Getbusy (LSE:GETB) — Acquisitions and Strategy Update’

0:01 Good morning, ladies and gentlemen, and welcome to the GETBUSY PLC Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. We'll notify you by email when these are ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you would be so kind as to give that your attention, I'm sure the company would be most grateful. And I'd now like to hand over to Paul Haworth, CFO and Daniel Rabi, CEO from GETBUSY. Good afternoon. Oh, sorry. Good morning. My apologies. Good morning. Good morning. Thank you, Mark.

0:51 And I appreciate everyone's time, joining us in this strategy update. We have, some really exciting updates, really exciting updates to go through.

1:01 Let's jump straight into it. The agenda for today's session is the GETBUSY strategy, then we're gonna move on to the growth opportunity and market drivers, followed by the recent acquisitions we've made. We're gonna then give an update on current trading. And as Mark said, we're gonna then follow on with some questions and answers. Our mission as a company is to make people productive and happy, and that very much aligns to what we do as as software providers. We are a productivity software company for professional services and financial service firms. Our suite of software applications streamline complex admin tasks for over 68,000 fee earning, professionals, enabling enhanced productivity and security anytime, anyway.

1:50 Our background as a company is document management. We specialize in supporting professional service firms through complex, data and document, workflows. We specifically add value through integrating into their practice management or, tax systems so that, the document workflow is very specific to their requirements. And that's how we differentiate ourselves from generic document management solutions, and that's why we are the market leader globally for document management in accounting and bookkeeping and financial service firms. We sell in Australia, UK, US, and New Zealand.

2:37 There is ample addressable market in those markets for us to significantly grow. In each one of those markets, we have deep integration with the leaders in the tax and practice management areas. And often, they are, successful channels for us as well as, us being able to leverage off those integrations to sell directly to their their clients. We're currently at 14,000,000, circa 14,000,000 in ARR. And we are confident that, through just document management, which is our background, there's ample growth opportunity. But today, I'm very excited to announce some additional growth potential, through expanding our capabilities from just document management and into productivity software.

3:26 So, the large customer base of 68,000 paying customers that we've we've grown over the last couple of years in document management has been requesting from us that we extend extend our capabilities beyond just document management into other components of their work flow. So that triggered a a strategic exercise for us to determine how best to add that value, specifically what problems are they asking us to solve, and then how best do we solve those problems. So this is significant extension of our capabilities, which enables us to grow not just in our current markets, but, into new addressable markets as well.

4:16 And so as I said, we are the leaders for accountants and financial service providers, specifically throughout two products, virtual cabinet and smart vault. These new acquisitions enhance those two products capabilities enabling us to ex upsell into that client base and enabling those two companies to sell into more and different addressable markets. It also extends our capabilities in the ERP space, which is the focus of our new product GETBUSY. And GETBUSY takes all the learnings from our financial services and accounting products and moves it into the ER space ERP space where we think there's a a opportunity to disrupt what is pretty cumbersome processes and a large addressable market, which have desire for this for a problem to be solved that we know we can solve.

5:11 In the accounting and bookkeeping and financial services space, we have 30% of the top 200 accounting firms in The UK all the way down to bookkeepers. So we're very familiar with a large spectrum of those client bases. And we know that from the top 30% to the bottom, they're requesting this additional capabilities of just from just a document search following and storage to more more components of their workflow. So on that, we we very much feel that through these integrations and our existing application, we can support our customers, initiate work, manage work, and complete work.

5:58 Our three products help them be more efficient, more profitable, more secure, more compliant, more connected, more differentiated. So the value in which we provide is clear, and the return on investment for them is very tangible. Hence, the reason that once we're in there, our churn rates are extremely low.

6:22 What we are able to now do is clearly identify where we support them in managing work sorry, initiating work, managing work, completing work. And as you can see, Virtual Cabin and SmartVault, our foundation products, were very good on the document component of those three elements. But over the last years through the additional investment we've made in GETBUSY and through now our two, acquisitions of Quoter and Dropdown, we can support them beyond just the document component into chat, task management, into their ability to book a book appointments, create a proposal, gather information. We now extend into all of those workflows, and they're naturally synergistic to the existing capabilities in which we we show.

7:15 On this slide, we're also showing some potential other road map opportunities. So that's either through partner build or buy, and these are additional capabilities in which our clients are requesting and prospects are requesting from us. This breaks down that in in a lot more detail because I think sometimes there's a lack of appreciation for how complex the workflow is of, accountant bookkeeper or financial service firm. And as you can see through each component here, there's a different course of action,

7:54 that the firm or the individual team in firm needs to take. And through each one of these different items, there is software that can support them being more productive and happy. And as you can see, we've tried to identify on this slide the components of this workflow that we currently dealing with and the components that we're not and probably won't ever deal with. And then in the red is the areas in which potentially in the future we may decide to deal with. So as you can say, we're now covering a large percentage of their workflow, and that is giving us a lot of monetization and expansion opportunity. It's making us more sticky within the firms and accountants and financial services more reliant on our software to be successful.

