System1 Group (LSE:SYS1) — Half Year Results

0:01 Good morning, and welcome to the SYSTEM1 GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to James Gregory, CEO. Good morning, sir.

0:32 Hello. Good morning, everybody. You have myself, James Gregory, our CEO, and our chief financial officer, Chris Wolford, here today with you. I'll start by running through some of our half one highlights and our strategic strategic growth areas, and then I'll hand over to Chris who'll go through some of the more financial aspects before we get to a final summary and close in any q and a. So without further ado, I'll start off by running through some of our half one highlights. And what's great here is we're really seeing the results of focusing on the customer and the execution of the strategy we set out in our strategic review. The way we're seeing that show up is through platform revenue growth, up 44% on half one last year.

1:18 Very strong, growth of new platform clients, a 136 in half one, and also improved retention of our clients as well. New partnerships launched with Pinterest, Finecast, JC Deco, and Teeds with more to come. We've had an increased focus on our non TV formats with the launches of our test your ads digital, test your ad audio, and upcoming innovation product launches. And all of this is then flowing through to the financials. So seeing gross profit margin increasing to 87.8%, statutory profits up, net cash up, and diluted and basic earnings up as well.

1:57 So within that, what's what's great to see is that we're back on track. So where our h one results across at f y twenty two and into f y twenty three at top line revenue were declining, we've now seen back to back half on half, revenue growth. So we're up 27% year on year, driven by our platform revenue growth underpins this.

2:24 What's lovely to see there is this is really happening on a quarter on quarter and half on half basis as we said we would focus on. Platform year on year is up 44% driven by data at 31% and data led consultancy at 46%. This is building on the momentum from half two last year, but also, I guess, a recognition that we're lacking a relatively poor overall revenue performance in h one and f y twenty three, but you'll see the platform has continued to remain strong, continued throughout that. The opportunity is for us to continue this momentum into h two this year and also further ahead. And as I've mentioned, the bespoke consultancy is in relative decline half on half, but it's actually relatively flat. So when we talked previously on this, we said there's a good outcome for the year would be for this to be finishing up around £5,000,000 for the year, and that is where we are still aiming for. There is more volatility in this just due to the type of work this becomes, which is why we've changed the business model to focus more on our blue and yellow data and data led consultancy business model.

3:32 The big focus that we've had this year, is becoming really truly customer focused. We know who our customers are and what we can do for them. So we know that we help the world's largest advertisers make confident creative decisions, and that leads to transformational business results.

3:53 Alongside this, we're really clear on why our customers want to buy from us as well. We're unique and be able to translate emotion into predictive results. We deliver high return on investment and marketing for our customers, and the way we do this is by being the most predictive, player in the markets. Alongside this, what our customers do tell us is that our speed is also very, very competitive. So if we could offer the predictiveness without having the speed, they wouldn't be coming to us. We're also aware that we've been focused strongly on price, but actually over the last year, we have seen some price increases go through, and we're aware that there is more headroom for this task to focus on this in the future. What's wonderful to see is, as this strategy comes off, we're seeing record levels of platform clients, both in winning new, but also retaining more.

4:47 I'll just explain this chart to make sure it's clear for everybody. What you can see on here in light pink is our existing client base, and this is looking at h one only for each year and also for platform clients. That's people buying our data and our data led consultancy offering. What you'll see on here is h one was when we launched the products in the platform. So, really, the growth is coming into, f h one f y twenty two. When you look across into h one f y twenty three, you can see that although we brought in over 50 new platform clients, the existing base in the subsequent year was relatively flat year on year. So that means that for sort of every new customer who's come in in that first half of the previous year, they they essentially weren't spending in the subsequent year. What's great to see into h one f y twenty four is that that existing customer base has grown.

