Pci-Pal (LSE:PCIP) — Review of Interim Results and Prospects

0:03 Good afternoon, ladies and gentlemen, and welcome to the PCI PAL results presentation. To begin 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 p c I pal at warbrook p r dot com. The company may not be in a

0:34 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 Me company dashboard. Finally, we would like to remind you that this presentation is being recorded. Now I'd like to hand you over to Chief Executive, James Byram and Chief Financial Officer, William Good.

0:57 Thank you, Tom. Welcome everyone to our half year update for FY 2022. It's been another really strong period of progress here at PCIPAL and certainly looking forward to taking you through these half year results today.

1:15 Thanks for joining us as well on the IMC platform. For those that know us, you know that we use this platform to make ourselves more accessible to a wider investor audience. We've built up a pretty good backlog of IMC presentations on here to help investors get a good good grasp of our story, our messaging, and our our long term plans for the business. So please, if you do want more background, do check out some of our earlier presentations as well. To kick us off today, I'll be giving an overview of our strategy and then I'll move into the half year update and financial review from William. Before I do move on, I did want to say a few words on the patent dispute that we first reported to the market in September.

2:03 I know that for many of you, this is going to be front of mind, so I wanted to deal with it at the front end of the presentation to allow us to spend more time focused on the the financial and operational updates, which which frankly are very strong. So it it might also be quite difficult for us to answer some questions at the end on this, but unless it's something fairly straightforward, we may not be able to answer the question because, you know, obviously we've got a legal case underway at the moment. So as a reminder, this case relates to alleged infringement of of IP rights concerning one element of one of our products. The the overriding feel from me really is one of frustration particularly as as we were the first in our space to do what we do in the cloud with our own IP.

2:53 We've been a disruptor in our market and those of you that have followed us since the beginning will will know that story very well. And we've we've really transformed the way that companies could access secure payment systems in in business communications environments. So so the situation is fairly frustrating from a a sort of business standpoint, but the bottom line right now is is positive. So we're we're very confident in our position. We have been since day one and there's reasons for that. Our position is multifaceted in terms of the ways we're able to defend ourselves on non infringement specifically, but additionally the counterclaims we're making on validity as well are very strong. It's important to note, as we've stated before, we have always taken legal opinions as we've evolved our product set to ensure we do not infringe any third party's IP rights. So, you know, those those things wrap together. We have a a very strong defense. We have high levels of confidence around this situation, and and frankly, with the strong performance of the business, we're very well resourced to to see this process out if we need to.

4:02 Now, I think I should say as an executive team, as a board, as with anything we do at PCIPower, we always consider all the options available to us, and we'll continue to do that as we proceed down this path. But certainly, whatever we do is working towards the best outcome for the company and therefore our shareholders. Okay. Now I'd like to try and get on with the good stuff now, the business progress, which has been been very strong. And William and I are really excited about what we're doing in the business today and what we've what we've got coming down down the track. So a little bit of background for those new to the story. PCIPow is a a fast growing SaaS business. We facilitate secure payments for organizations that use our solutions, use our services.

4:53 And we do this securing of payments across all business communications environments. So by business communications environments, we particularly mean contact centers and and the omni channel mix that goes into that that sphere. So voice or phone and the more common today or certainly growing digital channels such as chat, web chat, social media, email, all of these that go into the contact center or call center mix. So basically, if a payment interaction is occurring anywhere outside of a website or in a store, we we get involved. Now, not only do we secure data, but we enable compliance with relevant data security standards as well, and particularly the global standard that governs the protection of card data, payment card data, which is known as PCI compliance, payment card industry compliance.

5:43 And by using our services, our customers make their journey to compliance with that standard much, much easier, and it can also support their compliance to other guidelines that are out there or regulatory standards such as GDPR, for instance. We're cloud only, true SaaS product set, and we can deliver as a result anywhere in the world. And our focus today has been we talk about our EMEA region, but the focus within EMEA has very much been The UK and our North America region, which our focus has very much been, The US. But, we are, very much, expanding as well. So I'm gonna I'm gonna talk to you a bit about that today. In terms of our products, we're very simple. So three core products, agent assist, digital, and IVR. Agent assist is involved in securing payment data in live agent phone calls with customers.