8:45 On that note, I'm gonna hand it over to Paul who's gonna go through our growth opportunity and market drivers. Great stuff. Thanks, Dan. So the we're fortunate to operate in an environment where there's some very powerful market growth drivers, that provide a tailwind, for us. And they broadly boil down to, digital transformation and productivity, privacy legislation, a shift towards mobility and working, and in cybersecurity. I'll just pick into each of these in turn. Within a large accounting firm, it's very possible for up to £50,000 annually per employee to be lost if you don't have efficient and secure document management and approval processes and signature processes.

9:38 Issues like version controls and just routing of documents by email and those sorts of things cause colossal amounts of inefficiency if it's not managed properly. So there is a clear productivity mandate within these firms to improve that position. Over the last few years, that productivity mandate has been strengthened because of the cost pressures that accounting and professional firms are under particularly in accounting, we've got increased scrutiny by the FCA, increased scrutiny around dividing accounting firms very clearly between audit and the rest of the services they provide. And the news recently around some of the larger accounting firms and the fines they've received wouldn't have escaped your attention. So they need to recover those costs somehow, and productivity and the software that enables productivity is one of the ways that they do that.

10:33 Legislation works in our favor enormously as well. And I think there's two key things to pull out here. First of all, is the very rapid adoption of digital signature frameworks around the world. You're probably very familiar with digital signature and DocuSign and things like that, and it's relatively advanced here in The UK. And, actually, there's 60 countries that now have very clear, digital signature frameworks that are, sealed into law. In addition, the UN and the EU has established frameworks for countries to adopt into. So the rise in digital signatures and therefore the software that supports that is gonna be very significant for us. Three years ago, back in 2018, The UK or Europe adopted GDPR.

11:22 That was a really nice tailwind for our virtual cabinet business in The UK, and we saw very strong growth that year off the back of people adopting technology that helped them to address the requirements of of GDPR. Virtual cabinet was a piece of that of that puzzle. We're seeing that happen across the world, but most notably at the moment is The United States. In California, the California Consumer Privacy Act was adopted relatively recently. And in fact, there are only two other states in The US that have adopted legislation. But there are 30 other states where legislation is going through the statutory process, and one can assume that the remaining states will also go go through that process shortly.

12:10 We see that as a huge tailwind for products that help people to comply with the likes of GDPR and related legislation. And our smart vault products and our virtual cabinet products are just part of that puzzle, making data secure, making personal data secure, and having very clear auditability and traceability around it.

12:36 The last two years have seen an acceleration of hybrid working of working from from from anywhere. This is a trend that's been going on for some time. It's not new. It's just been accelerated through through COVID. And in order for professional firms to allow their staff to work remotely or require their staff to work remotely in some cases, you need to have the right digital infrastructure in place. And probably your legacy infrastructure wasn't adequate cope with something like COVID and and suddenly, potentially, a hundred percent of your staff working remotely. So it's very clear that the firms that have invested in those sorts of products in advance of COVID weathered that storm much more successfully. And our products are part of that tool set that enable firms to work securely, to enable their information to be available, accessible easily.

13:29 So it needs to be secure, but it also needs to be workable. Again, it come back to that efficiency thing. And that's, again, a very favorable tailwind for us. And finally, the landscape of cybersecurity has become especially prominent in the last couple of years. And in fact, in 2021, global spend on data security has increased by almost 20%. Businesses on average are spending nearly twice as much now on cybersecurity as a percentage of revenue than they were just a couple of years ago, two or three years ago. Preventative measures are always the most cost effective, and our tool sets are part of those preventative measures. Putting your data, putting your workflows and documents and signature workflows and those sorts of things in a secure environment that's accessible, that has bank level security around it, means you're much, much less likely to have a security event in your workplace. And so as as prevention measures become much more prominent on an IT director's shopping list, again, that provides a nice tailwind for us as a business.

14:40 So there are the tailwinds that we're in. How are we actually going to market, and how do we plan to capitalize on this? Well, actually, this is quite simple. So first of all, and perhaps very obviously, looking to acquire new customers. I'll show you in a second the markets that we're playing in. There is a lot of market out there for us to go and and seek to capture. So new customer acquisition is a very clear area where we are able to grow. As Daniel alluded to earlier and we'll speak to a bit later on, we are always improving the functionality and the tool sets within our products. And that enables us to improve what we call ARPU. That's average revenue per user per year as we basically sell more functionality and more products into our existing user base.

15:28 And we've got 68,000 paying users at the moment, so a substantial base to sell into. Having that additional functionality, having a better user experience and user interface allows us to price and package our products in a much more confident way,

15:45 and that will allow us to close the gap over time between the price that new customers pay for our products and the price that customers across our base pay for our products. So there's a monetization opportunity afforded to us by that as well. And some of that new pro product functionality will come through selective bolt on acquisitions, like with quotas and dock down, which we've recently announced. And that helps us to capture more of the workflow, a lot of the back office stuff that our customers seek to do in an efficient way. And they know us where we can integrate that functionality with our existing products, and it provides a very nice scalable solution for for our customers.