5:39 So we have actually got 29% more clients year on year than we did in the previous year. On top of that, what you'll see is there's been an excellent growth of new clients as well. So 97%, up on the previous year. So what that means is we're filling new clients in at the top of the funnel, but we're also becoming more sticky to make sure that our existing clients don't leave at the bottom of the funnel as well. When you align that so this is looking at the number of clients on the platform. When you look at the same data from a revenue perspective as well, what's great to see is this is an even stronger story. So on the previous chart where the number of clients remain flat across f y twenty two to f y twenty three, what you'll see is for those customers who remained, they spent more. So what this means is some of the more transactional customers or the customers who are testing us out would be the ones who weren't staying, but our biggest customers are staying and spending more than ever. So you're seeing that existing client revenue growing year on year. And, also, even within the new client revenue, we're seeing that they are spending more year on year as well.

6:45 Underneath this, so if we're really clear on who we want to serve, we're really clear on why they want to buy from us. Our go to market strategy around the partnership model is also working really well. In the first half, we announced Pinterest, Teeds, Finecast, and JC Decaux as partners, in particularly alongside our different test your ad offerings. So for example, JC Decaux being great in the out of home space. What we've also done is we've also added radio center, subsequently in h two on top of our h one partnerships. And as we push our test your ad audio in that space, you will see them coming through.

7:26 What's also become really clear to us is that our strategy to lead with test your ad supported by test your idea and test your brand is working. Within test your ad, we have the best levels of fame, the best levels of validations, the most customer demand. What we want to do alongside this is to ensure that we can build out similar levels of growth in our test your idea space, And that will be our next phase and will be continued to be supported by brand. But at the same time, we can't take our eye off the ball, and we need to ensure that we're continuing that growth in the test your space. And you're seeing that growth come through in the test your ad space in our platform comms growth. So if you look on here, you can see there is 6060% growth in revenue year on year.

8:12 Absolutely excellent growth as we are continuing growth in this space. What we'd like to see is similar, as we said, in the idea space going forwards.

8:23 Underpinning the test your ad, as I mentioned earlier, we have got new formats that allow testing outside of TV. What you can see on the screen here are two examples. So on the left hand side, our out of home offering whereby we can test this is actually a billboard which was live in Canada with somebody swimming in a in a in a live swimming pool that we're able to run through our platform. And on the right hand side is a digital video. This is the static of it, but it's a six second loop where you can see a digital video being played as well. And that we all know that digital is a massive opportunity with around 50% of market growth being in that space. So as I've mentioned, if test your ad is working wonderfully well, we want to ensure that our test your idea or our innovation offer can continue to grow at similar levels.

9:09 And the way we're doing this is by going to focus on our five steps to five star innovation and sort of relaunching our test your innovation offer. Again, it fits with our mantra wanting to ensure that our customers can create with confidence through our marketing decision platform. One thing we've learned here by being customer focused is that our test your idea offer is excellent from the speed it plays, the price it offers, and the predictiveness it offers, but it wasn't always meeting what the customer wanted. So what we've actually under identified is the customer process from that new product development from discovering to selecting so discovering what they might want to focus on, selecting down few of those ideas, improving the ideas, validating the ideas, and then tracking, which is again where our test your brand offer can come into play as well. Again, what's great is we have a

9:56 benchmark of over 60,000 ideas in the database, which will underpin all of this. And in reality, what we can do is we can alter slightly our proposition to ensure that our core base and our core products and platform can meet our customer needs.

10:14 One of our principles within this as well is understanding that, when people look at innovation, what they look for is 80% familiar and 20% new. So we're applying those principles when we look at our platform offer here too. And on the screen, you can see a few visualizations, which will feel similar to our test your ad offering that we can ensure we offer out within our test your innovation offer too.

10:39 What's lovely to see is over the the first half, we had growth in each of our regions. You can see that The UK has been a really powerful place of growth at over 45%. But out in The US, LatAm, and Europe, we've had over 17% regional growth as well. And what's lovely to see as well is we had stabilization of our business in APAC, where previously this has been in decline, and we've been able to turn around to positive growth. And finally, for our end of this, Chris, I wanted to share our model for growth that we're applying for the future. Some people might call this a flywheel. And I'll walk you through this very briefly to bring to life how we're ensuring that each of our propositions, each of our products, each of our regions can grow in the future.

