Getbusy (LSE:GETB) — Half Year Results Investor Presentation

0:01 Good morning, and welcome to the GETBUSY PLC Half Year Results Investor Presentation. Throughout this recorded 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. Simply type in your questions and press send. 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 is appropriate to do so. Before we begin, I would like to submit the following poll. I would now like to hand you over to

0:32 CEO, Daniel Raby. Good morning to you. Good morning, and thank you for having us. And thank you everyone for joining us for the h one twenty three GETBUSY results. In terms of instructions, my name is Dan. I'm the CEO of GETBUSY, and with me today is Paul, the CFO. In terms of an agenda, we're gonna go through company strategy, which I'll be taking you through, and I'll hand over to Paul to talk through the market opportunity and then the financials. And I'll finish with an overview and some highlights. Let's get into it. Our mission is to make people productive and happy. This mission guides our culture as a company. So all our cultural values are around making our team productive and happy. It also guides the way in which we support our customers. So we sell productivity software to professional service firms, and our main aim is to make them productive and happy through having good workflows and great user experience.

1:35 We, as a company and as a board, are very clear on how we maximize shareholder value. And if I draw your attention to the bottom right hand side of the screen, our aim is a cash distribution within the next seven years of a 150,000,000, and, we are hyper focused on achieving that and confident that we're in the right we're headed in the right direction to be able to achieve that. So as a board, we are clear of what steps we need to take and how we create strategic value within our organization to ultimately provide, significant shareholder returns over the next couple of years. In terms of how we're tracking towards those that goal, well, we've been consistently growing since IPO.

2:25 We CAGR about 18%. This year, we grew 16% in recurring revenue, at a constant currency, I think 19% at a, actual currency. ARR was up 20 point one to 14,000,000. We're class leading in recurring revenue, so 96%, of our revenue is recurring, which I'm pretty confident is the highest, if not the second highest on on AIM. We provide material value to our our customers. We've got over 70,000 paying customers, predominantly accountants. So about 65% of those are accountants. And on behalf of those accountants, we store over a billion unique documents.

3:10 So those are predominantly tax returns and financial statements. They're core pieces of information and data that accountants are responsible for.

3:23 We also enable the our account since those Sorry. That's a waste of time to be share their interaction with their client and want to log in our cloud portal and interact their lines.

3:44 Daniel, can you hear me?

3:47 Yes. I can hear you. Can you hear Apologies for that. You're just cutting off there, so we can't really pick up most of the things that you're saying. So I'm just gonna refresh your browser if that's okay. I I can too. Problem.

4:12 Ladies and gentlemen, please do bear with me as I try to reconnect Daniel to the room. Daniel, I can see in the room. I'll just turn on your camera and microphone and hopefully perfect. Daniel, can you hear us?

4:44 Daniel, can you hear us?

4:49 K. While while Daniel's reconnecting, I'm happy to to pick things up and and and keep moving. So Daniel's just explaining that our 70,000 plus paying users interact with 3,000,000 of of their clients. And, typically, they are signing about 3,000,000 unique individual documents through our platforms every year. Typically, those documents are tax returns. So, you know, we are a material part of The UK and US tax take in terms of the number of tax returns that are being signed. Danny, are you back on?

5:24 Yes. I am. Can you hear me? Absolutely. Yeah. Do you wanna do you wanna keep going? I've just gone through I've just gone through signatures and collaborators. Yeah. Excellent. Well, thank you, Paul. Apologies about that. I'm not sure what happened there. So as Paul was saying, we facilitate over 3,000,000 digital signatures. So that's a material amount of finishing an accountant's process and enabling them to give a good customer experience. So as you can see, we're we're essential to our core market. This value is why we're selling so much more of our product at a higher average sale price. It's also why we have such low gross churn, within our customer base. We are also expanding into new adjustment markets, so we're very clear on how we create competitive advantage within the niche markets that we target, and we're expanding that addressable market to enable us a clearer path to the 30,000,000 target by December 2026 and ultimately the 150,000,000 cash distribution.

6:29 We're in very resilient, end markets. So, irrespective of the macro economy, we seem to be resilient against it. And our business model is a very good one in terms of subscription revenue is very predictable. It's very cash generative. So if you're not making a decision to invest into growth, you can become very profitable very quickly. And, operational leverage of 45, 50% is what we're achieving in our virtual cabinet business, so that gives you an indication of what we could achieve in our overall group if we wanted to. And on that note, we have 3,700,000 of available growth capital. So considering we're reinvesting our growth back into our business and then on top of it, have 3,700,000 in available growth capital, 1,700,000 in the bank, and 2,000,000 debt facility, we're in a very good position to be able to, focus on these subscription revenue, which makes our business a lot more valuable in the future. So in terms of the broadcast sorry.

