Intercede Group (LSE:IGP) — Full Year Results

0:00 Good afternoon, and welcome to the INTERCEDE GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. 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 can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Klas Vandedeese, CEO. Good afternoon, sir.

0:31 Good afternoon, Lily. Good afternoon, everyone. My name is Klas Van de Leest. I'm the CEO for INTERCEDE. I would like to welcome both existing investors as well as potential new private investors to this session who which will cover our interim results presentation for the period April 1 until the end of March twenty twenty four. During this presentation, I'm joined by Nitol Patel, who is our CFO and Alan Storey, who is our Chief Product Officer. Whilst this presentation is us presenting to you, we do look forward to your questions, but also your feedback after the session. So without further ado, let's start with the presentation, which will provide us with a financial update as well as an insight into the markets we operate in and how we're expanding our target account markets through additional features and functionality in the MyID platform, which now consists of three product lines.

1:16 So let's start. Introduction wise, very quick intro of the three of us. We do progress report, product strategy, summary and outlook. There's a few slides in the appendices which we do not aim to cover unless they are being raised in the Q and A towards the end of this session. So three of us, on my left hand side, I see Alan Storey. Alan is Chief Product Officer has been with the company over twenty years. He's a specialist in our area understands our markets, our customers and prospects, as well as channel partners incredibly well for his since. He also runs the marketing team. Nitol joined just over two years ago, Does a phenomenal job on the financial side and keeps us all on the right page.

2:07 I joined INTERCEDE just over six years ago as part of a turnaround play, which is well underway now, and we look forward to take you through the presentation. So what does INTERCEDE do? 30,000 feet high level INTERCEDE protects its clients against data breach. Why data breach? It's something we see pretty much day in, out on the news now. For those of you following the news more actively, NHS clearly is being held to ransom in certain parts, and I think there's a ransom demand for $50,000,000, $50, being touted around at the moment. So how do we protect our customers? Again, in simple terms, we try and make sure that our customers don't use passwords anymore where possible and bring them up to a higher level of authentication or, as we call it, strong authentication.

3:03 We do that simply, we do that securely, and we do it at scale. What we mean with simply is it's standard off the shelf software, so it's easy to implement, it's easy to upgrade, it's easy to maintain. Secondly, it's secure. As some of you will know, we work with some of the most security conscious organisations globally who test our software inside out before it goes into production. So we know this software is secure. And finally, we can do it at scale. With scale, we mean anything from hundreds of licenses to thousands of licenses to many millions of licenses. Our largest clients use between six and seven million licenses. So what in effect our software is? It's business critical software. What business critical software is, this is probably something that will not be turned off, even though the economic or the financial climate may be harsh. This is something the software they use is to basically protect their crown jewels.

3:55 What we focus on is employee identity. So it's not consumer identity. We protect employee identity. So, employees, colleagues like ourselves, who need to be protected from a security perspective.

4:13 We work with around 150 high profile clients. And again, for a small company, we always say, hey, we're small, but we punch well above our weight when it comes to our client base. We're around 105,106 colleagues who are split between two countries, and the majority of our staff are indeed based in The UK with head offices in Luttwelve. And we have a second office in Bracknell through acquisition. And our US colleagues are based just outside of Reston, so they can serve The US federal market. We've issued many, many millions of credentials, which in effect is many millions of licenses, and we typically focus on our channels. So we hardly do any direct sales, which we'll focus on later on. So what's our North Star? Our North Star is really customer requirements.

5:02 Once we understand customer requirements, then the rest will fall into place. It's also reflected in our Net Promoter Score. Our Net Promoter Score is fifty five zero, which is nearly double of what it used to be two years ago. We're quite happy that it is 50, but, of course, we always wanna push this further forward. Once we understand the requirements, we know what we need to do from product perspective, what we need to invest in. We do around £3,500,000 in terms of r and d investment, but that also makes sure that we have market leading product. And that's obviously something that Alan and his team work very, very hard on. Of course, we can't do this without our colleagues. Our colleagues are incredibly valued. We're also the biggest asset we have. Without our colleagues, we can't develop the code. We can't serve our customers.

5:49 So what we've done over the years is recruit significantly. We're bringing in lots of bright people into the organization. Last year alone, we had 13 net new colleagues, which also underpins what we want to do going forward, and we'll continue to recruit, but recruit in a in a balanced way. Already talked about our go to market strategy in the past in the speech. Sometimes was direct, sometimes was indirect. About six years ago, we decided to go indirect, go to market model, go to distribution, go to channel, to resellers. Over 95% of our new business is transacted through distribution and channels. Pricing wise, we're offering fully flexible pricing, both perpetual as well as subscription, which is new because traditionally we've been a perpetual pricing model. And finally, m and a as the last piece in the puzzle.