6:34 Digital is a live agent digital interaction with a customer, so that would be web chat or social media like I mentioned just now, or IVR, which is the sort of industry term for auto auto attendant or automated services, which can also be used with speech recognition too. We're a primarily channel led business, so majority of our business comes through resellers and that's some of them shown on the slide there and I'll take you through that later and give you an update on that. And then also just an example of some of our awards which you can feel free to dig into afterwards. The highlight on there being some of the people awards that we've been winning this year, which is kind of testament to our our focus in our people, which has been particularly important given the competitive hiring market right now. Getting into a snapshot of the year, so strong increase in revenue year on year, 72% up, ahead of our management expectations, not significantly, but it was ahead of management expectation. I'll let William talk a bit more about revenue growth in detail.

7:35 We're continuing to drive new business sales through our key sort of future indicator of recurring revenue use, which is TACV. So that stands for total annual contract value, and that's the total annual contract value of all contracts that we have, whether they're live or not, I. E, they're revenue recognition or not. And that today is at 11,400,000. So you can see that's not too far away from what we're anticipating doing in our market forecast for the full year. Another two key metrics for us that I look at particularly that we introduced at the end of the last financial year, NRR, net revenue retention, and churn, and our management of churn and minimalizing that. So I think we're proving with that kind of performance at a 120 NRR and our churn rate's less than 5% that not only are we winning business, we're keeping it and we're growing it too. And that's kind of the utopia that that we want to get to. This this has been something I've been particularly keen on as we as we brought further focus on this because we've got more opportunity here as we evolve our product set, adding features and more opportunity to do more with the customers that we win. So we work very hard to win those customers in the first place.

8:44 Other highlights here for the half year. Partner ecosystem is critical to us. I'll have a bit more of a deep dive on that, but we do have the strongest partner ecosystem in our market by some margin. We've been completely committed to channel since day one of this journey. We're very targeted about the businesses that we try to align ourselves with, and we've won a number of new really interesting regional and global partners in the first half. We've also got a very strong pipeline of new global partnerships as we look out into H2 as well. And just for a moment, will talk about people, which is not new for us. We've always talked about people. Majority of our cost base is people, and that's what drives this business forward. But that's been brought into sharp focus in the last six months with the, the war for talent that's been been going on and sort of hit us two or three months into the, into the financial year. But I'm pleased to say whilst that's been a headwind and been a challenge, I think we've kind of won that wrestling match. So we've adapted the way we're working with recruiters, adapted how how we were hiring, and not put too much pressure either on our budgeted pay scales either. So we've been quite creative there. I've really worked on our employer brand. And I'm also pleased to say with that, we've been able to maintain employee retention high, is tracking pretty much today about 9090% plus. So, yeah, very happy with that and that's a testament to the sort of culture that we've built here at PCIPOW.

10:12 In terms of the strategy, very simply, key pillars to our strategic growth. And they have to be the leader for cloud solutions in our space, for our solutions to be available to customers anywhere in the world, and to leverage a sales model that by majority sells through channel partners. And and we think we're being very successful in in developing and progressing along those those strategic avenues.

10:43 A slight delay on the slides, excuse me. In terms of our global presence, we split this into two places, so cloud and the sort of global establishment strategy. So focusing on cloud for a moment. So key competitive differentiator for us, as I say, first to launch cloud in our market by some margin, and we have the most mature cloud platform in that market as a result of that. It's also one of the key reasons we've been successful with other aspects of our strategy. So in particular, success in working with partners. Many of our resellers are cloud companies themselves, global cloud companies, many of them very large US headquartered organizations. And so we sort of set out our stool to be the go to cloud vendor for these cloud parts companies to want to work with.