7:46 Hello? Daniel, I'm just taking your camera down just to keep the integrity of your audio, and I've done the same for Paul. So please carry on. Excellent. Well, in terms of the the practical problems that we solve, so we we solve document chaos. As you know, accountants are very document heavy workflow. And so the efficiency of how they deal with documents internally and externally is core to their ability to be successful. So we streamline that process. They're email heavy like I'm sure we all are. They have large security and compliance risks, and those security, cybersecurity, and and compliance regulations are only increasing, year on year. So from a practical standpoint, this is what we solve for our prospects and clients. Clients.

8:38 And in terms of how we present that externally, if you look at our marketing material, for example, you'll see us talk a lot about improve your client satisfaction, You know, the old process of getting a client to print a tax return, physically sign it, scan it, email back, all of that is a very cumbersome process. So our ability to streamline that customer experience through cloud portals and digital signatures, makes everyone's life better. We talk a lot about reduced burnout and better retention rates. So, I'm gonna talk to this in more detail in a later slide. However, accounting market is growing, but staff who wanna be accountants are reducing.

9:24 So it's firms are really struggling to get new staff, in The US. And this is meaning that they need to retain their existing staff, and they need to attract the best staff when they can. And having the best tech in place enables them to do that. It reduces stress. It makes the operations flexible and enables hybrid working. So we're to making sure that they keep their existing team and that they can bring in new people and the best new people. We reduce the risk of sanction and fines. This is a core value proposition that we sell, into accounting firms. We also hold majority of their important data. So making sure that we keep that secure is a high priority for us and a high priority for them.

10:14 And we help with the move to low carbon footprint. So, obviously, digital experience is much better than a paper experience.

10:25 Here's some, newspaper articles, which have all come out recently. I think there was one yesterday, actually, on, the crisis that's happening in The US regarding, accounting firms' ability to to bring in staff. So a lot of them are looking at offshoring. A lot of them are looking at, consolidation. Private equity are eyeing up a lot of accounting firms. And all this change is is supporting this move towards automation and supporting this move into, having the best tech stack to enable you to be efficient and as effective as possible. So, you know, the the trend within the the market is playing heavily into our hands.

11:09 In terms of our products, so we have two established products, Virtual Cabinet and SmartVault. Both are document management solutions with client portal and digital signatures. They sell anywhere from small SMEs all the way up to 30% of the top 100, UK accounting firms. We are the clear leader in document management for accountants. There is no one else that comes close to us in terms of market share. We are, cloud hosted mobile and on premise and in The UK, US, Australia, New Zealand. Virtual cabinet is a very cash generative business. So as I said, it creates operational leverage of about 40%. SmartVault is a high growth business, and that is the objective of those two companies, Virtual Cabinets to create the cash and SmartVault to grow.

11:59 SmartVault is growing in a very strategically valuable US accounting market, and we continue to pick up more and more market share within that. Those two products are short term growth products, to ensure long term sustainable growth, which has always been a strategic objective of ours. We've got three emerging products coming to market. So Workhero, is our next gen generation enterprise content management solution. Essentially, what we've done with Workhero is we've been very successful through SmartVolume Virtual Cabinet at solving document problems for accountants in practice. And we quickly realized that, in corporate accountants, so for example, Paul and his team, his finance team, they struggle with the same efficiency problems that in practice accountants struggle with.

12:53 So we felt that we could help them manage short, organized, file, share, sign documents in the same way we've been so successful doing to accountants for the last twenty years. And so that that triggered the investment in Work many years ago and, over the last probably eighteen months, a hyper focused on the ERP market. And we're seeing really good progress within Work Hero. 20 partners signed in the last, twelve months just validating on top of winning international partner of the year last year. Just validating the opportunity here and that the ecosystem around NetSuite specifically are seeing that this problem exists and, identifying us as a potential solution to that problem. So we're confident that we're growing in the right market and solving the right problem.

13:43 We're also confident that the financial characteristics of work here are gonna be very favorable. And what I mean by that is we're gonna have good average sale price. We're gonna have big average deal sizes. Churn rates are likely gonna be low. There's gonna be opportunity to monetize and upsell in the future. So, we're confident the work here is headed, in the right direction and that we're making the right progress. Certified Vault is essentially just a spin off from SmartVault. So it's the same core underlying product. It's just focused on the asset management sector. So what we identified is that within asset management, their ability to store and, be custodians of of important, documents, was limited and and that the provider that was focused in that market, was no longer focused in that market, and that created a good market opportunity. So in 2022, we brought a MVP to market and saw that there was demand for a product like ours with, some really successful wins.

14:49 Since then, what we've learned is the need to make sure that the security protocols around the application are are first class. And so that's what we're in the process doing it right now. It's just not worth us risking, you know, the rest of our successful business by making any mistakes here. So we're hyper focused on, making sure that we get our security protocols right. And then, from there, I think, Certified Vault is a really nice complementary product to Smart Vault to increase the growth within that business unit. HelloPlan, is a scheduling and and meeting, application. So, again, through through feedback from our clients, what was clear is that scheduling meetings is a is a challenge often, especially in a hybrid, working environment.