11:25 So it starts at the top right with our proposition. So what we do is we make sure that we are creating a platform and proposition that ensures we meet our customer needs, which is helping the world's largest advertisers make confident, creative decisions. We then move into the world of fame. So once we've created that platform and proposition, we need to ensure we're famous for those predictions and improvements, again, targeting our customers in the middle. The third point we then come to is around conversion. So once you've created the right platform and proposition to meet the customer needs, you've created the fame so they're aware of you, we need to make sure they can easily convert and buy from us. And once they've done that, we need to ensure that we can scale up within those largest the world's largest advertisers, and embed ourselves throughout their process. And finally, that last allows us to invest the results of our higher volumes and margins back into the platform and proposition, into our people, or with you, our shareholders.

12:19 And then alongside this, we have the sixth strand, which is really critical to what we do, which is having a robust support structure and performance culture alongside this. And I think this is something where we've made real leaps this year, but there's more for us to go in and focus. So at this point, I'll I'll hand over to Chris, our CFO, to take you through the numbers. Thanks very much, James. I'm just putting up the headline numbers here for the half year. Some of you will have seen them before. But, really, in the first half year, we're starting to see the benefits of the scalable business model that we've been talking to our followers about for the last two or three years now and the operational gearing in the business. So total revenue grew by 27% versus h one last year, as James has just said, with platform revenue up 44% and the other bespoke non platform revenue down 18% year on year.

13:13 And within that, the actual cost of sales, these are the direct costs of producing the ad tests or the innovation tests. They're mainly outsourced panel surveys or or other outsourced providers. They actually came down 17% against that 27% revenue growth, and that's on the back of some operating platform efficiencies that we achieved during the year, including the benefits of benefit of investing in our supply chain automation. And that gives us, as well as sort of seamless information flow between a portfolio of suppliers and and our platform gives us much greater purchasing power with those key suppliers. So combined with some price increases and the revenue growth that we delivered, there the reductions meant that our gross profit increased by 3,100,000 in compared with the first half last year at a margin of 88%.

14:13 And adjusted operating costs, this is our measure we've had for three or four years now, which takes out certain items that might distort you from seeing the underlying year on year trend. And so those exclude noncash measures like impairment, share based payments, sabbatical, and holiday provisions, but it also includes a couple of other items, the cost of the litigation that we were going through with SYSTEM1 LLC in The US, and also performance pay, variable pay. And this is the last half year where that's going to be an adjustment because we're about to lap that period in h '2 last year where we completely changed the way that we rewarded not just our salespeople, but everyone. So at the full year, you'll see the variable pay disappear from an adjusting item and back into the main operating costs, and we'll restate recent priors as well.

15:15 So between adjusted PBT, there's 1.3. These and all those adjustments, by the way, and there are a lot of them, are broken down in note 12 of the release. If you look at the statutory profit before tax, that was zero. This time last year, that's gone up to 900,000. And after tax, we delivered a profit before tax of 600,000 versus 400,000 in the prior period. Excuse me.

15:52 The good news is that our strategic key performance indicators are moving in the right direction. Platform revenue, which was at 73% of total revenue in the first half last year, up to 82. Now that is actually somewhere ahead of our internal plan for there, and I'll come back to that issue when we look at the longer term goals. Platform revenue growth, as James has said,

16:17 44% versus 33% a year ago. And very pleasingly, the profit gross profit margin, so that's after the direct costs, up to nearly 88%, which is a very big year on year increase, and we can't obviously promise to deliver that year year after year. But if we can keep it close to where it is, that's pretty good for a business of this type. Adjusted EBITDA. Now that adjusted EBITDA, the only adjustment from the statutory pretax is adding back share based payments. So it's a different set of adjustments from the adjusted operating profit on the previous page. That was up by 900,000 on the prior year, and the margin is also making good good progress up from eight in the first half last year to 13.