16:30 In terms of the markets we play in, they're substantial. And I've got a couple of examples here of of of the markets that we are operating in. In. So if we look at The US, first of all, SmartVault is our strongest product in in The US. It's about $8,000,000 of annualized recurring revenue at the moment. In the area where we have very clearest product market fit, which is with users of Intuit's tax suite of products, we estimate there's about a $50,000,000 opportunity just in that market alone. And it's worth flagging that we are the only provider of cloud document management services into the into into its and Pro series products. That's a substantial opportunity for us even in just what we're doing right now.

17:17 Expand that out, into, other, uses of other accounting technology and so the broader accounting bookkeeping base in The US, and that opportunity becomes, very nearly a billion dollars in ARR. We estimate about $800,000,000. And then as we seek to move more into the mid market financial services industry, which currently is is woefully served by technology, that opportunity opens up into about a $3,000,000,000 playing field for us. So there's a very significant growth opportunity even by doing exactly what we're doing now and serving the same sort of customers that we're serving now. But as we branch out from that, that opportunity becomes much more significant. There And are very similar dynamics, albeit on a smaller scale, in The UK as well.

18:06 With GETBUSY, our new product, which sits in the ERP space, we see, again, a very substantial growth opportunity. So GETBUSY currently is is is in the the the the gaining traction phase, so it's still relatively small ARR for us. But within the base that we're initially selling into, that's NetSuite's global user base. We estimate there's about $250,000,000 ARR opportunity within that. If you add on the other ERP systems that are similar to NetSuite in the fact that they are pure cloud and relatively innovative in their nature, that opportunity approaches $500,000,000. And then over time, as we build product out into some of the legacy ERP systems, that opportunity clearly exceeds $1,000,000,000 there as well. So the spaces that we are playing in are substantial.

19:00 And what's exciting about GETBUSY for us is there's no single product that that solves the problems that GETBUSY seeks to solve in that ERP market. So we're currently unique in that space.

19:17 Since we IPO ed in 2017, our ARR has doubled, and our target as a business is to at least double ARR within the next five years. And we can see very clearly through a combination of new customers, product expansion, and monetization, that we'll have sustained double digit recurring revenue growth well into the future. And we focus on recurring revenue growth because ARR is very highly valued, and we regularly see companies that are trading at five, six times ARR. Now I'll hand over to Daniel to talk about the recent acquisitions. Fantastic. Thank you, Paul. Following on from what Paul just said, our our value very much sits within our ability to streamline workflow for, accountants and bookkeepers and ERP users.

20:17 Traditionally, our ability to take a piece of work which they've they've done, whether that's tax return or a form they filled out or pro proposal, and bring that into an efficient way of managing that document, whether it's, you know, sharing it with someone, communicating around and storing it, flying it, filing it, making sure there's adequate version control. And then the end of the process of that document to complete that work without sending it out out through a cloud portal and getting that digitally signed or whether that's sending it out and asking some additional questions around it. We've been very, very good at doing that in the last couple of years, and our success is very much being built up in the financial services and accounting space. We understand in the ERP space that, no one is attacking this problem, effectively.

21:09 So hence the reason why we're investing in GETBUSY to build all that capability into one solution and solve those problems for for ERP users in the same way we offer accountants and financial services.

21:22 So, you know, that's what we've been very good at. And what we quickly heard from our customers and potential prospects was, you're great at managing and completing the workflow. There is some initiation of those workflow that we need additional support with. There's not integrated providers that solve these problems in a very integrated way. And that led us onto a journey of trying to find, buy, build, or partner with the right kind of tech to solve these problems. It's been a journey we've been looking at for a couple of years now. And we're very fortunate that two potential opportunities came at the same time. You know, the saying when it rains, it pours.

22:08 We recently completed the acquisitions of Doc Down and and Quotas to solve the two key problems that our customers have been demanding for a long period of time. Quotas is a effortless, beautiful quoting and proposal system. So its core function is enabling customers to create pro proposals and quotes very simply and making those look very professional very easily. So those of you that work a lot with accountants will realize that accountants are not the best at selling themselves, neither are financial service firms. Or if you're in the ERP space, the proposal and quoting system is generally, disconnected from the ERP workflow.

22:57 Or by us enabling, sorry, by us acquiring quotas and and embedding that within our application, what we're enabling accountants to do is create proposals really simply and making sure that that proposal then integrates with their ongoing workflow. So quota's capability is pretty, dynamic. It enables customers to, you know, put in images, videos. There is really what easy ways to put in pricing tables. And for those of you who want to, please go on to the Quoter's website and you can see a whole lot of templates of proposals in which they've set up. Our process from here is to go and integrate these into our existing applications, which we think will take approximately six to twelve months.

