Audinate Group Limited (AD8) Earnings Call Transcript & Summary

Good morning, everyone. Thank you for joining our call today. My name is Aidan Williams. I'm Co-Founder and CEO at Audinate. And with me is Rob Goss, our CFO. In the first part of the call today, we'll be talking through the investor presentation that accompanied our financial statements, both of which were lodged with the ASX earlier today. You can ask questions at any time during the call by typing them into the Q&A box in your Zoom call. At the end of the presentation, we'll collate your questions and answer as many as possible in the time that we have available. As many of you will be aware, Audinate provides networking technology to manufacturers of professional audio and video equipment. Our technology distributes audio and video signals across a standard IT network, eliminating the need for traditional specialized AV cabling. We are primarily a software company, although we have traditionally packaged our software for sale into electronic chips, cards and modules so that equipment manufacturers can readily incorporate our technology into hardware designs. Our customers are primarily manufacturers of professional audiovisual equipment like Yamaha, Bosch, Bose, brands you've heard of and AV professionals who design and install audio visual systems for clients around the world. As you can see on the map, we are a global company with headquarters in Sydney, Australia. However, we have several locations around the world, primarily providing sales and support functions with video engineering teams in Cambridge in the U.K. and Louvain-la-Neuve in Belgium. Before getting into the details of the presentation, I'd like to draw your attention to 3 highlights, I guess 3 takeaways from our results. First, we have again delivered excellent Australian dollar revenue growth of a tick over 50% and U.S. dollar revenue growth of 40%. A freer supply of chips enables to -- enabled us to convert continuing demand for our technology into revenue. We delivered a positive free cash flow of $2.5 million in the second half of the financial year. Second, I want to highlight the long strides we've made with Dante video this year. We've gone from 7 to 48 video products released by our OEM customers during the year. We shipped over 10,000 video units, achieved 26 designs for our video technology and delivered new video products for OEMs and users. It's very encouraging to see such healthy traction with Dante video. Thirdly, we continue to deliver results in our core audio business with our OEM customers releasing a further 261 products over the course of the year. We released our first cloud products called Dante Connect, which enables broadcast and corporate content production workflows to be delivered by the cloud. In the second half, supply constraints for Ultimo chips substantially eased, and we were able to deliver considerably more volume to our OEMs. With the successful launch of Brooklyn 3 earlier in the year and the increasing supply for Ultimo chips, we are confident that supply chain constraints are now behind us. I'll return to these points later in the presentation. We've included Slide 3 in the pack to give you a sense of the broad range of applications for Dante technology. I won't talk too much to this slide other than to note that Dante technology is integrated into millions of devices, in thousands of audio-video installations around the world. With the full alphabet of applications ranging from, A, for arenas and stadiums; B, for broadcast through to Z for Zoos. Slide 4. Many of you will have seen this slide before. This is a high-level map of Audinate's products and customers. On the left, you can see a vertical column where we have characterized our products into those purchased by manufacturing customers and those primarily purchased by AV professionals. The bottom row of the slide categorizes products -- further breaks down those categories into chips, cards and modules, which are some kind of electronics and software. Dante solutions for manufacturers and -- are embedded in thousands of AV products and form the bedrock of the Dante platform. The products shown in the middle row are primarily purchased by AV professionals or by users of AV equipment. AVIO Network Adaptors enabled Dante technology to be added to an existing brownfield installation in a cost-effective manner and pull through a variety of other Dante products. In addition, we provide a full complement of PC and Mac software products to connect computer and application software to Dante systems. The top row is the category for configuration and management software and includes the very widely used Dante Controller software, which is needed to initially set up a Dante System and Dante Domain Manager, which professionals use to manage Dante systems at scale. By a way of applying this map, I'd like to highlight the launch of a new software video product for ASPEED chips, which you can see in the bottom right-hand corner that's called Dante AV-A and our first cloud product, Dante Connect, which you can see in the right-hand [Audio Gap]

Can you hop back in?