17:04 And then those of you who've been following us for more than a year will know that the way that kind of rule of thumb KPI we use to make sure that we are growing profitably and we have the right balance between growth and profit is the rule of 40. So that's adding together, in our case, the platform revenue growth year on year. And so that's 82% of our revenue goes into that calculation in h one and the the adjusted EBITDA margin percentage. So you want to add those two together. It needs to be 40 or more, which it was last year, and it is indeed in this h one at 57%. And the reason it's so high at the moment is the revenue growth is is very, very high. The margin not quite where we want it to be in the long run.

17:54 But as we as we grow, you'd expect to see the, perhaps, the revenue growth percentage come down a bit and the profit margin go up. Pleased to report that we generated some free cash in the first half year compared to a pretty big outflow this time next year. And so we're slightly head ahead of the guidance that we gave at the beginning of the year that we would be broadly cash neutral in the year. So whilst we're not we're not promising that we will generate another 600,000 of cash in the second half year, it it depends on the working capital position apart from many other things. We think we'd be yeah. We we do expect to have some free cash flow for

18:35 the year. And then net cash, in fact, we have no we have no senior debt now. Cash was 6,300,000 at the end of the period versus 5.7 this time last year. So looking forward on the KPIs to give you an idea as to how we might scale. So when we talk about our scalable business model and our operational gearing, when when will we see the benefits of that? Well, arguably, we're starting to see them now with our quarterly revenue breaking through the 7,000,000 mark. We said historically that once we get through 30,000,000, the benefits of our operational gearing will be there for all to see. So this chart shows our goal at scale. And for the purpose of this conversation, at scale means roughly double what our revenue is at the moment. So let's say 50,000,000 revenue provided we achieve that within five years. I think these are very good

19:39 this is very good guidance as as to where we would and should be. So starting with platform revenue as a percent of total revenue, we'd expect that to be in a range of 90 to a 100% of our total revenue. So 95 is the mid of that range. Frankly, if it's 93 or 94, that's still very good and aligned with our with our plans. Platform revenue growth, I've sort of touched on this. It's it's pretty high at the moment, 44%. We'd expect a a a good medium term channel for that growth is 10 to 20%, so solid double digit year on year growth at gross profit margins in the next row at or above 85%. Obviously, we're well above that at the moment, but

20:22 we won't always we can't guarantee to be, but we will plan to be above 85%. Really important, probably the biggest change will be in the profitability, and this is where the scalability comes through with our adjusted EBITDA margin. So that's the the adjusted profit. So profit add back share based payments and then add back interest tax depreciation amortization. That's running at 13% in h one, and our goal is to be at or above 30% at scale, which we think is eminently achievable for a business of this kind. And then the rule of 40, if you take the bottom of our growth range 10% and our target EBITDA margin, you add those two together, that gets you to 40.

21:08 That's the bottom of our of our range. Clearly, if the growth or the margin higher than that, then we will exceed that.

21:18 And then, again, to be pretty transparent about the cost growth because I know there've been there have been a lot of questions over the last ten days about the all the adjustments. And what what what I'm trying to do here and this is this walk through is on the statutory administrative expenses. So this is not adjusted cost. So to be really transparent, this takes the stat cost from last year, 8,700,000, adds the increase in variable pay of 1,100,000. The other employment costs, so that includes well, there weren't any inflation based wage rises in the first half year, so that's why that figure is a pretty low increase year on year. And then what have we spent our what else we spent our money on? Well, we've continued to invest in the test your ad premium database that used to be called the ad ratings database.

22:12 And this is our unique asset of pretty much every ad, every TV ad in The UK and The USA in the categories that we track. And we regardless of whether it's one of our customers ads or and we rank them using our five star scoring system. And then that's useful for marketing our services, but we also get a subscription revenue stream from that. Another factor in the increase in reported costs was the fact that last year, we had a large net capitalization effect, and that has basically halved year on year as the amortization starts to come through. We travel a bit more, and we had some FX headwinds on costs.