6:42 We started our m and a journey just over three years ago, made our acquisition just in the first acquisition, just in the two years ago. We'll provide a bit more color on our m and a journey as we go through this slide deck. Market sizing, I'm not gonna go and spend a lot of time on this, but two two main points on this slide. Point number one is two years ago, the only market segment we could cover is the top segment, so the PKI market. Since our acquisition, we also moved into the MFA in the past with security management

7:15 layer. Second point I want to make is that all three markets show very good double digit growth, which aligns with our stated ambition to drive strong, solid, double digit growth from an organic perspective. So we have good markets that we can operate in. Of course, as a small company, we can't address or serve the entire market. We're quite specialist in what we do. We focus on the addressable market. We then focus on the served market, and then ultimately, we grind it down to the actual market we operate in. And what Alan will do in his slides on product management, he will focus on how we position the three product lines in the markets we're operating in, but we see ourselves as specialists and we're being recognized as specialists in the markets we operate in. But what is clear that compared to three, four, five years ago, the target account market that we operate in today is materially bigger than the market we were in when we were just focusing on the PKI part of the industry.

8:18 So what's our growth strategy? Our growth strategy is based on two pillars: the four blocks on the left hand side is all organic, the three on the right hand side is inorganic. So what do we focus on? We focus on landing and expanding. We target our prospects and customers quite heavily. Once we get in, we may sign the first set of licenses, which could be twenty, thirty thousand licenses, and then we do up and cross sell. So basically, we'll try and increase the number of use cases within that client. So over time, the client buys more and more licenses. Through acquisition, we can also now do vertical land and expand, because we know a lot of our customers don't just use PKI or our CMS product, but they also use multi factor authentication elsewhere in the organization. They may even use password security management.

9:05 So we can expand both horizontally in extended license use across one product line, but we can also expand vertically across the multiple product lines we now have. Of course, we're always looking for new features and we're very good in launching new software every quarter into the market. We're also looking for new geographies. We've moved into Asia Pac more extensively. We've moved into Brazil, but also look at new specific market segments. And again, we'll provide a bit more color on that. But again, to be clear, our main ambition here is to drive organic growth. We are not a buy and build, but as and when we find interesting IP that we can acquire, then clearly we'll do that as we did in the case of Orthologix, which again had proven IP, had some good recurring revenue, was close to profitability, and actually brought us real good traction into The Middle East.

10:01 At this point, I hand over to Nitol, who will talk about progress report and financial results. Nitol, over to you. Thanks, Klas. Hello everyone. So on the right hand sorry left hand side is progress report on FY24 and then some key highlights, especially contract one and contract two which we announced during the year. It has been a record revenue for the group. We recognized 20,000,000 in revenues during the year and that's been a good feed into the bottom line of that profit of 6,000,000. And that's converted very nicely into cash. Our operating cash generated from operating activities was £9,600,000 and we ended up with a cash balance of £17,200,000 at year end with no debt. And as of May 31, we've got about 18,500,000 So we continue to concentrate on revenue and cash conversion and a strong balance sheet and we'll tell you why we're doing that.

10:55 And it's not just about deployments and we've had 17 of them in the year, again a good number for the group, but we've also been investing and Alan will explain later on where we're strategically increasing our headcount, planned increases in development and testing to increase our advantages on the CMS and bring our advantages into the MFA PSN product. And we've also done some really good numbers for PS this year. We've done 30 projects for the group across our client base and again that's reflected in the revenues we recognized in the year. As mentioned on the right hand side, we wanted to highlight two major contract wins. The first contract, I think most of you know, was a large order from a large federal agency in December. It was a perpetual order. They ordered 6,600,000 of licenses which had to be recognized immediately because of the sale and responsibility of passing across.

11:49 But we also had an associated support and maintenance element of that of 1,400,000 which we as we call recurring and we'll come I'll come to that later to explain why that's an important number for us. The very interesting one is contract two. We introduced subscription pricing for our perpetual product during the year FY24 and this is the first time a large federal agency has taken a hybrid approach to this. They came to us saying that they wanted to buy some licenses in perpetual with certain licenses on our subscription and that we were able to accommodate this. And we see this as a benefit for us not just from a pricing strategy but hopefully from an acceptance from our clients that they can either choose to be more flexible with their pricing and subscription obviously with the recurring elements that companies institutions value is beneficial for the group as a whole. It's not all about CMS, it's also about MFA.

12:46 We're investing heavily in the product as Adam will describe later, but we've had some good wins especially in The Middle East and we'll continue to invest in that area as we expand out but we're also into Europe and America. And we just wanted to highlight one POC that we're doing at the moment with a large federal unusual dynamics of this federal agency, they've decided to go down the PLC route. We're happy to do so. We've got at the moment a twelve to eighteen month window and if successful we see some benefits coming out of the potential PLC being successful here and see how that pans out. Financial highlights. Just wanted to show you the in force screens how or the results for FY24 were. If you look at the top left, revenue breakdown.

13:35 This is really important for us and we're showing you here the support and maintenance, the professional services and the license income. Why are the first two really important to the group? S and M, what we call recurring revenues, continually comes through. We can have the ability to increase our SNM by circa 3% to 5% depending on the client and the professional services that I mentioned previously, the 30 deployments, the constant upgrading every quarter of our CMS product, bringing the cadence of MF APSM into that process gives us the ability to kind of bank on that recurring and repeatable revenue. Why is that important? Because if we can cover 90 to 95% of our operating expenses, then our license income is highly highly accretive.

