Getbusy (LSE:GETB) — Half year results 6 months ended 30 June 2021.

0:02 Good morning, ladies and gentlemen. Welcome to the GETBUSY PLC investor presentation for the half year results for the six months ended 06/30/2021. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated in the right hand corner of your screen. Simply click q and a, type in your question, and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investor meet company dashboard, and you'll be notified once

0:34 they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, I would like to submit the following poll. I'd now like to hand you over to Daniel Rabbie, CEO, and Paul Howarth, CFO of GETBUSY PLC. Good morning.

0:50 Good morning. Thank you, Paul. Welcome, everyone, and thank you for joining us for h one twenty twenty results at GETBUSY PLC. By way of introduction, my name is Daniel Rabi. I'm CEO of GETBUSY. Pre leading before GETBUSY, I was working for Rec Unlimited, which is a publicly listed company in Australia. It grew to about a 100,000,500 staff.

1:18 I was there for eight years in multiple different roles, leading to the chief operating officer role, and then that was the catalyst for the demerger of GETBUSY, from REC Unlimited and IPO and raising capital on the London Stock Exchange.

1:37 I'm a father in two, and and that still takes up a lot of my time. Paul, would you like to introduce yourself? Yeah. Good morning, everybody. Paul Howarth, CFO since shortly after IPO in 2017. Before joining GETBUSY, I spent about eight years with various UK listed companies in various finance roles. And before that, I spent nearly a decade working in accounting practice like Daniel, also a father of two. So very much looking forward to life returning to normal the next school term. Excellent. So by way of background, as I said, GETBUSY PLC was a demerger from a publicly listed company in Australia called Reckon Limited.

2:23 Reckon Limited sold small business accounting software to small businesses and then practice management software to accountants. The practice management software to accountants had about 16 modules that we sold into the accounting firms, and 70% of the top 200 accounting firms used reckon software in Australia. What we quickly realized was that document management as one of those modules was an innovative space that if we broaden our capabilities from integrating just into our own suite to many other practice management providers and tax providers and to raise gave it its own brand identity and gave it more capital for growth, it would be able to accelerate the growth of the business. And fast forward three year four years now, and that's very much proven to be the case. So we were far larger. We've doubled from the time of IPO to where we are today with a significant amount of growth potential ahead of us.

3:30 Our mission is to make you productive and happy. That's important internally and externally. So we're very much focused on productivity software for specifically, professional service firms, but we sell into all different types of businesses. Our half year results, we were very encouraged by them. We are a b to b subscription software with business with 93% recurring revenue, which is up from 91%. We've got 14,000,000 in ARR as at June 2021, which is 13% up from the same period last year. We've got resilient end markets, and low customer concentration and low churn, which bodes very well for the last twelve months of of COVID disruption and whatever the future brings for us.

4:24 Our core competency of digital infrastructure for professional services is a growing market, and we very much feel that we're the right product at the right place at the right time. And that leads us to a whole lot of great growth opportunities, which I'm gonna focus on through the rest of this presentation.

4:44 Our SaaS portfolio involves three products. We've got two document management businesses and one which is focused on task management. Virtual cabinet and smart bud are two document management products, effectively solve similar problems just in different ways, and with different underlying architecture, and I'll talk to that in more detail later in the presentation. Virtual Cabinet is a proven market leading product. It's highly cash generative and about 30% of the top 200 accounting firms in The UK well, top 100 accounting firms in The UK use it. SmartBold is a rapidly growing scaling SaaS business, predominantly in The US where there's a large addressable market.

5:33 And we've created some very strong key competitive advantages in some niche spaces, which we think have ample growth potential in the future. GETBUSY is the product we built off the learnings of virtual cabinet and smart vault, and its ambition is to open us to greater addressable markets and enable us to sell into, broader segments, solving broader problems.

6:01 Let me start with the document management group. I think it's worth explaining what we do. We solve very practical problems for predominantly accounting firms, but many financial service companies. When we started selling document management into accounting firms, accountants used a tax return a tax software, sorry, to create a tax return. And then when they were dealing with their documents, that was done in a very separate way through things like email Microsoft Explorer, Microsoft Windows file, and it was a very messy process where it was very difficult to keep order control, version control if they needed to get digital signatures that was almost nonexistent.

6:51 There was lots of misfiling and searching that was unproductive for the internal team. So what we do is we integrate into tax systems. We enable them to do everything that's up on this slide within the document management system, and then give them a great customer, experience by enabling them to sell that send that document through a cloud portal where their clients can log on digitally sign and it automatically updates the document management and then the tax offer. So we provide great efficiencies within their firm, and then we enable them to support their customers in a much better way. And it's this practical problem that's driving our growth, and that also, once we're in the practice, means that we're generally very sticky and have low churn.