23:02 But, obviously, those would have been largely offset on the revenue side. And and the other naught point naught point 1,000,000 is effectively the cost provision that we made for our deposits with WeWork. Hopefully, we won't need it, but we've provided for it prudently.

23:22 And then the equivalent on cash flow, just the walk through from profit before tax through to free cash flow. And you'll see just on the far right, free cash flow in the period was about $600,100,000, which is about our profit after tax for the half year. And I expect that as we go forward, we will revert to the situation we have. And as the net capitalization comes down, you'll see that there's a better correlation between our after tax profit and free cash, which was the case for SYSTEM1 for many, many years. So in the period, a slight increase in receivables of a pretty high year end base from which you might deduce that September was a pretty good month, which it was.

24:11 And payables, so all all short term creditors were up, and that is largely due to a half year all staff apart from the executive bonus scheme that we put in place when at the same time, as we said, there were no inflationary pay rises for the year for the for from April 1. And that was paid in October. So that's why that's why that increase in payables was there. Software net capitalization, I've already discussed. So there's a smaller benefit from that. And cash tax, relatively high, 300,000, and that includes the benefit of a £200,000 receipt of an r and d tax credit in The UK. And so to summarize, platform revenue continues to grow strongly driven by new business wins, particularly in test your ad, a record number of new client wins in the first half, and a revitalized innovation proposition coming next year.

25:16 We've got the direct cost base down quite dramatically through platform and supply chain efficiencies and thereby improved profitability and cash generation. And as I'm sure you'll pick up in the q and a, we are not sitting on our laurels and relentlessly effective on execution. Welcome back, James, and we should probably try and go through the q and a. Hopefully, James, you've had a chance to scroll through them whilst I've been mattering on. Yeah. Sure, Chris. So shall I take two myself while you can have a look to to get them as well? So I think one question was around so it was asked, how does the company position itself against its main competitors, especially in the light of strong growth in ad testing revenue and new partnerships? And the second question was around marketing say, mid market conditions in channel can be challenging client markets. Do we have view on how long it will continue?

26:12 Actually, sorry. A new one just coming in as well around what are the key markets you targeted for growth? What strategies are in place to take market share? So if I if I talk about those pieces so when we talked earlier in the presentation, we talked about so our USP being predictiveness. So we are we are the only company which can actually take emotion and translate that into return on investment. I mean, that's fundamentally what we're here to do. The place where we've seen the most success in that, as I said, is through our test your ad proposition. And as Chris has mentioned there at the end, we want to ensure we do that through our innovation proposition as well in 2024, and that will be coming into that space. So that's what sets us apart from our competitors. We also do it at market leading or at least minimum matching, but mainly leading speed. So what that means is we can turn around and add test within twenty four hours or an innovation test similarly within twenty four hours so that our clients can come to us with a broad set of questions, and then they will know the answer through the platform within twenty four hours. So that's predictiveness, and the speed is what really sets us apart from a unique point of view.

27:16 In terms then of how how we're seeing any sort of, either negative impact from the markets or where we're where we're looking to grow, we're looking to grow with the world's largest advertisers. And that's what we're targeting ourselves on. They are the people who spend the most on pretesting, which is our core our core proposition. They're the people who also spend on a regular basis as well, so they are able to be sort of quite good income for us. We aren't actually seeing a downturn in that. So if you look at the slides we shared on the platform revenue growth, that growth has continued quarter on quarter and half on half. Now long may that continue. We know that, obviously, the market can be challenging and who knows what f y so You know what calendar year 2024 will bring. But, I think what we're saying is we're confident at the moment as a smaller player relatively.