23:47 And then we're gonna mobilize our existing teams to be able to sell these products. The integrations will take place both into the core document management and then also with the esign capabilities that we provide, which enables people not just to send a quote, but also complete a quote as well. The typical pricing in the space is 25 to $45 per user per month. So you can see it's a significant value add to our existing application. And it there's a lot of demand in the space for that the the these type of products, and I think that's illustrated by Sage's recent acquisition of proposal.

24:30 There's no material upfront con consideration for the acquisition. It's known out over a fifteen month period, which is one times ARR at December 2022. I think that might be two times ARR at December 2022. We we are partnered with the founders to ensure that they stay part of the journey because we know how valuable that is. And they see the potential long term upside of working with us and adding additional value to our ongoing road map. So we're very proud that we're not just buying tech here. We're buying the founders along with the tech who can help us integrate it into our application and educate our team on how to sell it.

25:24 The sec second application we bought was doc down, which is a automatic form fill and client information gathering. I'm sure a lot of you have experienced the cumbersome process of receiving a PDF form from account in a financial service firm and having to manually fill that out and, filling in a whole lot of information. You know they've got, you know, if you've recently gone through a KYC or an AML process, that's even more cumbersome. So this this is a process in which we're very confident that 99% to a 100% of our clients do regularly. And a lot of them are very frustrated with the process.

26:11 Dropdown is a an application which has a lot of open APIs, enables them to integrate into our existing applications to pull data into a form fill. So its, value is that it it helps, our accountants and our financial service providers set up the form easily and do that in a a, reusable way, which traditionally has been a struggle for the accountants and bookkeepers. And then what it enables them to do is send that to a customer and for a customer to, fill that in digitally. And, again, that is where most of the frustration lies, and it's where the bad customer experience, yeah, is is happens.

27:03 So form fill, we can see integrated into our cloud portals. We can put communication around it if there's questions. Again, if there's a need for digital signature, we can do that. And it's mature in its capabilities with a lot of existing current users which have validated its its capabilities, and and those users are are currently still using it and have low churn. Again, we have partnered with the founders, so there's an earn out period over fifteen months, which is the same earn out period as quota, which I will clarify is definitely one times ARR. And that, again, enables us to make sure that it's nicely integrated and that our teams are adequately educated on how to how to sell the application.

27:55 SmartVault recently brought out a new feature called request docs, which was our first step into this arena. It was the purpose there was, as it says in 10, enabling accountants, bookkeepers, financial service providers to request documents easier. Clearly, the key documents in which they request is often needing some form of a form fill. So you can naturally see how we can add value and integrate through that process. We have decisions to make whether both of these applications are sold as stand alone or included within our current pricing and packaging. If that's the case, obviously, there'll be a monetization effort and how it works as an expansion option as well as a new new customer acquisition option.

28:43 So, you know, embedding it within the the current in our company is a process we expect to take six to twelve months. But what we are very confident in is that there's demand for these applications and that we are the right people or company to provide these type of applications to the markets that we're so familiar with. So on that note, I'll hand it over to Paul just before I can say I'm very excited about these two acquisitions. I think they add substantial value to our business. I think in themselves, they're gonna be, significant contributors to our revenue over the next couple of years. Thanks, Dan. So many of you will have seen this trading update as part of our recent announcement. I'll just kinda run through the key areas of it for you. So in the first half of twenty twenty one, our recurring revenue growth was at 12%.

29:38 That growth rate has continued into the second half, and we expect it to to continue for the foreseeable future. Cash at the end of September was about £2,300,000. That's up about 300,000 from June 30. So we are debt free. We have a facility in place, but we're a debt free business. And that increase speaks to some of the very favorable cash mechanics that we have in our business. When we IPO ed, we IPO ed four years ago with £3,000,000 of cash in the bank. Roll forward to now, we've had about £4,000,000 of EBITDA losses, but we still got 75% of that original cash remaining.

30:25 And the reason for that is when you're a software business selling to customers usually annually in advance, so the people are on payment plans that are annual in advance, and the cost of operating that product once you've initially sold it and implemented it is is very small. You've seen our gross margins. That creates some very favorable cash flow mechanics when you are growing your your new business. Add to that the fact that we are very grateful beneficiaries of The UK's r and d tax credit regime. Typically, we receive north of £500,000 annually from that. So our cash flow has generally delivered much better performance than our p and l. We remain very confident on the outlook for the remainder of this year and as we go into 2022.

31:19 And with that, I'll hand over to Mark. That's great. Thank you very much indeed, Paul and Daniel, for updating investors this morning. Could I please ask investors to continue submitting your questions using the Q and A tab situated on the right hand corner of your screen? But just while Daniel and Paul take a few moments to review the questions submitted already, I'd like to remind you the recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your Investor Meet company dashboard, and we'll notify you by email when they are ready for your review. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, we'll redirect you for the opportunity to provide your feedback so the company can really better understand your views and expectations. Daniel Paul, I haven't given you a a lot of time to review the questions that have come in during the meeting, but, of course, you did receive a number of questions before today's event. If I could just hand back to you guys, if I could ask you to read out the questions and give a response where it's appropriate to do so, and then I'll pick up from you when you're finished. Thank you. Thanks, Mark. No no problem at all. Just worth reminding people that we are always open to questions and feedback from people directly, Investors at GETBUSY dot com, we do always respond to to inbound queries within within the bounds of the law, of course.

