Pci-Pal (LSE:PCIP) — Results for year ending 30 June 2021 and prospects

0:03 Good afternoon, ladies and gentlemen, and welcome to the PCI PAL results presentation and update on prospects. To start with, if we could cover a couple of housekeeping items. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen only mode. However, 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, or if anyone has dialed in via PCIPal at Warbrook p r dot com.

0:35 The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where appropriate. These will be available via your investor meet company dashboard. Finally, we would like to remind you that this presentation is being recorded. I would now like to hand you over to chief executive James Barham and chief financial officer William Good. Thanks, Tom. Welcome again to another PCIPower update. Today, we're gonna be covering the full year results to end of June twenty twenty one. So so thank you for joining us through the this IMC platform, which we've been using for eighteen months to two years now. So we're starting to build up a bit of content through IMC.

1:24 So I just wanna notify you of that so that I can try and minimize some of the time we spend on the background through the presentation to allow more time for questions, which has been some some constructive feedback we've had on the previous two events. So if you do need background information, do view some of our other videos or you can read up on those through the annual report when that's released. Okay. So into a bit of background. So PCIPL is a fast growing SaaS business. We're a fairly small company, but we're growing quickly. We're we're now nearing five years into this journey since we we separated from the previous group within which we were established a year or two before that.

2:09 And in terms of what we do at PCI-PAL, we facilitate secure payments. So we provide technology that secures credit and debit card data primarily for organizations that handle payments from from consumers. And we do this securing of payments across all business communications environments. So what we mean by business communications environments are voice primarily, so across phone calls, but also more commonly now through digital interactions as well such as chat, social, email, which are commonly found within the call center mix or or what's known today as a contact center. And it's kind of hard and fast rule with this, I suppose, is if it's not on a website or in a store, then we generally get involved in it. But not only do we secure data, but we enable compliance as well as there are, you know, a growing number of data security standards across the world impacting companies today, all day, every day pretty much.

3:09 Now now PCI compliance or PCI DSS, the payment card industry data security standard is the main security standard that that that we help our customers to comply to by by by using our technology. And that's a fairly complex set of rules that govern how companies handle and protect cardholder data that they handle from from their customers themselves. Plus on top of that, you've got a raft of other regulatory compliance requirements around data. The most well known of which in Europe being GDPR, but you've got all sorts of stuff cropping up globally, including state level regulations in The US such as the California Consumer Protection Act. So, you know, the the need to comply with these standards is only growing and PCI compliance itself is seen not only as essential for sensitive personal data, the most easy to monetize data, which is payment data, credit and debit cards, but it's also seen as a very strong foundation towards other security requirements as well.

4:13 Now just finally on us, we're we're a cloud only company, so we have a true SaaS product set, and we can, as a result of that, deliver our products anywhere in the world. But to date, primarily, we've been focused on the The UK and The US markets. On the top right there, you can see we have three core products. So we're fairly simple. We have agent assist, which is secure payments for live agent and customer calls, and this is the most commonly used of our products amongst our customers. We also have digital, which we launched in January 2019, and that's an extension to to agent assist and enables secure payments through any number of digital channels like those I mentioned previously such as web chat, chatbots, social. And this is an area within contact centers that we're seeing growing.

5:09 And then finally IVR, which is automated phone payments. So press 1 for this, press 2 for that. But we also have fully speech enabled versions of both the agent assisted solution and IVR. Some examples of some of our partners on the slide there. We're very much a channel first business, so the majority of our business goes through channel partners and in particular goes through resellers, which all six of those are on that slide there. Have a bit more on our partners later. And then finally, we have our values on there and some of the awards which are which are increasingly being linked to to the quality and achievements of our people within the business. And we're a very people and culture focused business, and and we encourage our values within the organization all the time. So for me, it's extremely important and especially so throughout the pandemic and almost even more so now as we enter this kind of post pandemic world where we're in a highly competitive jobs market. So it's extremely important for me that we're focused on people, development of current people, how we hire, and how we how we retain people.

6:17 So that that gets a big focus from us. It's it's our biggest cost in the business after all. So, you know, with all this in mind, we're building some real momentum in this business. That was a key word within the report that we posted on Monday. It's where we believe we're outperforming the competition in our market now in many areas of of the business.

6:44 In the year, we've seen very strong increase in revenue, up 67% to 7,400,000. So we're very pleased that by getting to that point, we beat our our market forecast. So, you know, it wasn't surprising for us to get to that point because we have a, you know, very forward looking revenue model. So we typically have very high revenue visibility looking out the next twelve months in this business, and we have the same today as we look out into FY '22. So we know we know what's coming down the track quite well. And the key metric that we talk about related to that visibility is TACV. So this is the total annual contract value or the total annual recurring contract value of all contracts we have signed to date, whether recognizing revenue or not.

7:34 And TACV has continued to grow substantially to 9,500,000 at the year end. It would have been nearly $300,000 more than that, but for the exchange loss against the US dollar, which William will talk about more in a moment. But we do highlight heavily TACV to investors as it is that key growth metric. It is the future indicator of our recurring revenues, is critical for us as a subscription based SaaS business.

