Ai-Media Technologies Limited (AIM) Earnings Call Transcript & Summary

Good morning, and welcome to Ai-Media's First Half of Financial Year 2022 Results Webinar. From the company today, we have CEO Tony Abrahams; and the CFO, John Bird. Before I hand it over to Tony and John shortly, I'll just remind investors on the line that we will take Q&A at the end of the presentation. [Operator Instructions] Without any further ado, I'll hand it over to you, Tony and John. Thanks very much.

Thanks, Simon. And thanks, everyone, for being here and for those who are watching online. I'd like to first pay my respects to the traditional custodians of the land on which we meet, the Gadigal people of the Eora Nation; and pay my respects to their elders past, present and emerging; and also pay my respects to the traditional custodians of the land on which all of us are joining this webinar. So Ai-Media is a global technology company delivering live and recorded captioning, transcription and translation. This has been a very exciting half. In fact, it's really the half where automatic live captioning has taken off around the world. We are still at the beginning of that mainstream adoption and it's a very exciting time for what this means for Ai-Media. We have built this business to take advantage of exactly this moment, and I'll run through some of those highlights in this presentation. So the highlights for the 6 months. So we've had 29% revenue growth on last year. So that's $29.6 million in statutory revenue, up from $22.9 million. We have grown our Lexi and Smart Lexi automatic captioning almost 100% on that. And that's against a pro forma view from EEG, which of course we did not own for the full 6 months of the prior comparative period. We delivered 47 million minutes in the first half across all of our products; a cash balance of $15.9 million as at 31st of December, which gives us a really strong cash position to execute on our growth strategy, with a 29% increase in revenue and more of that delivered with our new SaaS products at higher margin. We've seen that gross profit number lift by 78% to $15.7 million, and we've seen our gross margins lift from 38% to 53%. And we're expecting to see that trend towards higher margins continue. And then that's also fallen through to the bottom line with a $7 million improvement in our EBITDA performance against last year with a break-even result for this half inclusive, obviously, of all of the growth investments that we're making to take advantage of this unique position. We are, yes, recommencing our buyback after these results now that we're out of the blackout period. 36% of that program has been completed. So a little bit on the automatic -- the impact of automatic captioning or ASR or automatic speech recognition on Ai-Media. As I said, this half has really seen these products take off, in particular the free automatic tools that are embedded in Zoom and Microsoft Teams which were launched around about -- between May and August of last year. What that has seen is a shift towards these free on-demand tools, as we highlighted in our AGM last November, that has seen some of the legacy services revenue, particularly in North America, shift away from the traditional ACS business that we acquired a couple of years ago. And that Live Enterprise services revenue is actually down year-on-year by 25%. What has balanced that has been our own efforts at introducing automatic speech recognition and doing it in a much better way than those free tools. I'll run through some case studies a little later around some of this marketing transition and the customers who are moving from premium to automated, but one thing really stands out in all of those case studies, and that is the importance of on-demand convenience. So the ability to not have to book a captioner. The ability to be able to turn on those captions on demand is something obviously that we are at a disadvantage at -- when it comes to Zoom and Microsoft Teams meetings where those closed loops actually have those features embedded within them, but on the other side, that's a huge advantage for us with the iCap gateway platform. And I'll talk a little more on that as we go through the presentation. So our automatic speech recognition is absolutely top quality and industry leading and significantly better than the free tools that you would get on those platforms. It's better because Lexi itself can use multiple underlying ASR engines. It's a completely flexible architecture. And what we know is that, among the dozens of different ASR engines, there are situations where each of them performs better. And that can be different languages. It can be different accents. It can be different contexts. And having the ability to swap in any of those ASR engines into the Lexi and Smart Lexi architecture really has provided us a step change improvement over what people would get with competitors' ASR solutions. We have the best-in-class AI modeling underneath all of those ASR engines. And really importantly, the gateway iCap delivery platform is critical to the user experience here. This is effectively the defensible moat for Ai-Media, and it delivers us that closed-loop environment in high-end broadcast and high-end enterprise. And that is why we are focused on growing that iCap network across the world. Consistently, we're seeing the quality results for our Lexi and Smart Lexi continue to improve as you would expect over time as the artificial and machine -- artificial intelligence and machine learning algorithms improve. And we are getting consistent ratings above 98% for that. Now that's not as good, and as I should say, as our premium service; and we continue to offer that premium service. And the market for that premium service is not going away. There remain a significant number of customers, including several new customers that we've signed in the last 6 months, for whom 98% is not enough and for whom they require the 99.5% that our human-curated captioning team continue to deliver, but increasingly customers are wanting to deliver captions on more and more content. And what we are starting to see with this widespread adoption of live captioning through the automated tools, we're starting to see live captioning becoming expected, almost a hygiene factor in meetings. And this is a really exciting time for Ai-Media to be taking advantage of. In fact, many customers who've never even thought about captioning before who have trialed the free tools are now coming to us because they want that improvement in quality