7:44 It's a bit about the two products. SmartVault has 40% of the ARR of our business. It's got about 25,000 customers. Its pricing varies between $30 per user per month to $50. Its core segment, as I said, is accounts as bookkeeping and tax providers. They're generally smaller customers than virtual cabinet. It's in The UK and The US. It's a pure cloud application. Our principal customer acquisition model is an email model based on educational content, and the onboarding process is is very streamlined. So we can get customers up in about an hour to a couple of days. Virtual Cabinet is 56% of our ARR business.

8:32 It's 42,000 customers. Its typical pricing is between £30 to £50 per user per month. It focuses on accounting, insolvency, insurance, financial services. It's generally focused on larger businesses. Its regions, The UK, Australia, and New Zealand. It's a hybrid crowd and on premise, so it's got on premise core capabilities with cloud modules sitting on top of it. We use more of an enterprise sales team to sell as a customer acquisition model, and it's got a hybrid on-site and remote installation process. So, generally, that's led by highly skilled consultants who build workflows around the practices specific needs. Here's some examples of the the third of top US accounting firms I spoke to earlier that we have, and we have about 45% of the top Australian accounting firms.

9:30 We've got 8,000 businesses in total that use our document management solution. So we we've clearly been validated by the biggest and best in the industry, and we're very confident that we are the global market leader for accounting for document management for accounting firms.

9:52 As I said, our core markets accounting bookkeeping, we've got an estimated value of about 350,000,000 in ARR, which is 200,000 firms and 1,700,000 people. So there's ample addressable markets for us to continue scaling and achieving the high growth rate that we currently are. Adjacent to that, our core market is insolvency financial services insurance, which we can replicate the problems we're solving for accountants over to those industries, and we believe that we can find additional growth through those verticals over time. This is on the screen, what you'll see is our competitors. We've got pure play competitors, which effectively are just document management solutions that integrate into multiple different taps and practice management providers.

10:41 We we like to think we win on on capabilities, on pricing, on our customer experience and relationships. Where we clearly win is through integration. So we have some unique integrations, for example, into TaxCalc here in The UK, which is a practice management provider where we're the only document management solution integrated into it, and in The US, which is Intuit's tax product, which is the market leading tax product in The US. So we have unique integrations into those tax products, and those providers sell us as their inbuilt document management solution. And therefore, we create significant competitive advantage over the pure play players.

11:30 In terms of practice management providers, there's probably some names on the screen that you're well familiar with. They're large providers. They generally sell a variety of solutions into accounting firms. Their core capabilities is not document management. So whilst they all generally have a document management system, they're generally very happy for us to integrate into them and be part of their suite of products if we solve a problem that their existing document management solutions don't. So we have this weird hybrid relationship with them where sometimes we're competitors and sometimes we complement them and therefore partners. As I said, our core capabilities and our unique proposition is through deep integration into mission critical software. So on the screen, what you will see is all the integrations we have. There's a couple, as I said, LASERT, which is Intuit's tax product, tax cap, reckon where

12:33 those are examples where we've got deep integrations where no pure play document management solution does. And so we win those clients nine out of 10 times. And just within those tax providers, a durable markets, we've got ample growth potential over the next couple of years.

12:57 So just a a very a very high level overview of where we see SmartVault going in the next couple of years. SmartVault's results were very encouraging this half with 28% constant currency revenue growth. Paul will go through the union economics in more detail later within the presentation. But SmartVault for us is very much a business which we see a substantial opportunity over the next couple of years to make it a lot larger than it is today. It's got very robust unit economics. The LTV to cap ratio four to one is a perfect example of that. We have a very scalable customer acquisition model, which we understand extremely well.

13:46 And we're very confident that with the additional investment that we're putting into it, it will scale, and we will be able to acquire a lot more customers than we are today over the next couple of years. SmartVault has four ways to grow. That is through new customer acquisition, through monetizing the base in a better way, through expansion, which is essentially selling new products into that customer base, and through reducing our churn. As I said, customer acquisition will currently is our primary focus, and we've seen significant growth over the last couple of years of that and especially the last six months. So we are determined to continue to invest in that additional customer acquisition because we are seeing solid return from that. We think there's massive opportunity to monetize the base.

14:37 There is significant proportion of our client base which is not currently paying retail price. We started moving a cohort of those clients to retail price in 2019, and we didn't see large churn effects on the back of that. So we're confident that, and we apologies. We we stopped that exercise in 2020 because of COVID. In 2021, we're confident that if we pick that at back end of 2021 and and 2022, if we pick that exercise back up, that we will see a massive return on the back of monetizing the base. So we're confident through a monetization and a customer acquisition strategy that the substantial growth over the next at least eighteen months.

