1Spatial Plc (SPA) Earnings Call Transcript & Summary

Good morning, and welcome to the 1Spatial plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the 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 Claire Milverton, CEO. Good morning.

Good morning, everyone. Thanks very much, Alessandro, for the introduction. Yes. So I'm Claire Milverton, CEO of 1Spatial and joined today with Stuart Ritchie, our CFO.

Hi, there.

So the main order of today are the final results for the FY 2024, which is January 2024. So this is what we're going to cover. First of all, overview and highlights. Overview and highlights, I'll do that. Then over to Stuart for the financial review, then back to me, talk a little bit about the market and the areas of focus for FY '25. Then we've got summary and outlook, and then we've got some time at the end for Q&A. Okay. So just to kick off then, a quick overview on what we do at 1Spatial. So focusing really on the left-hand side of this slide at the moment. So we've got this existing Enterprise business that really provides expertise, reputation and financial resources. We've been using this business to fund and develop these two new high-margin SaaS solutions that are on the right-hand side of this slide. But back to the left-hand side. What we do, we are leaders in Location Master Data Management. And we have this software platform that really is market leading, and I'll take you through that in a bit more detail in a moment. But what it really enables is our customers make critical decisions from up-to-date, accurate location data. We sit in the middle of 2 key global growing markets, GIS data and master data management, and we'll talk about this a little bit more when I come back later on. We have a broad range of customers across our key sectors of government utilities, transportation and our Streetworks. And we have a number of partners that we work with, and they're key to our strategy. We have grown recurring revenues, and we have an increasing geographical spread. Our recurring revenues last year were 49%, and we've now tipped over into 56%. And that's really been core to our strategy over the last few years, really building those annual recurring revenues, which gives us a really strong pathway for growth. In terms of our geographies, we're growing in all of our geographies. Europe has been a little bit flat in the year, but we've won some big contracts at the end of the year, and that should be going into growth for next year. And from a geography perspective, the U.S. is a key growth market for us, and we'll look at that again more at the end of this presentation. So that's the Enterprise business. And then moving over to the right-hand side. So we've identified these 2 key markets where we want to launch SaaS solutions into the 1Streetworks, which has got a GBP 400 million annual recurring revenue market opportunity and NG-9-1-1, which is $350 million. And we launched those solutions in this financial year. Really good SaaS margins, and it really considerably expands our addressable market. We have made around GBP 5 million investment in those solutions over the last few years, including our overall cloud investment, which we do need for our Enterprise business as well. So to make our software and cloud enabled for our customers. So we've had a successful financial year to January. We've been really growing that annual recurring revenue, and we launched those SaaS solutions. So on the left-hand side, you can really see we've got positive metrics across the board. Revenues up 8%, ARR up 9%, gross margin up 3 percentage points and EBITDA improvement by 10%. And Stuart will take you through these in a bit more detail in a moment. But the year has had strong sales execution and contract delivery. So we signed multiyear contracts across our key -- all of our key geographies. In the U.K., we increased our footprint across utilities and we had a new win with Yorkshire Water, which is a customer that we've never worked with before. We developed -- we've been sort of -- we've secured multiyear renewals with customers such as Ordnance Survey, and we continue to deliver on some of our key contracts with the Ministry of Defense. And we are working on the National Underground Asset Register with the likes of Atkins and the geospatial commissioner. In the U.S., we're now in 18 states. We added the state of Oregon in this financial year. We continue to expand with our key existing customers such as Google and the Department of Transport in California's Caltrans. In Europe, we've really started to complete our transition from declining legacy software, and this now is an engine for growth. And at the end of the last financial year, we signed a EUR 9 million deal with a customer called ORES in Belgium. So there were points around the Enterprise business. And we had our first 2 SaaS solutions launched in the year, and we did manage to get a GBP 0.2 million of revenues in the period. And really, these were just trials split across NG-9-1-1 SaaS and traffic management, but lots of potential for growth there going forward. A quick recap on our platform, our multiuse LMDM software platform. They're bringing in lots of data from different sources. It's data agnostic, system agnostic. Our portal 1Data Gateway is cloud enabled, where all that data gets uploaded to and then we can get going on the data. And really key to our platform is rules, putting in rules of how this data would look. To get good, clean data, what are the rules that you need to put in? We can validate clean, synchronize update and then analyze the data. And we use this core engine a lot with our major clients doing large projects with them, where we sell them the software and there will be services with that. And as I mentioned earlier, the state of Oregon is a new win in that area. But what we then also try to do is we create repeatable solutions where these rules can be used more broadly. And that's what we're doing with our SaaS solutions for NG-9-1-1 and 1Streetworks. But also in that top gray on the left-hand side, we have our French business, where we have apps on top of the Esri platform like 1Water, arcOpole PRO and 1Telecomms. So just to see the platform in action. I just want to take you through one of the wins that we had in the period with the state of Oregon. So this is a first win for us in the state of Oregon for $0.4 million of annual recurring revenues using 1Integrate and 1Data Gateway. And just if you just move over to the picture for a moment, I'll talk you through what we're doing there. So on the bottom left-hand side, you can see some parcel data, so parcels of land like where your house would sit on. And that data is currently held by all of the counties. And what the state wants to do is have a state view of all of those parcels of data for things like broadband planning. So what we did, the contract enabled us to -- the counties upload their data into our 1Data Gateway. We use our 1Integrate. And by using that, the state now has this very valuable database of all of those parcels. And importantly, now when a county updates their data, that flows straight through to the state. So you've got a mirror image of the data at the state and then at the county. So that's one valuable database that we help them create. And then on the other side, there we have some statewide tax assessor data. Now this data has data around the parcels and the size of the land and the value of the land, if you could look there, that's like a little full. You probably can't see, it's a bit small. But that is a nonspatial database. So the -- so it might say John Smith has this parcel of land, and it's 1.5 acres. But what we're doing is creating -- as you go to the top right there, you can see that we've created a statewide tax assessor data, but it's -- we've now spatialized it. So we brought the parcel data together with that tabular data. And what that enables the authorities to do is say, "Well, John Smith said that he had 1.5 acres of land, but we can compare that to the parcel data and it says it actually has 2." So this really helps them. The tax authorities look at where these discrepancies and potentially get more revenue. So you can see how valuable the work we are doing is to the state of Oregon. And we'll now have a strategy of land and expand. So within Oregon, we can now expand and take them, our other solutions that we have, for example, NG-9-1-1 or go to the Department of Transport, where we work a lot. We also, in the U.S., have an ambition to grow our annual recurring revenues per state to $1 million. We now have software in 18 states out of 50. And the way we can do this, for example, is now take the solution that we've done with the state of Oregon. We've got these rules, they're repeatable now, and we can take this solution and drive that through the other states, increasing the annual recurring revenue. So hopefully, that gives you a good flavor of what we do and some of the wins that we've had during the year. So I'd now like to hand over to Stuart, who will do the financial review.