11:31 It's also a reason why we're able serve the small to mid size end of the contact center market very efficiently. And coming into this space, that was always critical for us because the vast majority of the contact center market globally, sort of 90% or more is is less than a 100 agent seats. So the vast majority is small to mid size, and cloud gives us the ability to be able to to do that. Now our cloud is hosted in Amazon Web Services, so AWS fully virtualized. And as you can see from the six padlocks on the slide there, we've got six regional instances of that of that platform that we can

12:08 can scale very quickly and at significant significant pace. And in terms of the geographic point, in April last year, we went through a fundraise, and that was to support an expanded development plan for us to grow our addressable market by up to 40% over the over the next eighteen months. And we've made good progress against that. The initial plans were that we would we would launch in Canada, and we have achieved that in the first half, at the back end of the first half. And we've also, since the end of h one, launched in Australia too. So we actually have people on the ground in those territories now able to work with our existing partners who have have offices there. So, yeah, really really looking forward to seeing the pipeline starting to come come together in in those territories as well.

12:54 Now we've also been investing as part of that fundraise in products, so product development, product marketing, and that's been progressing well too, but we're going to see the majority of those benefits starting to come through in the second half. In terms of the ecosystem and giving you a bit of an update, so as I we're channel led. 81% of our contracts come through partners. We we're a channel first business. That means we still do business direct as well. Majority of our direct customers tend to be more enterprise in nature. We do have some of the largest contact centers in The UK, for example, who use us through direct agreements with us. That tends to typically be where we sell where we sell direct. We are a pure play organization, so that means we're only focused on secure payments and that makes us much more attractive to many of these partners, so there's no perception that we might compete with them trying to cross sell products that might potentially tread on their toes, which we know has been a challenge for other competitors of ours.

13:54 We're completely committed to channel with the people we have, the processes we have, the technology that we've built and all of those things underpin how we've been able to be successful in building a strong partner ecosystem. Now on the left hand side of that slide, you'll see that we split our partners into four groups. I'm not going to spend a long time talking through those because I have done it on some of our much earlier presentations, so please feel free to go back to those if you'd like to listen through. But the short point is we have a very joined up and focused and tactical approach to how we treat partners work once they're onboarded, enabled and then we're getting them into business as usual and producing for us. In terms of partner highlights in the period, Amazon probably wanted to choose from that. So the Amazon deal that we announced in h one. So Amazon customers can now procure PCI-PAL services through AWS Marketplace, which is the Amazon technology marketplace.

14:48 We're the first vendor in our space to achieve this globally, and we have a fully approved integration there. So we're going through partner enablement with Amazon at the moment, and that's Amazon Connect customers, which is Amazon's cloud contact center platform in particular that we're on there. But as you imagine, Amazon's a very large organization, so, enablement, onboarding, and and getting that moving will, will take a little bit of time. Now we've we've signed other various global companies in the period, all of them on our target list at the start of the year, and I'll talk a little more about those at the regional regional breakdown. And then finally, I would say that we've really upped our game in terms of our relationships with existing partners coming into the year. You know, we've seen seen the emergence of marketplaces, for instance, which may make it a bit easier for competitors to get into those environments. We've actually been taking it up a notch with many of these organizations where we've built up a lot of trust, built up strong customer bases. So actually, we're becoming the solution of choice for many of many of these resellers, and I'll highlight a company like Genesis, for instance, where we're an AppFoundry premium partner, which is a fairly fairly exclusive group, but we, you know, we got that off the back of our hard work and focus getting to that point.

16:02 So it's enough on the background. I'm gonna hand over to to you now, William, for the, for the financial update. Thank you, James. So, as James indicated, very you know, we're very happy with the, with the numbers that are are flowing through into the business. The you know, the continuing the trend, the strong growth that we've set out over the last five years and have reset out in April to drive the business further forward. And I'm pleased to say that, from my point of view, all the all the key metrics we have are in the green if you use a traffic light system, which we do. And some of them are right at the top end of of the performance criteria we're looking for. So, yeah, you'll you'll recognize the formats of the presentation. I try and keep things consistent for you so you can see the comparisons and the performance going forward. So these are just some of the key financial highlights.