15:22 Expansion is something we're looking at very carefully. We've seen through virtual cabinet that we can sell additional modules into this client base. So we are currently evaluating what opportunities there are for the smart vault market, and we have some current products in our portfolio that we think will be attractive for that client base. GETBUSY being an example of that. And then churn, our current gross churn rate is about 1.2%. That's come down over the last couple of years. If you compare us to other SME SaaS businesses, then we're very favorable in terms of our gross churn rates. So we don't think there's necessarily a material change in that, but we'll continue to strive to push that down over the next couple of years.

16:08 So in summary, we get we continue our customer acquisition. We we effective we execute effectively of the monetization strategy that we've got in place, and we keep churn whereas that, we should see a substantial growth in SmartVault over the next eighteen months. And as SmartVault becomes a bigger percentage of our overall group, that will affect our overall recurring revenue growth rate, and therefore, we should see the grow group growth rate increase over the next eighteen months. Moving on to virtual cabinet, it's very much marking leading product. It's proven high cash generative product. So we very much are looking for, Virtual Cabinet to fund the growth activities within SmartVault.

16:57 It's a highly cash generative business with 45% operational leverage. I think what 2020 proved to us, because 2020 limited our ability to sell new products, it very much showed a strength in the the product and the low churn rates that produce and our ability to upsell into the existing client base. So we proved that we can continue to get growth through the existing client base without selling a lot of new products. The first half of twenty twenty one showed a massive rebound in in new sales for the first virtual cabinet. We saw 91 96%, sorry, increase from the first half of twenty twenty one to the first half of twenty twenty. So we're we're confident that we'll we'll continue this rebound of new sales, that the churn rates will stay stable over the next couple of years, and that we will continue to be able to upsell into the base, and we are specifically looking at GETBUSY as an upsell potential at the moment.

18:04 That should keep this to very stable cash generative business with strong operational leverage well into the future. And if you combine the SmartVault group and sorry, the SmartVault business and the virtual cabinet business, we think that document management group as a whole have substantial has substantial value.

18:26 Moving on to our task management group, is specifically the GETBUSY product. We're very clear on what GETBUSY does. It's one place to organize, communicate, and store work. We message it as build exceptional relationships with customers, vendors, and teammates, and the specific functionality and features of the product task is document management, tasks, communication, and and esignature, which is all built around the relationships that we enable clients to have. GETBUSY is very focused on NetSuite and the the ERP space. So as I spoke to in the document management business, what we've learned is that we if we embed ourselves into applications through deep integrations and solve problems that no one else is solving to create competitive advantage, then we are generally able to sell into that client base and create a niche that you can build sustainable long term growing businesses on the back of.

19:31 So with GETBUSY, what we did is we learned from our document management businesses that there were broader problems that we could solve that weren't getting solved for many users within both accounting firms and and external corporates. And so we expanded our capabilities by building that by building GETBUSY, and then we very much focused on integrating that into NetSuite and ERP systems as a whole so that we could solve these problems of file storage, real time communication, task management, and eSign, which no other providers are. At the moment, if you're a NetSuite client and you wanna solve those problems, so for example, you're a NetSuite client and you wanna send a vendor a contract to be signed, or you just wanna have a vendor record, which is the contract attached to the vendor within the ERP system and have any communication around that contract.

20:36 At the moment, all of that's done externally from the ERP system, so that's done within Windows file or email. And so, generally, what you find is those that are use, NetSuite as their workflow or their accounting system, they when a contract needs to be found or or communication around contract needs to be found, they spend lots of time searching for that information, chasing up the vendor, chasing up internal team members, and it's just not a very efficient process and the relationship around that piece of information generally isn't effective. So what we do is we embed ourselves within NetSuite, and we enable customers to find documents and information very simply and then share that with external partners to communicate and sign around.

21:29 NetSuite have a a large ecosystem around it, so it's addressable market. It's far larger than what we're currently playing in the in the accounting space. And there's NetSuite themselves that we've signed a reseller arrangement with, so they're gonna sell us with commission. But we're not just relying on NetSuite. We're gonna directly go to their customers and talk directly to them to build our own inbound funnel and sell to them. We're for we're also in talks with a whole lot of value added resellers, technology solution providers, and IT to dual transformation

22:02 consultants who, build their business around implementing, NetSuite and selling NetSuite and generally have a large client base that they are responsible for supporting. So by building relationships with them, our aim is to get them to sell GETBUSY into their client base or sell GETBUSY as part of any new sale. And the way we do that, that is a, by adding substantial value to the NetSuite product, and b, by incentivizing them adequately to sell into the client base. So we've signed our first value add reseller, and we're very confident over the next twelve months that we're gonna build up a network of, partners that will sell GETBUSY on on our behalf.

22:52 So in terms of h two focus, the h one performance was 31 k in ARR, which is substantially up from December. We've got 334 paying users with an average revenue per customer of $58.08. We weren't very focused on the revenue of this product over the last six, twelve months. We've been very focused on building out a a core business process and model that's scalable and sustainable and making sure that we got product market fit in a key addressable market that we can scale into. So I think moving into we're pretty confident we solved that now and moving into h two and beyond, our focus is gonna be building out a network of partners, building out customer wins, validating this sustainable and scalable business model that we think we've started to implement.