above and beyond what they would get from effectively the out-of-the-box solutions. And that's coming through very strongly in our broadcast and enterprise sales pipelines. A lot of that revenue obviously hasn't hit, as we're reporting obviously results just for to the 30th -- 31st of December, so we're very excited about the prospects of this strategy and the execution of it in the quarters ahead. Now this is -- a few people have asked me, "Can you try and explain iCap a bit better?" And so really what is it? And so if we unpack the iCap network: We've spoken about it in the past, about being this gateway network that connects captioners, broadcasters; and provides a secure IP delivery platform around the world with 5 9s uptime, so 99.999%. It's incredibly reliable. It's what almost all U.S. broadcasters use to deliver their captions. And it's what we are installing almost exclusively now with all our new customer contracts, but they're really -- I'm picking that a bit further. There are kind of 3 different elements that kind of need to come together to deliver high-quality captions. The first is that you need to encode the video. Then you have to add the captions, and then you have to have some way of displaying those captions. And all of those things need to come together for a fantastic user experience. An example, right, is if you've got all-white captions coming up and you're watching, say, the winter Olympics, they're going to be pretty useless against the snowy backdrop. Equally, if you are sizing your captions for a television screen and people are watching that content on a mobile device, then those captions are not going to be fit for purpose. What the iCap network does together with the connected devices that are either physical devices, virtualized devices or cloud-based devices is that they ensure that the caption stream is encoded brilliantly with low latency and with full reliability, such reliability that -- NBC relies on this for the delivery of their winter Olympics and summer Olympics content. And that encoding is done in a way that is consistent regardless of what video format comes in. And that's actually a really difficult problem to solve. And it's not a problem that any of the big technology companies that are working on speech recognition are working on. They're just not focused on that. Adding the captions to that, that's critical; and that is obviously part of the iCap infrastructure. And those captions can be automated with Lexi, semi-automated with Smart Lexi or human curated with the [ Ai ] premium option. And the final part of the puzzle and one that's often the most difficult is how do you actually display those captions. And you could perhaps think of an event you might have been to with a whole lot of tables and some screens up on the side or even up the front. How do you actually get the captioning -- how do you actually get the audio from the event and the captions back onto the display? And these are the technologies on the right that enable us to do that in a very seamless way. And so it's putting this entire package together, this entire product suite, that really is underlying that iCap network. That delivers us the closed-loop system. It delivers our customers the single-button convenience for turning captions on; and the reliability that -- regardless of how their customers are viewing the content, that the captions are going to come up in a way that is appropriate to the device and the situation that they are viewing it on. And that's [ with the measure ] of either inserters that will then insert the captions onto a video screen. It could be decoding the captions so that they will display according to the monitor's preset caption display options. Or it can be a separate user interface like our Ai-Live display which is running as well in parallel on this session. And I'll show a demo of that, in both English and French we've got it running today, as we move to the Q&A part. So some really exciting sales wins. Not many of those have actually hit the revenue for the half, which is particularly exciting obviously for the forecasts. So we have deepened some really, really key strategic customer accounts, including 3 of the big global technology companies, 2 parliaments and 1 international sporting organization. We've also moved existing iCap customers away from a premium delivered service with one of our competitors to the Lexi and Smart Lexi. And that includes NBC, FOX Weather, ABC in the U.S. and ESPN. And then we've also won new customer accounts, where we are expanding the iCap network and delivering Lexi and Smart Lexi. And they include Sky News Australia and TVSN which we mentioned in the last quarterly update, but a brand new customer that we haven't announced until today is GB News, which is a 24/7 news service in the U.K. and our first U.K. customer broadcast win with this combined iCap product suite, which is really great news. So I'll move now just to a little more detail on some of these case studies, and then I'll hand over to JB for a bit of a deeper dive on the financials. And then we'll come back and have a look at the outlook. So as I said at the outset, this 6 months really has marked a step change in the market. It is something that we highlighted in November, but I'm pleased that we're able to offer a bit more color today, this market in transition. As I said, the on-demand convenience outweighs any accuracy concerns for a lot of one-on-one support environments. What do I mean by a one-on-one support environment? It could be a deaf student in a lecture theater. It could be a hard-of-hearing employee in a workplace. For those hard-of-hearing employees who are using Teams or Zoom as part of their workplace, they just have to click a button and the automatic captioning comes on. That is going to see -- that section of our business is going to see revenue being about $14 million to $16 million lower than it was in FY '21, but what we're seeing on the upside and making up for that shortfall in revenue are these long-term tailwinds at the more professional end of the market, in the bigger broadcasters, in the over-the-top streaming companies. And really excitingly -- and I think this is my bet on sort of where the overall ASR transformation is really going to take off: It's in large enterprises, large enterprises that want to make all of their meeting rooms accessible, to do it on demand and to do it in a professional -- do it in a secure environment so that none of the conversation and none of the captioning data ever leaves their