15:39 You know, having making sure that those meetings are productive is particularly a struggle. So having a set agenda, making sure documents are there, taking notes, fielding that note, feeding those notes back into tasks. All of those things we're very familiar with, and now other applications do bits of it really well. So what HelloPlan is focused on is being that more professional meeting scheduling tool, that helps professionals, predominantly accountants, schedule meetings more successfully. The purpose of HelloPlan is not to put huge amounts of investment into it. It's not something that we're gonna be, piling cash into. It's very much just a complementary application that sits in a virtual cabinet and work here to upsell into those existing client base. So it's very much in the course of business of our other, products and, you know, isn't a drain on cash flow. It's just got upside potential.

16:39 So, in terms of our future, as you can see, we're investing, for growth today in SmartVault, you know, through the cash today from Virtual Cabinet. And then we've got, a clear focus on how we generate return well into the future, and that's through the emerging products, specifically Workhero. Across all those products, what is clear is that we're sitting on, this rich foundation of of content, of data. Has said we have over a billion unique documents. We got over 3,000,000, businesses logging in to exchange information around those documents. So in the future, we have a big opportunity to leverage off AI, to just make that that data more intelligent. So, just more search and answers, more context around the data, being able to, provide feedback to data or, review data a lot quicker.

17:43 So, you know, we have components of AI in our application already, but the evolution of it is an exciting prospect for us because it's clear that through AI, we can just add more and more value to our customers and just make them more and more efficient and intelligent, on the information in which they hold. We're hyper focused and clear on our responsibility within that. So as I said, core to our value proposition is that, accountants trust us. They trust the fact that we're gonna secure their data in the right way. We hold over a billion important pieces of information on behalf of, you know, the largest tax accountants in the world. So we take that responsibility extremely seriously, and we would never expose that data in a way that puts them or us at risk or provides any confidential information.

18:39 So, within the context of AI, we're very we understand our responsibility to do it in a safe way. And we're confident that within a safe way, we can create a whole lot of additional value to our existing clients and future clients, which is really exciting, journey for us to go on.

19:01 As I said, you know, again, to validate the the strength of our business, 30% of the top, UK a 100 UK accounting firms, 70,000 users, 8,000 customers. We've got low customer concentration, so you can see how that split. The customer size is split across, our base. The low customer concentration helps with low gross churn. As you can also see that, from the bottom of the screen, just some of the logos that we've got, and the customers we've got. So we're truly trusted by the biggest and the best, and, you know, we we add so much value to these customers that the cash flow that comes out of them is pretty protected for a long period of time. We've got a 150 rock stars, working for us, a very dedicated team. I think most importantly to note is we're very experienced with this. We've been doing, selling document management to accountants for fifteen, twenty years. I've been in the accounting industry for twenty years. Now we're very, very experienced selling software to, accountants and very, very experienced in how we manage document workflows. It's all we've ever do done. It's all we're ever gonna do in the future.

20:13 And through doing that, we are the best at it. So we often get the the question, how do you win? How specifically do you win? So, you know, there's lots of people that manage documents and lots of people that manage workflow. There's lots of VC solutions. Why do people choose us over other others? And there there is a simple answer which has real complex barriers to entry as a result of it. So the simple answer is really deep integration into the specialist vendors. Intuit and TaxScout are two which, you know, I draw your attention to. You know, Intuit with with SmartVault and TaxCalc with SmartVault.

20:59 We are their document management provider. So if you go on Intuit's website or TaxCalc website, you will see that they recommend SmartVault as their document management. And that's Intuit and Taskark acknowledging that they're great at tax. They're great at practice management. The document component is a whole different workflow and a whole different skill set. And by integrating into us, they can have the best upgrade solution to their clients. And by us creating a deep integration into them, we can get things like data sync, single source of truth, fewer clicks, less human error. It just automates the admin process, and it makes the accountant's life a lot more efficient.

21:44 So these deep integrations is our unique proposition and why we win nine out of 10 times and their significant competitive advantage and barriers to entry. Others cannot do this quickly. It took us eight to ten years to get to this place. No one is trying. And if they did try, it would take them five to ten years to get there. We're trying to with with Work Hero, we're trying to create that same competitive advantage with with NetSuite. So deeply embedding ourselves within NetSuite. And again, on the work on the VC business, we've got lots of experience with, say, Turnkey, which is a key partner of ours. We are VC is, Turnkey's, document management. And so, you know, we're we're clear on how we we win.

22:32 And when you're clear on how you win, it's it's easier to repeat it and scale it. Here's another practical example of that. Tracy is a great customer of ours. And, again, this quote just showcases the value of the integration between GETBUSY and TaskCap, which in this case is actually SmartVault and TaskCap, and that being the core reason why she switched to to SmartVault.

23:00 So I think, hopefully, what what's clear to you now is, you know, the objectives we're trying to achieve, how we've got competitive advantage, the value we provide to our customers. We think that that sets us up for, you know, as really successful next couple of years. And so the focus is now on scaling our customer acquisition models, and growing as quickly as possible to build up as much subscription revenue as as possible over the next couple of years because we know how valuable that subscription revenue is, either from a cash perspective or from an exit multiple. So at the moment, the team, and the investment is very much going into sales and marketing.