32:33 So I'll start running through the questions. I'll take them in chronological order as best I can. This was a pre submitted question. Why have you chosen to go down the acquisition path? Is growth slowing in your core business? Well, I think I've I've just answered the latter part of that question. In terms of why we've chosen to go down the acquisition path, I think it's worth stressing that, you know, this isn't just something that has just happened. I think we've been clear that we're open to, you know, potential useful acquisitions of technology for quite some time. We've probably been looking for about three years. I think over that period, we have seen probably in excess of a 100 either companies or pieces of technology.

33:27 But we've always said and we remain very, very fussy. And amongst what we've seen, we've seen some some great pieces of technology that are overpriced. We've seen some piece of technology that perhaps weren't suited to what we what we what we do and what we can offer to our customers. So finding two at the same time was certainly not expected, but that's sometimes the way it goes. And we've remained open to selected bolt ons in the future. Not to buy scale, but I think to buy a technology that that we perhaps get, you know, get ahead in terms of developing out new feature sets that are complementary to to our customers. Worth noting as well, I guess, we were looking to buy for scale, you you wouldn't buy a business that essentially has no revenue either. So and that's probably not something that interests us.

34:22 Next question. Are you confident you can integrate these businesses, and what are the main challenges involved? Integrations is a very core part of what we do anyway. So our developers are very well versed in integrating our products with a variety of different products. Within that, of course, there are always challenges. You always encounter areas within code bases that are potentially deficient or not up to your standards. But, again, this is something which we we do all the time, so that doesn't doesn't doesn't faze us. The main challenges involved well, probably not best position to to describe that. You know, there are obviously technical challenges with all these things, but, you know, that that is what our teams spend their lives doing and are very good at.

35:11 Next presubmitted question. How will pricing work? Will the products be rolled into one, or is this an upsell opportunity? I think in truth, we need to work out what pricing will be over time. Our core way of pricing our products currently is on a per user basis, so either per user per month or per user per year. In the broader market, we do know some of these similar products to, say, quotas can be priced either on a per user basis or a per customer basis and sometimes on a per quote basis. So what's right for our customer base, we'll need to work through. Either way, the purpose of the acquisitions is to improve our ARPU. So, ultimately, we'd look to see a higher value of revenue per user of our products.

36:02 Will they be rolling to one or is it an upsell opportunity? Definitely an upsell opportunity. Conceivably, we can package some of these into a particular plan that then comes with, if you like, the the core product as well. These are commercial things that we need to work out as we test the market and and and work with customers on how they want these products to be delivered. Another presubmitted question here. Sorry. I don't have the names from the people who presubmitted, so apologies if you're if you're on here, but I'm not saying your name. Are these acquisitions primarily for the accounting space, and is there a possibility of expanding the total addressable market by going after other areas? Because these are upsell, initially, of course, we'll the the where we sell these products will probably reflect where our core market is. So right now, roundabout 65 percentage of our customer base is in that accounting bookkeeping market. So that will definitely be very important in where we sell these products in the future.

37:03 You saw from the presentation earlier the size of the market we're in. So, yes, in theory, these problems are very relatable to other industries, manufacturing, those sorts of things. But there's so much to go after in the area where, a, we have brand recognition. We have product market fit with our core products, and, also, we we have domain knowledge. So I don't especially see that we would look to go outside of those core areas initially. But in theory, yes, in practice, I don't think there's a need to. Another pre submitted question. Can you talk about pricing of old customers versus new in SmartVault? Sorry. It says ARPU of old customers versus new in SmartVault. And what is the average duration of a contract?

37:51 I'll deal with the second question first there. SmartVault, we sell either on an annual or monthly contract. People either pay annually in advance or monthly. Virtual cabinet, similar sort of model, but we always have a an initial three year term. And in SmartVault, have some customers who are on multiyear plans as well. So contract length is either basically twelve months or or or one month. In terms of the question, which I think the question is getting at is how long the customers typically stay, you can reverse engineer that from the inverse of our gross churn number, which we publish. So our gross churn number in SmartVault is somewhere between 1.2, 1.4% per month. If you do the inverse of that, that equates to customers typically staying around for about seven years.

