Beamtree Holdings Limited (BMT) Earnings Call Transcript & Summary

Good morning everyone, and thank you for joining the webinar call today to hear from Tim Kelsey, the CEO, and Mark McLellan, the CFO, COO of Beamtree. We'll be taking you through the annual results, some very live information that's coming to hand which is quite exciting across the 4 core divisions of the business and allowing you to fully digest the full year's annual results which are being released to the ASX this morning. I know it's a busy time for everyone with reporting season. So we will try to be to the point. We will be offering a Q&A session so for those that have questions. Please feel free to type your question into the Q&A tab there, and we will pick up that question as we go or perhaps towards the end, depending on what the question is, if it's addressing a current point in time. And for those who don't know me, Mike Hill, Chairman of the Board, have been Chair for the company since it was listed some time ago and I'm pleased to say that the 2023 financial year has marked another really fantastic year and I think you'll see just from the headline, growth results and more importantly, once Tim and Mark start taking you through the ongoings in each core division of the business you'll see that this is coming together very nicely and starting to pave the way for the horizon statement which the guys will talk to which we've put out now to take the business towards that $60 million revenue mark. The percentages growth wise, I'll let Tim and Mark talk to. Mark will talk to the detail and financials also the operating leverage and the cash flow position in the business which is very strong and the exciting news about the new contract wins or indeed the pipeline developing into procurement opportunities and implementation of the software is for us that sit around the boardroom table. The really exciting stuff that we can see that the hard work of the team is now really starting to come together and I think we will have lot of confidence in not only the underlying products of Beamtree and how they sit in both pathology in hospitals, not only in Australia, but internationally, more and more so internationally. So really solving a problem in healthcare and driving towards the vision of the company. So without further ado, I would like to hand over to Tim to take us through the slide deck. And then as I said Mark will come in. So please add your questions along the way.

Thanks very much Mike, and welcome to all on the call. So these are the summary highlights, financial highlights of performance in the last financial year. We're very pleased with them. We -- as you can see 20% -- 25% annual recurring revenue, 38% growth in reported revenue and importantly within that, that metric 51% growth in the recurring revenue components of our reported revenue. A lot of international growth has been a particular focus for us. The investment we made in FY '22 to really grow the international capacity to meet demand in a number of countries but in particular, in Saudi Arabia, the U.K. and more recently in Canada is starting to pay off and what we're beginning to see is acceleration in the market opportunities, I'll explain in a minute in those overseas priority markets. Our operating loss has come down very considerably, and we're on track for delivery of operating profits in this financial year as well as cash flow -- neutral cash flow -- positive cash flow towards the end of the year, so very encouraged by that progress too, and good cash at the end of the financial year. So those would be the highlights of the performance. So let me just pause and take you through here some of the kind of divisional highlights by products and we've taken here just to give people a sense of that acceleration in the opportunity that we're seeing both -- wins during the course of FY '23 but also some more recent indications. So if I start first with diagnostic technology, what we saw in the last which is essentially RippleDown in pathology and is the first of our full product domains. What we report in the last financial year is 43% year-on-year revenue growth in that segment, so very pleasing performance. And what we're seeing is that an acceleration in that revenue performance, even in the first and the first quarter of this financial year. So just to take you through that some of the highlights in direct sales, which are a key priority for us we have a partnership with Abbott Laboratories. Very important milestone in the last financial year was agreement of a new partnership with Abbott which essentially gives us far more revenue upside than we've had in previous arrangements with Abbott. Abbott has really been mobilizing very effectively over the last -- since we agreed that in December, and we're now starting to see, as I say, a -- an acceleration in high value sales through Abbott. We reported to the market that we had our first co-sale at the last -- in the last quarter, but we're -- I'm pleased to confirm we've now had our second co-sale -- high value co-sale with Abbott. And we have a very strong pipeline of co-sales, particularly in Europe, in Middle East and in Asia Pacific region. So we're just -- we actually launched the product with Abbott in America -- North America in -- a month ago. So we're looking forward now to growing the pipeline there as well. But what I can report is the very strong commitment that Abbott, at