organization. And we've got a great case study on exactly that coming up, but first -- so one of those customer wins, which was a big 4 U.S. sporting organization which has been a customer of our EEG subsidiary for 8 years. And they've been using iCap-enabled devices with an expanding in-house production suite, including full IP video production and making all of their content accessible for all their viewers. Excitingly, they're now extending that to one of their subsidiary competitions which, for the first time, is going to stream all of the events on their OTT platform with captioning, for the first time. So our integrated technology allows for caption insertion on both of the IP video workflows. So it's transport stream and 2110 with the automatic Lexi captions. And of course, Alta is the product that provides that encoding, that virtualized encoding. And the impact of this is that it's a highly scalable and affordable solution and a large customer account. And as what we're seeing with a lot of broadcasters is they are -- almost all of them are expanding their over-the-top streaming options. So for example, NBC had over 60 channels streaming on their Peacock platform during the Olympics. And so we're very well placed with that Alta product and with Lexi to take advantage of all of that OTT market as it continues to grow. Second case study is the one that I highlighted just before the really exciting one. So this is a -- one of those large 3 -- one of those 3 global technology companies. They have their own consumer-grade ASR product as all global technology companies do, but what they wanted to do is to make sure that they had on-demand accessibility throughout their global organization in all of their corporate meeting rooms to provide single-button on-demand, high-quality captions. Why? Not because their employees are deaf or hard of hearing but because they talk about a lot of technical information. And a lot of their engineers speak languages other than English at home, and having the ability to ensure the precision of the spoken word is really what's driving this universal design initiative. Why couldn't they do this themselves? Well, they don't worry about the encoding. They don't worry about the display. And they don't even worry about having the tools to customize the dictionaries as we have done with Lexi and Smart Lexi. So I think this really helps to really differentiate where we are in the market, what this one-stop-shop solution really means for some really exciting customer accounts. And as I said, we're just at the beginning of this adoption curve of live captioning. And there's no reason why, in a few years time, this case study can't be replicated with thousands of other organizations around the world. And we are well placed to do that with the resources and the technologies that we have at the moment, and of course, we will continue to improve on those areas where we are clear leaders. And the final case study is a really interesting one actually. So this is a long-term U.S. university; a customer of our ACS subsidiary for many, many years that was paying $99 an hour for human-delivered premium captions, for many years. In 2021, so last year, and I think it was June, they switched to the free auto captions on Zoom. Again they really liked the convenience. And we had conversation with them to say, well, what if you could get a higher-quality outcome while still being on demand. And they've now come back to Ai-Media. And we've installed the Falcon product for them, which is a $400 a month subscription. And they're now paying $20 an hour for Lexi because the quality of those captions are so much better than what they would get with the free tools. And they're paying 25% [ all up ] of what they were paying back in 2020, so -- and again, there are 5,000 universities in the U.S. alone. And really helping to refine this pitch and then also to deliver more accessibility for these universities in more situations is what our growing sales team are really focused on. And so all this shows really in the growing share of SaaS and devices as a percentage of the total. So our SaaS and devices revenue share on a pro forma basis, so inclusive of the EEG stand-alone business, has grown by 44% from 18% to 26%. And we're expecting obviously that trend to continue. The next couple of slides, I find just really interesting. So the top side is really looking at the growth overall of the market; and the network, the iCap network. And you can see that begins in 2017, and that market has really begun to step up since we acquired EEG. And what we're also seeing is that Lexi as a percentage of iCap or, if you like, the percentage of that iCap network that we are monetizing is increasing much faster. So we are currently delivering 20% of all iCap volume with our Lexi and Smart Lexi products, which is up from 16% in May when we acquired EEG. The next slide really also shows just how much room there is for us to continue to grow that share. And our bet is that automatic captioning can be used for a lot more content than it is being used at the moment; and that -- with continued improvement in quality, where we're working on even smarter Lexi, that we'll be able to turn on even more of that iCap network into the future. Our competitive advantages haven't changed. These are the same competitive advantages that we've been focused on for years, the same ones that we reported on in the prospectus, but of course, we've enhanced all of those. So our proprietary technology delivers us that one-stop-shop ecosystem and gateway across the iCap network, the best-in-class AI and machine learning powering our Lexi and Smart Lexi products. The security element, we never would be in that -- in conversations with those large technology companies if we didn't have that security. Integrating all of our systems, whether it be the encoders, the captioning and the decoders; whether it's customers being able to access with single sign-on; or whether it's API integrations with large enterprise systems. And of course, delivering everything multilingual and right across the globe with our local sales teams. So I think we're very excited about what this shift towards automatic captioning means. We're very excited about being clear leaders in the professional end of this space. And for many reasons, this hasn't shown up in the financials yet, but we're expecting to see this continue to improve as the sales pipeline turns into actual revenue. And I'll now hand over to JB to walk through the financials. Thanks, JB.