8:05 I've been personally very pleased that we've achieved our sales goals with a significant uplift in new customers as well. So 79% more customer contract signed in the year compared to the prior year. And the reason I'm particularly pleased about this is because I I really feel it justifies our strategy to be able to serve the majority end of the contact center market, which in the main, as those of you that know us would have heard me say before, in the main, it is the small to mid size end contact center operation. So it's it's really pleasing for me to see us hitting our numbers, beating our numbers off the back of that strategy being being a success because it's what we, you know, we set our stall out on. And for those of you that that do know us well, you'll know we've invested a lot of time and efforts into improving our delivery capabilities since not long since I took over at the beginning of twenty nineteen. We've got a real focus into this.

9:02 So it's been great to see this big uplifting customers, but we've actually been able to maintain our strong delivery performance in line with some of the big improved averages that we had from the prior year. So that key metric that we have in our report is time to go live or TTGL and we've been able to maintain that which is great to see even though we we almost almost doubled our customer numbers. And then we, you know, we try to be as clear and concise and transparent as we can be with our numbers for our investors. And keeping with that, we've now started to report on a new key metric that we're going to be talking about which is NRR. So that's our net revenue retention. So that's in the top right of the slide there, which at the year end is strong at 111%.

9:50 So effectively, we're selling more to existing customers than we're losing. Know, we're we're really starting to step up our game around customer success. We've been talking about customer success for the last twelve months. It was part of the fundraise recently. And this is the function that really drives focus into retention, upselling, minimizing churn. And I think, frankly, that's an exciting opportunity in terms of what we can achieve with with an increased focus into that. But we've we've got us no doubt, we've got a strong starting point to to work from. And then in terms of non financial highlights to the bullets on the right side of the slide there, we formed the PCI Power Advisory Committee in September, which we talked about at the interims.

10:37 We called it the PAC PCI Power Advisory Committee. And and that really allows us to add more breadth to our knowledge base on the board, but also on the management team as well as we're strategically plotting our path over the next five years, this evolving five year plan that we're we're constantly working on at the moment. We added

10:55 the first member of that committee who's now been working with us for a year, a lady by the name of Nira Jones, a real payments and cybersecurity expert, was formerly head of payments at at Barclaycard. And, you know, we're really enjoying working with her. In fact, we're really enjoying working with the format of the advisory committee, and the the input from that committee to myself and the board is is really carrying some real real value for us. And and also subsequently since the since since the financial year end, we have added another two members to that advisory committee as well. And and I would point out as well that it's a pretty cost efficient way for us to gain this additional insight too. You know, they're not they're not non exec directors. They are advisers, so they have minimal time inputs. But sometimes it's just a a knowledgeable answer to a question that we're looking for.

11:46 So it's been really, really quite useful for us in terms of long term strategic planning. And keeping with the the theme of expertise, during the year, we brought into the business a new CTO, chief technology officer, Mufty Monin, who joined us in late April, early May. He's he's held numerous senior tech leadership roles across payments or more broadly fintech communication communications as well. And and this was a planned activity going into the year, so it was a big big job of mine going into the year. We knew that our previous CTO was was was reaching retirement, so we always knew going into this that we would be hiring a new CTO. So very positive feedback from the business after an extensive recruitment process for for him and personally, and I know the management team believed this too. We're very excited to about the year ahead and how we can continue to work closely with him and see the positive impacts on the business.

12:49 And then finally, the fundraise that we had at the back end of April, which was gearing us up for a new expanded plan, in particular, the additional regional geographic expansion. So I do have an update at the end of this presentation to let you know how that's going in terms of timing of our execution against those plans.

13:11 Okay. So I'll keep this quite high level, but from a strategic perspective, we have three core pillars that we talk about from a from a strategy standpoint. Cloud to be the leader in true cloud solutions in our space, to be able to deliver those solutions anywhere in the world, leveraging cloud, and to be able to achieve scale by selling through channel partners. And in particular, that's that's reseller partners.

13:41 Narrowing down into the the channel sorry, the cloud pillar there. This is a a key competitive differentiator for us. It's one of the key reasons we've been successful with partners. Many of those are cloud vendors themselves, but it's it's also a reason for our capability to serve the majority small to mid size end of the contact center market as well. So light touch, easy to deploy services are pretty critical when you're selling to to small to mid size enterprises. But but also, like like many of our partners, we are hosted in Amazon Web Services. So the vast majority of our cloud partners are hosted in Amazon Web Services. It's the leading virtual hosting provider globally, and it also allows us to be entirely agnostic to whoever we're integrating to as well.

14:29 So that that that that's a nice side benefit to it. But we've got far more detail in previous presentations on the infrastructure and the cloud cloud technology and also in our AR as well. So

14:42 I'd encourage you to please watch previous presentations on that, and then I'll I'll move forward so we can can get to the financials before we're too late and plenty of time for questions. So the one of the other pillars I was gonna draw some more focus into is is channel, which is another competitive differentiator for us, not against all of our competitors, but but some of them. And we do sell primarily through through resellers. So as I said earlier, it's channel first approach. So that means we do still sell direct and some of our largest customers, you know, four five thousand seat contact center plus, we have actually sold direct and that's purposely why we retain the ability to to sell direct. But as you as you can see from the bullet points there, this this is the second year we've generated 78% of our new customer contracts through channel partners And that's just a complete fluke. But we do expect generally it'll be between 7585% is where it'll typically hover. And then direct business, we'd anticipate being around the sort of

15:45 20% mark. But as a business, we're very committed to channel. You you can't play at channel. It needs to run through the organization, the whole organization top to bottom. So so since day one, we've we've really tailored our recruitment strategies, our product development strategies around this goal, and we focused them on on our ability to succeed in the channel. And and I really believe this is why we've been able to build the strongest partner ecosystem in our market. And, you know, some of the logos that you can see there, many of whom are resellers of ours, some of the best known names in their sectors. So we're really quite proud to to to be able to reference that. We do categorize our partners in terms of, you know, drilling down into the detail, into the strategy of how we approach the different sort of segments that we have within our partners.