Thanks very much, Claire. Okay. Excellent. Right. So a very good year for us this year. So we've grown at about 8% compared to the same period in the prior year at the revenue level. So our full year revenue performance was actually slightly ahead of market expectations at GBP 32.3 million versus GBP 32.1 million that was out in the market, with EBITDA growing about 10% compared to the same period in the previous year and in line with the market forecast at GBP 5.5 million. So encouragingly, we've seen double-digit revenue growth from our recurring revenue streams and also at an EBITDA level. So recurring revenue is now at 56% of our total revenues, which is up 7 percentage points compared to the same period in the previous year. So as Claire mentioned before, we've just ticked over from under 50% this year. Our gross margin contribution has actually increased from 52% up to 55% this year, which is really encouraging, and that's generally due to the sales mix and with EBITDA growing up to GBP 5.5 million for the period. So during the course of the year, if I summarize what we did during this year from a financial perspective, we continued the investment in our SaaS business and cloud platform. And what that allowed us to do is complete all the product work on our products to get it ready for market. We've got one landmark customer, which Claire will talk about, which we signed just post year-end. And any further development will be based on customer feedback. We managed to streamline our cost base during the course of the year. We've got a charge going through, exceptions of GBP 700,000, but that will drive significant operational leverage and also cash generation in the next year. We're anticipating that's going to lead to GBP 1 million of cash, additional cash inflows in FY '25 on an annualized basis and beyond. And then the plan is we are set up now with our strategy to execute on our transformational growth, which is going to be driven by our SaaS products. And the sale of our SaaS products is going to lead to increased margin at the gross margin level, EBITDA level and have a knock-on impact on cash generation. So moving on, just to pull out some of the important points in the income statement for the year. So as I mentioned, revenues increased by 8% compared to the same period in the previous year with recurring revenue now contributing 56% to the total revenue. Gross profit has increased to almost GBP 18 million from GBP 15.5 million. So that was -- that's a 15% increase compared to the same period in the previous year, with the gross profit percentage increasing to 55%. At an adjusted EBITDA level, we can see that the inflationary cost increases that we saw across the across the period compared to FY '23, have actually been more than offset by the increase in the gross profit contribution that we saw during the course of the year. So during this year, we took on new sales heads across the U.K., U.S. and Europe, which led to an increase in our admin expenses. We saw an FX -- negative FX impact of about GBP 300,000, and we saw smaller increases across our admin expenses base. So we can see that these have been weathered by the gross profit increase. Below EBITDA then, we can see depreciation and amortization is flat year-on-year. But as we have now completed the majority of the work on our products, subject to some customer changes, we would expect the amortization charge to increase next year and beyond. Share-based payments is negligible, but the restructuring cost of the GBP 700,000 that we spent during the course of this year will have positive impact on FY '25 and beyond in terms of the restructuring we did, mainly from the European development business. So in spite of the increases in cost base, the restructuring costs we've actually seen almost a 10% increase in operating profit, from GBP 1.4 million to -- sorry, from GBP 1.3 million to GBP 1.4 million in the current year. Moving on then to the cash flow. So the impact of these exceptional costs, which are nonrecurring and won't occur in FY '25 and beyond. We generated about the same amount of cash as we did in the same period in the previous year. There were some negative working capital adjustments towards the very end of the year where we had expected to receive a large cash receipt from a customer. It was about GBP 700,000, and that came in the week after the year-end. So the cash actually generated from operations is slightly higher than that, had that money come in. We -- the cash that we generated from our operations was mainly spent on our product. So last year and during the course of the year, we've