23:50 So we expect, as a result of that, revenue to start to increase next six to twelve months.

23:59 So that that's that's an overview of the business. I'm gonna hand it over to Paul to go through more specific unit economics and results. I look forward to any questions towards the end, and I appreciate your time. Great stuff. Thanks, Daniel. So this slide here shows our general trend since we came to market in 2017. So, generally, revenues have consistently gone up each year. Our percentage of recurring revenue, so that's revenue that is comes from either subscription contracts or support contracts for older customers, has increased from 83% of our total revenues to 93%, and that gives us tremendous visibility and stability as a business.

24:47 You'll see in the middle block at the bottom there that our losses have increased over the last two halves. And that's a reflection of the increased investment that we've made in our SmartVault product specifically, and that's led to a 28% constant currency revenue increase in SmartVault in the first half of this year. For those of you that are new to us as a business, it's just worth explaining what some of these metrics mean, specifically our adjusted loss figure. So that's effectively what we'd call almost a naked p and l. So all sort of development costs and everything like that are capitalized in that. Sorry. Not capitalized or fully expensed in that loss number. So it's effectively the closest we can get to a cash loss number. So all of the accounting that we have to do for development costs and that sort of thing is below that line. So we think that's a very transparent model to to show, but worth bearing in mind when you compare us to to other businesses.

25:48 If we look at the results for the first half of the year, recurring revenue was up 12% at constant currency to £6,900,000. That's come from a combination of an increase in the number of paying users that we have for our products. That was up 4%. We now got just over 68,000 paying users amongst our three products. And also a 9% increase in the amount that each user pays us on average each year. That's gone up 9% to £207 per user per year. Our total revenue growth was up 10% at constant currency to £7,500,000. That growth rate slightly slower than the recurring revenue because we have been actively phasing out upfront license and upfront consulting projects within Virtual Cabinet over the last two to three years in order to move that business to a pure subscription, pure SaaS revenue model. So we're seeing that nonrecurring consulting and upfront license income gradually fade away.

26:55 Our gross margin was down, obviously, slightly on the same time last year. That's a reflection of the increase in the proportion of the business that comes from SmartVault, which is a pure SaaS business that sits in the cloud, has a slightly lower gross margin than virtual cabinet where the ongoing operating costs of the product are borne by the customer rather than by us. You can see as well that the over the last twelve months, we have reinvested all of the incremental revenues and gross margin back into growth in the document management business. So we've reinvested that back into SmartVault specifically, and that's led to the 28% increase in the revenue within SmartVault. So overall, our loss in the year in the half was just under GBP $05,000,000.

27:43 And at the end of the half, we had GBP 2,000,000 of of net cash in the bank. That was down about 6% on the end of last year. So looking at the businesses individually, this is SmartVault. I'll draw your attention to the the chart at the bottom right there, which basically shows the movement in our revenue run rate. So our subscription revenue run rate from the beginning of January through to the the end of June. And we sort of live and breathe this chart on a monthly, almost daily basis within our business. So the growth for us over the course of the first half was driven by an increase in new business from new customers. So that naught point £8,000,000 of new business was 26% increase on the same time last year. And what was particularly pleasing for us was we've been able to move up the value chain a little bit. So we saw a 43% increase in our average selling price to the accounting bookkeeping market in the first half of the year.

28:51 Now that's a product not of price changes, but of the average number of users per customer. So broadly, we are selling to slightly larger accounting bookkeeping firms than we were in the same period last year. We are pleased as well with our gross churn number. So that's the the the the average revenue churn per month that we get from customers who are leaving the platform. That's improved from about 1.4% this time last year to 1.2% in h one. If you compare that to the average churn rate you see across businesses that sell into the SME sector, the average is typically two two and a half to 4% per month. So this really speaks to the stickiness of accounting firms. When they buy this sort of product, they tend to keep this sort of product for a decent period of time.

29:46 Also worth noting on here, the next share number at the top, which has increased from naught point 6% to naught point 8%, that's a product of the fact that in the first half of last year, we have the tail end of the price increase that Daniel talked about, which is for a specific cohort of customers. We paused that price increase as COVID hit because we didn't feel that was the right time to increase prices to customers. And we plan to pick that up again towards the back end of this year and into next year. Particularly pleasing for us as a business as we've been scaling has been the LTV to CAC ratio. Now if you're new to SaaS, what that basically means is if we put a dollar of of of of cash into acquiring new customers, what's the lifetime value we get from that customer typically over the period of their time with us? And that's measured at the gross margin level.