16:36 So we give a full description of those segments in our our reports as well. So you can catch up on those there. I think though, I'm probably going to move on now to the financials with William. So on that note, William, I'll hand over to you and I believe you should be able to control the slides yourself.

16:59 Good afternoon, everyone. Thanks for joining us. So from a financial point of view for FY 'twenty one, the numbers, the metrics have been it's been a really good year for us. As you would expect, as a CFO, I I measure core KPIs. We measure against competition. We measure against what a good SaaS company could be. And everything I'm pleased to report is

17:26 greenlighted and, up towards the top quartile of of performance, which is very pleasing. So what I've done here is just lay out the key financial highlights, but not just showing this year and last year, but also trying to indicate the journey we've been on since we set off and launched our new Amazon platform in 2018. So you can see the the revenue growth has grown, 6067%, to £7,400,000. Next year's forecast in the market is 10,400,000, so we're expecting that journeys to continue strongly with another 40% year, year on year growth. Our gross margins continue to improve. They've gone from, you know, what was 42% in 2018 to seventy five point five percent. Why is that? Well, we actually own, the outright, you know, the Amazon platform we developed. We've, developed that all in house.

18:18 And so, it's a very high margin to us, 90% plus. Whereas the first generation platform we talked about, which we haven't sold since 2018, was a $50.50 revenue share, with a with a with a telco company.

18:33 Over time, I've always said in previous presentations that this margin will continue to improve and should get to 85%, 90% over time. The other key area we've looked at as we set up this business in two thousand sixteen, seventeen, and and positioned it, we've always said we want high sticky recurring revenues because that's the future of a business that grows long term sustainable, and ultimately good value. And I'm pleased we're we're continuing to make a good journey on that. Our recurring revenues were up another 4% to 88%, of all revenue. And I'll talk a little bit more about the split of that later on. The top right hand of those boxes, yeah, we are a loss making com company. We are on a journey having started the the you know, started the journey with 10 employees in 2016.

19:24 In late two thousand and sixteen, we're now 71 employees, selling worldwide with a new platform. That takes money, which is being funded by our shareholders, but we are delivering a loss before tax ahead of expectations because we've had such a strong strong year. James has already talked about TACV, and I've got a lot more on the next two slides, so I won't, talk about that too much. But the next box along is new ACV. We also have an annual metric of sales growth. You know, this feeds into the TACV number, and this is obviously carefully monitored as we expand and grow. And I'm pleased to say that's continuing to grow strongly. We're further investing in our sales cycle, which James will talk about. We're further investing in our, you know, our addressable market. So that should continue to to drive forward.

20:10 The deferred income box there, we're up 79% year on year. This is just a reflection of our business model. As a good SaaS company, you would expect us to, you know, charge some professional services fees upfront and things like that, which we get which we do, and I'll talk a bit more about that. But, also, we try where possible to charge annually in advance for our licenses. And, clearly, when those contracts are signed, we invoice for them. And those those in those revenues future revenues sit in deferred income in the balance sheet and only get released after we hit that TTGL number that, that, time that James was talking about earlier. So we can only start recognizing our revenue when, when, contracts go live, but it doesn't make doesn't stop us collecting the cash first.

20:58 As a result, our cash balances at the end of the year are strong at £7,500,000. We did have a top up, fundraise of £5,200,000 net in April, which is gonna be yeah. It which is pushing us into international expansion. And I can just confirm that we are debt free. So that's that's a an improved position and ahead of where we were expecting to be this time last year. Just talking a bit more about TACV now. TACV is probably the number one metric. I give you the analysis there on a half on half basis because it just shows how, yeah, the revenue and the future revenues build up in the within this business. So you can see we finished the year with 9.5%, million pounds worth of TACV.

21:47 That's up 41% since June 2020. Now as James indicated earlier, we have had a dollar headwind. It's a nature of being an international business selling in multicurrencies. So that dollar headwind, the dollar went from $1.25 at the, at the beginning of the financial year and finished at $1.40. That 15¢ movement knocked some £250,000 off our TACV value. But as I say, that's just a risk not a risk of doing business. It's just a nature of doing business on an international basis. I've also indicated there, similar to what I did last year, what I think the, TACV number will look like, in f y twenty two if we so, yeah, we're hoping to, again, grow it strongly over the next twelve months, adding another £3,600,000 worth of annual contracts to our to our business.

22:39 And that's 13.1. Sorry. Excuse me. That 13.1 will be you know, can be seen to underpin the f y twenty three forecast numbers, which FinCap have provided, of 13,900,000 revenue. So you can see we're building it up slowly and surely, and the business is getting stronger and stronger. On the TACB side, just a further analysis here. I split the TACV on the right hand side graph between, yeah, the European operation, which is the original business, the more mature business, and the North American business, which is the orange section at the top. We only launched in North America in f y eighteen. And so you you know, I'm very pleased to see how the sales growth is growing through. And in fact, the 2,800,000 number in North America there is, would have been north of 3,000,000, but for the dollar exchange rate.