23:49 And we're probably doubling our headcount in sales and marketing over the next twelve months. We have been very successful in terms of our, results of our sales and marketing, which is a traditional inbound model where we engage customers at the top of the funnel. We nurture them down to demos, and then we convert those demos. And, traditionally, we've done that at about four to one return on spend with a twenty four month payback period and a typical demo conversion rate of 50%.

24:20 So as you can see, it's an efficient engine, and now we're just trying to do that at a lot more scale, and we're making progress towards that. I think just before I hand over to to Paul, complementing the inbound model is a is a new partner strategy, and Paul's gonna talk to that in a bit more detail. But what you would have seen is, our announcement of right networks,

24:44 our 20 partners that we bought in through the NetSuite ecosystem. So we've been very successful in, directly selling to our customers. We're confident that if we complement this direct model with a partner model, that's just gonna accelerate our growth in the future. So I'm gonna hand it over to Paul now to talk through the financials and the market opportunity, and then I'll come back for an overview at the end. Excellent. Thanks, Dan. So all of that has enabled us over time to create what we consider to be a very valuable base of of customers. And what makes those customers valuable to us is they tend to be very loyal. We've got very low churn rates. So in the first half of this year, we're at 0.8%. That's been improving over the last couple of years.

25:30 And those customers tend to spend more with us over time. So our net revenue retention, that is how much more each month our existing customer base is spending with us. That was about a 100.5% per month in the first half of of this year. Part of that's been void by price. Internally, we target that number anything north of a 100%, but that's been a particularly buoyant figure of ours over the last couple of years. If you take a step back and look over the longer term, the customers who we have today who were with us when we IPO ed back in 2017 are generating 35% more revenue than our entire customer base was back at IPO. So over the long run, these customers tend to be highly accretive in in revenue terms.

26:19 Our revenue is very predictable. We've got 96% of our revenue now comes in as recurring subscriptions. That's the highest we believe on the London market. It makes revenue visibility and revenue predictability very high indeed. And about 70% of our business comes in annually in advance. So we offer typically monthly or annual plans to customers. Monthly plans are more expensive. Annual plans come with a discount, and typically, we see substantially lower churn rates on those annual plans. About 70% of our business comes in in that way, and that creates a lot of a lot of upfront cash for us to reinvest into the growth of the the business. And we consider the customer cash flows to be very valuable. If you take the discounted gross profit from our current customer base over the typical lifetime of our customers, that's worth well over £200,000,000 to us. So there are substantial substantial value within that customer base.

27:23 Some of you, I think, would have seen this slide before. We offer, as with many subscription revenue or subscription software businesses, monthly and annual plans. If you're an enterprise customer, you'll typically come in on a three year initial term, and then we have annual renewals thereafter.

27:40 Typically, our customers stay with us for nine or ten years. So we, yeah, we we've been around long enough that we have customers who have been with us well over that period of time. And we'll often charge one off implementation, training fees, and those sorts of things, migration fees. It's not a priority for us, that, but it's nice nice cash to have, and it helps pay for some of the cost of onboarding those customers.

28:05 Once we've got the customers in through the door, we look to expand them through adding additional users. So that might be simply because we're selling to growing businesses. It might be because we start with one of our products in a single department in an accounting firm and then roll it out to other departments over time. We also have an expanding capability set, so functionality set, which we've modularized and we can upsell to the existing customer base too. And an alternative way of doing that is creating different price and packaging plans. So if any of you have been on a SaaS software website, you'll typically see on their pricing page a variety of different plans, usually a starter, potentially even a free plan moving up to richer plans over on the right hand side, and we are no different. We plan to do that with our customers too.

29:00 The markets that we're in are very large. We actually break them down in much more detail in a second, reflecting the way that we go to market. But the broader landscape we're playing in is very substantial. So the territories we consider that we operate in are The US, UK, Australia, and New Zealand. We've actually got customers in well over 50 countries, but these are the countries that we are we are focused on.

29:25 And in the accounting and professional services markets, that's that's around about £750,000,000 opportunity for the enterprise content management space that we are in. Financial services have a similar sized opportunity, and the ERP market into which we've moved recently is also a similarly sized market. At the macro level, these markets are great places to be at the moment. All professional services firms and particularly accounting firms are going through phases of digital transformation. They have to make their people more

29:56 efficient. You saw the headlines Dan showed you earlier. You know, the accounting profession, particularly in The US, is in crisis. People are leaving the profession because of the pressures of the sort of three or four months of of tax season. Too few people are coming into the profession, and there's an increased influence of private equity in the in the profession, which is driving that sort of professionalized management approach. So you're seeing digital transformation projects, software implementations happening right across the size spectrum in the accounting market, and that's obviously beneficial to us. There's a greater awareness around the world around around privacy concerns and protecting client data, and you'll all be aware of the GDPR legislation that came into Europe a few years ago. There is GDPR like legislation currently being rolled out in The US state by state. That creates complexity for professional services firms who typically hold large volumes of client personal data.

