Beamtree Holdings Limited (BMT.AX) Earnings Call Transcript & Summary

Well, good morning, everyone. I'm Marek Stepniak the Chief Executive Officer of Beamtree. And with me is Mark McLellan, Chief Financial Officer. It's a pleasure for us to share Beamtree's 2025 audited results, reflecting the dedication and vision of our entire team and board. Go to the next slide. As we look ahead, please remember this presentation is for information only, contains forward-looking statements about our exciting journey. So let's begin with the key highlights that have made financial year 2025 a year of continued growth for Beamtree. Beamtree delivered strong financial results. With a record Q4, we delivered $29.2 million in annual recurring in annual recurring revenue. Our reported revenue continued to grow at $28.6 million, of which 87% is recurring. Our disciplined approach to cost containment and strong quarter 4 underpins our growing operating profit and positive operating cash flow. We've maintained a robust cash position ending with $4.8 million on hand with the balance excluding an undrawn and undrawn capital facility of NZD 5 million. So financial year '25 was transformative in many ways. I stepped into the CEO role in mid-March. We sharpened our priorities. We significantly improved our sales pipeline processes and product pipeline prioritization. Our focused cost control throughout the year delivered a 2% overall growth year-on-year, supporting a 78% increase in operating profit. Q4 set new records, and we carried that over into Q1. I'm excited to have also announced this morning that we have secured a $1 million clinical coding contract in Singapore. We've launched some innovative new products, particularly orders in Australia and then driving 23% increase in growth on our coding products. We've expanded internationally, signed major contracts in the U.K. and in Saudi Arabia and deepened our partnership with Abbott through a 50% increase in revenues. Our pipeline is stronger than it's ever been heading into financial year '26.

Good morning, everybody. This slide provides some insight in terms of what happened in Q4 around our sales conversion. If you remember in our Q3 trading update, we gave insight in terms of target for Q4, which is $4 million. On the left-hand side, you can see the component parts of that $4 million being PICQ, Autonomous coding, ICP diagnostics. And that target was $4 million and the first half FY '26 pipeline was at that point, it was about $15.5 million. What actually happened in Q4 is in the middle of the slide in terms of we delivered very strong performance in PICQ driven by a new module in PICQ called PICQ audit, which is now -- was launched in FY '25 and now 1/3 of that PICQ installed base now bought PICQ audit. So that was a strong performance in that side of the business. The Autonomous coding, we have 3 Autonomous coding programs underway. We have paused selling any more of those while we work through that in order to deliver a minimum viable product. So no additional contribution from Autonomous coding in Q4. ICP, we are still pushing ahead with looking to get our first contract from KSA and are targeting a first half FY '26 for that to be signed up. Diagnostics, again, we've got a major contract, which we forecast has moved into the first half of FY '26. And then we got a strong performance from our knowledge networks, particularly NHS Roundtable following the investment into the new platform and that delivered $1.6 million of ARR in Q4. So a positive -- a very strong performance in Q4. We delivered 80% of that $4 million target. And then the pipeline looking forward into the first half of FY '26 is up 30% at $21 million.