23:32 The other thing that I'm pleased about is that Europe continues to grow. It's gone from, you know, £2,000,000 to £6,600,000. So we are winning good long term contracts with our clients. Now the box on the on the right hand side there breaks down the TACV, into, you know, what's live and what's going through our deployment. Because we can only recognize revenue, which turns up in the p and l, once a contract's live under IFRS 15 rules. And I'm very pleased to say we've had a very strong deployment year. We do all our deployments remotely. We don't have to go into customer sites. Our team have worked fantastically, and we've delivered £3,700,000 worth of annual contract value during the year. So I start the the new financial year with £7,700,000 worth of annual recurring revenue coming through the books, which is very important because that underpins what we're trying to do in f y twenty two.

24:27 You can see the in deployment. I've got 1,100,000 of in deployment, which just means the contracts are going through. They're gonna they're going you know, we're we're working with the customer to get them live and running. And then there are on hold projects, which is just waiting for resources to come through, and they'll eventually fade into the in deployment, number and then ultimately go live. They just take a little while longer. You can see the in deployment number has dropped by a million pounds. That doesn't mean we've sold less. Actually, it means we've been quicker at deploying. But also, the opening number, the 2,190,000, did include two very large whale, sized deals we signed last year, which had more than £900,000 worth of ACV value. Both of those went live in the first half of the financial year.

25:16 Just moving on and talking about revenue now. This is the recognized revenue, I. E, the the revenue that turns up in the p and l that I report to you. And, again, on a half and half basis, you can see how that's beginning to build up. The charcoal bars there show the recurring revenue, I. E, the licenses and transaction fees that we should expect or or which we have charged during the year and should expect to continue going forward. The orange bars at the top relate to the IFRS 15 treatment of professional services fees, And we released £860,000 worth of those in the period, which is up 46% year on year. So overall, revenue has grown half and half, 31%, which is in own right is strong, but year on year is 67%, and 88% of it's recurring, as I've said before. We don't treat professional services releases as recurring revenue even though they will appear for probably for a four year basis four year basis because of the treatment, eventually, will drop off.

26:20 Professional services are an important part of our business. We signed £1,630,000 worth of those in the business. So that's up 26%. So that 1,630,000 will start getting released to the orange bar sections over the coming years once those contracts, the underlying contracts go live. And, generally, it's released over a four year period. So those contracts alone will, once live, add £400,000 to our to our, IFRS 15 release. And as I said earlier, the the gross profit margin is continuing to improve. Now just looking at revenue visibility. One of the good things and one thing I really enjoy in this business is I can see, the revenue into the future.

27:09 Yeah. So long as we keep our customers happy and we work on customer success and our churn rates are are low, then, we will continue to deliver, strong future revenue from our existing customers. So you can see the fourth charcoal bar there is with the 6,500,000 in it. That that's the, revenue for this financial year. So we did 6,500,000 of recurring revenue, naught 900,000 of our IFRS 15 release, making it 7,400,000 for the full year. Now as at the 07/01/2021, we had £7,700,000 worth of annual contracts live. You remember that's from the, yeah, from the slide, from this two from the slides two previous earlier, looking at TACV.

27:54 I've also got no point £8,000,000 worth of existing IFRS 15 revenue to release from existing live customers. So as of the July 1, I've got clear visibility of £8,500,000 worth of revenue. The FinCap forecast out there has revenue growing to 10,400,000 in the year, and and so we have a gap of 1,900,000. That gap, can be filled from the existing contracts that are going through deployment or, from the on hold projects or the new sales that we are delivering primarily in the first half of this year. So we are well on track for achieving that growth. Just moving to the income statement. I'm not gonna hover too much about it because we've talked about quite a lot of it. The only one I would like to indicate here is staff costs.

28:46 We continue to grow staff numbers as we continue to expand and grow internationally, and we will continue into the future. And I'm expecting us to grow to, near a 100 employees at the end of this year following the fundraise for the international expansion. So but staff costs have only gone up by 14% to 6,300,000. They make up roughly 75% of our overheads, but that's is expected for a normal SaaS company. The other the other item I'd like to point out of here is, you know, is the exchange loss in the period, which has been, you know, driven by that US dollar rate moving from one twenty five to one forty. If you know? So for those shareholders that know us well, we've raised two lots of VCT money to fund the international expansion into America.

29:34 And so we have had to put that money in sterling across to The US, which obviously sits in The US in US dollars. And as the US dollar moves, we recognize gains and losses. And this year, because it's moved against us, we've had a £550,000 loss coming through the p and l. So the underlying operating loss is actually significantly better than the headline rates. Just so incidentally, there's a corresponding change in the balance sheet against that number. So it you know, it's a non nonmonetary movement. The other pleasing thing for the year with price, bearing in mind we entered the year in the middle of a pandemic, was the, you know, the cash generation of the business. Yeah?

30:20 My initial assumptions going into the business was caution. Yeah? People would like to you know, would sign contracts with us, but whether they will continue to pay us annually in advance was a question. And so, you know, we we took, you know, we took a cautious approach to to our cash generation. However, I'm pleased to say that, yeah, our business model wasn't affected by the pandemic, and we continue to sign new customers, yeah, up yeah. Yeah. In line with expectations, about slightly ahead of expectations. And then yeah. And as a result, even though we recorded an EBITDA loss of 3,200,000, we actually generated £250,000 of cash in operating active at operating activities. Why is that? Well, that's because our customers continue to pay us in advance for our annual licenses, which is, you know, as I said, referred reflected in our deferred income growth.

