was raised with the intention of investing further

17:25 in growth of the business across APAC in Europe. And Mark will cover those in a second as part of the strategy element. What that means is that we ended up the year with balance sheet substantially strengthened over the previous year and £8,500,000 in the bank. Nothing particularly to highlight on the balance sheet. It's there for completeness. And in terms of KPIs, just to to highlight a couple that we track. So connect sites is obviously our key KPI, and you can see those on the various announcements. So we ended up in 2020 at 419 connect sites. That's 30% compound growth for the last five years. We have 47 contracted sites as we speak today, which means we've got a medium term outlook of 466 connect sites.

18:15 Lifetime value of customers to customer acquisition cost was 5.6 through the year 2020. That's down from last year and down from the half year. That level being a measure of our sales efficiency is actually very high, and and we'd expect that to continue to come down over the next year as we make continued investment in our sales and marketing capability. Mark will touch on that a bit in a moment. We have our business and our products are inherently of benefits to large scaling multisite customers, and we have, therefore, a number of customers that are significant. The top three account for 37% of the business that is down from our IPO, about 45% and full year of 'nineteen full year 'nineteen where it was 41%.

19:02 And we continue to see larger customers growing within the balance of that top 10, both in The UK and The US, and therefore reducing that concentration in the the top three and top five. Increasingly, we we see cross sell across to across both our products, both connect and operate. About half, if not slightly more now, half of customers will take both products, and that's particularly true in the newer, broader corporate real estate and landlord entrance into the market where we are providing them with a a complete technology solution for running their flexible workspace solutions. And that's it for me, Mark. Turn over to you. Thanks, Alan. So I'm gonna touch a little bit about the development of the market and and in particular, the total size of the opportunity and how how excited we are about how that looks as we look out.

19:57 And so the world of commercial real estate and the world of the office has changed massively over the last decade. Undoubtedly, if if you will, you know, the the the idea of onerous spends and long term leases and commitments for for all the empty boxes that take hundreds of thousands, if not millions of pounds to fit out, is one which is becoming less and less appealing over time to pretty much everyone. And so the rise of space as a service models is really led by demand side drivers. So that is really what the new demand default is from occupiers. And that's really, you know, started to surface in a number of different ways. So, you you know, we always knew about Regis IWG.

20:47 We saw the rise of WeWork. But increasingly, what you're seeing now is the response from landlords and the commercial real estate industry at large who are developing and delivering their own products and services so that they can support their occupier base from cradle to grave. They can provide all of the real estate products and services that are needed in the lifetime or life cycle of a company. And so you've seen many different types of space, and that that trend was growing. Undoubtedly, that would take time to pull through the real estate industry as it looked to change and respond. Well, COVID nineteen has been a major catalyst event for that transformation Because, actually, now we're all used to a new way of working.

21:32 Today, this is not unusual. We are coming to you via video link, you know, the rise of Zoom, different tools, remote working. The rise of actually people wanting to be in the office, so I'm seeing that across the piece with with our teams across The UK and The US. You know, I think we were asked the question is sort of what does occupancy normally look like based on the fact that, you know, it's a running at about 40% again across all of our customer bases. And and and, you know, occupancy, undoubtedly, COVID will lead to some dedensification of the space. So, you know, people won't be crammed in, and there'll be more space, actual space, for people. And and so we see the space requirements stay the same, but obviously less people per square foot. So, hopefully, for Alastair, that answers the question about how it compares to pre COVID levels.

22:28 And we with the the the evolve I guess, the the rapid evolution of the industry, it means we're very confident about our outlook in terms of opportunity size and scale. And I think, you know, we've heard before, but but the stats that I most refer to is that the research points to 30% of all commercial real estate globally will be consumed flexibly by the year 2030. So and that's from today, a market which is broadly about 2% of all real estate is consumed flexibly. So it's such a growing part of the real estate industry. It's huge. And that really plays to our focus in terms of our routes to market. And so we, for a number of years now, have really been concentrated on developing relationships and customers that are strategic, that are future, that long term high value opportunities across four key persona types in the industry. So the first is the the low or the very mid CapEx light, if you like, franchise type operations. And we saw this model evolve in the hotel industry originally.