talked about how we're going to invest in our product, make that ready for market and execute on our strategy. So now our product is, we spend a lot of money during the course of the year on the product to get it ready. This year, we're investing in resource and then FY '26, we think we're going to reap benefits from the resource and the quality product we've developed. In terms of net cash, the net cash decreased from GBP 3.1 million at the end of FY '23 down to GBP 1.1 million. And if I were to take a step back, the majority of that decrease was due to the investment that we made in the Streetworks platform and NG-9-1-1 and the costs associated with that in terms of the marketing events and the other team members who are already engaged to sell that product, that was GBP 1.1 million of it. And then the remainder was the exceptional items of GBP 0.7 million. So if we -- that is the main contributing factor to the decrease in cash. At the end of the year, we have an undrawn facility of GBP 1.1 million, which gives us available liquidity of GBP 4.1 million, which is more than sufficient to service our obligations therefore due. I suppose in view of the fact that the exceptional costs that we took out -- spent money on during the course of the year won't reoccur next year, and we're going to gain operational savings and cash inflows from the restructuring changes we made in Europe during the course of FY '24. So in terms of the regional revenue, we can see that across the individual territories we operate, we've seen double-digit growth in the U.K., Ireland region, U.S. and Australia. So some encouraging performances across those regions. As Claire mentioned, the growth in Europe has been flat, so there's been no growth in Europe. But during the course of the year, we won 2 multiyear, multimillion-euro deals, which gives us a really clear line of sight on revenue into FY '25 and beyond from the European business. There's very little concern at all over the services revenue in Europe as we go forward given the value of the commitments we've got. We also generated some excellent partner relationships there as well, which may yield further additional orders. In terms of the composition of revenue in the split by country, at a percentage level, it's pretty consistent with the same period in the previous year. So the real focus is to grow the U.S. next year from 15% to give it more of a sort of overall proportion of the total revenue that we generate in FY '25 and beyond. In terms of recurring revenue then, as I've mentioned, our recurring revenue is up 22% compared to the same period last year, so we're up GBP 18.1 million from around GBP 15 million last year, of which term license revenue has grown by 60%. So really encouraging statistics there in terms of the generation of recurring revenue, and gives you real certainty going into FY '25 of the security of our revenue line and our forecasts. As Claire mentioned, the SaaS revenue contribution this year is small, so that's only GBP 200,000 and it's generated from trials. But already, we have -- we've secured at least GBP 350,000 from the UK Power Networks contract that we announced in February. So that will be recognized during the course of this year. So our SaaS revenue will at least double, and we're hoping for further growth on that during the course of this year with a forecast of just under GBP 1.5 million from SaaS product. In terms of annualized recurring revenue, we can see over the last 5 years, we've continuously grown that. So it's a really great leading indicator as we go into the next financial year of the security of our revenues are up at GBP 17.2 million from GBP 10.2 million in FY '20, of which term license ARR is up to GBP 7.7 million from GBP 5.6 million. So some really encouraging leading indicators going into the next financial year and beyond. So I prepared the slides, for the last couple of decks and what's -- what I'd pull out is the now, so the cash where we are now. So we've moved a little bit along the track there. There's no time line on this, but what we can see is a proportion of the SaaS revenue we're envisaging is going to significantly increase. And the SaaS revenue that we're going to generate over the coming years is going to be at a significantly higher margin, the gross margin level and the EBITDA contribution compared to that which we see in the Enterprise business currently. So as we scale and grow those SaaS revenues, there's going to be a transformational impact on gross margin, EBITDA and then cash conversion. So that's the plan for FY '25 and beyond. I'll hand back to Claire now.