30:43 So our LTV to CAC ratio has been very robust at about four to one over the last eighteen months. So that means for every dollar we put into acquiring a customer, we typically get $4 back over the lifetime of that customer. Now as we have increased the investment we've made in acquiring customers, That's been a real test of the robustness of that LTV to CAC ratio. It's remained very, very resilient. So we have a lot of confidence that increasing our investment in customer acquisition, we will yield similar returns in the future.

31:22 In addition to that, this chart here shows you the average annualized recurring revenue that we add from new customers each month and takes away from that the average annual annualized recurring revenue that we lose from customers that churn each month. So effectively, it's showing the net step up in annualized recurring revenue that we get from month to month. And this is shown on a moving average basis just to iron out all of the the noise that you would otherwise get in the graph. Now we started significantly investing in the SmartVault business in customer acquisition and in customer success and in the product towards the beginning of twenty twenty or back end of twenty nineteen. And what you can see particularly over the course of this half is the output of that investment and the return that we're now getting on that investment.

32:14 And we've been very, very pleased to see led by customer acquisition, but also led by an improvement of in in churn that we are adding considerably more revenue on

32:23 a monthly basis now than we were twelve months ago. And that gives us tremendous confidence to increase the level of investment that we're making in the SmartVault product. That investment will, of course, continue to go into customer acquisition, so that's sales and and marketing, but we'll also go into customer success. So those are the teams that onboard customers, that make sure customers are supported well when they're when they're part of us, and also look to upsell new products to existing customers or to upgrade their plans or to add new users for those customers. So they're very a very important part of our monetization strategy. And we'll also invest in the product development teams. We see a lot of value in the product as it is, but as with all software, it needs to stay very current, and we see a lot of value by investing the sorts of capabilities that would be expected at slightly larger accounting firms and to build out more functionality to upsell to existing customers in the future.

33:29 Moving to virtual cabinets. We're very pleased to see a very clear rebound in new business for virtual cabinet during the first half. So typically for virtual cabinet's biggest market is in The UK. Typically, accountants in The UK are very, very busy during January and into early February. That's a result of the personal tax deadlines that keep a lot of account ants very busy during that period. That makes it very difficult to sell to accountants in that period. So really for us each year, our selling season for virtual cabinet kicks off towards the back end of February. Last year, of course, that coincided with the onset of COVID lockdowns. So essentially, our first half selling season last year was wiped out.

34:16 Very pleased to see a rebound in that, however, this year with a 95% increase in revenue from new customers. For the same reasons, we saw a slight decrease in upsell to existing customers. That was down about 17%. And that was because last year, as our customers sent staff home to work, they made sure that all of their staff had all of the modules for virtual cabinet, that they had subscriptions for all of the functionality that they would need. So we saw quite a nice boost to upsell in the first half of last year. This half, it's returned to relatively normalized levels. Worth adding that a lot of the increase we've seen in new business has come from the insolvency sector.

35:04 Insolvency is very buoyant in The UK at the moment. I'm sure many of you follow the likes of BEGBUSY Trainer and the reports that they issue. It's a very, very buoyant market for very obvious reasons at the moment in The UK. But also, what we're seeing is a lot of the larger accounting firms are spinning out their insolvency and restructuring practices because of some of the independence rules that have been introduced for accountants. So what we're seeing is new insolvency and restructuring firms springing up that are building their technology stacks and their operational stacks from scratch. And that's a great opportunity for Virtual Cabinet, which has the best integration with the leading insolvency practice management software in The UK.

35:53 So we expect to capitalize that over the on that in over the course of the second half of this year and into next year. So a quick talk on cash flow. Our business model and the environment in which we operate have two very advantageous effects for us from a cash flow perspective. So first of all, when you are a growing SaaS businesses with cost new customers coming on board, often paying annually in advance, that annual in advance model creates a lot of self funded growth.

36:40 So if you're growing the amount of new customer business you're bringing on each year, that gives you a natural cash inflow from deferred revenue over the course of the year. We particularly see that in the second half, by the way, because a lot of our customer renewals and a lot of our sort of strong selling season is in the half of the year. The costs to fulfill those contracts are relatively small. So a lot of the costs that we incur are upfront in the onboarding of customers and in sales commissions and that sort of thing. So once an order has been won and once the customer has been onboarded, the cost of operating those customers is relatively low. So we get a very helpful cash flow advantage from that deferred revenue differential. The second upside we get to cash is from the very favorable UK r and d tax credit regime.

37:31 And we go through a process each year to apply for an r and d tax credit. Typically, that leads to an upside for us as somewhere between £05,000,000 and 750,000 annually. So those two factors have enabled our cash balance to remain very healthy. We IPO ed back in 2017 with £3,000,000 of cash in the bank. Since then, we've incurred about £3,500,000 of losses. We've also spent about £500,000 of CapEx on two of our new offices during that during that period. And yet at the end of June twenty twenty one, we've had £2,000,000 of cash in the bank. And we've also got a £2,000,000 completely undrawn facility with Silicon Valley Bank to underpin that strong cash position.