30:54 Our products help clients to track that data to identify who has accessed it and to carry out the various requirements of of the of the privacy access, the CCPA or GDPR. We're living in a much more hostile cybersecurity environment that will probably not be news to any of you. Our products help our customers to secure their very valuable and very sensitive client data. So we are part of that cybersecurity stack solution for our customers. And the trends of flexible working over the last few years, which I think, you know, clearly were accelerated with with COVID, but have been around for a while, also play into our hands. So if you want to enable a a flexible workforce or indeed if you want to off shore some of your work or outsource some of your work, which is happening as a response to those labor shortages in The US, then you need a secure and efficient cloud technology stack to enable that.

31:55 So we are also part of that of that solution. I said I'd break down our markets in a little bit more detail. I do that with two of them here. So The US accounting sector and the ERP sector. So the way we go to market, as Dan described, is very much aligned to the integrations that we have with other back office software. In the case of accountants and particularly tax accountants, that is their tax preparation and practice management software. A lot of the SmartVault business historically has been built off the back of our integration with various Intuit products, including the Cert and Pro Series two of their professional tax preparation products. We estimate there's about 200,000 people across The US who are users of those products.

32:41 Each of those is a potential user of SmartVault. That translates to us as about a $100,000,000 ARR potential market. We are still in the high single digits of penetration of that market, so there's still a long way to go. And we are the only cloud document management provider into those products. We recently announced back in January back in July, rather, our new integration with Thomson Reuters' UltraTax product. UltraTax is a is a is a similar product to Lacerte and and ProSeries. It does similar things. It's a tax preparation product. And broadly, it's got a similar market size or similar user base rather to Intuit's products.

33:26 So that effectively doubles our accessible market in The US. So that's a brand new integration launched in July, and we expect to see that starting to contribute over the balance of this year and into 2024. There is more than enough market amongst those two integrations for us to go after. You'll see the other items of software over on the right hand side there. CCH has a suite of tax products, which in the future, we'll look to integrate with, and other providers include Drake and a few smaller ones, which will be, you know, hopefully additive to our growth once we get those integrations in. Historically, most of our business in The US has been done through direct sales. So even though Intuit on their website recommend SmartVault as a as a product, all of the selling and most of the marketing is done by us. So, essentially, thus far, all of our business has been generated through the direct channel.

34:24 Back at the end of last year, we announced our partnership with Wright Networks, which is a hosting provider specializing in the accounting industry in The US. So Right Networks effectively acts as an outsourced IT team for small accountants in The US. They have about 8,000 accounting firms on their books. SmartVault in total has about 6,000 customers, and there's very little overlap between the customer bases of Wright Networks and SmartVault. So Wright Networks will be reselling SmartVault into its customer base. We'll be looking very carefully at how that progresses during the core q four selling season this year. Our sales and marketing teams have been working together very well, and we're very excited about what that partnership opportunity can bring us.

35:11 And we're looking for additional partnerships in The US as well. So all of which will complement our direct sales strategy into which we are also investing. So we're approaching the cloud ERP market in a similar way based on the integrations that we have with cloud ERP providers starting with Oracle's NetSuite product, which is arguably the the biggest and the best. That's got a customer base of about 33,000 companies around the world. We estimate that the opportunity in that base is north of $500,000,000,000. We're obviously at a very early stage in that, but we expect over the long term to be able to rinse and repeat that with other cloud ERP providers like Sage Intacct and like Acumatica.

35:57 Partners are and will continue to be a more important part of our growth strategy in the ERP space. And you can see some of the 20 partners that we've already signed up in that NetSuite ecosystem at the bottom of the page there. The reason they're so important is because they usually have well established existing customer bases who look to them for their technology suggestions, who look to them for their technology procurement. So incentivizing those partners to sell Work Hero on our behalf gives us access to, you know, existing customers who we know use NetSuite and who the partners understand the problems of those customers very well. So I'll just quickly go through our twenty twenty h one results starting with revenue.

36:48 So our annual recurring revenue excuse me while I just sort my mouse out to properly hover over this, was up 14% year on year at constant currency to 20,100,000. ARR is our subscription revenue run rate. So if you take all of our monthly and annual subscriptions, that is the annualized value of those monthly all those revenue subscriptions. That's up about 77% at constant currency year to date. Typically, we have a big q one in terms of new business. Q two tends to be quieter because accountants, particularly in The US, are far too busy doing tax returns. They don't really wanna speak to any technology providers over that time.

37:35 So where did that 14% uplift come from? It is predominantly driven by in an increase in our average revenue per user to £275. And year on year, our user base has been essentially flat. So why is that? Historically, we have acquired a long tail of general business customers, usually to fill that sort of quiet time when accountants don't speak to us. Now some of those are fantastic customers, very healthy customers for us. But amongst that mix, there are customers who have no integrations, who have been expensive to acquire. They're typically four times more likely to churn than an accounting customer. And, typically, they have very low average sale price. So their ARPU can be sometimes just a quarter of the ARPU of our new accounting customers.