16:55 As I say, we're making significant progress against all the all the McKee metrics. So the the top left hand box there is the revenue. So it's up 72%, as James said, year on year for, you know, period to period. So we did 5,470,000 in the first half of the year. And you can see that I've kind of outlined the the forecast that's in the city at 10.9. Actually, it's it's just been increased by our brokers to 11,100,000, and we're well on track for for achieving that. And if you if you take that into context, we're on target for doing £11,000,000. You go back four years, we did £2,000,000 revenue. So we've, we've increased revenue five and a half times in that four year period. And, I mean, as we set out in, April 2021, we're looking at driving that from 10 times in six year period. So we're, you know, we're we're we're achieving that.

17:49 More importantly, on the, right hand side, the gross margin continues to improve. So not only are we driving revenue, we're keeping more of it, to pay our bills. So revenue improved by an by 8.4%, half on half, and that has allowed us to increase our adjusted EBITDA. Now the adjustments I take out are exchange movements. I take out the cost of the patent, which I'll talk about later, and also share options. So the adjusted EBITDA for the for the half year was just a shade under £600,000, and the statutory loss on the basis was 1,100,000 when you when you put everything back in. That adjusted EBITDA was a 57% improvement.

18:35 The other key metrics or some of the key metrics we look at are our annual contract value, the the value of contracts that we sign in as new contracts in the year, we call it ACV, that's performing well. That's up 6% period to period at 1,760,000. Please bear in mind that the the comparison was quite strong as we had as we were coming out of the the first impact of the pandemic coming through in the, yeah, in the comparator. But also bear in mind that this delivery is on roughly the same level of salespeople we had the previous year. Now we have taken on new headcount. We have expanded it, as James said, into Canada, into Australia. We've added people in in in in The United States.

19:23 But, typically, it takes four to six months before those people actually sign their first deals, and then it takes another, you know, another time before it actually starts filtering through to revenue. So we're looking forward to that growth continuing. And we're, you know, we're targeting 3,700,000 there or thereabouts in the full year. The new ACV is one of the key drivers that drives our TACV number that James mentioned, and that's up 37% half half on half, at 11,340,000. And for those that have been following us for a little while, when we, you know, did the presentation in September, I outlined that we are looking for, to achieve TACV in f y twenty two of about £13,100,000 by by the time we get to June 2022.

20:13 So we're well on track for doing that, and I'll talk a little bit more about that later. More importantly, recurring revenues continue to grow. Yeah. 90% of our revenue is now recurring. That's that's on the basis of our, you know, of our deliberate plan to make sure that we, you know, we don't charge up front. We work with our clients, and so we have recurring revenues. And finally, the the the other highlight is cash balances. We finished the period with 5,500,000. That is substantially ahead of where we were expecting to do coming into the year because of the strong performance of the business. And, again, I'll talk a bit more about that in the next few slides. So looking at TACV in a bit more detail. Some some of you will recognize this this graph. I keep it going. You can see the half on half growth coming through. So it's grown 19% since June 2021.

21:09 And the little white box at the top, the 1.8 box at the top, is the amount we've got to do to take it up to the 13.1% forecast I put in the market in September. So why is it growing? Well, it's growing because we're signing new customers, but, also, we're not losing that many customers. James talked about churn. It's a focus for us. Always has been. Yeah. There's no point signing customers and then have them switch off after twelve, twenty four, or thirty six months. And so we, you know, we measure that, and we started publishing those stats to you in September. As of December, based you know, our churn is down at 3.5%, which is right at the top end, you know, the lower end of our of our target. So, yeah, anywhere between 38% is seen good for a SaaS company, and we're at three and a half percent.

22:02 And but, clearly, we're focusing on that. Net retention, as James mentioned, is another key key metric. So not only are we successfully signing in new logos and bringing them in, but a good proportion of our sales are now coming from upsells to existing clients, be that new licenses or be that being introduced to other parts of the of these global businesses we've signed. And we've been very successful in rolling that out over the period and expect to continue that into the second half of the business. Just looking at TACV a bit more. This is the split by region. The charcoal bar on the in the graph on the, left hand side, represents EMEA, which, again, is growing, strongly and continuing to grow strongly.

22:47 The orange bar is North America. And as I remind people, eventually, the North American bar will overtake the EMEA because it's a bigger market, but it just takes time to get that momentum building. The table on the right hand side is very important to us as a business. That's the split of the TACV. So TACV is the measure of all the contracts we have signed and still valid. So if council if a contract is canceled, it's taken out of TACV. But the split is is is important because, obviously, we can only recognize revenue under the accounting rules once they go live. So our ARR, which is the deployed contracts, has grown from 5,890,000 to 8,960,000.