leadership level, is making to promotion of the clinical decision support component of RippleDown into its product set and that reflects a growing market demand for productivity in the laboratory. So we're speaking to one of the biggest pain points in pathology today which is reducing the cost and improving the margin of those businesses. And RippleDown with the way it automates clinical decision making and data entry into the laboratory plays perfectly into that priority. So we're very strong market development. Just to remind those on the call that Abbott has a current client footprint of around 18,000 clients worldwide. So an enormously important pool for us to be targeting sales of RippleDown into. I'd also just mentioned that recently we've also been pleased to announce our first sale of RippleDown in Mexico, in Central America and just sort of following on from that launch we made in North America last month. And overall in the last financial year recurring revenue doubled from Abbott sources. So the beginnings of a journey which we think will be very productive for Beamtree over the next couple of years. In terms of direct sales, which remain also extremely important for us, we are -- having reported some tremendous progress we -- the NHS is a very key market for us, and we're very pleased to announce that we are now -- we've moved from a trial partnership or trial contract with Coventry & Warwickshire, one of the leading pathology providers in the NHS now to implementation of RippleDown. So that starts in the first quarter of this financial year. And that will be a very important reference site for us in the rest of the NHS. In fact, we've already had leads developed from that initial implementation in other parts of the country. So look forward to developing the NHS [ in depth ] relationship in particular, but also spreading that into Scotland and Wales and Northern Ireland. We've also -- as you'll remember, we reported last year a very significant new contract with -- in South Africa that's now been implemented very successfully. And we've also been implementing with the -- a large client in Australia, again, successfully. Pipeline development is very strong currently, and we have both -- well, in direct sales, and we're making significant progress in those markets identified on the slide, particularly, of course, in Australia, U.K., Canada and also in Europe, and we hope we'll have some more news on European developments in terms of direct sales at the next reporting period. So overall, very confident about RippleDown's direction in the pathology laboratory. And as I say, the international context of demand is accelerating as people look to improve margins in laboratory services. Moving then on to the second domain, which is to intelligence, clinical decision support domain. So this is where we are pioneering some very important applications, a very modern artificial intelligence technology. And I think here, we want to just make sure that people are aware of the very important endorsement that's happened to our Ainsoff Deterioration Index. So just to remind those on the call of -- those who don't know, we have developed an algorithm which predicts the likely deterioration of patients in the hospital. And recently, that algorithm, which has been in clinical trial in Australia has been -- the results of that trial been published in a leading academic journal, which confirms very significant impacts on clinical and operational efficiencies in the hospital. That's prompted quite significant levels of new demand for that service. And it's a very important and actually quite rare thing that technology of this kind does receive that kind of validation in the academic press. So an important step forward for that product. It's also true to say, certainly from our clients and from a broader global perspective, that this issue of patient deterioration is becoming one of the most important priorities for global health. And that's because it's both about managing patients away from a very expensive intensive care facilities, but it's also about ensuring that you can discharge people efficiently from hospitals. So many countries are facing what's called bed blocking in hospitals. And so giving clinicians more guidance on when it's appropriate to allow patients to go home, be discharged from hospital is also a very important advantage of this algorithm. And a second sort of element to the scientific kind of validation of Beamtree's technology was -- is the appointment we made in the last financial year of the first Beamtree AI professor and that appointment was made with the University of Sydney, and that gives us a very rich and deep resource with which we can properly evaluate our emerging technologies, so a very important development there as well. In terms of sales momentum for the deterioration index, this is a greenfield site, as we've said before, this is a new product, which has been in trial in Australia now a number of -- and has also been on trial in Asia Pacific, and it's going on trial in the United Kingdom. I'm very pleased to note that in Australia, we've now signed a strategic partnership with one of the country's leading health services in the Gold Coast to test the deterioration index against existing early warning systems. And in Asia Pacific, where we've been running that trial with [indiscernible] a full multi-hospital implementation. So a very encouraging momentum