14:20 And as you can see in FY24, the 7,700,000 converted into a 6,000,000 net profit. That's a good result for this group. On the right hand side, regional revenue. United States dominates and yet we've obviously had an outlier in that exceptional contract, but the rest of the world is growing and although it's slow in The United Kingdom and it's slow in Europe, we're seeing traction and we see growth coming through especially with the concept of what's happening in The Middle East and what's happening in Ukraine and we're seeing some really good opportunities feeding through at the moment which we hope to convert in FY 2025 and FY 2026. The last two slides at the bottom on the left, adjusted EBITDA and net profit for the year. Why do you want to highlight this? We want to show you that the difference between the two is not a lot.

15:09 And why is that? It's because we as a company expense our R and D expenditure

15:13 into our income statement and therefore the adjustments that we make from adjusted EBITDA to net profit are mainly to do with depreciation, amortization, the normal stuff you'd expect from an EBITDA to net profit. And also on the right hand side research and development we spent just expended £3,500,000 in the year that went through the income statement. But because all the money's spent in The United Kingdom we benefit from The UK tax system on R and D. So we used to previously claim in arrears cash because we wanted the cash. Due to the strength of the cash balance on the balance sheet and the strength of the capital structure of the group we've decided to elect not to do that going forward and as we're forecasting profits for FY 2025 and 2026 we're going to generate the tax losses on the R and D tax credits and shield them from our profits going forward.

16:06 The reason we're doing that is simple, the arbitrage on the tax rates 25% corporation tax versus a 14% tax credit on R and D for the eleventh. Income statement, it's a very simple income statement. We report the top half. The bottom half is just for presentation purposes, mainly for institutions. As expected, revenue is a key element of focus for us. Why is that so? Because obviously with the control of operating expenses, we can then feed that into the bottom line. Operating expenses increased, not surprising, 80% of our costs are people, but also there's a variable element to it. So depending on the revenue streams that we deliver in the year, sales commission and bonuses are attached to that.

16:54 As you can see the net finance income was strong. Again that reflects the strong cash balances that we have on the balance sheet. And taxation again that's reflecting the tax credit for last year. You'll see in the notes when the annual report comes out that we had brought forward losses of circa £9,500,000 tradable losses. We utilized 6,200,000 of that. We've got circa 3,700,000 going forward. And now going forward, as we have mentioned previously, we'll use R and D tax losses to shield us against the corporation tax rate. One thing we do want to highlight is that we've been asked a few times in the last few months to consider developing a module out of our core product and we're looking at the feasibility and the economics of doing so. If we decide to do so, we may take an element of core product out and charge that and sell that separately.

17:48 And to develop that, there may be an identifiable separable asset that we've created with separate revenue streams. And if that's the case, we may have to capitalize. We're not talking a huge amount of money here. The core investment of R and D still continues to be in MyID platform and will continue to be expensed. It's just a highlight depending on how the standard, how the contracts are struck and how the core development versus the module development occurs, We may have to apply the standard accounting standard. Then moving on to the financial position, again a very very simple balance sheet, a clean balance sheet. The big movements here are mainly to do with working capital which is what we like, trading other receivables, cash and deferred income. We focus on these three things because they're really good for building strong foundations to do what Clas mentioned, the business principles, listen to the customer, invest in the product, invest in the people, deliver on our execution and growth strategies.

18:50 And we'll continue to do that. And that's fed very nicely into a strong cash generation. Cash generated from operating activities has been 9,600,000 and that's a strong indication of how good our clients are. They pay us on time. It's within the forty five, sixty day procurement with big corporates and government and we convert that very quickly. And that's good news. What does that mean for our capital structure? I'll come to that in the next slide. But it means that the group is in a strong position to then continue doing what it wants to do which is to utilize its structure for investing in our product, growing it, growing its capability in a controlled manner. We're not going to go and do what four or five years, six or seven years ago prior to what my class joined the team was to go and something that we've seen an economic benefit for. Hence why the North Star of the client is so important to us. But we've got a prudent capital structure. We've got a new treasury policy.

19:47 We've taken a de risk the element of concentrating our cash in one institution in The UK. We spread that across three institutions. We're looking at how we increase our interest income while we waited to see what happens on the acquisition play. It's a controlled M and A approach. We have a strict criteria that we adopt. If it doesn't fit in, we are quite happy to walk away. We had three LOIs last year and we walked away from all three deals because it just didn't stack up for us. But the focus on M and A and the focus for the organic is all about recurring revenue, increasing that recurring revenue, creating an environment that gives us capability of selling more license income, creating more profits, cash and therefore shareholder return.

20:33 On that basis, I'm going to pass you over to Alan who'll describe where he's going to spend the money. Thank you, Nithal. So let's take a quick look into the product set, the markets they serve and where we're investing in them to capitalize on the growth we can see ahead of us in those opportunities. So as Lars mentioned, our role really is to help protect our customers against data breach. The number one cause of data breach is a weak credential. So credential being something somebody logs onto a system with. We use what we call the authentication pyramid to help customers understand the different strength of different types of authentication. So starting down the bottom of the pyramid, we have passwords, the weakest form of authentication. It's just a single factor. If I steal your password, I can log onto your system as you.

21:20 We've seen examples of this in the healthcare recently in the news. So most customers are looking to move away from passwords towards something more secure. The next level up is multi factor authentication. So that's two factors, a combination of something I have, such as a phone, something I am, such as a fingerprint and something I know, such as a PIN. That typically in effect generates a one time password. I'm sure we've all seen these where we've received one from our bank or we've typed one into an application of one time code to log onto it. So it's like a password but it lives for a very short time. At the very highest level of assurance here, we are using cryptography based authentication. So that's FIDO, which is a standard faster identity online that's coming from the consumer space and coming into the enterprise world. But the traditional strong authentication mechanism here, which is still the gold standard that's been used by governments, aerospace, defense, military for a few years now is PKI, public key infrastructure.