38:24 So as we look to the future, the objectives really for us over the next eighteen to twenty four months is to scale the document management business and to prove out our task management business. So looking specifically at SmartVault, we will look to invest significantly in customer acquisition, in customer success, and in product development. As a a broad guide, we would look to invest all of the incremental revenues from the document management business back into growth in SmartVault. So it gives you a a feel for the sort of level of investment we'd be looking to to make then. We're basically looking to capitalize on our position as the leading document management business for accountants and to try to take as much of that market as we can.

39:15 Worth noting as well that we're doing that within the space that we already understand. So selling into accountants, selling into the the same areas where we already have product market fit. We expect then that growth to be supplemented with growth in new verticals as well. So in insolvency, potentially in insurance financial services in The US. But our core growth will come from the markets which we've been in, which we've proven success in, and in which we are very successful. In virtual cabinet, we would expect relatively modest recurring revenue growth. The great thing about virtual cabinet is it has very high operating leverage. So a lot of that incremental revenue will drop through to the bottom line and as cash to fund the scale up of SmartVault.

40:04 And as Daniel said earlier, we'll continue to prove out the GETBUSY model to build out partnerships within the NetSuite ecosystem to win customers within that NetSuite channel and to start to develop relationships with other ERP providers outside of NetSuite as well. So that's it from our core presentation. Just before we dive into questions and I hand back to Paul, I would say that if any of you do have any questions that you think of after this and don't get a chance to ask on this call, we do always respond to questions that we get via the investors at getbusy dot com email address. So please don't be shy in coming forward with any of those. Over to you, Paul. That's fantastic. Daniel, Paul, thank you again for the presentation.

40:51 Ladies and gentlemen, do please continue to submit your questions just using that q and a tab situated in the top right hand corner of your screen. But just while the team take a few moments to review those investor questions submitted already, I'd like to remind you the recording of the presentation, along with a copy of the slides and the published q and a, can be accessed via your investor dashboard on the Investor Meet company platform. I'd also like to remind that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations. Daniel, Paul, perhaps before we move on to some of the live questions we've had in, we did have a presubmitted question from an investor. And if I may just start off the q and a session, I'll just read it out if that's okay, and you can just give your response. Question reads as follows. Whilst marketing expenditures increased, growth appears to have been harder. Is this because of COVID, or is it a matter of longer lead times, or is it just tough?

41:43 Great question. So I think, first of all, I assume the I assume the person who's asked the question is asking around around SmartVault. And I I guess they're looking at the s g and a costs, which aren't just related to marketing. So that's all of the costs of effectively operating the business that aren't product development costs. Our marketing costs, which I think the question was specifically around for SmartBulk, we're up about 20% in the first half of this year. And that compares to a revenue growth rate of about 28%. So I think we are fortunate that we have always been operating a digitally led marketing model. So at the beginning of last year when COVID hit, we didn't have to suddenly learn how to do that. And our teams, I think, had a head start over potentially a lot of competitors in that respect.

42:41 Definitely, digital channels have become noisier. However, our approach in SmartVault has always been to attract accountants and bookkeepers to places where they go to be educated. So where they go for their, what are called, CPD points. So anyone who's worked in professional services will know what you have to do to to to sort of keep your accreditation and to keep make sure you're always current. So SmartVault is regularly present in those places where people go to be educated. We cohost webinars and seminars that help people to stay current in their profession. And within those webinars, SmartVault is sort of introduced either as a a soft sale or potentially a harder sale if it's something that's more relevant to to to what we do.

43:29 So that's how we generate leads. And the advantage to that method for us during the beginning of COVID is that we already had a trusted presence in the sector. So people knew SmartVault. They they they recognize the brand and the the association bodies that we often do these educational seminars with remain the same. You know, it's that people like the institute's chartered accountants in England and Wales will be The UK equivalent. So we have that trusted brand presence, meant we're still able to attract high quality leads over that period. The general sort of paper click type marketing channels that, you know, you would have seen some of the results that have been put out by the likes of Google and Facebook.

44:14 Those the the prices in those areas have definitely gone up. Channels have become noisier. But, thankfully, for us, they're not core channels to market. It's those educational content webinars and sort of a content generation type lead generation that we do that has helped us to to to to, you know, do well over that that period. So I hope that answers your your question. Fantastic. Thank you indeed, Paul. If I may, guys, if I can just ask you just to click on that q and a tab, and you'll see, some of the questions that have come through. And if I may just ask you to read out the question where appropriate to do so, perhaps start at the top, and we'll we'll sort of work our way through. Thank you. Okay. No problem. I'll kick off, Daniel. And if you see any you wanna take, then you can crack on when you when you want. But so first question here from from Andy.