Suppl can also -- supply constraints for hardware products for OEMs. The bottom row, chips, cards and modules have largely eased with availability of chips for Ultimo and the delivery of a drop-in replacement for Brooklyn. Slide 5 summarizes Audinate's financial results for the first half. Again, I want to draw your attention to 3 points. The first is the excellent revenue results indicating continued demand for our technology. The second is an improvement in gross margin percentage, up 72.1% for the full year from 71.2% in the first half. Gross margin percentage has been impacted during this COVID period by variations in product mix and need to prioritize reliable supply over price and design changes to mitigate chip shortages. Ultimately, we believe gross margin percentage will return to the historical average and continue to rise with an increased proportion of revenue coming from Dante software designs. Finally, the improvement in operating cash flow is consistent with the scalability of the business with increased revenue dropping through to improved EBITDA and operating cash flow. Notably, Audinate generated positive free cash flow of $2.5 million in the second half. And Rob will speak to much more of the financial details later on in the presentation. Slide 6 shows key operational highlights for the first half. Strong demand for Dante continued during the year -- or Dante audio continued with 142 design wins, up 12% from the previous corresponding period. Each design win represents a new or existing customer committing to developing at least one new type of Dante product. As Dante technology becomes increasingly entrenched as the de facto standard, design wins become a more revealing metric than a simple total of OEM customers. The total number of Dante-enabled products continues to grow and hit a record high of 3,853 products with over 10 Dante-enabled products on the market for every product using the next alternative technology. A healthy 261 new Dante-enabled products were released by manufacturers during the year. Some products were retired as chip shortages forced manufacturers to do redesigns with the total number of Dante-enabled products now at 3,853. There are 138 OEM brands developing their first Dante-enabled product at the moment. Strong demand for Dante, a positive industry outlook and much improved chip supply bode well for future revenue growth. Slide 7 summarizes the various supply chain impacts affecting Audinate over the last few years. I'm really proud of the team's adaptability, the hard work and resilience dealing with chip shortages, product redesigns, factory shutdowns and the like during this period. We've worked hard to develop product design variations that eliminate critical dependencies on specific chips that have been in short supply. The combination of increased chip supply and the design variations we now have on the shelf closes the chapter on COVID-related supply chain problems for us. It is remarkable in my view that over the 3-year period impacted by COVID and supply chain disruptions, Audinate has delivered a U.S. dollar revenue CAGR of 31.8%. There are, of course, still risks ahead of us, high interest rates, potential recession, geopolitical risks, et cetera, et cetera, but we consider these to be typical macro factors that need to be managed in a business-as-usual fashion. Slide 8 summarizes progress against our FY '23 objectives. I won't cover everything in this slide, but I would like to hit a few highlights. It has been critical to transition our products and manufacturing customers across the chips or modules that are available in reasonable quantities. The Brooklyn 3 project has been particularly successful in that regard with most manufacturers able to easily transition across to Brooklyn 3. Additionally, we have worked hard to deliver Dante software solutions on a wider variety of chips, creating alternatives for chip-down solutions like Broadway and Ultimo. As you can see, we continue to drive design wins in our core business, mostly the audio products, and OEMs continue to bring products to market. Design wins and products coming to market are a leading indicator of future revenue for Audinate. Progress continues to be made on improving operational efficiency with a substantial increase in capability in the Philippines and the delivery of a configure price quote or CPQ module in sales force to improve sales efficiency. Manila is now our second-largest office by headcount. Slide 8 summarizes our success with Dante video. I am delighted with the progress that we have made with video products during the financial year. We exceeded our goal to ship 10,000 video units during the year, and we collected over $3 million worth of revenue from video products. A total of 34 OEM brands have licensed Dante video technology, and you can see many of those brands on this slide. A total of 48 Dante video products have been launched by OEMs, up from 7 at the 30th of June last year. We released several software solutions in the video space, Dante AV-H and AV-A and Dante Studio. And we have made substantial progress integrating the designs and technologies that we acquired with the Silex video business into our hardware products. We've worked hard on delivering video solution during FY '23, and the reaction from our customers and users has been very satisfying. I look forward to enjoying the fruit of that hard work during FY '24. Slide 10 spells out what's ahead for video in FY '24. As I have said on previous occasions, we aim to build out a complete toolbox of video product offerings that mirror our capability on the audio side. This means an appropriate suite of hardware and software product for manufacturers, integrators and end users. For manufacturers, we will continue to refine our video software stacks for H.264 and ASPEED chips. Those stacks are called Dante AV-H and AV-A, respectively. We will be releasing a next-generation Dante AV Ultra product, our highest performance hardware solution. The newest AV -- the new AV Ultra product will combine the video technologies we acquired from Silex with our Dante networking technology to deliver a best-of-breed solution capable of meeting the highest, most demanding real-time performance needs, but yet still operating on a cost-effective 1 gigabit per second network infrastructure. For integrators and end users, we will be refining our Dante Studio PC and Mac software and adding video support to our Dante Connect offering. We will be following our typical playbook over the next year in the video side of things, driving manufacturer adoption in our video technology, getting first products to market from video equipment manufacturers and continuing to broaden our portfolio of video product offerings. We aim to finish FY '24 with a footprint of over 30,000 Dante video products either installed in field or shipped. Turning to Slide 11. During FY '23, we launched our first cloud offering called Dante Connect. It enables broadcast and corporate content production to be shifted to the cloud. Content production has historically been an on-premises activity with equipment, operators and talent traveling to specific locations to record or create content. The rise of network connectivity and the cloud enables real-time production to be delivered largely with software and with operators in remote locations even at home. It is the type of thing we're doing with the results call today. Dante Connect enables millions of Dante devices already in the field to be used with cloud-based production workflows. It launched basically in April at the NAB Show, and it has been very well received with a strong pipeline of initial customers and integrators expressing interest. We also launched our first professional services offering during the year. That's something quite new for Audinate. The aim is to provide paid professional support for integrators and manufacturers using Dante in their AV system designs. We don't intend to replace our integration partners, rather, we want to support them with complex designs and/or troubleshooting as the need arises. The combination of support and training has been well received. Please follow the links in the deck or head over to our website to find out more. And with that, I'll hand over to Rob for the finance section.