Thanks, Tony. And good morning and thank you to everyone for attending. I'll only take a moment of your time because I think Tony has sort of hit the highlights and the high points of where the organization is going, but look. There are a couple of very important numbers that I'd just like to draw out that might help you understand our performance. And I'm happy to take questions at the end. Our revenue growth, it was driven very much by the acquisition of EEG. [ And our ] services revenue continues to change. As Tony identified, there is slow growth in some regions. And there is decline in other regions, particularly the U.S. And that is driven by some of the old legacy business, but what we're also seeing is a change in the quality of that earnings. So even in the services business, we're seeing a move of some customers. They are moving away from us to services that are free, whereas others and particularly the targeted customers, the ones that we want to retain, are moving into smarter products. And often it's at a lower cost to the customer, a lower price, but it's at a significant higher margin. And the change in revenue mix and the new revenue from EEG has actually seen our profit, our gross profit, grow quite significantly. And our margin rate has grown from 38% up to 53%, which is incredible when you start to consider how the business has evolved and the fact that we are getting higher penetration quite quickly on some of these new products. Looking in contrast. The expenses has increased. The underlying expenses, so when I look at the prior comparative period, included $3 million of IPO costs; and the costs associated with our share raising, our capital raising, but the underlying expenses are growing at a far slower rate than the revenue and the profit. Now part of the reason for the growth in expenses is that we are investing in markets. Tony has mentioned on several occasions that the lead time on some of these sales, some of these bigger customers can be some period of time. So we've increased the sales force, the marketing activities. And it's starting to pay real dividends [ in this ] attracting bigger and better customers and developing the revenue further. What does this mean for the half year? The half year has been [ all about the shouting it's a break-even performance ]. And that's a great outcome compared to the prior periods, whether it's the June year-end or the December year-end. On the balance sheet, from my perspective, the highlight remains a strong cash position. We will talk about the cash flow in a moment, but we effectively threw off $2 million in operating cash. So the fundamental growth of the cash is going to always remain important, and we continue to work very heavily on that. One point that I would like to highlight is that, the other current liabilities, it includes a contingent consideration for the EEG purchase. That's USD 4.6 million. Now that has performance hurdles associated with it. And fundamentally it's due quarter 1 next financial year, but we are working on deferring that to once again just maintain a very strong cash position. Some of the options remain open. Now I mentioned the cash position. And I might go to the next slide, Tony. As I said, the highlight in this is that we've actually grown the operating cash flow. So $2 million was throwing off and that is a great outcome. We continue to work on improving our working capital. And that will strengthen that operating cash flow over the next 6 months and, hopefully, for time immemorial. The financing -- the cash for financing activities actually relates to some earlier acquisition payments; and also the share buyback, about $0.5 million of the share buyback that we implemented last October. And on top of that, we actually have $1.6 million of transaction costs which hit the cash flow in the past 6 months, and that's all associated with EEG, but I think fundamentally a highlight is that we are generating cash at an operating level. We continue -- we expect to continue to do that. Did you want to do this one, Tony, or...