22:15 So this is private public key based, it has cryptography. And our solution set covers this whole pyramid. So the question we can ask our customers is, how secure do you want to be? Not everybody needs to be at the very top of the pyramid. Being at the mid level is fine for some people. And we can help them on that journey. The reality is most people are on the journey uniquely we can help them on that journey. So just quickly looking at each product in turn, and what it actually does. First one is password security management. We get it, most people are still using passwords somewhere in their organization. So even if we're on a journey to get rid of them while we've still got them, let's make them secure as they can be.

22:59 The challenge with passwords is that they tend to get reused. They get leaked online. Once they appear in the data breach, LinkedIn, Marriott Hotels, for example, those usernames and passwords in the dark web. Bad actors will steal that information and then try and break into systems with it. We do the same, but we don't break into systems with them. That will be illegal. What we do is we collate that information in via a team of ethical hackers into the world's largest database of known compromised usernames and passwords. So we make that information available to our customers to help protect themselves. So they can call into that via APIs programmatically, if they're using a managed service, we can run audits with it. So we can see, are you actually using passwords today that are already known to be compromised? So you should change them. And what we really want is customers deploy our password security management software, which will actually tell them they're using a compromised password and force them to change it. So if my password was absolutely fine on a Tuesday, it appears in a data breach Tuesday night. Wednesday morning, I try and log in the system, it will say stop, this is a compromised password, you need to change it.

24:09 For customers who need more than managing the security of their passwords, have more. So this is a very busy market space. As we move down that pyramid away from the very top end, the number of people needing that technology expands. So it's increased the addressable market by us moving down that space. But in this multifactor authentication space, there's actually a significant number of competitors. So we have quite a key strategy here. So what we're doing there is at the very top end, we'd like to work with the likes of the Microsoft, the Optus, the four drops of the ping. So that's where the credential management system plays. In this mid market space where our MFA product is targeted, we believe there's an opportunity for a product that is easier to deploy, cheaper to actually deploy, but still brings a high level of security.

25:03 So one of the things we've done is brought something from the top end, and that's the FIDO pass keys capability. So still a high level of security, but into that mid market product. So we think it differentiates it in that particular space. At the very top end credential management, probably the easiest way to describe what this product does is describe one of the regulations that it helps our customers comply with. And that's FIPS two zero one in The US Federal Information Processing Standard number two zero one, subtitled PIV Personal Identity Verification. So what that regulation states is that all US federal government employees and people who work with government data, So that's suppliers into governments such as Lockheed Martin and Boeing, Northrop Grumman for example, have to follow a certain set of security standards. There's two parts to that. The first is we need to know this person is who they claim to be before we even let them anywhere near the organization.

26:02 So our software will capture fingerprints, capture facial biometrics, photos, scan documents, check passports are valid, pass that through to background checking systems, which will tell us, is this person who they claim to be? And even if they are, are they on a terrorist list before we let them into the air traffic control town. Once we've validated that identity, then we issue them a highly secure credential in the form of PKI credentials, private keys on smart card, and we manage the entire life cycle of that. So this helps our customers comply with that high security regulation. And we help them do that simply. And we help them do that at scale up to hundreds of thousands and millions of users. So looking at where we invest in the product set, we look at what's happening in the market.

26:52 Key thing that we see in the market is that the level of cyber attack is increasing, the sophistication of cyber attacks is increasing, increased use of AI, artificial intelligence to drive phishing scams that are very, very difficult to differentiate from the actual real scenario. So we're seeing that drive increased cyber spending as well. What's most important for us is regulation. So the reason we're very strong in The US, we have a significant revenue stream from The US is the regulation there drives customers towards our technology. That regulation FIPS two zero one is starting to expand. So it's driving more use of stronger authentication down the entire organization and also down the supply chain. So there's some significant growth opportunities there for us in The US.

27:40 Probably a bigger change for us is in the EU. So there's been a lack of cybersecurity regulation that drive people towards a particular type of technology for a long time in the EU, but that's changing. There's a regulation called NIS2, Information Security Directive, which affects about 50% of the companies in the EU. That's now being passed at the EU level as legislation. And that states that by October 2024, each member state must have enacted its own cybersecurity regulation, I. E. Law. So that's starting to drive people. And they will have a time to comply with that, but everybody's starting to look at this and how do I need to be compliant? So that we believe will drive the market in Europe towards a higher level of authentication.

28:28 And that's one of the reasons we've brought that high security element FIDO pass keys into that mid market product. So looking at where we're investing, I won't go through all of these. I'll just pick some key elements on here. So the slide in front of you is showing our planned roadmap for each of the products in turn. This one's password security management. On the left hand slide, have where we are now. So what do we have today? Password breach database software to help protect people. On the right hand side with the dot dot dot, these are elements we're investigating as research and development. We continue to invest in that, that we will bring into the product at the appropriate time. And in the middle, we have the first half of the financial year, second half where we're investing to cover new opportunities. The So key one I'll pick out on password management here is enterprise password management.