31:15 Overall, after we've taken our, you know, capitalization into into account, we used £763,000 worth of cash, during the year. Now that should be compared to the £7,500,000 I've now got in the balance sheet to to fund the future of the business, which is continuing to grow. So we are well positioned to finance that growth into the future. And just to remind you, you know, out of during the year, we fully repaid the £1,200,000 of debt we had. Finally, just on the balance sheet, there's nothing really to talk about here apart from our trade debtors. Our trade debtors, we don't have any, aged debts over a 120 old. It's a sign of a healthy business that our customers are willing to pay us as and when, there's no no arguments.

32:05 Yeah? And I'm very pleased that, that that has occurred. It's helped our cash generation clearly, and it's a key focus of the business, but it's sign of a healthy business. So, that's it from from me on the financial side. I'll hand you back to James now. But if you've got any questions, then please put them on the chat. Thanks, William. And, yeah, we are we are getting questions coming through. I've just tried to answer some of them as we've been going through, and we'll we'll answer as many as we can at the end. And then if not, we always go back and and and answer those that we are able to answer through the through the responses on the website as well. So, yeah, back over to me in terms of the divisional updates. So The US opportunity, we are investing further in regional expansion into other new territories, but we have in no way taken our off the ball in The US, and it remains the the largest regional opportunity that we have in this business. As William has just highlighted, the majority of our fund funds raised to date have come through North American before North American expansion.

33:10 The The US market is five to six times the size of The UK from a contact center standpoint. The UK is the second largest contact center market in the world, so it shows the substantial size of The US. But I will point out that 90% plus of that market is less than 250 agent seats. That's the small to mid size end of the market. Now in the appendix to this presentation, we do have some data related to market sizing. So we've had a number of questions around this. You'll be able to see in there The US contact center market actually grew in 2020 by around 3%. We saw the same in The UK actually. And the other thing I'll say about The US market is it's generally the center of the universe for many of the new high growth cloud business communications vendors, the CCaaS and UCaaS market, many of whom we're partnered with.

33:58 And I'm sure some of you will have seen the big news of Zoom acquiring Five nine for a fairly substantial amount some months back. So how are we performing in The US? Third full financial year since launching in The US, so another another real stepped increase in our ability to execute there. Very pleased with the increase at 60 over 60% to TACV, which as we say is, you know, it's critical indicator of future revenues growing that to £2,800,000. That's been driven by a 26% increase in new business sales. So ACV, that's that annual contract value that we talk about, the recurring annual contract value.

34:45 Actually, that was against a strong comparator last year as well, which included one of the company's largest contracts ever. So again, pleased to see that we've achieved that sales number through a significant increase in customer numbers showing that we really are accessing and can deal with that that very large small to mid size end of the end of the market. Revenue is still relatively low given given how long we've been there, but they are becoming more substantial in terms of the contribution to the group at 25% now. We've had some nice sales highlights in the period. Probably the number one is the in the top right for me is a large sports well known sports retailer across North America. They have stores globally actually. And not only did we win that large enterprise account, which is more than 1,500 agent seats, but we also got it live in record time. So they were live using our services as a mixture of in house and also home working agents within less than ten weeks. So that's that's less than 50% of our average time to deployment. So it just shows that even the very large ones, if you've got a fully engaged customer, we can move very quickly. Most of the time on deployments, we're waiting for our customers.

35:53 But if they can move quickly, so so can we. In amongst the new customers as well, we've signed numerous new Fortune five hundreds, well known brands building more credibility for us, giving us referencing opportunities as we we expand further. But but also there's customer success expansion opportunities within those accounts too. So once we've sold into one part of their business, can we grow into the rest? So we are starting to be much more proactive in that side of things. And then finally, a point that I've made before is that we put a lot of hard graft into winning partners and managing partner relationships in The US. Out of all of our global partners, there are a small handful who are not US headquartered organizations. The vast majority of the companies that resell our solutions are US headquartered.

36:40 So what we're finding is any of the good work that we put in in The US by the US team is not just benefiting new sales in The US, it's benefiting the the the group as a whole. And that can be seen moving on to the EMEA update, which is by majority our UK based business. But no doubt they've been benefiting from our activity in The US with some of our top performing partners in The UK being US headquartered organizations. Big step up in revenue for this division of the business in the year to 5,500,000. It's the most mature. It's where we're from. It's where we were launched. Another big uplift in the amount of customer contracts signed. So, you know, we're well in excess of 400 customers now, which is which is fantastic to see given the journey we've been on when we started on this not longer not more than four and a half not much more than 4.5 ago.

37:33 TACV is up a third to six point six point seven million and a healthy increase in ACV. So that's the new sales bookings that we made in the year of 12%. Now what I would say is that that's about right. That was slightly ahead of our expectations in the year. And we would expect whilst we expect to see new sales bookings increase year on year in The UK, While we're solely mainly focused on The UK, we wouldn't expect the increases to be much more than that purely because of the size of the market, the maturity of the market. So I'll talk a bit more about the expansion into Mainland Europe on next slide. Some nice sales highlights though. We've signed a really good number of strategic deals. We classify strategic deals as being worth more than GBP 100,000 annual contract value to us. So effectively, in terms of our license fees.