38:44 Worth noting there as well, I think that SmartVault has been around as a business for, you know, in excess of thirteen years. So unlike sort of brand new SaaS companies where customer life is just a sort of a piece of arithmetic and they actually have evidence within the customer base of of that sort of longevity, we do. And we have customers who have been with us for well over a decade as well. So we have evidence within the base for that sort of customer length. Next question here. How is the GETBUSY product doing? How do you know you're on the right track, and what are the main metrics you're using to determine capital allocation? So there's a few questions there within within one. GETBUSY product, we believe, is is doing well. I'd refer you back to the announcement we made at our half year. So within that NetSuite space, we have channel partners. We have our first customers.

39:38 We recently attended the NetSuite SuiteWorld global conference. The product was very well received there. What we're finding is that the sales cycles within the ERP space are quite similar to, I guess, the larger accounting firms that Virtual Cabinet typically sells to. So those sales cycles, you know, in SmartVault selling to SME bookkeepers, sales cycles are typically a month. Within the ERP market, these are much more sort of longer term managed projects. But the traction we're making, we're very pleased with. We always want that to be faster. We always want progress to be made more quickly, but right now, we're happy with with where that's going.

40:26 How do you how do you know you're on the right track? I think the truth for any business that is essentially pre revenue, no one can ever say they know they're on the right track. But what you can say is you can look at the the qualitative and quantitative data in in the business. You can speak to prospective customers and your channel partners and gauge the level of excitement among them. And I think it's fair to say we believe very firmly that we are on the right track. I think it's very difficult to speak in absolute in that in that environment though and say that you know you're on the right track. What are the main metrics you use to determine capital allocation? So I assume this is a question for around the whole group. Our capital allocation, we're we're fortunate as a business that we've got a lot of data in each of our businesses.

41:16 So for virtual cabinet and smart vault, capital allocation is based on return. So we we we have very good data on what return is in different areas of investment in those products. An example would be the LTV to CAC ratio in SmartVault that tells us, you know, by putting a dollar in at the top of the customer acquisition funnel, how much comes out at the bottom over the lifetime of the customer. So we have some great data in that. Most of the investment in those core virtual cabinet smart vault businesses are going into mid to long term growth in in smart vault. Important to note as well that we always make sure we're protecting the quality of returns in those products as well. So whilst LTV to cap ratio is very attractive in SmartVault, You know, doubling, tripling, quadrupling the amount that you put in the top of the funnel doesn't necessarily lead to the same returns at the bottom of the funnel as it does when you're putting, you know, $1 to the top of the funnel.

42:21 So we're very clear on ensuring that we're protecting the quality of those returns. And a practical example of that is we generate leads for that business by creating content online, educational content for accountants, that sort of thing, where we're helping them effectively get their continuing professional development points. By saturating that market, by sort of doubling, tripling, quadrupling the amount of content we're pulling out there, actually, what we do is we undermine ourselves in that market, and we we become less credible. So credibility is really, really important. They need to know the people they're going to for their education are trustworthy. And that's what we mean by quality of return. You can't know, on a spreadsheet, it works very easy to sort of double, triple, quadruple your investment. But in reality, you have to be a bit more careful the way you phase in that investment.

43:15 In each of the businesses, we also allocate a level of investment for growth in new markets and in new products. An example of that in SmartVault is recent investment we made in our certified vault feature, which is targeted at the financial services market. So we've been investing in that now for about twelve to fifteen months. We're starting to take it to market. Very difficult with those growth investments in new markets to gauge what returns are going to be. So what we do is we analyze the market we're looking to sell into. We analyze the competitive space around it, and we establish, you know, is this conceivably a market that we can play in? What we don't do is forecast out what are basically made up revenue numbers for that market because, you know, that that the error bars on those things would be very large. But what we're clear on is that we carve out pots for investment in new markets and new products.

44:14 The biggest pot we got for that is GETBUSY. So we spend about £2,000,000 a year on the GETBUSY product, and you saw earlier how we articulated the market that we are trying to get into there. We believe it's not a very competitive space for the problems that we're solving. We believe it's a very competitive product that brings a lot of productivity gains to to to the prospective customers there. So that's kinda how we look at capital allocation. Just two seconds. A question here from I think it's a live question from Mike h. ARR has doubled since IPO. What has the number of customers done, and what is the mix between ARPU growth versus customer growth? Great question.

45:04 And a great way to look at the business in terms of how ARR scales over time. So right now, we've about 68,000 paying customers. That's very roughly fifth 40% higher than it was at IPO. So 40% of that growth effectively comes from growth in the in the user base, and the rest is from ARPU. So what's driving that ARPU growth? Yes. We've had some price increases in our customer base as you would expect, but mostly, it's the differential between our new customer pricing and the pricing of our existing customer base. So particularly in virtual cabinet, that delta has been very high. It gives us a potential opportunity in the future to close that ARPU gap and increase the the the price to our existing customers.

45:54 Another question from Mike h. What is the current ARR of of of Quotas? We haven't published that. The way I'll ask that question is by saying that most of Quotas' existing customers came on board through upfront payments rather than a subscription payment. So we see that a lot with these small sort of founder led businesses where they're trying to sort of scrabble for cash quite early on in their existence. So effectively, the ARR of quotas you can sort of discount from from or current ARR of quotas you can discount from sort of growth expectations. One from Michael. How competitive was the process of bidding for quotas in lockdown, and how long have you locked in the founders, and are there any earn outs?