28:02 It's not a phrase I'd like to use because we want to continue to grow until we're one of the bigger players, but currently a smaller player in the market with less than 1% of market share. Do We believe we can continue to grow without being impacted by wider market impacts. And I think, Chris, I think, the next question that then came and I saw was around sort of investments in, in particular in IT, but also a question around sort of if if headcount is decreasing, does that match with our growth plans? And I guess if I maybe do sort of the strategic aspect first, if that's okay on the top level, and then hand over to you. So we are a business that's investing in growth. We we aren't a business that wants to stay static. We want to grow considerably. It's been sort of the big area of focus, which is why we lined up our our flywheel or our model for growth to be really clear where we want to grow.

28:48 But what we know is if you took that model for growth, that we built out a really great proposition and platform in the world of advertising. We aren't very far off it being absolutely world class in the space of innovation as well. So we believe that's something which we can do within our realm to be able to grow. I guess an opportunity for us to grow then is probably in that promotion and fame to ensure we do then convert and scale up in a significant way. Chris, I'll hand over to you at that point. Yeah. In terms of the reductions, so this is Marcus' question about o overall average headcount decreased by 6%. How does this align with your growth plans? Well, some of that reduction was in IT and operations. It's partially offset by an increase in sales and marketing. So I think think we've signaled in the past that where we do within our scalability model, where we do see some remaining headcount growth is in the front line. Clearly, marketing and sales heads and definitely marketing spend will continue to rise. If not in line with sales, it will continue to rise.

29:57 So we we won't see those reductions in that area. Conversely, in IT, we signaled that we don't need a bigger we don't think we need a bigger IT development team than we have, and we were at sort of peak last year was a peak peak year in delivering that, and we're starting to see obviously some of the benefits of that in the variable cost base. And we've also had some two things. We have outsourced some work, so that doesn't show up in headcount. It's done offshore. There are a couple of couple of those actually in finance, year on year, for example, and also in IT. And then in operations, it's the continuing efficiency benefit of the platform.

30:44 So effectively, a much higher proportion of our revenues coming through the platform, which means we need less human intervention and in terms of the actual production of research and insight. And so that research and guidance team, as we call it, has continued to taper down. Though it's probably getting down to a level where it's not going to get much smaller with 82% of our revenue being being non being platform now, and that team's still having a role in business development and helping us, you know, look good with our clients, you know, before, during, and after we, we acquire them. Thanks, Chris. And and off the back of that, think the question's come in from Patrick L. The strategy has been to pursue US growth. Always surprised to see The UK growth was so exceptional during h one. I think that kind of builds on the back of what Chris was saying there. So the the the first part is the when we talk through that model for growth, if you consider it, so does the proposition resonate in The UK very strongly? Yes. It does.

31:45 Have we got high levels of fame? So we do particularly in The UK. We've had Orlando Woods books and sort of being, I guess, very visible on on the stage. We have, for example, our chief customer officer, John Evans, and his podcast, the uncensored CMO, being very, again, high profile within The UK. All of which meaning that when our customers are ready to buy, they are easy to convert. And, also, they are then simple to scale up as well because they've come from a very good position. What we are doing is investing to ensure we have the same levels of growth into The US. So what you'll see, I think Chris is referring to there from our sales and marketing growth aspirations focused on The US to ensure that we do have similar levels of growth in The US as we're seeing in The UK. And and the challenge for us as the business and and running the business is to ensure what's working well doesn't slow down and isn't distracted by new areas of focus. So we need to ensure that The UK can continue at the levels it does. It's excellent.

32:41 We need to ensure that Europe and The US step up to that level, and we need to ensure that also similarly from a revenue a product perspective that's underpinned by our innovation offer too. Yeah. There's a really, really good question from Charles about, do existing customers vary their expenditure with SYSTEM1 much over months or quarters depending on what campaigns they're doing? And can I just why don't I start with a set of how I see it from the way the numbers come in? I think there's a sort of real correlation here between the top the top 20 customers, less so. I mean, they tend to spend more predictably, the top 20 platform customers for sure. And then you've got one or two legacy customers who have non platform business with us, and that can be quite lumpy.