23:33 So a £3,000,000 jump in the in the last twelve months. And that that leads to the, you know, to the regular monthly recurring income dropping through. At the end of December, we had a further 1,890,000 in active deployment. So our TTGL, which some some of you, will, you know, will remember, is our metric we use to how quickly we get a business, a sign a contract from signature through to revenue recognition. In the period, we achieved twenty two weeks. Typically, it's 22, 24, 26, somewhere in that in that region. So we're on track for that just at the top end of it. And so that 1.89, all things being equal, will get deployed, and we'll get we'll drop into the ARR, boosting the ARR up towards, yeah, the £11,000,000 as we come into f y twenty three.

24:26 You'll also see there's an element of on hold contracts. These contracts, we declare because they relate to either where customers need to put extra resource in to get going, and they're part of a or they're part of a bigger expansion or rollout of changes in that in that customer, or they've come through an channel partner, and that channel partner is selling new to the end customer. And so they have to put their business in you know, their processes in first before we can get switched on. So that you know, those contracts, yeah, they do roll over. Eventually, they come into deployment and then go through, but they they typically take a longer pair longer time to go live.

25:06 Just looking at the revenue. Again, revenue is growing strongly. So the graph on the left hand side, the 5.0, that that represents our recurring revenue. And the little orange blob on the top represents our professional services release under the rules of IFRS 15. So we do charge upfront fees. They're worth $1.21500000 to us every year. Those then get held and start getting amortized once the contract goes live in line with the normal IFRS 15 accounting process. Now within our revenue, we have had some strong tailwind some strong tailwinds boosting us, which is why we have achieved 72% year on year, which is ahead of our own expectations.

25:52 So firstly, where we where we upsell and where we upsell with new licenses, the time to go live on those are a lot shorter than obviously a new contract coming through. And so so we can switch them on and start recognizing revenue. That's probably added a $100,150,000 pounds to my to the revenue this year, and then we'll flow through into the second half and onwards. In addition, we do, in some use telephony minutes to help connect our services to contact centers. And those minutes are related to to, you know, calls coming in. And if we're receiving more calls, we get more revenue. So one of our customers has been substantially busier than we expected and has generated an extra £250,000 worth of minutes in the the period. Now those are high yeah. Not not as high margin as as licenses as you would expect, but it's still an important revenue earner and gross margin earner for us.

26:54 That strength in growth of revenue has allowed us to increase our our forecast revenue in the period. So if you remember, we came into the year with a forecast of 10,400,000. We raised it when we did the trading update to 10 0.9, and we just raised it again to 11,100,000, driven by those by those factors. And, again, the gross margin's 81%, so more and more of that is dropping to the bottom line. I do expect the gross margin to continue to improve because the AWS platform, which we sell on primarily, is our own. And so that will head up, as I've said in previous presentations, to north of 85, maybe 90%.

27:35 Just looking at the income statement in more detail. Clearly, I've talked about the revenues and the cost of sales and the gross margin, so I'm not going to, talk any more about that. But I will highlight the staff cost there, which has grown by 36%. Now that's because we're taking on more staff because of the April 21 fundraise, which, you know, we set out our stall to to continue to expand this business and grab additional TAM, yeah, so addressable addressable market. So our headcount in the period has gone from 71 as at the end of June twenty one to 86 as at the end of December, and we're now just in the low nineties as we speak in in the end of February. That's all part of the plan. We haven't held back on the plan because we have been funded for it even though the patent yeah. The is is has come into the equation as well.

28:27 You'll see the loss from op the operating loss for the business has improved from 2.1 to 1.1. Now that's a statutory operating loss. So it includes all the exchange gains, losses, and other sort of adjustable items. So below that, you'll see I've taken it out. So the biggest movement is the exchange gains and losses. So in the prior period to, you know, to December 20, we actually had an exchange loss of 366,000 because the US dollar went from 1.35 up to 1.4. Conversely, in this period, it's dropped back from one point one point five back down to 1, to 1.4 back to 1.35. So it's reversed itself again. That's why I strip it out. All that exchange loss relates to the revaluation of the sterling loans that the PLC has made to The US. It's no cash implication at all.