46:45 So the process of both those products was not especially competitive. We're aware that, you know, there is action going on with similar products in the space, particularly the the quoting and proposal space with Go Proposal and Sage. But for in our particular processes, it wasn't an especially competitive it was a very collaborative process that we we ran through. We've locked in the founders for a fifteen month period since the end of next year. And I think Daniel answered the question on earn outs. And now she'll just confirm those earn outs are based on one times ARR at the end of next year. Question from Duncan here, which I think repeats the GETBUSY question from earlier. Duncan, if that's not the case, please get in touch with me on email. I can answer it more specifically, but I think your question is is asking the same question from earlier.

47:43 Another question from Duncan. In your trading update, you said you'll double ARR within five years. How much is that in pounds sterling so we can get a reference point? So our current ARR is just south of £15,000,000. So, essentially, our target over five years is to get that ARR to £30,000,000. Duncan, again, asking here, what is the normal level of net cash you want on your balance sheet? Great question to ask a CFO. We we've been very fortunate that our cash has has held up very well over the last last four years. We have our debt facility in place to enable us to use that cash. So if we didn't have that debt facility in place, we would typically need about a million pounds of sort of buffer on our balance sheet, something like that.

48:36 That was sort of consistent with advice that we're receiving, so consistent with the fluctuations we typically see in our business. But we specifically put our £2,000,000 debt facility in place so that if we need to, if we see an investment opportunity, we can take it without having to go try and put that funding in place at the time. So, essentially, the cash that we have is is there to be invested if we see a place for that for that return. Question from Paul. Hi, Paul. Incremental costs. What are the incremental costs of integrating quotas and. So, essentially, we have brought on three three members of of founding teams, so relatively relatively small. That's, you know, equates to about 2% of our of our people. You know, three we we have about a 150 people around the business.

49:31 Most of the incremental costs will be, you know, our own development plans anyway. So we, you know, we we wouldn't really see much in the way of incremental cost between those three individuals. So, essentially, very small. Another question from Paul. GETBUSY products sorry. Paul, I'm gonna have to read this slightly more slowly. GETBUSY product seems more integrated into your product stack in the presentation in the reality too. So GETBUSY is a is a stand alone product. It is integrated with our virtual cabinet product. And over time, we would probably look to integrate it with quotas and potentially drop down as well. So it is a stand alone product. It doesn't rely on, for example, virtual cabinet or smart vault.

50:23 But in terms of the way our customers look at the problems we're trying to solve, you know, we we we we show that virtual cabinet can solve one part of a problem, GETBUSY can solve another part of of a problem. Do you consider q three twenty twenty one as showing acceleration in GETBUSY adoption? We've not published any numbers around that, of course. I'm afraid I can't specifically answer that, but I'll refer you back to the wording that we used in our first half announcement and how much is driven by free trial. We so we don't publish numbers for free users for the for the product. So we don't we we it's not something that we we put out there. Worth noting that for the ERP customers, free trial is not part of the is not part of our go to market.

51:10 So customers have we sell the product to them. We demo the product to them. We then implement the product, so they start paying for it. There's no free trial element to that. So the free trial side of it would be a very trivial part of what we're currently doing in that ERP space in any case. Another question from Paul here. This is how we're doing for time. How is the client acquisition or retention and loss process evening out in smart bulb and virtual cabinets? We've come through the latter of COVID. I think the way I'll answer that is by saying that we are seeing very similar characteristics to the first half of this year. So the overall, our recurring revenue growth rate has has held up. The precise metrics of, you know, what's new upsell churn and all that sort of thing vary slightly, but fundamentally, they're all pointing in the same direction they did in the first half of the year.

52:09 Another question from Paul. Good question. This one, what is the approximate path to doubling revenue over five years? Does it include the GETBUSY product, or is it nearly all document management? I think it's fair to say we we are confident we can get there just with document management. So you've seen the size of the opportunities that we that we are playing in. And and very definitely, we have a path there through those businesses alone. So we definitely see that GETBUSY would be, you know, a a a very nicely enhancing part of that story. Couple of other questions just to pick up here. One from Sebastian. What are you doing differently within your sales channels that will accelerate growth rates?

52:59 Doubling ARR in five years doesn't suggest any kind of step change in growth or material penetration of market opportunity that you highlight. So in terms of the last point there, so, yeah, that changing growth rate doesn't materially doesn't change materially the the the the rate of growth. I'd call you back to the what I said around quality of return. So whilst I think on a spreadsheet, you know, we could quite easily, you know, quadruple the amount of investment we put into customer acquisition in SmartVault On the ground, when you're dealing with a market where you are a trusted provider of technology, it just doesn't work like that. And, obviously, we push that as hard as we can. We wouldn't put numbers out there in terms of doubling ARF. We weren't very confident that is that is achievable, and you can look at how we've tended to guide the market in the past in a really relatively conservative way.