23:47 And so you're starting to see that replicate across the flexible workspace industry, and we've been working with two significant franchise operations in The US, and they've been really fundamental to our recent successes in The US. As well as the franchise operations, you know, there's a traditional flex workspace providers. They're standalone providers. They may you they scale, so they may have twenty, thirty, or 100 locations. And but really, they're looking to scale. They're looking to build real estate platforms, but they're really doing it separate from the landlords, other than the fact that they're taking space within those buildings. And then you've got probably the most active part of the industry right now in terms of speed of of response and also size of opportunity. So you have the landlords themselves, the asset owners, and you have the asset operators, if you like. So the asset operators being, if you like, property management firms and, you know, the world's biggest co commercial real estate firms globally.

24:47 People like JLL and Cushman and Wakefield are really becoming much more active in that. And and we work hard to win those customers over over the recent years to really make sure at the top of the value chain, we were having success, but also to to give us a real foundation so that we can compound those relationships with new logos over time and really build increase velocity in terms of our customer acquisition. And I think, you know, those customers today, they represent about 10,000,000,000 square feet of commercial real estate footprint. Now if 30% of that real estate over time, and it might be ten years, it might be fifteen, twenty, but if 13 30% of that becomes a flexible product, You know, for us, that's a huge opportunity.

25:37 So on average, we we we see roughly every square foot is probably worth a dollar or a pound of software revenue per year for us. So significant opportunity just in the customer base we have today, massive expansion for us in future. And I think someone was asking about sales cycles. So how have how's the sales process changed? How sales cycles evolved during the pandemic? And and, you know, we're all evolving. We we respond to things in front of us. And so our sales teams, our marketing, our messaging, and we've, you know, videos involve more sales cycles that are a little less efficient. I think that's fair for every business in in in b to b. And but nonetheless, we've still we've still closed big deals. So we've just closed a global framework agreements, one of the big global real estate companies.

26:31 And and whilst, you know, that's early stages of that relationship, we see massive opportunity with those guys ahead. So, hopefully, hopefully, that also covers the sales cycles. I think that question came in from Nick. Just moving on then in terms of from the from the the market opportunity, we've got to develop and deliver products that meet the requirements and solve real problems for our clients. And and also, if you like, makes our our capability compelling. So this year, we've been working hard to develop new capability that really met the requirements of of the slightly different audience that is the landlord and the commercial real estate audience. And so we developed our proposition step, which is our wrapped up capability. So it's the connect and operate technologies of our core platforms and wrapped up in a way which is much more aligned with the requirements of landlords in the real estate industry at large. So it it it's based on a pay price per square foot model.

27:32 It scales as they scale their flex footprint, and and it's really designed, to appeal to those buyers. And we've had amazing success already with that, and we're seeing pipeline grow rapidly. And we launched that product in in the middle of summer, and we've actually already won the first contracts with STEP we sit here today. So very excited about the future of that part of our business. And and, also, across summer, we launched a product called smart access, and you may sit there and think, oh, it's access control. We can all get into a building and tap our cards to get in to a door. That is is absolutely right, and for many years, there's been great access solutions for the enterprise and for also the buildings at large. The the world of flexible workspaces, flexible real estate is very different.

28:20 You have lots of coming and goings. This is lots of real time requirements. So I need to book a space. I need to get into a space. I need to book a meeting room and get into a meeting room in real time. This is about taking friction out of that journey and about making and delivering immediacy. And we couldn't find a product, and our customers couldn't find a product that really suited that requirement. And so we set off and to build that ourselves, and we've actually launched that product in less than twelve months from ideation to delivery and first customer contracts. That's a significant bolt on to our capability. It's a new module, and has significant revenue upside. And and, obviously, in the current clients, anything that's touchless, anything that's contactless, has, massive relevance in our in the current world we are in. And so new product capability with developing new markets and new revenue opportunities.