Yes, sure. Thanks, JB. And as JB says, we can -- we'll take more questions on that if anyone wants a deeper dive, but look. The next couple of slides just kind of talk to this business in transition. So the -- this is the geographic mix. And you can see that the share of offshore revenue continued to increase, in particular the North American region which has really been powered by that EEG acquisition. And the rest-of-world growth has really been fully organic and a lot of new customer wins. And those key growth drivers remain that transition towards the SaaS and the devices revenue, and we're seeing that right across the world. We are also seeing very, very strong growth in live broadcast. And this is a sector that got hit very hard by COVID, so there's an extent to which this is a bit of bounce back from COVID, but also it's been increased with the EEG acquisition. So we're seeing a far more balanced view between live broadcast and Live Enterprise. And of course, we've got that iCap solution that meets both of those markets. And we are continuing to see much less of a focus on the recorded media industry, where there's much more competition in the market and the margins are much lower than what we would get from focusing on what is our -- that market that we're clearly #1 in which is the professional live captioning and the professional live ASR captioning at that. So in terms of outlook. So the guidance for the remainder of the year: We -- taking into account the first half and the first 2 months of the second half of the year, we're forecasting revenue between $60 million and $62 million, which compares to a statutory number of $49.2 million in FY '21, noting of course that we only owned EEG for 2 of those months. So the pro forma version, if you like, is relatively flat, but we are -- and that's because of that erosion that we're seeing in that traditional services business, albeit being made up for in these new and exciting revenue streams, but as JB said, the sales cycle on a lot of those is reasonably long. Some deals take multiple years to close. Almost all of them kind of take 6 to 9 months, so we've got a pretty strong handle on what revenue is contracted, obviously, between now and the end of June. We're forecasting those margins to be around 53% to 54% -- and remain positive EBITDA, of course, inclusive of the growth investments in sales, marketing, product and technology. The assumptions around these are that our contracted revenue continues to be realized, that our product enhancements are successfully deployed and that our customer service levels continue to be met. And then if there are -- to the extent there are risks, those risks include any delays to customer onboarding, which has happened in the recent past with component shortages in some of the other implementations; and of course, unanticipated events; and global macroeconomic uncertainty that everyone is very aware of. Our investment, in this outlook, will continue in iCap and in Lexi and Smart Lexi. We will ensure that, that single-button on-demand convenience is enhanced for more and more customers, that our Lexi and Smart Lexi products continue to improve in multiple languages and in multiple settings. 12 months ago, it didn't work in sport. We've now successfully deployed it in multiple sporting environments, including the Olympics, in the winter Olympics. And importantly as well, we've just launched our "partnerships for success" programs. And we are exploring some very, very early, exciting opportunities with some top-shelf partners, who will earn a revenue share of up to 25% from reselling our Lexi and Smart Lexi services across the iCap platform. And these are organizations such as players in the audio visual industry, events and entertainment; and other distribution partners in the space of corporate comms; and in the broadcast industry and the broadcast technology industry more broadly. So putting all this together, we've got a pretty clear view on where we need to invest in the next 3 years out to 2025. It's establishing iCap as the global gateway standard, growing and diversifying our customer base, continuing on the early wins that we've had, driving that growth at higher margins and continuing to enhance our leadership in our product suite and technology. And with that, I'll hand over to Simon to moderate the Q&A.