45:03 Are you at the point from the from the current annualized revenue and cost base where you see operational gearing now pulling through to the bottom line? So this really is a question about the extent to which we intend to keep investing and ultimately, I suppose, you know, the point at which we get to to to breakeven. So with, first of all, just explaining the the dynamics of of the group, we've got a very highly cash generative business in virtual cabinet. We are using that cash to invest in, you know, a very transactional and predictable scale up business in in SmartVault and then also to invest in the build out of of of GETBUSY. We would expect to continue to invest effectively all incremental document management revenues back into the growth of SmartVault for at least the next eighteen, twenty four months.

45:52 During that period, we'll continue to reassess whether the LTV to CAC ratios are holding up, whether those customer acquisition efficiency ratios are holding up. Because what we're after is quality of return. If we start to see the quality of return tail off, we'll perhaps scale back the investments a bit. And what you see in SaaS businesses, as you would have seen in other SaaS businesses, if they are within your portfolios, is that as you start to reduce the the incremental investment you're putting in, cash starts to drop through to the bottom line very, very quickly. So the answer to that question is we could be at that point now if we chose to be, but actually based on the LTV to CAC ratios and based off the scaling metrics we're seeing in SmartVault, we are currently choosing to reinvest all of that incremental cash back into growth.

46:42 Just going through some of the other questions here. Richard m, I'll take one of your questions now. Lack of churn is impressive, but what are the main reasons given by customers leaving your platforms? This is a great question. Frustratingly, Richard, there is no one standout reason. And I think if there was, that would be the thing we go out and fix. So customers leave for all sorts of reasons. Bear in mind, particularly with SmartVault, we tend to be at the bottom end of of town, so very much sort of SME bookkeepers that may be anything from one user up to, you know, six or seven users. People churn because they they they go out of business. People churn because they choose a different practice management provider, and that practice management provider perhaps has a a better document management integration with with somebody else.

47:38 They churn because they may have had a poor customer customer service experience, which is unfortunate. But, you know, when we have 8,000 customers, occasionally, that that's going to happen. But there's no single reason we have for customers' journey. It tends to be five or six reasons that generally have roughly the same proportion of of of of churned customers apportioning a reason to. Also worth noting, we don't always know why customers leave the platform. We always ask for feedback, and we try to engineer a requirement to provide a reason before people are able to churn. But, ultimately, if someone didn't want to give a reason, then they, they wouldn't need to. Daniel, do you wanna grab any other questions?

48:29 I'm happy for you to keep going, Paul. Okay. This is working. Good stuff. Okay. Simon here is asking, looking at the scalability of the offering, what's required to acquire the new customers, and is anything holding you back? How big is the opportunity you're going for here here in revenue terms, and when should we see this pull through? So there's a few things in that. What's required to acquire acquire new customers? If we look at that first. So, really, as I think I explained, our customer acquisition model for SmartVault is all based around providing educational content. That educational content has to be placed in a way that it that is trustworthy. So what we don't do is is push and push and push low quality content out to accountants and bookkeepers so we end up just being noise in the market.

49:21 We want when we speak and when we align ourselves with educational webinars, we want that to mean something. We want to be heard. And therefore, customer acquisition customer acquisition for us isn't just a product of shoving cash in the top of the funnel and generating new leads that way. There's a throughput of leads that we need to ensure those leads remain high quality. So when they eventually, having been nurtured through quite an automated lead engine, get passed to our inbound sales teams, Those sales teams still have a very high probability converting those leads into new customers. Typically, by the way, at the moment, that that conversion percentage is somewhere between sixty and sixty five percent of leads that get passed to our sales teams get converted into new customers. So very high conversion to new customers. When people come to us, they're coming with intent to buy.

50:14 So really what what our marketing and sales teams do is continually experiment effectively how hard can they push that funnel to generate leads that that are still high quality leads to pass to the sales team. So, certainly, putting cash in the top of the funnel is a component of it, but it's also around quality of content, quality of of and trust in the brand that we have out in the market. In terms of the size of the opportunity, if you look at the four territories we're in, so UK, US, Australia, and New Zealand, we estimate that overall document management is about £350,000,000 annual market in those four territories. So you can see how much there is to go after in that market at the moment.

51:07 When should we expect this to to pull through? Well, I think that's what the scaling of SmartVault is is all about. So a lot of our investment over the next eighteen to twenty four months will be in scaling the recurring revenues of SmartVault. And as SmartVault becomes a bigger portion of the group, you'll see that the group growth rates start to be more heavily influenced by those much higher growth rates in the SmartVault product. Kelvin here has asked a question. Who do you see as your main competitors? I think there was a a slide on that in the in in the deck, Kelvin. So I'd I'd suggest you refer back to that, and there's a copy of that on our website if if you if you need to look at that again.