29:16 So it's not just looking after the security, is this a secure password? It's being able to provide password management and single sign on experiences into applications. So we'll learn the password, we will scramble that password within the workplace, and we will replay that an application to give somebody a single sign on experience. I'll come back and show what that looks like in a couple of slides time. On the multi factor authentication piece, we're really turning this into an access control solution. So we are deliberately not trying to compete with the likes of Microsoft or Okta who provide these capabilities for very large organizations. There we work with them and we have connectors to them. We add value to them by providing the credential management.

30:04 But there's a significant population, particularly in Europe, there are smaller organizations who don't have the IT skills in house

30:12 and to deploy something as complex as an ENTRA ID or an Okta. So we believe working with the likes of the Gartner analysts, looking at what the competition does in this space, there's a gap for a product that brings that capability down to the mid market. So I'll explain on the next slide what we mean by access control. So this is really taking the product we acquired, we've now rebranded and are taking to market as part of the MyD family, but adding value to it. So we can upsell into existing customers, new capabilities, new modules, but we can also target net new opportunities with it. So on the left hand side of the slide, we have somebody accessing the system with strong authentication. Typically in the mid market, that will be their own phone because it avoids having to buy expensive hardware tokens. But we can do that with that FIDO pass keys that brings that level of stronger authentication and phishing resistance.

31:06 Once they logged onto the machine, they're then presented with the applications they're allowed to access. So this isn't just authentication, is it really SAM? This is authorization, what can SAM do? With modern applications on the top right of the slide, they support protocols called federation. So that means sharing identity between system. So for those, we can simply provide a single sign on log on experience to those applications, strongly authenticate once we can let you into the other applications. The reality is though, particularly in healthcare, finance and some military as well, there are some legacy applications that still use passwords.

31:46 So what we'll be able to do there is for those applications, we will have scrambled that password, we will have learned it, we'll play it into the application to let that people sign on, but only once they've strongly authenticated into the system. So this believe, we believe combines capabilities of modern authentication and password management in a single compelling application, very much aimed at that mid market who need high levels of security.

32:15 For the credential management system, what's key for us is keeping it at the top of the tree as the best product on the market. I realize I'm biased thinking it's the best product on the market, but luckily, we've had independent analysts such as publishing reports on this, conversations with Gartner we have. And some of the significant wins we've had in The US, we believe give us very credible evidence.

32:40 A lot of our large customers who buy this product tend to look ahead. So they're looking five or ten years ahead. And what's really important to them is that they're working with a vendor who's still going to be investing in this space in the future. Just picking a couple of recent examples, one of the large contracts we won with the US Federal Agency, as part of their request for proposal, they were looking at mobile identity, so mobile identity documents. And then we're looking at FIDO, how can I bring that into the enterprise space with those FIDO pass keys? Because we continue to invest in the product, we were able to through our prime contractors, we were able to demonstrate this to the end customer. So we weren't showing PowerPoint slides on how this work. We were actually showing this working in the product. And that's really important to the customers.

33:27 They're concerned about artificial intelligence and how it's been used to create deep fakes and scams. They're concerned over post quantum, where you can have more powerful computers that could potentially crack cryptic keys. We're already working on those. So we're working with partners to look at how we bring that into the product and bring that protection to our system ahead of when our customers need it. So we continue to invest. So hopefully that gave you a quick overview of where we are with the products. But to summarize, we've got a strategy at the top end of working with the very large players. On the mid end, we have a strategy of providing a cheaper, easier to deploy alternative.

34:12 And down the very bottom of the market, we have a strategy with partners, but I'll let Clas talk about that.

34:19 Thank you, Jan. So if we then try and wrap up and summarize the reporting period. Clearly, as Alan has indicated, there are some real solid market drivers that point towards the use of our type of technology, whether that's US regulation, whether that's

34:38 newly formed European legislation that really works well and is favorable for our software offering and particularly our partners and channels are taking that to market. Second point is we've clearly been expanding our product portfolio. Again, two years ago, we had a single product line. We now have three product lines. The product lines are fully integrated, and we're bringing high end functionality available in mid market product by adding Phytopas keys into our MFA offering.

35:12 Pricing wise, we're offering now full flexibility in terms of perpetual as well as subscription, which gives not just us flexibility, it gives the partners flexibility, but also the end client flexibility. We tend to get a lot of questions on this about, you know, can't you just drive one or the other?

35:30 Ultimately, we take the view that the customer requirements come first. If the customer has got a strong preference for a CapEx model, they will probably go down the perpetual route. However, if the customer has got a strong preference for an OpEx model or a combination of the two, we can now offer the full flexibility from a pricing perspective. Fourth point, revenue margin and profitability focus. That's something which was extremely high on the agenda when I joined six years ago, because we were pretty much running out of cash. We were loss making the year before. Good news is, over the last six years, we've been profitable, we've been steadily growing. Clearly, last year has been exceptional year in terms of revenue growth, and we also have good plans to continue to drive that. Cash conversion, again, has been strong, particularly in the last year. But if I go back six years, we were well below £2,000,000 of cash. We had a 5,000,000 convertible out there. Today, I think, reported end of May eighteen and a half million cash. We have got no more convertible and we've done an acquisition, which again, we paid through cash. So ultimately, our cash position has materially improved compared to twenty eighteen, twenty nineteen. And that's also the final point on here that our balance sheet is very clean, very tidy, very unleveraged.