Thanks very much, Stuart. Okay. So I'm going to take a look now at market overview. I mean the demand for accurate location data has never been greater. We'll then focus on looking forward, what we're going to be doing for FY '25 and beyond on the Enterprise business and then into the SaaS business, the NG-9-1-1 and the 1Streetworks where there's a real opportunity for transformational growth. So just looking at the overall market at a macro level, the demand for location data has never been greater. The need to have accurate location data all in one place, either on an organization level or at a national level is just never been greater to do all the things that are noted on the right-hand slide, planning for electric vehicles, maintaining the nation's flood defenses, we work with the environment agency in the U.K. and improving response times for emergency services. At a macro level, our position, I believe, in the market is very unique because we sit at the middle of 2 key global growing markets. And at the left-hand side of this is the geospatial information systems market, and in here with the likes of the partners like Esri that we work with. And we work with them from more of a technology perspective because we're bringing in their data into all of these different systems. And on the right-hand-side, we've got the more mainstream master data manager and IT market. So the partners that we work with, the likes of CGI, Atkins on the new National Underground Asset Register, because as what we bring to our customers is the best of both worlds, the GIS and the master data management. So now just taking a moment to look at the Enterprise business. So we focus this on the key government -- key areas of government utilities and transportation. It's all about selling our products of 1Integrate and 1Data Gateway. And we will continue to invest in these products, our world-class platform that we looked at earlier. We're also looking to incorporate AI into this platform. We will continue to strengthen our partner relationships. But we really do think the opportunity for our business is still within the U.S. for considerable growth of our Enterprise business. So we're looking at getting $1 million of annual recurring revenue in each U.S. state. We have 18 states so far, and each has expansion between [indiscernible] been through that earlier with the example with Oregon. But in FY '25, we're really going to give this some focus. So we want to set the U.S. sales division up for success. And we're going with a more sector-based approach. So currently, we have account management teams sitting in particular areas of the U.S. So one will look after the Northeast region, one will look after the West. But we feel that it's more appropriate to actually have sector base. So we know that the Department of Transport, transportation sector has a lot of money to invest this year and we have specialists around the Department of Transport. So we're going to go in an approach of having sector focus with the account executives on these different areas. So some focused on Department of Transport, some focused on NG-9-1-1 and some focused on the state GIOs and the parcel data example that I showed you earlier. We've also got an expert to join us on NG-9-1-1 in the first of May, which is really exciting for us. She has a background of sales. She's also worked within one of the states, and she's also on a number of the committees. So we really think bringing her on board is going to be a significant asset to us. We're going to increase our direct Enterprise sales resource in the U.S., so we're going to -- as well as taking on the industry expert, we're going to be taking on another 2 heads. And just more generally in the Enterprise business, post year-end, we had some good contract momentum. So in the U.K., we're working with CGI on a big Cabinet Office framework. So CGI won GBP 100 million strategic framework contract with the Cabinet Office, and we're going to be part of the ecosystem to help deliver that. And with Texas, we've been working on a framework contract over the last year, which enables us to contract with Texas, any of the departments within the state can contract with us to buy our technology or buy our services without going to formal tender. So that's a really great contract win for us. So that's the Enterprise business. And I have just got one other example here of where we're working in the Enterprise business with Caltrans, who's the Department of Transport for California. And we had an expansion contract with Caltrans in the year for $0.4 million for our traffic asset management system. And again, what we're doing with Oregon, we're creating them a really valuable data set. And if you look to the left-hand side of the picture, you can see we're bringing in data from lots of different sources, linear road reference data, other data, Excel data, some traffic crash data. All of that gets more in through our system. And at the top, you can see we're helping them create this transport asset management system, TAMs database. And this is going to be a really valuable database for them that will have all of their assets in. And this is just, again, another example of how we're working with these organizations. And we've further expanded with Caltrans actually after the year-end, they want another -- us to help with another project called the CAVs project has given us another $200,000 after the year-end. And in line to what I was talking about earlier with the sector focus, having someone like California transportation working with them, they do the selling for us. They'll stand up on stage and say, "We work with 1Spatial. They're doing this great work with us." And that's why we think it's really important to now go around and look to sell this solution to the other departments of transport. So some really good opportunities within our Enterprise business. So now looking at the SaaS solution. So the first SaaS solution is NG-9-1-1. So what we've done is taken our enterprise rules and everything that we've created that we can sell to the states, which is GBP 200,000 per state of annual recurring revenue. And this is quite a significant amount for the cities and the counties to spend as they have less money. So what we created is a pure SaaS solution. It's a smaller amount of money that they have to pay. It's just a vanilla, it's a vanilla platform -- vanilla rules in the platform. and they can just validate their data as much as they like. And we've been offering that at sort of GBP 15,000 per city and county up to about $30,000 per city and county. The market opportunity is vast at $350 million because there's 23 cities and counties. The progress in FY '24, where we secured 5 contracts, and those were they're going well. They really like the technology. It's a modest amount, so we've only included GBP 200,000 for both NG-9-1-1 and traffic management in FY '24. But one of the things we're working with them is that we identified that they wanted this Esri plug-in. So as they're working in their Esri system, they work in their Esri system day to day, they decided they wanted to validate their NG-9-1-1 data. They would come out about -- they would come out their Esri system going to our SaaS solution for NG-9-1-1, validate their data, bring that back and then have to come in back into their Esri platform. And they