29:15 And and post IPO, obviously, one of the key investment decisions we made was to really take the two platforms that exist today, operate and connect, and to develop them into a single unified capability, one which was much more modular, so had much lower barriers to entry for our customers so they could take those modules, became best of breed. And not only would we significantly increase the value of those products to our customers because they're really focused, but also and that would also increase the revenue opportunity as we could make an increase the number of modules and amount of capability. And, obviously, if we can increase value to customers and ROI, then, obviously, you have an opportunity to increase revenue and price. And and so we are barreling forward, barreling ahead with the delivery of the flex services platform.

30:06 We are on track, on budget, on time to deliver the first capability in 2021. And so exciting time for product. But this was all really good on PowerPoint and on the slides.

30:21 What I've learned in fourteen years of running a census is that really it's only what you do that counts. And so our focus on strategy execution is is, if you like, tighter than ever. And and that pulls through in some of the successes and how we see things in the major markets we operate in. So North America this year, you know, this is a business that last year grew 45% year on year recurring revenue growth. And that's not from a small business. It's not from tiny numbers. That's an established business and growing rapidly. So we've

30:53 that business has as it's evolved, we've been able to invest in in increased sales capacity. So more headcounts of 75% increase in headcount. But as we've been able to attract, you know, higher quality people, so that increases quota, reduces sales cycles, and also gives us more capacity. So an increase in overall increase in sales capacity in The US of 84% in the year. And and, also, that means our business in The US and North America can support us recruiting a a focused in region CEO to lead the charge across that market. And that's a market with 11,000,000,000 square feet of office space, and so that is a significant opportunity over the next three, five, ten, fifteen, twenty years, for ESSENSYS. And so, we are, in deep in process for the recruitment of our our North American CEO, and, hopefully, in the months ahead, we'll have some good news and and be able to announce the person who's gonna lead that charge for us.

31:54 So US, great success, continues, and also more important, I guess, the size of the opportunity behind it, and we're very early in that journey. In the The UK and Europe, you know, as we were clear at IPO, our focus was really spinning up The US business. And so now as we build that team and the leadership team to take that forward, we've been able to think about how we scale out in Europe. So as part of use of proceeds from from our raise earlier this year, we're gonna build our pan European capability and presence. So that means we've identified and appointed a European sales director who will be building our European sales team and sales capability in the months ahead. And that means that we're expecting and we're seeing actually that momentum build across developing pipeline, new customer engagements, customer wins, and so we're excited to see where the European opportunity takes us. And the platform, the product is all ready. It's all built.

32:56 It's native. It's ready. It's localized, if you like. So all we need to do is a little bit of translation work, and that's ready to go in those European markets. So, again, a more opportunity and more expansion chances for us in terms of Europe. And finally, is the APAC region. So the Asia Pacific region is one that's really starting to embrace flexible workspace. And so you see landlord responses, but also you see our customers, our global customers becoming more active in those regions and those markets. And so they're pulling us and and looking to take us into those markets where we currently don't have all of our services. And so and as we think about it, obviously, we've had some there is some restrictions on travel and some logistical challenges to make sure to to sort of as we think about how quickly we can get into the market. But we certainly see that the second half of this year will be when we'll we'll complete the big push, recruit a regional CEO for the APAC region, and build back go to market, I. That sales and marketing capacity in those countries to really drive pipeline and sales.

34:10 And so we expect to see those those first customers probably in the the start of our next financial year. And and and, actually, they're they're fertile markets. We have customer relationships because of our operate platform in those markets today, and the pipeline is developing well already for our full market entry later this year. And and so just to to bring us to a close is really about what does the outlook look like and and and how do we see the future.

34:44 This year, we've answered a major question to what happens in a downturn. And while strong resilient performance, the quality of our customers, and the underlying performance of the business and growth continuing from 19% recurring revenue growth year on year and gives us that strong platform. But it's also perhaps more importantly about the size of the opportunity. So we've made great progress this year in The US and so reaches a geographic reach across The US continues, and and our our our sort of our beefed up capability in our leadership team pushing across The US later this year with the new CEO will sees us very optimistic for the the for for the, I guess, for the future of the North American business.