36:49 And obviously, it gives us more firepower, particularly on the back of the cash we have. So we've made good progress. We had exceptional performance in the last twelve months, but we also feel we've got momentum. It's not just the momentum in the last

37:04 twelve months, but we've carried that momentum that we had in the prior year into last year and we're carrying that momentum going forward. So the other question we tend to get a lot is, okay, you got a lot of cash in the bank, what are you going to do with that cash? And we want to be clear on this that part of that cash will be ring fenced for M and A. Now, if we start on the left hand side, that's the pyramid we've basically been talking about for the last probably three to four years by now, where we started initially only covering the PKI side. We then build functionality, FIDO PASCI functionality into our CMS offering. And then we said, hey, this pyramid is also a very good reflection of relative market size. Clearly, the top is a lot thinner than the middle and the bottom end of this pyramid.

37:53 So we then had lots of conversation at management team level and also with the board and said, what do we do? Because we can see there is a market now, we can see our clients are using MFA, our clients are using password security management solutions, but, you know, what will it take to build? So questions you continue to ask yourself, do you partner? Do you build? Do you buy? When we looked at the MFA side, we said, look, it will take us two to three years to build a credible MFA offering into the MyID portfolio. But at the same time, we knew that the regulations that Alan was talking about in The US, FIPS two zero one, and now NIS two in European Union, they were moving a lot faster than we could actually physically build net new products. So we decided to go down the acquisition route.

38:38 So what this pyramid is actually reflecting is person identity, employee identity, as I referenced in my initial slides. But as we all know, pyramids have got different sides. So from an acquisition perspective, we want to look at, you know, what are the other sides of the pyramid. And, yes, some of the areas we're looking at is, for instance, one person entities. We're good on the person side, but there are also certificates being used on Wi Fi router service, etcetera. So that's an interesting play. It also plays very, very closely to what we do because even some of our existing customers already use MyID, CMS, for instance, to manage nonperson entities. We turn the pyramid one more time, we get to an area, particularly in The US, where President Biden has announced a new cybersecurity framework, which is called Zero Trust.

39:31 Zero Trust is more of a concept. It's not a single product, but it's an approach, and the federal agencies will have to comply with that over the next three to five years. It's not a single shot. It's not a single solution, but it's a combination of multiple products. There are five pillars within the Zero Trust framework. Pillar number one is person identity. Well, that's the pyramid on the left. We understand that one. Second pillar is devices. Well, devices is the non person entities I talked about. Third pillar is application. Fourth pillar is network access. Final pillar is data. Data is probably less tightly aligned with what we do in absolute terms, but in relative terms, we clearly deal with a lot of data as an application.

40:18 And then underneath those five pillars, the framework talks about orchestration. Orchestration is something, again, we're very, very familiar with on the top end of this pyramid in our CMS product. So on each and every angle of this pyramid, we will evaluate whether we partner, whether we build, whether we buy. One of the partnering opportunities that we're pursuing at the moment is the the SMB part of the market, which is clearly an area based on our client base we've never been particularly active in, but we're in active dialogue with partners. We've got a first partner in Germany who is pursuing this, who is actually serving the SMB market in a managed service model or MSP model or managed security service provider model. So that's quite good for us because the partner takes care of the entire sales engine and the support engine. The only thing we do is provide code.

41:11 So we're clearly quite clear on what we want to do from an acquisition perspective, but at the same time, I repeat what I said earlier on. I do not see INTERCEDE as a buy and build. I see INTERCEDE as a company that's pushing for organic growth, double digit organic growth. And as and when we find the right acquisition, we will try and bolt it on based on the paradigm we've just discussed here. So if we then look at outlook, we clearly had an exceptional year and we believe we're very well positioned to maintain strong traction going forward. At the same time, we need to invest. We continue to invest in colleagues. Last year, we had 13 net new colleagues. We're heavily investing in our internal IT infrastructure.

41:56 We're heavily investing in product development, and we're spending significantly more money on marketing. On the marketing side, a lot of that is driven towards events at the moment. A couple of weeks ago, three, four weeks ago, I was in Dubai attending the largest cybersecurity show called JISEC out there. Again, we are participating on one of our stands, one of our distributors called Shifra, who had a very nice, well developed stand. And as we all know, in The Middle East, relationships are absolutely key. It's very difficult for a company like INTERCEDE to build its own relationships out there. So we use distribution partners who have existing relationships, who have the contacts with the reseller community. And we had a very successful event, and we are pursuing multiple opportunities on the back of that. I've already talked about the pricing strategy.

42:49 We can now offer full hybrid pricing. Interesting in that approach is that we're pursuing some opportunities at the moment where multiple system integrators are bidding the INTERCEDE solution. Some of the integrators choose to go down the perpetual route, others choose them to go the subscription route. And ultimately, the client will decide what's best for them in terms of budget. Final couple of points here is, you know, we have good visibility in the pipeline. Our investments are all planned out. And the balance sheet, again, as highlighted earlier on, has got very strong cash flow and we got real strong growing recurring revenues.