said to us, "We love the tech and the way that we can just validate the data and it pinpoints all the issues for us. It will be much better if we had a plug-in into Esri so that we could stay in our Esri system all day." So we did that. So that's really good, and we think that's going to give us much more traction with the NG-9-1-1 SaaS. But in terms of FY '25, we just need to do a little bit more optimization of that plug-in, but it's nearly ready. And we also then just want to relook our go-to-market approach. Because we've now got this Esri plug-in, we feel it could be a faster method to go via distributors. And also, coupled with getting the new NG-9-1-1 expert on board, we think we're going to take maybe one step back to really go forward at a faster and more effective rate. We want to just have a look at how we're going to market around this. So with the NG-9-1-1 expert, we're going to go look at that. But our feeling is using the Esri distribution network, that would be a faster approach than going with one person selling GBP 15,000 at a time, which is quite labor-intensive and really focus on account execs back onto that Enterprise opportunity that I just went through. So now we just want to finish really on the SaaS solutions, which is looking at 1Streetworks, our traffic management automation. So this really is the first solution in the market to fully automate the production of traffic management plans, significantly reducing time and cost for our customers. There's no other solution in the market that is currently doing this. And just to give a few minutes on what this is actually doing. On the left-hand side at the bottom, you can see the picture there. So if I'm a utility and I want to dig up the road, I have to create something called a traffic management plan, which sets out where all the codes are going to go, where all the traffic is going to go -- the slowing down sides. And this has to be submitted with a permit to the local authority. And there is a red book that says how you need to lay all those plans out. And we've encoded that red book into our platform. We're bringing some data from Ordnance Survey. In a matter of a few minutes, we can automatically create that plan, which currently takes customers hours, days and potentially, weeks. Now the market opportunity for us of this is around -- there's 4 million road works a year on low-speed roads. Two years ago, this is 2.5 million. And there's an addressable market of over GBP 400 million of ARR. It's pure SaaS. No services, quick to access, one platform to maintain, gross margin of 80%. And we're targeting 25% to 30% market share, but we've actually got an ambition to get to a GBP 40 million of annual recurring revenue in the next 5 years. And we did a deep dive on this for 2 hours on about the 12th of March, and that is available on our website if you want to look at that. But we've made some really good progress in FY '24. We signed our first significant contract with UK Power Networks in the South. And that actually gives us recurring revenue really for the -- for next year for FY '25 of GBP 350,000 because it's actually recognized as you go through the year. And really, this is just really the tip of the iceberg. This is just a very -- really a small amount for UK Power Networks South just to get them trained on our software, and they've now mandated it in the small connections team in UK Power Networks. And the small connections team, the ones that come out and give you an extra electricity into your house if you need it for a Jacuzzi or an electric car. And we're using this GBP 350,000 to get it through as many departments within the South, so that they're all using it and developing ROI and use cases so we can really spread it out and expand within UK Power Networks. And they have their budgeting cycles that start really from 1st of March, April 2025, going out for that financial year. So we've got our minimum for this year with UK Power Networks working in the South of GBP 350,000, which gives them 3,500 plans. So we can grow through that contract. But really, this year is all about building these business cases for the big budgeting cycles ahead. So what are we doing in FY '25? We're going to be continuing to expand in UKPN, but also looking at utilities that are really aligned to UK Power Networks. So those that are going to be the other electricity network operators, the other gas network operators because the business case that we get with UK Power Networks, we will be able to use that with them. We've got great advocacy in UK Power Networks. Paul Dooley of UK Power Networks is talking about the amazing success of the benefits they're seeing. And that's our best cost -- that's our best marketing, having Paul Dooley talking about that for us. And indeed, we were at the HAUC event last week in Manchester where a lot of the street works companies and local authorities get together, and we were on the stage. Our evangelist, Andy Fennell, was on the stage. And after our presentation -- the previous year, we were just demoing the product. But this year, we were saying, right, these are the benefits, these are the tangible benefits UK Power Networks is getting. And after that, we had a number of the street works, people come up to our stand and say, right, we want to get going on this. We can see the benefits. And these are a number of the big DNOs within the electricity and gas DNOs within the U.K. So a really exciting time for us from that perspective. We're also targeting this year the Tier 1s, the likes of Balfour Beatty, Kier, Skanska. So these are the organizations that do a lot of the actual digging up of the road on behalf of the utilities or the local authorities. And actually, we think we might be able to get more traction with them in the shorter term because they don't have such the regulation around the budgets as say a utility would have. So also in FY '25, to capitalize this, we're investing in sales resource. So we've got a new sales director that I'm looking at hiring. Hopefully, get them on board relatively soon. So we're down to the last or final 2 on that. And we also need to invest in the sales team. So we do really see in the near term, opportunity. We've got a really good strong pipeline for this. We now need the sales execution. So the overall aim for FY '25 is to really build on those foundations to build for those solid really FY '26 returning revenues that are occurring revenues from the SaaS that we now forecast. So really, as a team, and at 1Spatial and the Board, we're really confident about the outlook for 1Spatial. We've had a really good solid start to the beginning of the year, those frameworks they're on, the wins in Caltrans. We really do have a growing SaaS contribution to our business. We've already kicked off. We've got that good start to the year at GBP 350,000, but really expecting more of those to come. Investing in our sales function is really key this year, both in the U.S. and the Streetworks to capitalize on those investments that we've made. And we're really confident in the revenue progression of 1Spatial, really improving that mix of revenues, getting that better quality of SaaS revenue, not just for now but really for FY '26 and beyond. And that enables us to get real increased operating leverage from our business. Thanks very much. And I think we're now on to Q&A.