35:29 And that's against the backdrop of really significant change in the real estate industry, flex becoming a much higher percentage in terms of its adoption across the wider real estate market. And and that trend is continuing and and, you know, I would have hoped not to to have COVID nineteen here at all, but it is gonna be a a net driver of growth of our industry in the months and years ahead.

35:59 And we've already seen that. So the quality and the size of the logo we've been attracting and we're we're now working with means that those strategic accounts, those customers we already have provide us with significant runway, great pipeline visibility, and long term opportunity. And our job is to build products and to deliver great services to those customers to make sure that we stay with them for the whole journey. And finally, you know, it's about making sure we've got everything in place. And so, you know, we have we are debt free, strong balance sheet, and, you know, significant amounts of cash on hand. Markets, we are we've developed fully in in our key markets of Europe and The US. And we are really doing we're proving how efficient we are when it comes to sales and marketing activities with that high lifetime value to customer acquisition cost ratio.

36:53 And so the things that are in our control are all now looking really positive for the future of our business. And and and our job continues mostly to

37:04 be not to cock it up. And so we're gonna focus, We're gonna stay hungry and ambitious, and, hopefully, you'll come on the journey with us if you're not already. I wanna just cover a couple of final questions before I hand back because I can see them here that I can see on the board. We mentioned sales cycle. I think I covered that. We talked about occupancy visibility.

37:27 Abby's asking, who would you say our major competitors are? What differentiates us when attracting new customers? I think, Abby, that that the the market is evolving. You know, we were fourteen years ago, we entered the market, and it was very nascent. It was a tiny part of real estate. And so we built ourselves. We've embedded ourselves in the market and solved the problems of the industry. And so today, most of our competitors has entered the market in the last few years. That means they're they're subscale, some are pre revenue, and, obviously, we have a bit of a head start and advantage. And in the years before, you know, no one really understood there was an option for an industry specific software platform to help them. So many of of many parts of of the flex workspace industry actually tried to use horizontal platforms. So use Salesforce or some of these ERP platforms and try and sort of mix and match them together to try and develop something that worked for them.

38:26 That's changing, obviously. Now people are looking for best of breed solutions. And today, you know, by most markers, we are the market leader, still very small, obviously, but we we hope that continues long term. So, hopefully, that covers a little bit about competition. Alan, I think there's a couple of questions that you can cover in terms of recurring revenue cash flows. Yeah. So yeah. So Nick's asked the question, what's the contract term cash flows recurring revenue? So a couple of elements to that in terms of how we contract with customers. The connectors are three year contracts on average and operates a one year. And and in terms of how that we we build out our works, we build on a monthly basis for the service in the month.

39:13 So the so on a on on a recurring revenue basis, that's month by month for either three years or or twelve months. Clearly, churn is very low, and therefore, we've got a very high success rate for recontract elements. Hopefully, I think that answers the next question. I'm gonna deal with the others. Yeah. I think we one of the questions from comes in from Alastair is, you know, we've only recently listed on The UK, but recognizing that fact and that we've got significant opportunity in the footprint of The US business. You know, are we considering a dual listing in The US? We're proud to be a a British success story. We think that will you know, that that is our focus.

40:00 I think, you know, what we're focusing on absolutely is making sure that we get on and and run the business and build the opportunity. And I'm sure I'm expecting fully the business to be fully valued in the fullness of time by The UK market As a significant shareholder, myself, obviously, I'm I'm absolutely aligned with that requirement. But we always, you know, we always assess our opportunities. But in the near term, no, we're not considering a dual listing in The US. It's probably also I'd say, Mark, obviously, we go forward, we're we're developing a European and APAC business. Business will become much more global over the next two to five years. Yeah. And then and another one from us is coming about how the the development function split between Vietnam and The UK. So how does that work? You know, I think I think these are well trodden paths now outsourcing.

40:56 But all of the for us, if you like, get into MVP, so minimum viable product, and really prototyping, all of that's done in house in London within sort of, I think, a couple 100 feet of me either way in this office. And that's important for the speed of delivery. It's all about being agile and being able to respond quickly. A lot of the heavy lifting once we've once we've completed and committed the code and is done and the maintenance work is done offshore. And that's always worked well for us, I think, as we've been able to post IPO, attract more a better quality of talent. You know, it's a very competitive world for software developers. But as we've grown and we've got a built brand and been able to attract that talent, we've been able to obviously rebalance and make sure that the if you like, the the center of our development universe is right right at the heart of our business, and that's working really well for us.