43:35 Acquisition was the previous slide. I believe we've got a very strong strategy that we're pursuing. But as Nitol referenced earlier on, we're very balanced on that and we're also quite cautious in that approach. We have issued a number of LOIs in the last twelve to fifteen months, but we decided not to pursue them as we went through due diligence. And then final point, we believe we're exceedingly well positioned to deliver on the medium and long term aims of the company. We have a stated ambition to double the revenues based on 2023, and we believe we're well on track to achieve that. At that point, I think I'm gonna hand over to Lily, if I'm correct, or if we go straight to q and a. Lily, please advise. A class, Nittel, Alan, thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

44:46 As you can see, we have received a number of questions throughout today's presentation. Please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Thanks very much, Lily. Right, we've got quite a few questions, so let's go through them. First question is from Ellen W. Thanks for your good work over the last twelve months. Your outlook statement seems to be a literal copy and paste from last year, which suggests it's not a nuanced reflection of the current state of play. Could you please give some color on how you feel versus this time last year, particularly with respect to the pipeline of opportunities where you can please quantify the weighted pipeline average opportunity size or at least sizes of the above relative to twelve months ago. Not sure. I completely agree that it is a complete copy and paste because it'd be very difficult to do a copy and paste based on record revenues of of 20,000,000, but I do get your point clearly that there there will always be some repetition.

45:42 With regards to pipeline, we do not disclose pipeline or pipeline growth or weighted weighted value pipeline weighted values in into the public domain. But what I can say is that we got extremely good visibility in the pipeline, and we believe there is enough value in the pipeline, both in terms of absolute as well as weighted volume to deliver the budget. Just to provide a bit of extra color on that, I manage the sales engine myself. Every Monday, we have a sales review with both sales teams here in The UK and in North America. And if anything, I know because of my cautious nature nature that the value of the pipeline is understated. So hopefully, it provides you a bit more color, Alan w.

46:27 Gary B, next question. How do you plan to make significant cash generated from operating activities? Nital, one for you. Thank you, Klas. I think hopefully this slide in capital structure tells you what we're One of the things I forgot to mention on that slide was that we have a strict internal working capital policy where we ring fence six months of operating expenses, the bulk of that being payroll and lease commitments, just to give us the buffer and the ability to continue investing and having no debt has the comfort zone for us. It does mean we have excess cash. We're not saying we don't. We're looking to do an M and A strategy.

47:12 We're looking to see how that pans out. We have a head of corporate, internal head of corporate who's got a very long list, 200,300 targets, which is shortened down to a 25 targeted list of which we focus on that. It's not easy. We are looking at that. We are looking internally obviously at some of the things that Plas mentioned on the growth pillars, whether we're going to buy, build or partner. If we're going to build, what is that going to look like? How that's going to pan out? Are we going to do a I assume the question is implying on a dividend policy at the moment the board has not decided as not planning to do a dividend policy at all. So we're looking at investing continuously into our product, ring fencing, being cautious about how we approach the future, but also looking for an M and A in a controlled environment and putting our cash as we see fit in UK institutions, are giving hopefully four four point five percent of interest income in the coming year.

48:15 I hope that answers your question. Thank you. Next question is from Gary B. How do you plan to utilize this oh, sorry, we just don't let one. Sorry, that was Gary. Next one is Roger. Do you have regular increases in support and maintenance prices at least in line with inflation? Generally speaking, the answer to that is positive, other than where there may be contractual restrictions where we we can't do it. But generally speaking, we're pretty, pretty firm with applying inflation on the support and maintenance revenue stream. Ignacio, Fantastic performance. Congratulations. How big can the company grow without any acquisitions in future years? Secondly, what are you looking what are you looking for?

49:00 What what areas are you looking for acquisitions? I think second part of that question, we kind of indicated what we're doing. The stated ambition, again, is in the public domain. Step number one is we want to double the size of this business based on 2023. And to be honest, I don't see any real restrictions. I always use internally the example of a company called Cerulean. They have managed to find a breakout. I do not see any reason why INTERCEDE couldn't pursue the same trajectory and significantly grow beyond its current shape and size. So that's IGP. What opportunities or threats, if any, have been identified in respect of AI? Well, I think Alan has been very, very patient.

49:45 No problem. So in terms of threats, it's fundamentally increased use of AI to create phishing scams or spear phishing, which is particularly aimed at an individual that are very, very difficult to spot. So you may have received an email saying, hey, could you please click this link and review this document for me? It's now de skilling cyber attacks so that somebody could send me an email saying, hey, Alan, it's class, can you review this document from Nittel? And no person has had to go in and get that information. AI can get that from social media, get that from websites. It can craft very difficult to spot phishing attacks. I'm on a company website, I'm trying to log in, I put my one time code in incorrect, please try again. It looks like I'm on the same site, but I've actually been taken to a site that's just a replica of it and it looks identical. So AI is out there doing that. Even some deep fakes video with people looking like people that they're not really that artificially created.

50:44 So the effect that has is to drive people up that security pyramid towards stronger authentication, where I can't accidentally provide my one time code on my password to somebody. So it's driving people up towards Fido and it's driving people up towards PKI. From an opportunities perspective, there are some interesting security organizations out there who are starting to use AI to predict behavior and track behavioral biometrics. How am I holding the phone? How am I typing? So we're looking at potentially bringing that in as an additional forms of authentication about the person. Thank you, Alan. Next question is from Ian H. I've read a white paper article on your website. This was a collaboration with Device Authority about IoT in the healthcare sector. Is this still ongoing? And if so, do you expect to form some kind of partnership with device authority? Alan, you want to answer that?