51:55 Do you see an opportunity to win the big four accountants as as customers? That's a great question when we get asked regularly in their their logos were obviously missing from the the customer logos we showed earlier. Selling to the big four is a very complex exercise, a very different piece from selling to the BDOs, Grant Thornton's downwards because they are much larger, much more complex enterprises that very often have their own very bespoke requirements. So for us, given our scale, given our size, and given the success that we're having acquiring towards the sort of anything from the mid tier below, we're not focused on trying to acquire any big four customers. That said, I talked earlier about this deconsolidation that's happening within the accounting space where accountants are demerging their their restructuring and their insolvency businesses to deal with some of the independence issues that there are in The UK at the moment.

53:01 I think all of the big four either have or are looking to do that demerger, and that's definitely been an upside for us. So one of the big four span out their their insolvency business at the beginning of this year. It's now a stand alone business. It's had substantial investment behind it, and we've acquired that as a as a customer. So whilst it's no longer part of the big four, it's span out of the big four and is obviously a major player in the insolvency insolvency space. So short answer, no. We're not looking to go after the big four. Especially, we believe that's the right approach for our business. They require a lot of investment to service on an ongoing basis, and the implementation projects are are potentially very huge.

53:54 We we we see there as a lot of potential in the mid tier and downwards. Richard m here has asked a question. Could you quickly outline your tactics for acquiring new customers? Is it conferences, physical calling, IT managers, direct mail, advertising, and trade journals? Sure. No problem. So we're very much digitally led for SmartVault. So I think I described earlier about how we generate educational content online. We host webinars with association bodies and those sorts of things. That generates a pool of leads for us, which are nurtured over time with additional content. We have quite a sophisticated lead scoring mechanism. When those leads reach a certain warmth, they're passed to an inside sales team who demo the product to the customer online.

54:47 So this is all happening online. And then those customers sign up in a pass to a customer success team for remote onboarding. That said, we do have a presence at trade shows when they when they return and places that they are starting to return both in The US and and The UK. And that really is about promoting our brand and, you know, for people who perhaps aren't plugged into those digital channels to to get ourselves out to them. I would say that in terms of lead generation, particularly for SmartVault, it represents a fairly small proportion of what we do. But for brand presence, it's it's it's reasonably important. But we don't do direct mail. We don't especially do trade journals or things like that.

55:35 You know, we may we may place content in trade journals, but that would be for the purposes of educating accountants and bookkeepers to promote the brand in that way. And then there's a question here from Dinesh. Hi, Dinesh. Approximately, when do you expect GETBUSY to turn profitable? I assume you're talking here, Dinesh, about the group as a whole rather than specifically the the GETBUSY product. So we as I said earlier, we are currently choosing to invest all of our incremental revenues back into the document management business. So if we were to eventually tail off the growth in that investment, you would start to see those incremental revenues drop through to the bottom line very quickly. That's, you know, very common in SaaS business models. It's one of the beauties of SaaS business models is that you actually have when you get to a certain scale, and bear in mind, we're at £40,000,000 of ARR now.

56:35 You can very quickly switch to profitability in that way. At the moment, we're comfortable that sitting in a slightly loss making position is the appropriate thing to do with the investment and the returns that we're seeing there. And then another question from Dinesh here. Our recent RNS mentioned that Lacerte and ProSeries the integration between with Lacerte and ProSeries could be worth around $50,000,000. How feasible is that? I think that's what we're trying to find out, Dinesh. So we will be the moment, we have great product market fit amongst the Intuit client base who use Lacerte and Pro series. We estimate the total addressable market just in that base is about $50,000,000.

57:26 It makes sense for us to try to grow and expand in that space as rapidly as we as we can. I think that's the end of the questions. You've you've been very generous because you've picked off every single question. So thank you very much indeed. If any further questions do come through, of course, the company will have the ability to review those, and we'll publish answers back on the investor me company platform. And just before we redirect investors to give some feedback, Daniel, perhaps if I could just ask you just a few closing words, that'd be fantastic. Thank you. Excellent. Well, first of all, thank you to Paul and the Investor Made company for having us on. Thank you to all the attendees for your time. We appreciate it.

58:12 As Paul said earlier, if you sent through any questions to our investor email, we will respond to those. We're very excited about the future of the business and believe we can add substantial scale and therefore substantial value over the next couple of years. So we're determined to make sure that this organic growth journey that we're on, creates the return that the opportunity presents. And we're passionate and aligned in terms of that from a cultural perspective. So we hope you stay connected to the GETBUSY journey, and we look forward to doing many more of these in the future. That's fantastic, Daniel and Paul. Thank you again for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected for the opportunity to provide your feedback order the team can better understand your views and expectations?

59:09 It only takes a few moments to complete and is 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 concludes today's session. Thank you, and good morning.