53:51 So we would see, for example, GETBUSY's potential upside on that that target. But I think it's worth flagging that, you know, what we don't wanna do is double ARR by simply spending and spending and spending because that's dilutes the quality of of those returns. What are you doing differently within your sales channels that will accelerate those growth rates? So I think SmartVault has traditionally been a very direct sales approach. We would look at potential partnerships there. We're also moving up the value chain. So SmartVault historically has sold to typically, you know, three, four, five user accounting firms. Gradually, we've been moving up the value chain there, so selling to bigger customers as well.

54:40 We would expect similar activity within virtual cabinet and broadening the range of customers that we can sell virtual cabinet. And looking at those higher value customers as well, particularly the insolvency space in virtual cabinet. It's very strong. It tends not to be terribly price sensitive either. So looking for those higher value markets to ensure the sales we're getting are very valuable sales for us. Do you have formal exclusivity for your product area with Intuit? And if so, for how long some of those are commercially sensitive, Sebastian. But in terms of if you probably the easiest way to answer this question with information is in the public domain is if you go to the Intuit, the certain pro series websites, you'll see that Intuit very much push us on that website. So there are two document management solutions. One is an on prem solution that Intuit themselves own, and the other is their cloud solution, which is which is us.

55:42 How are we doing? Time are okay with five more minutes? I'll try and get through these other questions. Another one from Paul. Is there a customer retention difference between accounting bookkeeping and other customers? Not materially, Paul. I think, inevitably, where you have strongest product market fit is where you have the lowest churn numbers. Is it materially different, say, in insurance, for example, for virtual cabinet? No. It's not. But we can probably command higher prices in the core areas of accounting and bookkeeping, and therefore, the lifetime value is probably greater in those areas despite the churn rates being being about the same. Just bear with me while I read this big one here. This is from Kimberly.

56:33 You mentioned GETBUSY seek to expand market reach in Australia and New Zealand. Can you give us more color around that opportunity? So we're already in Australia and New Zealand. Sorry. To be absolutely clear, that's not a new territory. Australia and New Zealand accounts for around about 15% of our business at the moment. So they're very similar opportunities there than there are as there are in The US and The UK. Actually, what we find is Australian is quite a competitive landscape. Generally, technology gets adopted there earlier than other parts of the world. It's often used as a test bed for technology by businesses. So we see a good solid business continuing in Australia and New Zealand. Also, the relative size compared to The U US and UK, I assume that's relative size of Australia and New Zealand.

57:24 Obviously, a lot smaller in terms of the market opportunity there. So I think in terms of market opportunity, would say focus on The US and The UK, Australia, New Zealand. There's still great opportunity there. But inevitably, because they're just smaller territories, that opportunity is less than it would be would be elsewhere. The growth strategy what what is there's no one from Kimberly here. What is the growth strategy for customer acquisition in Australia and New Zealand? Does this differ to The UK and US markets? Sorry. Customer acquisition strategy. Essentially, our customer acquisition methods are defined by the products themselves. So SmartVault is a very transactional business which generates leads online in a very traditional lead funnel that is nurtured in a very automated way.

58:18 And then once those leads are warm enough, a demo is booked with a customer. A sale a salesperson gets in touch with the customer and and demos the product online and converts a very high proportion of those leads. With virtual cabinet, there's a combination of that inbound model, but also outbound kind of lead hunting. So, you know, experienced BDMs and salespeople going out to conferences, meeting people in the field, demoing the product, and and converting them. Generally, those lead those sales cycles are a bit longer. But, fundamentally, what determines the customer acquisition strategy in Australia and New Zealand will be determined by the product itself rather than necessarily the the territory. The final one from Sebastian, do you have CPI, RPI increase causes in your contracts?

59:07 Not specifically, Sebastian, but we are able in all of our contracts to to to raise prices. So we we look at what the market is doing at the time rather than necessarily that being a default RPI or CPI increase. Paul, you'll you'll be glad I'll jump in here. You've taken every single question sent from investors. So thank you firstly to everybody that's taken the time to send in questions. And and, of course, thank you for for giving your responses as you have done so openly today. Perfect timing as well as we just hit the hour, so thank you for that. Guys, I know investor feedback is important to you both, and I will shortly direct the investors on the call to give you their thoughts and expectation, which I think will be incredibly valuable to you. But before doing so, if I could ask you just for a few closing comments to wrap up with. Excellent. Thank you, Mark.

59:53 Well, thank you for your time and thank you for your questions. We're optimistic about the future and believe that we're solving more of the client workflow than we ever have before. And we're confident that that would drive growth in our current markets and new markets. And so, you know, as a team, we're buoyant and excited with what the future holds. That's great. Daniel Paul, thank you once again for updating investors this morning. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity for you to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team at GETBUSY PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good afternoon to you all. Thank you.