38:30 But those customers tend to be just as resource intensive as our accounting customers to to service, arguably more resource intensive. So the economics of them generally is not favorable to us. So as we went through our pricing moves over the last last couple of years, we've restructured the plans that are available to those general business customers. We've introduced minimum account sizes, and we've substantially increased the the average price of those plans. Although they're still probably the entry level plans are still about half the price of a of a of an accounting plan. So those pricing changes have, over time, shaken out effectively the low value nonaccounting customers that don't especially add value to our business. They don't necessarily make economic sense to us.

39:22 And that leaves us with a healthy base of of larger business customers where the economics are much more much more attractive to us. Our view is that has simply accelerated churn that would probably otherwise have happened over the next couple of years, and it dilutes away that proportion of our customer base that isn't in our core accounting and professional services market. So we expect that to continue to contribute towards lower churn rates over time. You can already see the impact of that in the first half of this year. Churn came down from nought point 9% to nought point 8%, and we'd expect to continue to see that trail gradually downwards over the next few years as well. Our average revenue per account was up broadly in line with ARPU at £2,490.

40:14 Our net revenue retention, so this is a measure of how much more our existing customers spend with us month over month before the addition of new customers, was at a 100.5%. That has been buoyed over the last couple of years by our pricing moves. Our target internally is always a 100%. And over time, through the selling of of of additional capabilities into the existing customer base and selling additional users into the existing customer base, we hope to continue to achieve those sorts of levels. We continue to acquire customers in an efficient way. Our LTV to CAC ratio, which is an indicator of how much how much cash we earn back over the lifetime of the customer at the gross margin level for every dollar that we put into acquiring that customer, has remained healthy at four to one.

41:06 As we increase our investment during h two, that may take a dip. We see anything north of three to one as very investable, but our target is to maintain it at four to one. So just showing you how we got from our opening ARR to our closing ARR. We started with 19,100,000 at the beginning of the year. We've added naught point 8,000,000 of new customers. That's roughly consistent with what we did in the first half of of last year. How we're gonna accelerate that in the future is through the launch of our UltraTax Thomson Reuters integration in The US, which starts to increases our accessible market in The US. We expect the partnerships that we've created to start to contribute. That's both in terms of SmartVault's partnership with Bright Networks, but also the 20 or so channel partners that we have established with Work Hero.

41:57 But we're not relying on partners for that growth. We're also investing in our own people and sales process substantially, and we expect that to contribute over the balance of this year and into next year. Our net expansion was £1,500,000. So net expansion is the combined impact of pricing, of selling additional capabilities to the existing customer base, and adding additional users to the existing customer base net of any users that are that are downgraded. Roughly, 50% of that 1,500,000 has come from pricing in the first half, and the balance is from up sell and selling additional capabilities. Our form fill and quoting capabilities are now fully integrated into SmartVault, and we've started to sell those. We're seeing great traction with our esignature capability in SmartVault and selling that as a subscription add on.

42:49 And we'll be looking over the next few months at repackaging SmartVault and and incentivizing people to move up those pricing plans to keep net expansion buoyant. We lost about 900,000 of customers through churn. That, as a percentage, is lower than it was in the first half of last year. How we expect churn to improve in the future is through really, really focusing on those core accounting professionals who are deeply integrated to us. We know their churn rates are lower by expanding and deepening the integrations that we have because we know those integrations create value. And also by targeting larger customers, particularly in SmartVault, larger customers historically for us have churned at much lower rates than than than smaller customers.

43:36 We had an FX headwind headwind in the first half of the year, particularly in q two where the dollar strengthened US dollar strength weakened rather about four or 5% against sterling had a similar impact from Aussie dollars. About 55% of our revenue comes from US dollars, and about 10% of our revenue comes from Aussie and New Zealand Dollars. So just moving to our p and l and a reminder of, I guess, our our cost structure. About a quarter of our operating costs go into sales and marketing activity. About a quarter goes into product development. About a quarter goes into customer success, client delivery and support and operations and those sorts of things. And then about a quarter goes into premises and the supporting functions like people and culture and and and finance.

44:29 So recurring revenue in total was up 19%. We've seen strong growth in both The US and in in The UK in particular. We'll continue to see nonrecurring revenue decline as we have moved away fully from a perpetual license model, which was prevalent in the business four or five years ago. Gross margins remained healthy at 90%. The slight reduction on the first half of last year is simply a product of mix. Our cloud products typically have gross margins in the sort of 80 to 85% range, and our on premise products have effectively no material ongoing cost of sales. So their margin is in the high nineties. As we sell more cloud products, that becomes a a a has an impact on on gross margin.