All right. We've got a number of questions submitted. First question, is the company expecting to make acquisitions this half? Or will there be a greater focus on growing the existing business organically?

Yes, we're not planning on any significant acquisitions in this half. We've had a flurry of acquisitions in the previous couple of years, which was to get us to the point where we really did have this one-stop shop and to help us take advantage of this shift to automatic captioning, the most significant acquisition of this being EEG. And we've had terrific success in integrating these businesses and terrific customer response from what is now an integrated product suite. So there's really no gap in the market that we're seeing that we would need to fill with a short-term acquisition.

Great. Next question is from Nick Harris at Morgans. Thanks for explaining the moving parts on legacy versus SaaS. 3 questions. The first one, the $14 million to $16 million of legacy revenue decline you mentioned, is there a rough percentage or a number you can share on how many are leaving AIM versus how many are staying but spending less with AIM because they are using Lexi or less premium?

No, this is just everyone who is shifting to the free tools. So that is the estimate of how much of that legacy business that was delivered with those legacy premium stenographers in many cases, respeakers as well, but most of it was stenographers. And all of that $14 million to $16 million will migrate over the course of this financial year to the free tools on Zoom, Teams and other platforms. To the extent we're winning some of those customers back with Falcon and Lexi, that's part of the other swing. So the $14 million to $16 million is kind of the gross number of the losses; and then some of those, we have won back. And all up, it's sort of balancing itself out on a revenue basis, albeit that we're focused more on the sort of higher-end enterprise market now and the higher-end broadcast and OTT markets than we are on sort of winning back individual students or individual employees who need that service, but if you think back to that case study, if -- when there is full accessibility in all of the meeting rooms, then the platform that people will be getting their automatic captioning on is iCap. And they will come back as Lexi customers rather than being on the free tools that they are at the moment. So it's very much a transition. The headwinds happen first. And we're now starting to see those longer-term tailwinds.

Great. And second question from Nick: Can you talk about iCap expansion overseas? What are the plans to bring iCap to new regions and initial progress and thoughts on the opportunity?