Thank you, Mark. Many of you know us well. But for those of you who are new to Beamtree, Beamtree is a proudly Australian technology leader, bringing deep expertise, unique IP and over 20 years' experience to deliver innovative AI coded data solutions for hospitals and pathology laboratories worldwide. We specifically have deep expertise in 3 areas. First is the coding of hospital clinical data, which accounts for 25% now of our total revenues. Secondly, we provide hospital health systems, analytics and benchmarking for hospitals in Australia and New Zealand and soon, as you know, also in the U.K. And this accounts now for 44% of our revenue. The third area of our deep expertise is in the automation of clinical decisions oral pathology laboratories now across 26 different countries. This accounts for 30% of our revenues. We are disrupting clinical coding analytics and pathology with AI-powered products. Our solutions span clinical data coding, analytics and benchmarking pathology automation and we're growing globally and recognized for our innovation and impact. The interest in footprint now spans 5 core countries. Canada, United Kingdom, Saudi, Australia and New Zealand. We're serving 300 customers in over 1,200 locations. Our partnerships with Abbott, which is 4 pathology laboratories in 26 countries, lean business services for sale of coding products in Saudi Arabia and the Middle East and the NHS Confederation for the provision of analytics and benchmarking for U.K. NHS hospitals are driving our international growth and our partnerships. Many of you know, both the history and many of the products that Beamtree has been delivering into market for many years. But for those of you that are new to Beamtree, we delivered 10 trusted products across coding, assistance and automation, analytics and diagnostics clinical support, helping hospitals and pathology laboratories improve efficiency, accuracy and cost savings and our tools that are relied on by hundreds of clients worldwide. We have 3 particular segments for coding. The first is coding assistance and data quality. We have long established tools of keeping risk, which focus on and provide data and quality assurance around clinically coded information for patients at these hospitals. We also now enable hospitals to maximize revenue that they receive from their payers through the introduction of our most recent product, which is [ people worth ]. As you have heard and as you will hear from us today, we are now actively developing in markets our Autonomous coding systems solution. At this end, we are looking to sell our first integrated coding platform solution in Saudi Arabia. Both of these software solutions that enable clinical coding to be delivered more efficiently, either by human clinical codes through our integrated coding platform or, in fact, automating with complete hands-off delivery of our solutions for Autonomous coding. And this is very much aimed in both instances in helping to reduce cost for hospitals. Our second area of product segmentation is around analytics and our knowledge network, which includes benchmarking. We do so through providing a health roundtable in Australia and New Zealand. And we're doing that and soon to be rolled out into U.K. through our Evolve Collaborative with NHS Confederation. And we also operate other knowledge roundtables. So our analytics platforms combine clinical data analysis and enable organizations to view and compare with peer benchmarking availability. This makes it possible for organizations to target improvements and to also help them make much more timely and informed decisions. And the last area for us is diagnostic clinical decisions to orders delivered through RippleDown and AI-enabled product that builds and delivers expert rules that are repeatable, both in the clinical. So it replaces the work that individuals would do in their nonclinical tasks, which are administrative tasks in nature. This significantly reduces time in pathology laboratories and in driving cost savings for pathology laboratory suppliers. We are leading the way in advanced coding with assisted and autonomous coding solutions rolling out in Australia, U.K. and Canada. Our new products are focused on building on our core coding quality products of -- and you have seen this before, a lot of history and successful history in providing automation around quality assurance to our customers globally. We've now moved these tools to focus on delivering greater value to customers capturing greater value for Beamtree and we're scaling our solutions for global impact both through the integrated coding platform in the Middle East and particularly, Saudi Arabia initially and through autonomous coding, where we are working with hospitals by providing a completely hands off, what we call a no-touch coding solution in Australia, U.K. and Canada. Beamtree is on a multiyear journey to become a global leader in clinical coding. Since my arrival, I sharpened our focus for this year on 3 priorities. We're developing a clear minimal viable product and commercial model for autonomous coding. This is a fully hands-off AI-enabled solution. Secondly, progressing initial sales of our integrated coding platform in Saudi Arabia. And thirdly, delivery of our analytics and benchmarking solution into the U.K. throughout NHS Confederation collaborative. In the medium term, we're embedding world-class AI into our coding products and scaling growth internationally. And our vision is to be the preferred one-stop shop for clinical coding for the future. I now hand over to Mark to just take us through a more detailed review of our continued growth in financial performance for 2025.