45:17 A reminder of our approach in the medium term is to reinvest pretty much all of our incremental revenue back down into growth. We plan to do that, continue to do that from our existing cash resources. We are not focused on achieving any particular EBITDA goals in the near term. In terms of what I said around that sort of broad cash flow neutrality, broadly, you can expect EBITDA to continue around or just north of that sort of breakeven level over the next couple of years as we reinvest back down. In terms of where we're investing in h two, we have a very heavy focus on customer acquisition, particularly in The US. We're scaling up our sales and marketing teams to support our reengineered sales methodology.

46:05 We'll be looking to incentivize and bring onboard new channel partners in The US, and we'll be upskilling various teams to support that new model as well. Just quick taking a quick look at cash. In addition to the adjusted loss we had in the half, there are two key components that I always draw to people's attention in terms of our cash flow dynamics. The first is deferred revenue. So I mentioned earlier that about 70% of our customer base pays us annually in advance. There's quite a heavy h two weighting to that renewal season. So particularly q four is a very heavy renewal period for us, and we see substantial cash inflows during that period.

46:51 Typically, over the course of the year, January is a very cash accretive month for us with very heavy renewals, and then we see a gradual decline down over the following sort of six months or so, and things start to pick up in the tail end of q three and into q four. So we'd expect that deferred revenue bar to flip during the course of h two. We've been a a grateful recipient of r and d tax credits in The UK over the last few years. So broadly, we've received a million pounds annually over the last last couple of years. As some of you may know, that r and d tax regime is changing. We it will be less favorable to smaller businesses like ours. There's still some ongoing campaigning and lobbying around that, but our conservative assumption at the moment is that you can expect our r and d tax credit receipts to broadly half next year, possibly a little bit better than that, and then to gradually tail off as more parts of that legislation start to take effect.

47:52 But we consider we've got more than enough growth capital for what we're trying to achieve. We've got 1,700,000 of cash and a very usable £2,000,000 loan facility with very favorable covenants as they sort of balance sheet restrictions in there or anything like that, And we plan to continue to use that over the, next few years. I'll hand back to Dan. Excellent. Thank you, Paul. Well, I'm gonna quickly finish with outlook and guidance before we head into some questions. I think, the key message we are trying to get across to our shareholders and hopefully future shareholders is that we've got adequate amount of cash and ability to reinvest our predictable recurring revenue back into our business to significantly grow the top line over the next couple of years.

48:47 So we will not need to go to the market and raise any money. We have more than adequate growth capital. And as as Paul said, the next couple of years, we'll likely do this as a cash neutral exercise. We expect then we will grow our top line. And then in a couple of years' time, we'll be able to produce a lot of cash out of this business. Right? And at that stage, the business will be a lot more valuable either from a cash flow perspective or from the multiples that you will apply to these kind of businesses, at an exit. We have a clear target of a seventy to a hundred and fifty million pound return to shareholders cash return to shareholders in the next couple of years. And the resilient markets, the products we got, the sticky customers, the strong balance sheet, our experience and capabilities in the market, our competitive advantage, all of that gives us as a board great confidence that we are on target to achieve those outcomes.

49:47 And if we are to achieve those outcomes, that's significant return for shareholders over that period. Thank you everyone for your time today. We we really appreciate it. We're gonna head into some questions now. I think we've got about ten minutes, and I'm gonna hand it over to Paul to read out the questions. And then between Paul and I, we'll we'll answer those. Excellent. Thanks, Dan. So, I'll take this, I'll take these questions, broadly, but I'll I'll prioritize those that were presubmitted that we haven't already answered. And then I'll take some of the others in what I hope is broadly priority at I know we won't be able to answer all the questions, but we'll try to get to as many of them as possible. So the first one, will Certified Vault be ready to be fully marketed at the start of twenty twenty four?

50:34 And if not, when will it be ready? Dan, do want me to say that? Yeah. I'm no. I'm happy to take that one. But But I I think think it's important to note that we already have some certified Vault customers, and they are being successful. In terms of fully marketed, again, depends what you define that being. But it's very dependent on our security protocols being in place and that we're confident that we're meeting, the bank's requirements and the regulation requirements. My expectation is probably by the end of twenty twenty four, we will be able to have a a make we'll be able to make a decision whether we make a more aggressive push into the certified vault market. It's also gonna depend on the direction which SmartBUSY is going because then at that point, there'll be an allocation of capital decision based on what we think will get the best return.

51:26 So it's great to have options, and I'm confident by mid to end twenty twenty four, we'll have that option, and then we'll make the best investment decision. Thanks, Dan. So next question, which I'm happy to take is this is from Ben. ARPU appears to be doing much of the heavy lifting regarding growth. When do you expect the emphasis to flip to paid user growth? So hopefully, Ben, I've explained the dynamics there with with the user movements year on year. You're absolutely right. Long term growth has to be driven by by volume, not not just price. We've had some great price benefit over the last eighteen to twenty four months. We expect to see user volume start to increase over the course of of h two of of of this year. So broadly, those lower value customers have now churned or they've moved on to our new pricing plans.