Yes. It's -- look. We're receiving a lot of -- so we have installed iCap right across the world. It's working very, very well. There was almost no penetration of iCap into Australia until about 3 years ago, when we became EEG's value-added reseller here. And we've now got it in customers in Asia, in the Middle East, in Europe; and then of course, also in more enterprise customers as well. We are seeing obviously more and more countries look to add captioning as part of the requirements; and these sort of regulatory tailwinds that are coming through, particularly around the international convention on the rights of people with disability which is a -- is sort of a multi-decade project to improve accessibility worldwide, which 180 countries have now signed up to, at the United Nations. And there's a process that's very similar to the kind of climate change net zero by 2050 to ensure that people with disabilities have full access to education, employment and social participation opportunities right around the world. And one of the key considerations in these new markets is affordability and quality. And where we are now and where we will be in the next few years with these investments in continuing to improve the iCap network but also continuing to improve the results of Lexi and Smart Lexi in multiple languages and with translation is that we'll hit that sweet spot where it's affordable, on demand, single button and the quality level is sufficient for it to deliver meaningful accessibility. And you can [ see ] there's still only 20% of U.S. broadcasters that have actually made the switch to automatic captioning, so we are still in very, very -- I need to stress this. We are in very early days of this wave of adoption of automatic captioning, but the signs are very positive. It's not going to be a short-term thing. It's going to be a multiyear project, but we're certainly not seeing any competitors come out with any products or solutions that compete in a meaningful way with what we're able to offer in those new markets.

Great. And just final question from Nick, on that same topic of iCap. Can you please talk to us about iCap, Lexi growth, win rates? What are the barriers to customer adoption and winning more market share?

So it's probably more -- any time that we go in with a pitch, it's now with iCap, so it's really a question on what are the Ai-Media win rates. And every single time a customer has been prepared to make the leap to automatic captioning, we've won it. So 100% of those situations, which is pretty extraordinary. Now there's still a lot of customers that haven't made that switch. And a lot of customers are afraid of more errors being on air, but increasingly as our own technology improves and as the reference sites and -- like being able to say that the ABC network and the NBC network in the U.S. are deploying this is really important to those sort of secondary customer wins because we've already got that top tier, but of course, we are not -- we don't have as much of a competitive advantage in the recorded media space. And if someone just wants human-delivered captions, then while it tends to be still across the iCap network, we would only then be earning the revenue from the devices rather than from the SaaS. So it's a bit of an evolving strategy, but our focus is really very much on those high-value large customers, both in broadcast and OTT, but also enterprises that are looking for [ whole-of-enterprise ] solutions for universal design and accessibility while delivering it in a secure way. And look. Most of these customers have been customers of EEG in the past and so this -- there's a long-term customer relationship there. Or a lot of them have been long-term customers of Ai-Media or ACS. And we're able to really, with authority, walk them kind of through this technology transition, manage the expectations about differences and vagaries in quality and the kind of errors that come up with automatic captioning. And we've expanded our sales team as a result of that. And as I said, the pipelines are looking very strong, albeit that they are long lead times, so we wouldn't expect significant uptick in revenue until that 6- to 9-month process has completed. And most of those conversations have only really started in the last couple months.

All right. Next question. There's been consolidation recently within the transcription and captioning industry; for example, Verbit's acquisition of VITAC and 3Play's acquisition of Captionmax. What does this increased activity mean for Ai-Media?

I think it clearly demonstrates that the industry is consolidating, that technology is playing an ever greater role and that smaller players are going to find it increasingly difficult to match the technology investments of the larger businesses.

Perfect. The industry is seeing greater global regulation. Can you talk to the impacts this has had on Ai-Media to date? And how are you positioning the business to keep abreast of these changes?