[Operator Instructions] I'd like to remind that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via Investor dashboard. [Operator Instructions]

Yes. Okay. We'll go from the top there. And I think probably -- I think there's quite a lot of these for Stuart. Yes, so what are the respective ROIs for 1Streetworks in the 9-1-1 applications?

Yes. I mean it's over the next 3 to 5 years, I would say. So to date, we've invested about GBP 5 million in the cloud and Streetworks application, less in the NG-9-1-1 SaaS because it's built on top of our platform. And it's basically a light rule set based on tech that we've already developed. So certainly over the next 3 to 5 years, I think, will be reasonable.

Okay. Very good. Right. The next one from Andrew J. Does the increase in percentage recurring revenue mainly come from new sales or from a substitution of nonrecurring revenue?

Right. It's a combination of three factors really. So it's new sales -- sorry, that's -- it's new sales; it's the recognition of revenue on some of our longer service projects, where we've developed products and we're able to recognize the revenue on some of the licenses in the current year which are term; and then there has been a certain amount, like in certain circumstances, based on the business case, we may take a slightly marginally low margin on the services. So at the expense of a slightly lower services margin, that would generate the recognition of new term license. So it's a combination of those three really, but mainly, it's new sales to new customers.

Yes. Very good. Right. Stephen K, with the successful transition towards higher-margin, recurring software revenue licenses, could you elaborate on the specific strategies or initiatives that drove the notable increase in software term license revenue, particularly across the U.K., U.S. and Australian markets? So maybe I'll do some of that. So I think the market, interestingly, as I've mentioned, is really getting to this point of if I look back 3 years ago, people -- if a utility company had bad data, okay, that's a bit of a problem. We might be a bit inefficient. But now they're happy to submit data to these public platforms, things like National Underground Asset Register. We are doing some work with some of the utilities where they've got missing assets, helping them to create assets and we can do some of that. Our technology platform, we call it, is a very versatile platform. We can do lots of stuff with it. So we can infer assets using data. Now we know in the house -- data when the house was built, we can take all the survey data, where the roads are, when the pipes are likely to go in half. So I think it's people knowing that they have to get their data more organized than more accurate so they can submit to these platforms, but also we'll say these platforms. I mean you just look at Oregon, they need to make -- they need to bring data together to make valuable decisions, and you can't do things like broadband planning without having your data in one place. You can't do electric vehicle plan. You can't really do planning anymore. And so all of those things are years ago, let's just not stick our head in the sand if the data is not very accurate that, I think. And that's why we're very excited about the opportunity at 1Spatial because of these aspects. And all we can see is this getting greater, people want digital twins. You kind of have a digital twin of your data. Digital twin from my perspective is just a digital replica of what's happening outside. And they need those digital replicas to do planning. I mean I think if the environment agency and I think if labor government get in, they want a whole new section of the government, just to focus on flooding. And you can't do planning around flooding if you don't have that digital twin. So I think it's just across the board really, but -- and we just continue to evolve our solutions to capitalize on that market. We do have a fairly big R&D, and a lot of that spend is on the 1Streetworks and all these new solutions. But we are putting more and more stuff into our platform, AI, all sorts of things so that we can just be at the forefront. We are the market leaders, from my perspective, of dealing with data, that's location and other data, that intersection is so key and really gives us a unique advantage. So we've got to keep focused on that and keep getting better and better because the market is just -- there's just more and more need all the time. Went on a bit animated there about all of that. But yes, we feel very strongly that we've got a good opportunity. Actually, this is -- James C has actually got a comment that's slightly aligned to that. Claire, you mentioned that you're going to incorporate AI into the platform. Can you expand on the value it will bring? And how to better the platform? I think it will be a value add, but just want some more info. Yes. So I think it's really back to that point that I would say. But we can just see more and more need to get data, good accurate data into these consistent -- platforms of consistent, good quality. And one way you can bring that data in faster and quicker is to use AI. So we are using AI in our platform to do that now. So it's not some sort of fairly -- you'd say it's quite a simple area, but if we're bringing in that data from lots of different systems. So for example, you're bringing in it from say, NUAR, for example, the National Underground Asset Register, you're bringing data in from hundreds of different utility companies. They will have data in a slightly different format. And they might call it pipe. One utility might call it pipe with an "S" one with a pipe with a capital "P," a small "P," one might call it "pipe 1", "pipe 2". So we're training the system now so that when it brings that data in, it knows that all of those actually mean pipe. So let's map it all and do that very quickly. We don't -- and sometimes, we might say we might do it as it would automatically populate it. And then we just run down and say, earlier, that all means pipe, accept it all in one go. Those are all things that we're doing. So it just can make up our platform much more efficient in bringing in all that data, really helping the end users. What we're doing is we're just shrinking the time down more and more and more, shrinking the cost down more and more and more. So really providing more ROI benefits. Okay. I think that's all the questions. So if there's any more questions anyone wants to ask?