29:17 You'll see the exceptional cost line in there. So, you know, the patent case that, you know, James mentioned in the beginning, we have spent £285,000 to the end of December with legal fees. I've treated that as an

29:30 exceptional cost, and, clearly, those costs are expected to continue. So if you look at the FinCap forecast, we're expecting a loss of a cost of up to £650,000 in the full year for to June f y to June 22. And then there's the expenses from share options. So taking those out, the adjusted operating loss is only has improved by 39%. So it's one, well, yeah, $103.07 against £1,700,000, a very strong performance and above our expectations. Just looking at cash. Cash, we've used 2,000,000 worth of cash in the business, which is, you know, actually slightly you know, which is actually less than we were expecting to when we went into the year because of the expansions we were we're we've been pressing, in headcount.

30:23 You'll see that's up remarkably from the prior period. Why is that? Well, just as a reminder, in the prior period, we did receive from our largest US customer an advanced payment for year two and year three licenses, which totaled $1,130,000. So that's that is recognized in the deferred income line. Deferred income actually grows because of advanced billing. And the other side is cash. So that's the primary difference between the two businesses. So we finished the period with 5,500,000 in cash, having started with 7,500,000. But we have yeah. But we also have no borrowing facilities, which were repaid in June 2021. So we're in good shape, you know, in cash wise and ahead of our expectations.

31:14 Finally, balance sheet. I'm not gonna talk much about this. The only thing that's probably highlighted is the trade debt is in line two, which has jumped a million pounds. That's not because we're not collecting our debts. That's because that's a mixture of strong contract sales where we're advancing billing in advance plus the growth in the business. We're up 72% in in revenue terms. And just to yeah. Our debtor days, our collection periods, actually collect on a sixty five to seventy day period our debts. That's not bad considering a number of our channel partners takes sixty days credit from us. And we have minimal debt over over 90, same as we had, you know, reported in the full year to June 21.

32:01 And, again, no bank borrowing in there. So that's it from me on the finance side. I will now hand back to James to take you through the rest. Thanks, William. Should we get to my slide? Yep. Okay. So yeah. Sales and revenue growth. It's okay. So just focusing on on split of ACV. So our new sales bookings in the period. EMEA at 1,000,000 was ahead of our expectations within the business for the for the half year, so very, very pleased with that. That's partly due to strong upsells in EMEA as well. So this is the, you know, direct result of of of the strong performance of NRR. So the the EMEA business is more mature. So we have more opportunities to upsell to those customers. So the North America number, which is all US based business, was in line with management expectations at just under naught point naught point 8,000,000.

32:53 Now the vast majority of that is net new logo business, so that's all all new business. So we'll we'll expect to see upsells coming in The US as the sort of years progress and those relationships get a little bit more mature. And we are on track moving into H2 with The U. S. To expect that to uplift in the second half. We're starting to talk more about our ARR now as well now that we previously talked about TACV being what ARR is likely to look like. But now that we're getting a slightly larger organization, we are starting to focus a little more on ARR, which is up 52% to 9,000,000. I'm very pleased with that result. There are some underlying operational metrics which are performing very well and help really drive that. So those that know us well will know that we've talked about one of our delivery metrics of TTGL, time to go live, which is the period of time it takes us to get from signing a contract to when it goes live

33:46 and is therefore revenue recognition. Well, we're we're inside of our management expectations for the half year against that metric at twenty two weeks. And and we've got very strong or high NPS scores across both implementations and our service desk areas as well. So these are net promoter scores. So this is, in fact, a very strong indicator of customer satisfaction with us. So, you know, critical that those two metrics are are working well for us if we're gonna be able to keep customers we're going to be able to do more with customers, which ultimately is what's driving those NRR and minimal minimal churn rates. In in terms of average deal sizes, so slightly slightly higher than the year on year average, but still we're very much within the sort of 20 to 30,000 ACB mark, which, you know, that's perfectly good for us because it's targeting that small to mid size end of the market. But we do have numerous enterprise deals that we are still doing. We we haven't had necessarily any of the one off really big ones that we had a handful of in the in the previous two years, but we've got a steady flow of hundred hundred and fifty k ACV value individual deals being done.