Yes. I mean, as I said in response to, I think, Nick's question earlier, very much this global regulation is all being driven by the widespread adoption of the UN disability convention. And minimum quality guarantees are critical, as is obviously security. And our focus is on engaging very, very closely with our local partners in each of those markets but also with our global technology partners to ensure that we have solutions that can improve accessibility once this regulation happens. And most of the time, the implementation of the regulation is done alongside an understanding of what the technology can deliver. So we are in a position to effectively work with the regulator, work with our local stakeholders to really kind of educate as to what is technically possible, what is economically feasible. And the exciting thing is that, with this inflection point that we're clearly at with the adoption of automatic captioning, then we are very, very confident that this kind of always-on solution for captioning is going to become mainstream all over the world. And how long that takes, obviously can't forecast, but it's all heading in the right direction. And all of the pieces of the technology puzzle are there. And the road map to continuing to improve that technology is also very clear for us.

All right. The share price since October 2021 has taken a battering. Can you talk to why that's specifically the case and what the company's strategy is to best control that?

Yes. Look. It's a tough one. I mean we're very much just focused on running the business. We have no impact on the share price. That's for the market participants to decide. Look. We've -- the directors have obviously taken a view that there is a fundamental mismatch in value between what the market is pricing the company at and what its intrinsic value is, and hence we've commenced the buyback program.

Great. In terms of the "preferred partners" program, how many partners are you collaborating with? And can you give me an example of a partner and how much you are looking to grow this aspect?

Yes. I'll have more to say on that in subsequent disclosures. This is very much a new program that we're just kicking off and we are in early conversations with some exciting partners. I've given some indication of kind of the sectors that we're looking for those partners with. So it's the AV sectors, event companies and people for whom captions and translation is going to be a layered service for their customers. And it's an open program. And we're actually looking for expressions of interest from people that would like to add this functionality to the offering that they're providing to their customers, but we'll have more to say on that in coming months.

Great. And can you just talk to or provide further detail on the recent 7NEWS issue and just how AIM has increased its safeguards to reduce the likelihood of this in the future?

Yes. Look. I mean that was obviously a very, very disappointing event; and the first time anything like that has happened in the 19 years of Ai-Media's history. Our customer contracts all kind of contain clauses about what to do in the event that something like this does happen. And so that obviously was triggered very seriously when this happened with Channel 7. And we were able with our technology and our systems to get to the bottom of what happened very, very quickly. As you can imagine, there were multiple possible scenarios about what had happened there. And look: We were able to determine within minutes that it was a single individual and, very soon after, that it wasn't actually anything malicious. And it wasn't actually a breach of the company's security systems, but someone working from home had kind of held an iPhone up to a screen, which is in a COVID world something very difficult to control for -- and that they had wanted to be insta-famous and sent it to one of their friends, who sent it one of their friends, who sent it to one of their friends. And 2 hours later, it appeared online. So certainly not a great outcome for Ai-Media or for the impacted presenters at Channel 7 or for Channel 7. In terms of improvements in the security posture, obviously that's a kind of error that can only improve -- be improved with education. And we've certainly taken a lot of steps, since that event, internally to reinforce the importance of customer confidentiality, but also people are used to sharing stuff now on social media -- and just making sure that there's that sort of mindfulness that something that might look cool on a screen, on an Ai-Media machine is very different to something that might look cool on YouTube. It was an impulsive decision by a very young individual. And so really there's nothing more in terms of the kind of technology architecture that we've needed to improve beyond kind of the education system but [ particularly ] disappointing nonetheless.

All right. And just a final question: Can we please get some further color on any key contracts up for renewal in the near term?

So the renewal of the Channel 7 contract and the Foxtel contract are the 2 major ones that are occurring in the next 12 months. I don't think there's any others that I need to mention or are significant enough for this audience.

Great. Thanks, Tony. That concludes the Q&A segment. I'll hand it back to you for closing remarks.

Great. Thanks very much. Thanks, everyone, for attending, and thanks for your support. We'll obviously continue to work hard for all shareholders and for our customers. I think, as I said, this is a really exciting time where automatic captioning has the potential to really become universal in more and more situations. And we are in a position to take best advantage of that with our Lexi and Smart Lexi products all powered by the iCap network and our great team of engineers who continue to ensure that we remain at the top of this industry in the years to come. Thanks very much.