Thanks, Aidan, and good morning, everyone. Over the next few minutes, I'll explain the FY '23 financial results lodged with the ASX earlier today and summarize in the accompanying investor presentation. The financial information is set out on Slides 13 to 18. I'll start with Slide 13, which explains some of the key revenue information for the business. In U.S. dollars, revenue was $46.7 million, up 40% from $33.4 million in the prior year. In Australian dollars, revenue was up 51% on the prior year with the differential growth rate due to currency tailwinds as the Aussie dollar weakened against the U.S. dollar. During FY '23, gross profit dollars grew 34.4% to $33.4 million and a gross margin percentage of 72.1%. The overall GP margin strengthened in the second half, up from the first half of 71.2%, which was affected by a series of supply chain impacts we outlined back in February and Aidan referenced earlier today. We expect that the GP margin will improve gradually over time based on the speed of transition to the Dante software implementations. From this point onwards, all amounts quoted will be in Australian dollars. Growth in Dante units amounted to 30% for FY '23. We used the 10 Dante units as a catch-all expression with a number of unique AV products and computers with Dante inside, whether that be [Audio Gap] units shipped of chips, cards and modules collectively called CCM increased by 22% in FY '23. In the main, this increase was driven by a recovery in the supply of Ultimo chips in the second half. From a revenue perspective, CCM was up 42%, primarily attributable to Brooklyn up over 30%, VIPER Boards and Ultimo chips up over 50%. Turning now to software, a broad suite of products summarized in the footnote on Slide 13 or in the product road map on Slide 4. In FY '23, software units shipped increased 42% due mainly to a second half recovery in reference designs and ongoing growth in Dante Embedded Platform. From a revenue perspective, software grew 34%, with this growth attributable from reference designs up over 50%, Dante Embedded Platform up over 30% and Dante IP Core up over 45%. Our sales backlog remains at near record levels and provides us with excellent visibility over the first half in particular. That said, given easing supply chain pressures, we expect that our customers will wind back the time frame of forward orders, which is likely to see the sales backlog normalize from the current elevated level. Historically, our revenue split has been around 45% in the first half and 55% in the second half. However, for FY '24, we expect a higher proportion of revenue in the first half as we substantively reduced the backlog of Ultimo chips customers. That said, we still currently expect revenue growth in the second half over the first half. In terms of the income statement set out on Page 14, you can see that EBITDA for FY '23 amounted to $11 million, up from $4.3 million a year ago. Employee headcount ended at just under 200, up from 178 a year ago, together with the annualization of headcount added in FY '22 resulted in a 23% increase in employment costs in the current year. Sales and marketing expenses grew to $4.4 million from $2.6 million in the prior year. The main factors driving this increase were travel up $800,000 and trade shows up $700,000 as COVID restrictions have eased. It is also worth noting that this expense line is denominated in U.S. dollars and therefore was unfavorably impacted by currency movements in FY '23. Other operating expenses were $5.4 million, up from $3.8 million in FY '22, driven by increases in software subscriptions, travel and professional costs. Given the positive outlook, the company recognized $7.7 million of tax losses, making up the bulk of a $9.3 million income tax benefit in the income statement in the current year. It should be noted that this item has no impact on any of the targets for short-term or long-term incentives for staff and management. It is, of course, one-off in nature. On Slide 15, there is an EBITDA bridge outlining the key movements driving the $6.7 million increase in EBITDA in FY '23. Please note that we've shown the increase in revenue dollars at the same rate as the prior year and quantify the impact of FX tailwinds separately. The other factors on the graph have already been explained in my earlier commentary. In terms of the year ahead, we budgeted at a U.S. dollar exchange rate of approximately $0.69. And at this rate, a $0.01 movement impacts EBITDA by roughly $700,000, remembering that Audinate is a structurally long U.S. dollar business. On Slide 17, you'll find the cash flow statement, which shows operating cash flows of $12.4 million compared to operating cash flows of $1 million in the prior year. Pleasingly, the adverse working cap impacts experienced in FY '22 did not reoccur and the business generated over 100% cash conversion for FY '23. It should also be noted that the business generated positive free cash flow of $2.5 million in the second half. We continue to focus on improving cash flows in FY '24, remembering that the payment of bonuses in the first half will increase cash payments in the first 6 months of the year. The statement of financial position is set out on Slide 18. From our perspective, it is a clean balance sheet with no debt and net assets of $90 million. This includes $40 million of cash and deposits at 30 June. I will now hand back to Aidan to cover the outlook for FY '24.