34:57 And in fact, I'll highlight one of those on on the next slide in The US, which has great expansion opportunities. So in the top right of the slide there, it's an enterprise deal that we we won with a very well known US headquartered pharmaceutical firm with with truly global operations. So we're going through a delivery process with them at the moment, but that is

35:19 not across their entire business. So, you know, the the EMEA business has been successful in expanding into existing accounts, we would now expect to start seeing that happen in the in The US as well. ACV sales in North America are up 14% year on year. As I said, that's slightly ahead of management expectations, so we're happy with that. That's off the back of the same resources we had in the prior year. It's only since the further investment that we've started to escalate that that growth. And you may remember that those of you that I've spoke to before, I explained there's a, you know, there's a timing intricacy with The US. We cannot just pile money into The US and expect a return because their maturity around payment security and payment technology is a little behind some of the other markets that we're operating in. So there's a there's a timed increase being built up there, but we do anticipate an uplift in the second half as part of that. And, of course, as I mentioned earlier, we did launch our Canadian operation too.

36:17 So the North American business won't just be US, it will be Canada as well. Actually that team has already started building our pipeline, which is great to see. In terms of EMEA, I don't want to repeat things we've already been through, but naturally, as the more mature part of the business, we'll see revenue being able to increase more significantly. We'll see that starting to come through in North America across the remainder of this year. But it was great to see the EMEA business EBITDA profitable. When we did the fundraise in April last year, we pushed back our cash generation points and our and our breakeven points by twelve to eighteen months, we told investors. And really, this is the first line in the sand of that new timeline that we have hit. So, you know, we're looking twelve months out now to get to those first months of cash generative and and breakeven. And it it doesn't actually feel that long ago that that I was talking about that previously. So I'm I'm very pleased that we're on track to and and in line to get to those those breakeven points as well.

37:20 As I said, upsell opportunities have been very strong in EMEA. Some great new partners that we've won too, and I said I'd highlight one or two of those. We've won two two new major BPO partners in Europe. These are big global organizations. One of them has actually got more than 200,000 call center agents across its whole group. It's one of the largest in the world. And we've sold customers to both these BPOs that we signed in the same period. So it shows how quickly actually the BPOs get working. So the and the BPOs are big big outsourcers, big outsource contact centers. But because that's Mainland Europe, that's a really good indicator of our capability longer term to be able to use The UK to expand into Mainland Europe to grow that addressable market opportunity for the for the for the EMEA business. And then just finally, majority of our engineering and product, Corey, is based in The UK, and some of you will be aware that I hired a new CTO in May last year who's also our CPO's chief product officer as well, and and he's been I've been working with him hiring new products professionals into the business. I could not be more pleased with how that's going, and I know that the management team feel exactly the same about that. So I often say this, we obsess about hiring and we don't let people in unless we're a 110% about them and I think we've got that one right. So we're very pleased with the direction that that that's taking.

38:44 Which in terms of an outlook, you know, we do have real confidence looking at not just for the second half, but we've got we're very excited about the rolling five year plan that that we're that we're constantly evolving. H two has started very well. We're two months in now, totally in line with management expectations as we expect it to be. New business tracking very well. We've had a strong strong couple of months there. New hiring as well. So the new hires that we've been making as a result of the additional investment, you know, they they they don't have an impact immediately. It takes people time to be to be onboarded, some more than others, some longer than others depending on their role. So in h two, we'll start seeing some of the benefits of those hires, whether that be sales, that be products, whether that be operational. So it's gonna be great to report on that progress with you. As I mentioned earlier, Australia is now active and open, so we've got a team of three out in Australia headed up by a VP of sales with some very specific experience of our industry. So we're hopeful of him hitting the ground running.