Thanks, Marek. This slide shows the full profit and loss for '23, '24 and '25 -- kind of key highlights I'd call out is in annual recurring revenue of 50%. That is back ended as Q4 was a record quarter for us. So if you look at reported recurring revenue, that grew by 7% for the year. The largest segment, Knowledge Networks grew 3% but we've seen a little increase in that towards the end of FY '25. So I expect that, that will rebound -- the largest segment will rebound in terms of growth in FY '26. In terms of nonrecurring revenue, we had a record year in FY '24 and then it reduce by 16% in FY '25, so that brought the overall revenue growth down to 4%. We continue to manage costs very tightly. That's allowed us to improve the financial performance with operating profit up 78%. Reported EBITDA is broadly in line with the prior year. And the other thing I'd call out in terms of the depreciation and amortization charge, which is $5.5 million, about 50% of that relates to intangible amortization from previous acquisitions. That will end in September '26. So the P&L will look quite different in FY '27. Just more of a deep dive into the revenue. We talked about ARR growth of 15%, which is certainly back-ended. In terms of revenue, you can see the split between international and Australia, international is down to 45% of our overall business. It's growing. It's driven by Saudi, predominantly Abbott made a contribution towards the growth in FY '25 as well. Most of that growth is also coding related. And if you look at Australia, it has gone backwards somewhat. That's really driven by a reduction in the nonrecurring element within Australia with the recurring element remaining broadly flat for this year. Looking at OpEx trends, you can see that we do manage it very tightly. We only bring on costs when the revenue appears. So a 2% increase in the year. That's mainly driven by the nonemployment going backwards from 7.5% to 7.3%, so 3% reduction. That's also tied to the nonrecurring revenue, which reduced and therefore, the cost that we incurred to support so the delivery of those projects also reduced. Looking at profitability, again, I'm very pleased by this continued improvement in the financial performance of the business. You can see FY '23 is a $1.4 million loss. We're now at $700 million of a profit. That's 150% increase for the year to 78% increase. So I'm pleased by that. On the right-hand side, there's a cascade from operating profit to reported EBITDA. The kind of key ones I'd call out are we incurred some costs around debt raise. We've raised NZD 7.5 million during the year, of which we drew down $2.5 million. There's some costs in relation to that. We also are in the process of deregistering 9 legal entities. That's incurred some costs. We've also incurred some restructuring and other nonoperating costs really around organizational change. And also, we spent some money on consultancy around strategy. In terms of cash flow, again, really pleased about the cash flow. It's a positive operating cash flow for the full year. It was broadly breakeven in the first half. So that's really the second half and tied to our improvement in our operations and revenue in the second half, particularly in Q4. We also continue to invest in our products. So we spent AUD 2.3 million on investing in our products in terms of financing. As I said, we've raised some capital during the year. We also paid a bond, Health Roundtable bond. So that acquisition is about AUD 1.8 million increase to our cash. So we go into FY '26 with a strong cash position of $4.8 million. That excludes an undrawn element of our debt facility of NZD 5 million. On a like-for-like basis, if I remove the impact of that debt, that $4.8 million is about $2.9 million. So we've gone from $5.5 million to $2.9 million. That $2.1 million reduction in cash flow is really tied to the capitalized IT that we've invested in our products. Balance sheet. The business is reasonably straightforward. We've talked about cash. The intangible balances continue to amortize down. As I said, that amortization will cease early FY '27. And in terms of the noncurrent liabilities, we paid the bond and we got borrowings on the balance sheet. So a reasonably simple balance sheet. And with that, that's my quick deep dive into the FY '25 financials, and then I'll hand over to Marek around the FY '26 outlook.

Thank you, Mark. So looking ahead, Beamtree is well positioned for continued growth and ongoing innovation. In summary, we have set 3 priorities for this financial year. Create a minimal viable product to scale for Autonomous coding through our work well underway in Canada, U.K. and Australia. Secondly, in Saudi Arabia, drive sales of our integrated coding platform. Thirdly, in the U.K., establish our analytics and benchmarking solution for all NHS hospitals through our collaboration with the NHS Confederation. So with record ARR growth in Q4, strong momentum in Q1 and a continued sharp focus on cost management, we are confident in sustaining growth and delivering improved performance in '26 and remain focused on midterm goals. Thank you for your attention and support as Beamtree continues its journey of growth and innovation. We're excited for what's ahead.