Thanks, Rob. All righty. So Slide 20 summarizes our priorities, essentially around growth for FY '24. So clearly, we continue to deliver video products and units to our customers, and that continues to be a substantial priority for us. We aim to end FY '24 with over 30,000 Dante video products in-field or shipped. We will continue to deliver video product releases and improve video support in our PC, Mac software and cloud product offerings. Dante Connect has had a very promising start, and we aim to ramp up delivery of that solution during the current year -- or the coming year. Our channel is through market-specific third-party integrators, and we aim to broaden the number of integrators over time, including through relationships with major cloud providers like Amazon. A constant theme for Audinate is managing growth and continuing to scale by improving and automating our internal processes. The more efficient we are, the more we will be able to translate ongoing demand for our products into improved profitability and cash flow. On Slide 19, we can turn to the -- on Slide 21, I guess, we can turn to the FY '24 outlook. As I said earlier, I'm really proud of the team's adaptability, hard work and resilience in dealing with the various supply chain and COVID disruptions over the last few years. With this chapter essentially closed, I'm looking forward to delivering strong GP dollar growth with some clear air. With the supply chain fire drill finally drawing to a close, we anticipate that OEMs will return to a longer-term theme of transitioning their products from using Dante chips, cards and modules, so hardware solutions and some sort to using a software Dante implementation of some kind. This migration is expected to be relatively neutral for gross profit dollars and should result in gradual margin improvement with a slight moderation in headline revenue growth. Irrespective of the pace of this migration, we expect the percentage growth in U.S. dollar growth -- growth profit dollars to be consistent with historical performance. There are, of course, still risks ahead of us. I think mentioned a few of them before, potential recession, high interest rates, geopolitical risks, et cetera, et cetera. But we consider these risks to be the sort of things that we need to manage in a more business-as-usual fashion. We aim to grow headcount by 15%, investing in both core business activities and growth in video, cloud and professional services. As usual, we remain alert for M&A opportunities that can help accelerate our strategy in areas like video, cloud products and services and software-based signal processing. We enter FY '24 with a strong backlog, which gives us good revenue visibility. And growth in combination with the structural operating leverage inherent in our business model should drive improved profitability and positive free cash flow. Whilst continuing to grow the core audio business, I'm looking forward to further solid gains for our video and cloud products during FY '24. And with that, I'll hand back to Rob to coordinate questions.

Thanks, Aidan. So we've put them up on the screen there for you to refer to. I'll handle the first 2. And if you want to turn your mind to answering the next 2 after that, they're also on the board there, if you prefer to reference on there. So the first question is, how does a 3x increase in video units translate into increased revenue for FY '24? So what we've referred to then in terms of the numbers for next year is the 30,000 is a combination of units shipped during the current year and units that we expect to ship in FY '24. One of the things with the video revenue is that there is a bit of an impact in transitioning off the historical VIPER Board onto the next-generation product. So Aidan have referenced that. There is some impact -- headline revenue impact on that. So the focus for us in the year ahead is the ecosystem, and ultimately that will end up translating into sort of increased video revenue, and we'll update the market at the half year around how that's tracking. Second question, I noticed that you removed the words expected double revenue over the medium term. Any reason why this has been excluded in the release? We, in fact, refer back to the time that, that "was originally made" by our Chairman with the release of the FY '21 results, and we confirm our expectation that we will, in fact, have doubled revenue during the course of FY '24. Aidan, do you want to take the third question then?