39:43 And then as I said, I'm I'm very positive about the the product situation at PCI Power, and we've got some great product initiatives that we're working on. We're driving more pace through our our development teams, and I should be in a position to provide, you know, updates on on how those initiatives are going throughout h two. So that's the end of the the presentation, but very happy to take some questions. Great questions. Okay. Super. Well, thank you, James. Thank you, William. Now if we could turn to the questions, we have a number of questions that were submitted ahead of the presentation. However, please 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 dashboard on the investor company platform.

40:31 Additionally, your feedback is important to the company. So immediately after the presentation has ended, you will be redirected for the opportunity to provide feedback. While you're submitting questions, let us first have a look at those submitted ahead of the event, and you'll be unsurprised to hear there have been a couple in relation to the intellectual property issue, which I know James may touch on again in in a second. We have a couple that were covered in the presentation itself, but one very relevant that I might put to you, James, if I might. Do you have any I think we've all lost Tom. So there were two questions that I know were going to come. One of them was related, and actually we've had a number of questions through the chat as well on this topic, so I will cover it, which relates to the timeline with the patent dispute that we're dealing with and what does that patent actually timeline look like if we're not to achieve the question was if we're not to achieve any kind of settlement or finish any sooner, what would the timeline look like? Well, the timeline in The UK will be court trial date is set for June next year, so 2023.

41:39 And The US is we're unknown at this point, but we're being told to anticipate probably a year after that. So we're talking mid twenty twenty four. And neither of those dates include appeal processes, by the way, which could add another twelve months plus to that. So, yeah, it's not a fast process, but it's one that we're in and we're going through right now. In terms of the second question that was submitted before on the assumption that Tom's not managed to reconnect And I've had one or two questions like this, so we'll cover it, which was a question about whether we have any major customers either in Russia or or Belarus or many any of our customers or do we think the conflict in The Ukraine could cause us any issues? Bottom line is I I we don't believe that the conflict in Ukraine would would cause PCI power any issues.

42:29 It's pretty early days for us looking at customers that we may have that are, know, Russian by nature, but obviously that's any considerations around that we need to take take very carefully. But it is something that we're looking at and we're very mindful of what our people think of this situation, you know, working in the business. That's not just UK but that's US too. So that's probably almost the the main focus point we will have is making sure that our people are feeling okay about it because there's a lot of anxiety flowing around around this situation right now. But from a business standpoint, I don't have any major concerns. Jumping to the questions. There's a number of questions on here which probably requires slightly more complex answers. So we're gonna take some of those afterwards and we'll respond to them in the portal.

43:15 So we have a question here from Morgan, which is how do you plan to manage your bottom loss going forward? Top line growth is good, but bottom line growth with a path to profitability is even better. Okay. So I would say that we do have the latter. So we we have top line growth and we do have a path to profitability. We moved that that profitability point out when we did the fundraise in April. Why did we do that? We did that because we were expanding our addressable market, so we needed to invest more to keep the growth rates going. So for us, what we said to invest at the time was that that was to enable us to keep the 30% to 40% minimum revenue growth going, not just for the next two years, but three years onwards is what we're looking at. So that's why we did that. And as I said in the presentation, we're tracking very well to get to our first months of cash generation followed by profit in the business in the second half of FY twenty twenty three.

44:13 I'm just quickly assessing the other questions. Well, I think that's it for the questions now, actually. That's great, James. Thank you very much indeed, and thank you for stepping in. We we did lose Tom momentarily. I know investor feedback is going to be important to you guys, and I will shortly redirect investors to provide you with their thoughts and expectations. And of course, we'll make all these questions should any more come through available to you as well post the call. But if I may, James, just hand back to you for a few closing comments. And then as I say, I'll redirect investors to provide you with their thoughts and expectations. Okay. Great. Well, I hope that today has been useful. We've as always, we're really trying to be as transparent as we are. We appreciate the feedback, and we hope the metrics are helping you figure out where you where you think we're gonna get to and whether you agree with what the forecast is saying. But we'll keep our heads down and we'll keep delivering as best we can, and we look forward to updating you in the second half.

45:09 That's great. James, William, thank you very much indeed once again for updating investors this afternoon. Can I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations? This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of PCI Power PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all. Thank you very much. Thanks, Mark. Thanks all.