33:33 So when they come in, they come in big, and then they might disappear for a quarter or two. And then there's the long tail of people to some quite small businesses with small budgets who might only do something once every three years because that's all their bit. They've got one product. They relaunch it once every three years. They might run an ad or or a concept test. And so those can be a bit on off. So that's we're still I it's think it's fair to say, James, we're still as a business working out what the right way to measure and communicate the stickiness of customers is. But we're I think we're gravitating towards a view. And when we've got there, we'll share it with you, of course, that it's gonna be weighted towards the top 20, probably probably the top 20 platform customers because that will give you the best view as to whether we're really succeeding and winning where it matters. Yeah.

34:18 Yeah. Completely agree, Chris. And and as you said, I think that that repeatable and maybe reoccurring, if not recurring spend from those customers is where we see the consistency and and how they spend. And look what's great is as we become more famous, as we win more of the world's largest advertisers, by default, we'll win some of the the medium to smaller advertisers as well, and that's what happens in all markets. So actually, that one will bring in some more spend, which might be more sporadic. But the core base, as you said, Chris, will be driven by the the world's large advertisers, which might turn out to be our our top 20, top top 50 customers and or clients, and we'll see where that ends up. Super. The another question that is coming around AI, and then it it wouldn't be a good, investor meet if we didn't get a good question on AI. And the question is, what part is AI playing in our product offering?

35:05 So we've been working with a partner, which is Warwick University, who are one of the top universities globally from an AI development perspective over the last few years to understand how AI can play a part in our in in our offerings. And if you think back to what I was saying on our proposition, the most core part of our proposition is we are the world's most predictive. Because that's the reason our our clients and our customers are buying from us. So if we are going to do anything with AI as a proposition and a product offer, we would need to ensure that it can be as clearly predictive as our current proposition as it sounds at the moment. So we are trying to stay relevant. We've been testing that in the space. We've made great progress, but actually, it's not at the point yet whereby AI is ready to swap out for a panel respondent at the moment. Now this could change in the future, and we need to be ready for it. We're continuing to focus it on the future. And actually, our our founder and president, John Kieran, is working really closely in this space to ensure that we are relevant.

36:02 And we'll continue to update the market when things become more relevant in that space. The other bit, sorry, that might go and I I sorry. It would be remiss of me not to say is there are lots of efficiency and operational opportunities of AI to improve the speed in which we work, the way we work internally. So all of those pieces are happening alongside that. I was just ensuring we asked the question about the product offering. Super. And I think sorry. I I think I might have tried to answer this, but maybe not so clear. There's one last question in the bank of around, whether conditions are challenging in key client markets, and do we have a view with how long this will continue? So so I think we are we're clear that we are growing at the moment. We're clear we've got headroom to grow. So the there is space in the overall market for us to grow even if markets were challenging.

36:49 So I think, actually, this shouldn't be a challenge in the near future. Well, we hope it isn't a challenge in the near future, but let's see what 2024 brings. But we have good aspirations for continued growth levels. Chris, James, thank you. And I think we've addressed all those questions you can have from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the investment company platform. Before redirecting investors to provide you their feedback, which I know is particularly important to the company, James, can I please just ask you for a few closing comments? Yeah. Sure. And thank you, firstly, for taking the time to to listen to us today, the live or or recording. What's really pleasing is, about sort of a year ago when we were having these conversations, we were setting out the strategy of where we wanted to be, and what we're now seeing is that it's starting to pay off. So we haven't, by any means, finished the journey. We are on the first steps of it, but we are seeing it translate into our revenue, into our profits, and we'll continue to focus on our customers and our strategy to ensure that grows in the future. So thanks everybody for your time today, and look forward to speaking to you again in the future.

37:50 Chris, James, thanks for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of SYSTEM1 GROUP PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all. Thank you.