Yes, sure. So third question is, there was a slight reduction in OEM brands with products in the market. Can you provide any additional information around this? Is it of any concern? So I think what's really going on is that there were certainly some Dante products, which were taken off the market, and that includes OEM brands kind of coming off the market as well. What happened with all of the supply chain disruption is that manufacturers had to make some difficult choices about whether to continue product lines using older, possibly not available chips anymore or they're using chips that are very expensive. In some cases, they have decided not to continue to manufacture those products. So if that's a larger OEM with many products, then we would still have that OEM in our account. But if it's one of the smaller OEMs, and keep in mind there is a very long tail of small OEMs, then they may just have 1 or 2 products. And those 1 or 2 products may be something that they decide not to carry forward. So I'm always concerned when OEMs don't -- will they stop shipping [Audio Gap] So as I was saying, not all products manufactured by OEMs are equally successful. And so perhaps as we have a very large portfolio of thousands of products in the market, it should not be surprising if some manufacturers choose to remove some of those products from the market. So overall, I'm not overly concerned, but clearly, it's the kind of thing that we do pay attention to.

And Aidan, there's another 2 questions there for you to deal with from Tim.

Yes. Thinking on video, when we think video in terms of ecosystem user training, network design and integrated willingness to use, how do you think about where we are now compared to a similar point in audio? I think in the last sort of 6 months ago, maybe a year ago, I would make a comment along the lines of -- I think we're probably going 3x faster with video than we were with audio. And I would say that, that has been reinforced with all of the various design wins we've had on the video side of things, and in particular, I think, 48 products that are now out on the market. So it took us many years to get to that sort of number of products on the market with our audio side of things. So I think we have a strong benefit in that -- in the industry. People have a positive experience of using Dante technology. They understand it to be reliable. They understand it to be easy to use. And I think that has translated to substantially more rapid progress on the video side of things because we've been enable to inherit both the strength of the brand, but also the reputation of the networking technology itself. How do you think about FY '24 video gross profit versus FY '23, moving from higher revenue, lower margin VIPER products and lower revenue, higher margin Dante products? Yes, exactly. Well noted. So the VIPER products were turnkey products -- white label turnkey products that we acquired with the Silex business. So the way you should really think about that is that Silex and then, of course, Audinate was acting essentially as a contract manufacturer providing white label -- complete, finished white label products to a small number of brands in the industry. Generally speaking, that is not Audinate's business model. Audinate's business model is to provide technology and technology components to many, many manufacturers in the industry. So it's -- generally speaking, you get a higher revenue for those boards. They are lower gross margin because contract manufacturing is a lower gross margin business than selling technology and intellectual property like software. But there are larger -- there's larger revenue and gross profit dollars. So the way I would talk about this is our aim is to ship many, many Dante units. And the way for us to do that is to provide AV Ultra -- next-generation AV Ultra components to provide software stacks for H.264 and ASPEED chips. All of those products will be a component as opposed to a complete video product that's shipped. But we'll be able to ship many, many more of those. So the long game for Audinate is to focus on our core business of being a technology supplier, possibly also incorporating the technology into chips or modules, but we want to be a scalable high-margin technology supplier to the industry rather than a relatively low process margin contract manufacturer in the industry. So we'll be going through that shift as VIPER customers transition from the full white label products that they're currently buying to a reference design manufactured by one of the original design manufacturers or contract manufacturers who are in the industry already.

Aidan, what we -- we might call time on the questions that we already have in the Q&A. We will be able to get to all of the questions that have been submitted so far. But yes, effectively, we all align under those that have already been received to this point. if you'd like to handle this next one and I'll get the one after.

On the OEM R&D?

Yes.

Yes, Sure. So the question is, where are we in terms of R&D -- OEM R&D required to do redesigns? Are the majority of major contributing OEMs done? So I would say, yes, but possibly not because the redesigns are all done. It's because as people have done a bunch of redesigns, there's now less pressure on the chip supply. And so chip supply is kind of chips are now more available than they were. So enough people have transitioned, and there's enough chip supply that's come back to not force manufacturers into a corner and force them to do various kinds of chip designs. So we've seen this, in particular, with our chip-down Ultimo solution, but also the Broadway solution. So the pressure is off, and so most manufacturers would rather be strategic about how they do their resigns. And that's what was behind my comment that we expect many manufacturers to go back to a more strategic approach to thinking about product redesign, in particular how they can use software Dante products across a portfolio of different kinds of products as they do redesigns. So I think the pressure is off on the chip side of things, not totally, but the cost of redesign is expensive. And so if you're going to do that, then manufacturers, I think, will start to think about next-generation solutions rather than chips, cards and modules.