38:25 We signed a very well known UK airline just before the restart, who's live and very active using our service now. In the back end of the year, in our q four, we signed a FTSE one hundred utility company, so that's going through deployment right now. And we've continued to grow our presence in The UK government space. We are very strong in this space in The UK. We have over 60 government agencies that that are contracted for our services. That includes two of the largest central government agencies in The UK with more than 4,000 seats. The majority of the rest of them tend to be local authorities, local councils that are using our services. And some of that's direct, some of it goes through partners. We've got good relationships with Capita, Civic, 8x8, do a lot of business into public sector as well now. So, yeah, all all in all, very happy with the year in The UK and with The US and and looking forward to to pushing on further.

39:23 Now in terms of and there has been a question come in about this, so I hope this answers a couple of those questions. We were intending to update today on this expanded global reach piece. So this is the additional regions, the international expansion that we talked about at the fundraising was the purpose of the fundraise in April this calendar year. And we raised net 5,200,000 to expand the business further internationally to Canada, Australia, and Mainland Europe. And a smaller element of the investment was gonna go towards further investment into product development, product design, and also our customer success function, is driving that all important retention metric and protecting customer churn. Now, product as I've touched on in this presentation is really motoring for us.

40:12 We've we've we've we've significantly increased the size of our product capabilities. We have a highly capable CTO who's not only an engineering leader, but is also a product leader as well. So very pleased and personally, it's one of the things we're really looking forward to seeing evolve during this current financial year. So we hope to be able to update investors to some the new features and add ons that we come up with throughout this year. So just focusing in on the geographic expansion and how that's going. So we do already have, as a reminder to those that weren't aware from the fundraise, we have customers and partners in these new these three new territories already. This is about us being proactive with local teams working for us and not reactive using our remote teams, which is what we've been doing today for for customers in Canada or in Australia or in Mainland Europe.

41:09 It's ensuring that we've got people that speak the languages that those local businesses may may want to converse in as well. So we've prioritized Canada first. That is well underway. So we're we're intending to launch in Canada at the back end of next month, so just October. So you can imagine we're pretty close to doing that right now. That's gonna be a small team of mainly sales and marketing presence with an element of professional services in that as well. And of course, they naturally are supported very well by our larger US Team which covers sales, marketing, ops and engineering as well. Next on our list, just two months later, prioritized is Australia intending to launch at the back end of December. Very similar structure to Canada, difference being travel. So we're having to do that entirely remotely. But unlike some businesses, we've been growing quite quite a lot during these various lockdowns that we've had in both The UK and The US.

42:06 So we've become pretty good at hiring and onboarding and inducting people entirely remotely. So we're we're confident that we can do that with with Australia. And then in terms of Mainland Europe, this one is scheduled for the back end of the year. So back back into our q four. So so next spring summer time. The location of where we're going to launch is still to be confirmed. We've got a pretty good idea of where it's gonna be, but we hope to update investors later in the year in terms of that location. But no doubt that small team will be set up and capable of handling business not just in one country in Mainland Europe, but across numerous countries in that region. So, you know, we certainly feel that we can get quite a quick return on investment from our efforts in Canada and Australia given the sorts of business we have there already.

43:00 The fact that our partners have very strong presences there already. But long term, no doubt, Mainland Europe is the more sizable market. It just comes with some additional challenges which we're quite up for. So we're looking forward to when we get that point to that point. So a big year ahead for us. And just to wrap it out before we get to questions in terms of outlook, so, yes, substantial year of progress ahead. We do need to grow our addressable market through this international expansion piece. It doesn't happen overnight. So we have to establish these business units. We have to get the marketing moving. And as we start to do that, then we'll start accessing that address that additional addressable market. And until we get that in place, then then we won't benefit from that. So we need to get that moving so that we can start to see the sales coming through to start benefiting from from revenues as we get into our our f y '23.

43:56 I personally have a big target and a big focus which is also driven by the board as well on people. It's how I started this presentation with you and it's one of the points I'll finish on. It's critical for us that we hire the right people. We're we're hugely passionate about that. We only hire people if we're a 110% excited about them. So and we and we wanna protect the people that we have and develop those and protect our retention rates too because we're moving too quickly to have that that go in the wrong direction. We've made a strong start to the financial year. So we're only two months in, but to to make a strong start in what's felt like the quietest July and August ever in The UK and The US, if you talk to anybody in any industry, it sounds like we've we've had a good start to the year. So we're we're happy with that as we're getting towards the end of this this first quarter.

44:47 The investment continues into products, continues into customer success. We've got lots of hiring going on right now. And I'm looking forward to to working with our two new US based advisory committee members as well as we continue working on these long term strategic product plans for the business. So on that note, I'd love to move to some questions. Great. Thank you, James. Thank you, William. If we could turn to the questions, We've had a number of questions that were submitted ahead of the presentation. However, please do continue to submit your questions using the Q and A tab situated on the top right hand corner of your screen. I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published q and a can be accessed via your Investor Meet company dashboard on the Investor Meet company platform. Your feedback is important to the company. So immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback.

45:46 While you're submitting questions, let's first have a look at a couple of those submitted ahead of the event, but also a couple that we've already received during the presentation. I just like there are a number here that address forecast revenue and profitability expectations, and I would just like to redirect you to the FinCap research notes. So we can't really talk about the forecast numbers on this platform. But for those interested, if you go to the ThinkApp website, you can register as a sophisticated investor and access the research note, which was published on Monday and is quite comprehensive. So Adam b, for example, you say you mentioned in the last AMC IMC call you were in the process of updating your five year plan. Are you now able to comment where you think revenues could potentially get to in five years? That will be answered on that note.