51:38 Yes, sure. So what we want to do, Klaus talked about the other phases of the pyramid, device identity is one of those phases. But what we want to do is really understand that market before we build something and understand the opportunities. Then we make the right buy build partner decision. So what we've found from working with the likes of Device Authority, potential working with them there is we believe the best fit for us for device identity is closer to our enterprise space. So firewalls, printers, routers, for example, servers have identities that are based on certificate. And that's the best place for us to actually either acquire or building. IoT identity we've learned is a little different. So yes, there's an ongoing relationship there, but that particular one is unlikely to turn into a partnership unless the market changes. But we've learned from that experience, it's influencing where we actually acquire or build product.

52:35 Next question is from David B. INTERCEDE has done exceptionally well in the government sector, which other sector or sectors are you targeting? I actually think one of our slides, if I recall correctly, in the appendices shows some of the other sectors we're operating in. So it's not just government or US federal. Broadly speaking, anybody who's got something to protect, whether that's banks, whether it's healthcare companies, defense and aerospace players, companies who provide mobile networks, we've got a mobile connectivity. There's a very broad space that INTERCEDE can offer its services in. Clearly, a PKI perspective, you're absolutely spot on. That's very much geared toward the very high end, but definitely when we look at multi factor authentication, password security management, it's a much broader kind of field of play when it comes to client opportunities.

53:40 Next question is from United Healthcare has suffered a very costly hack. I can see they are a client of INTERCEDE. Does this mean this hack has somehow overcame our authentication system, or have we been brought in to help UnitedHealthcare to improve its security? Alan? Yep. So familiar with the hack, medical data got lost. There's been no details of how the hack happened released. So there's no information on how it actually occurred. I'm absolutely positive it was not overriding any authentication technology we've provided. And the reason I'm confident in that is we don't invent these standards in this security. We follow the standards that NIST published. We follow the standards that our own security authority published. So we use the gold standard of authentication. We don't invent anything proprietary here. And there's no information that any of that has been compromised.

54:33 But on this particular one, there's no information yet available from either the organization or the organization that hacked them on how the hack actually occurred. So there's nothing further I can add to that at this point. We're getting close towards the end now. Question from George O. Thanks for the presentation. Can you give information on the expansion rate from customers? Also, the industry is talking more about platformization in between inverted commas of security products. Are you seeing this? So if I take the first half, Ellen, you take the second half. We're not providing any insight about expansion rate, I. E, the land and expand from existing customers. We don't provide that data. But what I can say is we are very good on the land and expand side.

55:19 We have a customer success manager who basically drives the adoption rate of the software. So this is definitely something very high on our our radar screen, and we're extremely, extremely motivated and skilled to drive the adoption of our software within our client base. Alan, can you take the second one? Yeah. Platformization. Platformization is basically building security into the operating system. So it just becomes part of the platform. That's very much on the large scale customer side. So if you pick Microsoft Intra ID as an example, they're building more and more security features in there. That's why we don't try and compete with them. That's why we have a works with strategy. So I was in Redmond a few weeks ago. I'll be back there again in July. FIDO pass keys is a big thing for Microsoft.

56:05 It's built into the operating system. So where does INTERCEDE play? INTERCEDE play because at that high level of authorization and security, our customers want to manage and control those pass keys. So even though Microsoft provide that capability, we can use our credential management system to allow them to combine those high security policies, FIPS to a one and work in that environment. If you look at something like Zero Trust, there is no one product in the world that can meet Zero Trust. It has to be systems working together. So even though more and more is becoming part of the platform, there are still significant opportunities. As long as we work closely with the big players like Microsoft and work out where we add value to them, there's still significant market growth for us there. I'm just checking the board. I think we're all done. We've answered all the questions. So, Lily, back to you.

57:00 Class, Nittel, Ellen, thank you for answering all those you care from investors. And of course, the company can review all questions submitted today and will publish those responses on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Klas, could I please just ask you for a few closing comments? Yeah, so a couple of final words in closing. We're looking forward to continuing our progress into the current fiscal year. Our offering remains very relevant, if not more relevant than ever, as witnessed by the daily stream of data breaches. Alan has explained how we are now positioning Mighty CMS, Mighty MFA, and Mighty PSM, and how we aim to take advantage of our enlarged target account market, which we serve through our distribution channel. We've got a highly committed and loyal team of colleagues who day after day deliver the best code in our industry. And I'm absolutely convinced that we write the best code in our part of the industry. It's witnessed by the client base we have, it's witnessed by the number of partners we can attract. It's also witnessed by the fact that we have very, very few support cases coming into the business once our code is being used in production.

58:10 Of course, we aim to deliver continued revenue growth, both organic and inorganic, as well as profitability, and we believe we are on track to deliver that in the current fiscal year. Please do take your time for feedback on this session. We do take it very, very seriously. I'm sure you're all aware we recently had our Capital Markets Day on the May 23 and that recording is available on the IMC platform. Thank you again for attending. I think we're stuck within our time at fifty nine minutes and we look forward to updating you all again in November. Thank you very much.