Very good. Thanks, Aidan. There's a few more here, which I will cover. So multipart question from an analyst. Thanks very much. Ultimo normalization, remind us how much that contributed in the second half. Our practice is not to disclose sort of individual product line revenue or unit numbers. But as a reference point, in an earlier half, we did talk about 90,000 units sort of being the impact in a particular half when we effectively weren't shipping many Ultimos at all. So that should give you some gauge from the order of magnitude. Dante Innovation, Dante connect and professional services, how much they contribute in FY '23? And remind us of both our incrementals TAM. So yes, very nominal contribution where we would be talking about sort of 5 digits in FY '23. They were both just launched towards the end of the year. Professional services is absolutely incremental to TAM. Dante Connect is sort of a way for us or another example of us accessing the software services TAM that we've referenced to in the past.

Can I just make one comment about professional services. I wouldn't want to give anyone the impression that we're planning to become a services business like an accounting practice law [Audio Gap]

Okay. We'll carry on here. Clarify historical range for GP growth. Referenced 26% to 31%, but that's sort of how we've -- that's what we've historically done in U.S. dollar revenue. We've given the 2- and 5-year range for gross profit CAGR in the investor presentation. That range is 24% to 32%. Expectations of gross margin going forward, I think we sort of talked to the drivers behind that. I think the near term sort of impacts around supply chain should ease sort of certainly over the next 12 to 24 months, which would put us up sort of at that 75% level where we were historically. How we go and grow beyond that is really around the pace of change to the software implementations. Video gross margin compared to the existing base will -- it is lower by way of the strong base to the revenue from VIPER Boards. I think a better way of thinking about that longer term would be analogous to the gross margin we generate from audio products. FX, how much of your OpEx base is in Aussie dollars versus U.S. dollars versus others? In terms of U.S. dollars, all of our cost of sales is in U.S. dollars. The majority of the marketing line is in U.S. dollars. And sort of headcount would be sort of less than 15% approximately, so of half of the headcount is Australian dollars and everything going through sort of other operating costs is in the main Aussie dollars. And then you can probably back solve on the rest in terms of employment costs. Over 100% cash conversion for FY '23. Cash payments in the first half year higher from bonuses. So should we see free cash flow potentially go negative in first half '24? Yes, potentially, we could. We expect to be free cash flow positive over -- on a marginal basis over the course of FY '24. First half does have that additional hurdle as you rightly pointed out. And the final question...

I can...

You don't have to answer that.

Yes. So with respect to the 15% head growth in -- headcount growth in FY '24 is -- are most of these staff to be allocated to growth projects. If so, which growth projects? How many headcount are likely be over in the Philippines? And how we should think of the cost per FTE in FY '24 as a result? So the really simple answer to this question is yes, like the 15% headcount growth is absolutely associated with growth. And that's because our core business continues to grow strongly. And we also need to -- so we need to invest in that in order to continue to scale, and we also want to invest in the new initiatives like the video side of things in the cloud as well. So in terms of proportions, I don't have those in mind. Rob may jump -- may have those at his fingertips. So we absolutely want to make sure that when we're investing in the scalability of the business, we are looking at using locations like the Philippines for our core business as usual operations. And so that means we -- both with automation and with also building up a location like the office in Manila, so that gives us quite a bit of leverage with respect to the dollars per headcount, for example. With respect to the engineering side of things on product development, we obviously have [Audio Gap]

Thanks, Aidan. And I'll just sort of round out on the numbers. So there is a reasonable sort of chunk of those associated with the establishment of the QA function in Manila over the course of the next year. And so there is that sort of bias, and it should sort of drive down the average cost per FTE of the headcount that we're adding over the next financial year relative to what you're seeing in the existing cost base.

Okay. All right. So I think that's it for all the questions that we have on the screen. I think we have answered all of the questions live. If you've got sort of further questions, feel free to shoot an e-mail through or something like that. Thank you very much for your time this morning. If things have been a glitch -- a little glitchy for you as you've been watching, my apologies for that. Hopefully, the overall result has enabled you to understand how we've been going this year. So thank you again. And with that, we will call this particular call to a close. Thank you very much.

Thank you.