46:37 Equally, for a and s, when will you start to be profitable? That will answer your question. David b, in what year do you forecast EBITDA reaching a breakeven point? That will be answered as well. So I'd direct you in that direction if I could for the simple reason we we can't address that here. But, James, if I could just group two questions together, and they're both related to the addressable market and growth rates generally. Please, could you comment on the size of your addressable market and who the competition are? What differentiates you from your competition? And also whether you could weave into that, do you have an estimate for the growth rate of your target market, I. E, excluding you taking more share, how quickly is the market growing? So it's a bit of an amalgam, but they're they're related. Got it. Okay.

47:23 Okay. So addressable market and and and size. So our our TAM, our total addressable market, we consider it to be the amount of contact center seats taking payments in the markets that we're focused on. So to the year just finished, that would be The UK and The US primarily. So looking at that, the TAM would be based on 2,500,000 agent positions across those two countries. So if we apply a value to that based on our sort of average license fees, then we would consider our TAM to be in the region of £300,000,000. We're we're expecting though as a result of that fundraise to grow that addressable market by around 40%.

48:08 So as we bring Canada, Australia, and Mainland Europe online, based on the analysis that we've done and the market research that we've purchased, we know that we can we can grow that addressable market by around another hundred, hundred and fifty, hundred and fifty million, which is one of the reasons we did that to push out the the breakeven points was to escalate our growth. Now the second question question was estimate estimates on growth rates for our addressable market. So if you look in the appendix, it's only The US, but some of our previous slides I think have UK in as well. You'll see that there's some data there in terms of that addressable market. So it's the amount of agent seats is generally what we consider it to be. And you'll see that and as I said in the presentation, US and UK contact center markets have expanded marginally by about 3% in 2020.

49:01 They are anticipated to reduce very slowly following 2020. Over the course of time, the contact center industry has generally followed the economy and that's typically what happens. It's not our belief that the contact center market is reducing in general. It is our belief and we believe that we're not alone in this view that what's happening is that it's evolving. So there's another slide in our appendix that shows you how the channel mix is changing and we're seeing a very slow reduction in the amount of phone calls traditionally what you associate with a call center and an increase in the likes of web chat and social media going into those environments. But they're all handled by contact centers. And contact centers very much certainly through the pandemic have even more so become the shop front for a lot of organizations that weren't actually able to have shop fronts anymore.

49:59 So so, yeah, it's it's not it's not that the contact center market is expanding, but we don't see it getting any smaller. And it is it is changing. And the the the cloud contact center market, if you're not aware of it, the CCaaS market is an interesting one to look at if you want to look at trends and the sorts of companies operating in those markets and what market analysts are saying about those those large highly rated organizations as well because there's some validation for what we're doing linked to that. Great. Okay. And another one related to markets, actually. Are you confident that you can still maximize the potential in The US while also taking on the new territories of Canada and Australia? Yeah. We are. Yeah. We're very confident we can do that. We we're we're still laser focused on The US. You know, my head of sales globally is US based in Indianapolis, my chief revenue officer.

50:56 At the back end of f y twenty one, we also created a new role, which was VP of sales US. So that's a specific country management role reporting into our CRO. So, you know, two of our most senior sales people in the business are sales leaders in the business are both US based. So, yeah, we're we're heavily we're heavily focused on that. The as we explained to investors at the time who asked us, why don't you invest another £5,000,000 into The US? And we we explained that it was about timing. So the The US does lag The UK in terms of adoption of some types of payment and security technology in terms of similar things to what we do. So whilst that investment over a long period of time is definitely valid, we think the timing of the way that we're investing right now is appropriate. But we felt that there were more immediate opportunities if we were gonna increase our investment spend to make in Canada, Australia, and Mainland Europe. But over time, no doubt, The US is going to pick up. And even just at the start of this financial year, we're very, very pleased with how our pipelines are looking, and we are anticipating quite significantly more growth in new sales business in The US than we're likely to see in The UK.

52:11 Great. Super. A quick question on channel partners. Are you continuing to add numbers of channel partners? Or is it more the case that the existing partners are showing consistent growth as your relationship matures with them? Yeah. Absolutely. We're very targeted about new partners and growing that ecosystem. We do it quite carefully because it takes time to onboard big partners. So we we ensure that we have the right resources to onboard partners that we have signed. But we do have realistic target list that we go after in the year business development objectives effectively that we we target our salespeople on. We we we segment our partners. So an area that we've been very successful in, a fairly new one which we've been targeting for the last sort of twelve months or so is the BPO space. So this is business process outsourcers.

53:05 Big big outsourced operations with 50 to a 100,000 agency. So we've been very successful there. We've signed a number of the largest globally who are headquartered in The US in FY twenty one, which is referenced in our our report. And also since the financial year end in our current trading, we announced that we signed a a large German provider as well as a pan European provider. So having some real success there. But, yeah, there's still there's still some CCaaS and UCaaS, the cloud communications vendors that we don't work with. So, yeah, no you know, you can make an assumption that we're we're trying to work with those sorts of organizations as well. Okay. Thank you. A quick one on time to go live. Your time to go live has stabilized at around five to six months. Do you see scope for improving this further?