52:24 I think all of them will have had the opportunity or the second opportunity to to churn or not to renew by December of this of this year. So, you know, we are hopefully coming to the tail end of that of that process. I'll give this one to you. Dan, this is from Sam. What percentage of employee working hours are working from home, and do you find that efficient? Well, Sam, I think, you know, this is core to our business because we are a productivity company that sell productivity software, and therefore, you know, we measure and monitor this very closely. We've always had a hybrid working environment. So pre COVID, we always had flexible working. You know, we have all the tech stack and the culture in place to enable us to do that.

53:10 We have all the visibility and the accountability metrics to be able to do that. So I think, our transition to COVID was, to fully remote working during COVID was relatively seamless, and then our transition out of it, has been relatively seamless with a good healthy balance of in person, in office hours, and and remote. And each team's slightly different, but overall, we're getting that balance right. Yeah. Excellent. Mark has asked, how will we see success of work of the Workero product? Will it be an acceleration of group ARR over the next one or two years? Yeah. I I mean, that's the objective here, Mark. Definitely. So we're confident that as we build up more of these partnerships and more brand recognition, more trust within the ecosystem, then we're gonna get more penetration of the end customers. And, ultimately, that's gonna grow ARR.

54:10 The sales cycles of these customers are gonna be longer, and that, as I said, is favorable in the long term if you look at the average deal size and an ultimate churn rate. So I think that, ultimately, it's gonna be a big contributor to the group ARR. Whether it's over the next one to two years is hard to predict, but that's definitely our our aim. Excellent. Mark has also asked, can you talk a little about your reseller partners and what they can bring in terms of new market access and how long that will take to be meaningful. Yeah. Well, I think the this is a big change in our business and a very positive change. Right Network's a perfect example of that where they have this trusted relationship with, you know, over 8,000 end end accountants where they are the IT provider to those accountants.

55:05 If they're recommending a solution like SmartVault to manage the documents in a more secure way, the likelihood is the customer's gonna listen and adopt that solution. So the ability for us to work with these partners and onboard them correctly, incentivize them correctly, to ultimately, adopt a lot of their customer base, can be a significant, catalyst to future growth. Right now, it's just started really well for us. So, I mean, we're only a couple of months into it. But so far, the the it's yeah. There's a very positive trend there. And I'm confident that them and, you know, maybe one or two others, because you need to be very strategic with your partners. You can be busy doing lots of unnecessary work in the partner ecosystem.

55:55 So one or two more strategic partners, and then we will have direct access to the core market that we're trying to achieve. And influences outside of ourself will be convincing our prospects to be buying our application, which is a very favorable position to be in. Thanks, Dan. Tim has asked I'll I'll happily take this one, Dan. What does doubling headcount in sales and marketing mean in terms of in terms of cash and and FTE? Broadly, Tim, once we are up to where we think we will need to be, ultimately, that's probably in the region of of of 15 to to 20 individuals over time. I mean, we wouldn't expect all those to sort of, you know, start on the September 1 or anything like that.

56:44 That that's broadly about 1.5 ish million sterling run rate. Obviously, part of that being sales teams is is also variable rather than than fixed. But how we scale that in will very much depend on, you know, how we see that new process working. You know, we we we've we've historically layered investment of it as we started to see results, we'd expect to be doing the same here, potentially in a slightly more aggressive way than we've done in the past. Tim has also asked just to flag we got about a couple of minutes left here, I think. In my experience, scaling sales in The US is often a struggle for European companies. Who is leading the efforts? And do you have someone from the management team on the ground to be close to operations?

57:33 Yeah. Well, I'll I'll answer these questions very quickly given time. Yes. We've got a team on the ground, and we've got strong visibility and accountability metrics in place in this tight culture. So it's it's always a challenge expanding, but we're confident that we've got the right people and processes in place to enable us to be successful. Excellent. Thank you. Sounds like investment is accelerating in product development and sales headcount. Not product development, Mark, but, yes, in sales headcount. Can you confirm any future placings? This has all been done this will all be done from existing cash resources, Mark. So we are not looking to to to do any placings. We're not looking to raise additional equity. I think we've answered Sam's question earlier.

58:24 Catherine's asked, could you give a bit more detail on customer interest in the form filling and quoting functions? Yep. So good question, Catherine. Those are now fully embedded into the SmartVault product and being upsold into the SmartVault client base. So they're part of our strategy to continue the average revenue the growth in average revenue per customer. Excellent. Thank you. Quickly answer Richard's last question here. Do you use the customer, GETBUSY as a as a marketing tool? Richard, we use a a customer referral tool, which I think is what you're referring to then. It's not specifically customer, GET customer, but it's a it's a similar similar product for customer referrals. We find that referral network to be very healthy. Excellent.

59:09 Thank you, Paul, and thank you everyone for your time. Daniel, Paul, that's great. Thank you for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of GETBUSY PLC, we would like to thank you for attending today's presentation, and good morning to you.