Actually, there might be one on the UK Power Networks contract itself from Stephen K.

Is it -- sorry, I've missed one -- skipped one.

So the recent contract win with UK...

Yes. Stephen K, the recent contract win with UK Power Networks for 1Streetworks seems promising. Could you provide an insight into the scalability and potential market penetration of this solution beyond utility companies? So yes, so we have a -- I mean, the utility market is vast. I mean of the [ 4 billion ], I would say probably I'd say, good half of that is utility companies. But the ecosystems are not complicated, but there's a big part of that ecosystem. So utility companies will do a lot of that themselves, but they might get contractors or Tier 1 contractors to do a lot of that as well. So I mean, if you just said 50% of the market is utilities, I mean, it's huge potential. They all have the need for this, all utility companies from my perspective, all have the need for 1Streetworks. But we could then go into all the local highways authorities that also need to dig up the road, we can then go in towards the Tier 1 contractors. So with -- in terms of the market opportunity, we can go after all of them, but our priority at the moment is utilities, building out those U.K. use cases with UK Power Networks, get them as our advocate, they will talk to other utility companies. So within the utility companies, they all have like heads of street works. The event that I was at last week was all the heads of those street works will go out. So they will all talk to each other, so we get great advocacy. I don't know if you want to add a couple of points to that, Stuart. I think...

No. I mean I think you got it spot on. So within the U.K., we're sort of saying 4 million road works a year, yes, about half of that is going to be the utility companies and the other split between the Tier 1s and the traffic management companies and local authorities as well. I guess from our perspective, in terms of market penetration, there's certainly like with the bandwidth we have, there's certainly enough to be getting on with the utilities. The -- what we've seen over the last year is UK Power Networks has really adopted this product and advocate on our behalf continuously on this. So most recently, as Claire mentioned, the HAUC event, we did the Streetworks deep dive in March. And prior to that, our Smarter Data, Smarter World industry event at the end of last year. So they're continuing to use this product, really advocate it and expand it within their operations. Now at the moment, they're in the South with the new connections team. And the GBP 350,000 contract that we signed with them at the beginning of the year, that covers them for 3,500 plans. But certainly, the scope significantly increase, at least within the very first instance within that customer. I mean they're doing about 90,000 plans a year or so. So yes, the opportunity is large. But as Claire says, I mean, the key is we have a direct sales team we plan to invest further during the course of this year and execute on the opportunities that are in our pipeline. We've got a lot of interest from the industry. And -- but actually, our biggest seller is probably going to be the advocacy that we're getting from UK Power Networks once there's further adoption within that company and expands within the organization and that account grows, then actually the biggest of the sales -- the sales momentum is going to be created by adoption by a very large company within the industry. So yes, I mean, like I don't really have anything to add. I think the opportunity is very large. And I think we're approaching it in a managed way, such that we're going to be able to convert the opportunity as it arises.

Right. So I've got a question here from Michael T. Please can you elaborate on how 1Street -- no, sorry, Tony W, sorry. I am a long-term shareholder. I am [ infused ]. But when can I expect growth in earnings per share, Tony? So just before I get Stuart to answer that, just to let you know, I think both myself and Stuart both booked shares in March, I think around 58p and yes, I'm a long-term shareholder as well. So most of my pension is in 1Spatial shares. But yes, Stuart, do you want to just talk about the growth in earnings per share?