41:54 A long way it continue. Just before, I think I've got a couple of questions that came in pre this. I think, Alan, you've a couple to cover, but I'll cover the first two. First question is, can you provide more detail on the type of new products and services you're looking to launch? Now we talked a little bit about the products we've launched in products and services. For, obviously, our job is to make sure we are continuing to add value for our clients. And so, you know, things, problems that we solve are real world problems for for our industry, and there are things around how how same parts of infrastructure, sensors, IoT technologies, how all of those products was all those things are orchestrated and how the the connection between them all are automated, that's gonna be important to us. How we then surface all of that data and make it meaningful in terms of actionable insights.

42:52 And we wanna do that and try and create some autonomy in the platforms to to give the platforms making decisions. So when I think about the future, think of surfacing that data to make sure that our customers can make better, faster decisions, and doing it in such a way whereas if can be, some of those decisions are taken autonomously to get our customers better answers. And so we're always looking to push on product and development, and we will continue to do so. Great business is normally based on built on great products. And the further question is, you state the group's further geographic expansion is being planned and will be rolled out when market conditions are ready. Could you provide an overview of how COVID dependent you see this playing out? Are there any new locations of interest? I think we've covered that earlier on. You know, those key markets of North America, Europe, APAC are gonna be critical to us. But having said that, we are seeing customer pull into other regions, and and we are everything's ready for us to efficiently enter new markets should the opportunity present itself.

43:56 But, you know, I'm sure you can hear by my my northern tones. I'm quite focused on return on investments, and that will always be our primary concern. Alan, do you wanna cover the Yep. There are two final ones, I think. Let's I think these are the two final questions. So what's the split between recurring and contracted revenue? So, clearly, there's an overlap between the two we touched on. So 86% of revenue that revenue is recurring. And all of and all of that, about 90% is actually contracted. So so that's probably should get with that. And then final one is what's the view on the payment of the dividend? I think when we listed the business in a was a a conversation piece for people. We are in our growth and investment mode.

44:45 I think there is a long term desire to pay a dividend, not least because the major shareholder is also on this call. And and and but but I don't think that's gonna happen for for probably two to three years at the earliest. Perfect. That's it. Thank you very much indeed, Mark and Alan, for updating investors today. Obviously, you've taken onboard the pre submitted questions. You've addressed all the questions that have come in by investors. Should any others come through as we're closing up, obviously, we'll make those available to you also. Mark, perhaps I could just ask you just to wrap up. And then what I'd like to do is redirect investors to give feedback. I know that will be particularly useful to you as a company, and I'll do that after you've wrapped up. Great. Thanks, Mark.

45:30 Yeah. So thank you everyone for taking the time to meet with us, albeit virtually and via a one way video today. Hopefully, at some point in the future, we'll get to meet in real life. I think our opportunity is something that we've built over the last fourteen years, and primarily, it's been down to commitments, the hard work, and the focus of the team and our people. But our ambition is on dim, and the opportunity is bigger than it's ever been. And our job is to to execute against that and everything else, if you like, the market should take care of price. And to Alan's point, should take care of me as the largest investor. So thank you all for your time. I'd like to say thanks to Mark and and the team at Invest in the company. I think it's a great platform, unbelievably usable and user friendly.

46:22 So we're we're really excited by the platform and what it can do in terms of extending our reach going forward. So thank you all. Stay safe. Have a good day. And you. That's brilliant. Thank you ever so much indeed, Mark, and thank you, Alan. Could I please ask investors not to close this session as you'll be now automatically redirected for the opportunity to provide your feedback? If you access this meeting from our website, then the feedback page will appear. And if you access this via the link sent to you by email, you'll simply be asked to log in and submit your feedback. On behalf of the management team at ESSENSYS, I'd like to thank you very much for attending today's presentation. That now concludes today's session. Good afternoon to you all.