53:55 Well, I'll start by saying that we've improved it a lot. So I think we've got it down from around seven to eight months in the last two years. So not far off halved it in the last two years. We can maybe shave a bit more off of that. Do do I think we can reduce it much more? The the main way that we will change we will reduce it more significantly will be if we are able to influence it further through our product. So how are our products integrated? How do we deploy with partners? What types of products are being deployed? It's more likely to be advancements in our technology and the or more advancements in the way that we're able to interact with our partners particularly and how they deploy that's going to influence that timing to go down.

54:46 So we're quite focused on that. I think in terms of what's within our control, our own due diligence on deals, documentation, how we run projects, how we do system designs and things like that. I think we do all of that very, very well, and it's very robust. So I think it really goes down to more products and improvements that we can make on the way that we operate with our partners. Okay. Super. Thank you. William, one for you. Losing a large amount of money through exchange problems sounds like there's no hedging strategy. Is that correct? That is correct currently. We didn't you know, the loss is non nonmonetary because it's just a revaluation of intercompany loans, the other side is in the balance sheet, as I said earlier.

55:31 But, naturally, we do have a natural hedge at the minute against the US dollar because we obviously sell in US dollars, but I've also got a substantial cost base in US dollars. So, currently, we are naturally hedged, so we don't see the need for a for a formal hedging policy. However, this is under constant review, and we will continue to look at it. Okay. One more for you, if I could. Please explain your policy about capitalization of r and d spend going forward. Is there a percentage of r and d that you will capitalize? At what point, if any, will you expense all r and d through the p and l? The capitalization of development is all linked to the building of our our our product road map, our features, our existing platform.

56:18 Each one is broken down into, you know, individual stories, if you if you want to talk talk technical side, and those are then looked at on an individual basis. So if the story has a long term view that's pan wide across our platform, then we have to capitalize it under I s 38. There's no choice about that. So as we continue to invest in that platform and further features, we will continue to, you know, have that capitalization. So to answer the question, do I see that, you know, ever being fully expensed to the p and l? No. Not at the minute. Not not for the short term because we are, you know, we are building our features, our product road set, for certainly the next few years. I do expect the the r and d capitalization to be around £1,000,000 a year still.

57:07 Okay. Super. A quick one on public sector. I understand you have Essex Council as a customer. Do you expect to increase university and local authority customers? We absolutely expect to increase local authority customers and government sector customers full stop in The UK. So that's a very key part to our our UK strategy. So, you know, we're we're proactively working with some of the largest technology providers into that space, and we continue to work very closely with them. And we do also work directly with some of the the larger agencies as well. I don't I don't believe we work with any universities today, though, I would say. So I'm talking primarily about local authorities and central government agencies.

57:56 Okay. Quick one here. How do you see the ongoing disintermediation of cardholder not present both by partners online sales strategies and the secular move towards digital wallets? How long until your TAM, total addressable market, starts to shrink? Well, what I will say on this is that we we put the advisory committee in place to to ensure that we can see these sorts of things coming. So the short answer is a long time until we we see anything shrinking. But no doubt, absolutely, there is a lot of change going on in the payments world right now, and it moves very quickly. So it's gonna be important for us to see what that change is and where it's coming.

58:41 As we know, contact centers are not going away. You know, customer engagement in that sense is not going away. So there should be opportunities further opportunities for us in the future related to other types of payment mechanisms. So we just need to keep a close eye on that. We're investing in product for a reason. We're we're we're investing in our, you know, strategic resources so we can look further ahead and see these trends before they start happening. You know, that we've we've got some some very long term ambitions for where we take this business. So, you know, the investments we're making now will allow us to do that and will allow us to capitalize on any change rather than it be a risk to our business. Right. Super.

59:29 Thanks for that. Just a quick one, and this this was slightly missed earlier on. The the question on competition and what differentiates PCI power was missed earlier. Can you ask it again, please? So that was in respect to our earlier questions in and around addressable market and what differentiates you. So Okay. Yeah. Well well, yeah, to to degree, we we did try to cover this in the slides. So what differentiates us from our main competitors? We still have very few competitors actually compared to organizations in other markets, certainly if you look at it on a on a global scale. So I would say that some of the main differentiators are that we're a pure play offering. So and and that mix together with our channel approach means that it's difficult for some of our competitors to be able to compete with that strategy because they're not pure play themselves. So it becomes more challenging for them to actually partner with other organizations who who may see them as potentially trading on their on their toes.

1:00:25 You know, I I reference cloud as a a key competitive differentiator for us. Cloud itself isn't. The maturity of our cloud offering, the fact that we moved first in cloud is a very key part of the competitive differentiation. So, you know, the maturity of our platform with customers live across the globe, while many of our competitors are only now bringing on their first customers to their cloud platform puts us in a in a pretty pretty strong position. It doesn't mean that we're the only ones with cloud. It just means that that we really know what we're doing with it and we're we're ahead in that regard. I think, you know, from a so I've covered pure play cloud channel model and the fact that if you compare it to regional competitors, we're we're we're a global provider as well. Great. Okay. I think that's a fitting way to close. So I've come up to the hour. Thank you, James. Thank you, William.

1:01:19 Could I ask investors not to close this session? You will now be automatically redirected for the opportunity to provide your feedback. If anyone has any further questions or would like additional information on PCI PAL, please do get in contact via pcipal@walbrookpr.com. Many thanks for attending today's presentation. K. Thank you. Thanks, everyone. Thanks, Albert.