Yes, I can talk about the earnings per share growth. Yes, absolutely. So I mean we're going to see a progressive increase in earnings per share, and it's really going to be dependent on the Streetworks. So where we are at the end of FY '24 as we've invested a whole lot in our products, which we're going to convert on in the next -- in FY '25 and beyond. So next year, we're anticipating EBITDA of about GBP 6 million, and that's going to drop to the bottom line but the increased amortization that we're going to charge from the products that we've just finalized the development on. So we're going to see a progressive increase in the earnings per share, but it's really -- like the earnings per share is really going to transform as the SaaS revenues that we're forecasting come in. So next year -- or sorry, for this year, FY '25, we have GBP 1.4 million in there for SaaS revenues. And then in FY '26, we have GBP 3.6 million in there for SaaS revenues, which is going to be Streetworks and NG-9-1-1 predominantly. As the -- in terms of the delta there, we can see that the GBP 2 million increase in SaaS revenue drops to EBITDA. So it goes from GBP 6 million in FY '25 to GBP 8 million in FY '26. And because the D&A and the rest of the charge sit below EBITDA are going to be lower in comparison to EBITDA that we're generating, that will yield an increase in the earnings per share. So it should -- now we spent -- I suppose, in response to your question, Tony, now we spent and developed a product that's ready for market, and we've already seen traction coming into this financial year. All we need to do now is capitalize on the opportunity that we have. So we can see an increase in profit before tax this year, which is going to lead to an increase in earnings per share and further increases as we go forward, as we scale the SaaS opportunity. That's what I see.

Okay. One question here from Michael T. Please can you elaborate on how much 1Streetworks trials are going and how [ trial sales ] to revenue arriving? So I mean the trials, everyone that uses 1Streetworks, the feedback is amazing, phenomenal. Everyone likes it. There's always a bit of lag between that and getting procurement, getting everyone to use it and all of that stuff. But we really do think we're going to start seeing some of this coming through now. Obviously, we've got the expansion within UK Power Networks, which we're working on. But within what we see this year is that all these other distribution network operators is using something like pockets of like innovation money to do what we've done with UK Power Networks. Let's get the technology in. Let's get the teams using it. Let's do some training. Get them up and running. Get the benefit so that we can go along the same road map that we've done really with UK Power Networks so that we can get them in with a big license opportunity. Remember, this product doesn't exist. This is a new product or a new market. And it is transformational, but we have to work with these organizations getting in. So I'm confident we will get some deals in. I think the deal this year will be like the sort of couple of hundred thousand type with the other utilities and potentially with some local highway authorities using some of the line rental money, and also with these Tier 1 contractors. And the Tier 1 contractors could be quicker in some respects because they're not burdened by the sort of whole utility budgeting cycles and all the regulation that's around that being sort of quasi government. So yes, I think we'll see a good range. And what we want to start getting is some really good market adoption. We have actually signed a pay-as-you-go with a tram company in the north. They're already starting it. We are actually signing some deals, we just haven't really because of the size of them. Some -- when they're doing the pay-as-you-go, we'll be charging higher pricing. If people sort of commit to a certain amount of revenue over a period of time, we'll give them a slight discount for that committed. But yes, we expect to see some good stuff coming.

I think it's also worthwhile saying, Claire, that what we're seeing in the market at the moment is that people aren't that interested in going to trial. Now the concept has been proven.

Right. Yes.

So with the adoption of the UK Power Networks, we went through a trial process because it was a new product to market. But actually, now it's out in the industry and people have seen it, they're interested. We've got more interest in people going directly to contract rather than going through a trial. So we're looking at sort of adoptions or engagements, direct engagements as well as trials.

Okay. Actually, on that point, so David B has just asked actually how many Streetworks trials you have current and planned? Yes, we've had around about, I think all told, we probably had about 6 or 7 trials, but actually a lot of people now are just -- as Stuart said are really going straight to right, let's just get this on board and let's just get going. So a demonstration of it is enough to see some of the use cases, some of the stats that are coming out. And as I said, we've already signed the tram company pay-as-you-go. So yes, we've got a lot. We've got a lot of pipeline and a lot of the -- as I said, the DNOs were really interested after our event this year -- event last week. We're now going into events time, so we should get some more pipeline of opportunities. So yes, we've got a lot of trials and demonstrations and a lot that we're just sort of started to talk to procurement people about now. So yes, so hopefully, some fingers crossed, some exciting things will start to happen during the course of this financial year.

Perfect. Claire, Stuart, I want to jump in there. I think you've actually managed to get through all the questions from investors. And then of course, the company can review all the questions submitted today, and we'll publish those responses on the Investor Meet Company platform. But just before redirecting investors, provide you their feedback is particularly important to you both. Claire, could I just ask you for a few closing comments?

Yes. I mean, I think, hopefully, I portrayed today how we're excited that the Board and I am about the prospects at 1Spatial. We've got a huge market opportunity for our Enterprise business. But our SaaS business has the opportunity to be transformational. We've been working at this a long time. We knew there was a market opportunity. We knew we had something, and now UK Power Networks are proving that. So it's now really about sales execution on that opportunity. We could really get to those scalable revenues really improving the quality of revenues at all that dropping to the bottom line in cash. That's it.

Perfect. Claire, Stuart, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order for management team can better understand your views and expectations? This only take a few moments to complete. Your time shall be greatly valued by the company. On behalf of the management team of 1Spatial plc, we'd like to thank you for attending today's presentation, and good morning to you all.

Thank you.

Thanks.