in the area of CDS clinical decision support. Moving then on to the next segment of activity, the coding assistance and data quality domain. So this, again, to remind everybody is where we have technology, it's very internationally distinctive that supports the quality assurance of hospital data. Hospitals produce data manually and our technology ensures that the experts that run that process are alerted to areas -- episodes, which may be wrong in the way that data has been recorded. We essentially have 2 sort of parts to our commercial activity in that context. The first is a series of programs where we will go into a country or a region, and we will provide an audit service that will help the client understand what the error rate is, a baseline error rate in their data. And then, of course, we will move towards implementation of our recurrent software or technology, which then runs on a normal license basis. What we're seeing here is a very, very significant growth in the -- in demand for both of those services. And this is growing much more quickly than we'd anticipated. So last year, you'll see we recorded 10% year-on-year revenue growth. We expect that to be very, very significantly bigger in this financial year and going forwards. And that's largely driven by demand in our 3 core international markets. So in Saudi Arabia, a major reform program going on. In this financial -- last financial year, we won a major contract to support the government of Saudi Arabia with their design of their future health information system. And we're also now in the process of pre-procurement for a number of, well 2 particular audit programs in the kingdom to do baseline assessments of data quality. In Canada, we were awarded in the last financial year, our first North American audit contract, initially for 10 hospitals. Now that's already growing and 2 further hospitals have now joined that group, and we expect a number of other hospitals to join that initial group quite quickly. We're also now engaged in examination of opportunities for taking that same approach with other provinces in Canada. And we see Canada being a very significant opportunity for us now. Similarly, in the U.K., we are engaged in negotiations with a number of the new integrated care boards who are responsible for the commissioning of services in local regions and we expect that we will be implementing our first audit in the NHS in England in the course of the first half of this current financial year. So really significant progress in all 3 markets in terms of the initial audit program. As I say, the point of us doing these audits is actually delivery for recurring revenue from software contracts. And what we're seeing is that exact process working again at an accelerated rate beyond our actual expectations. So in both the Middle East and in Asia Pacific, we are in the middle or towards the end, actually, of pre-procurement process for 2 significant contracts for our PICQ audit technology to be installed. And we have, in total, a pipeline now for that technology worldwide of around -- of over USD 10 million, so very significant pipeline development. And as I say, reflecting not just the priority of [ Saudi ] around data quality driving the reform program but just generally about -- as fiscal constraint means health services have to be far more conscious of the allocation of their resources, of the importance to those health systems of understanding the quality of their data as a key driver of fiscal and clinical efficiencies. So just reflecting that position. In Australia and New Zealand, also quite a bit of activity to building a platform for growth in this financial year. We raised prices. Prices of PICQ were well below the appropriate rate for the product. So we did raise prices. And our retention of clients has remained extremely high. So we're well over 95% client retention. Some clients have stopped the -- that 5% group. There are a handful of clients that did terminate their contracts based on the price increase, but the very, very large majority, realizing the benefits of the product, have maintained their contraction engagement with it. So again, extremely encouraging in Australia, New Zealand. And finally, in the knowledge networks, domain, this is where we have 2 principal contracts, the largest with the Health Roundtable, which serves over 200 public hospitals in Australia and New Zealand with a data collaboration, providing the data, which they are able to share to drive improvements. And we operate a similar program with Ability First, a collective -- an organization that brings together a number of disability providers in Australia called the Ability Roundtable. We saw very significant year-on-year growth in the revenues in that space of the business, 20%, and we continue to see a significant momentum in sales moving forward into this financial year. In particular, in the last financial year, we agreed with the board of Health Roundtable to invest about $2 million in a new data platform, which will offer us very significant opportunity to improve and develop member services in the future. And with that momentum and growth, both in terms of new programs, we can offer those numbers, but also migration into potentially new areas of activity in healthcare. And you'll see there, in particular, the focus on aged care following the recent reforms in Australia to provide similar kinds of data comparison services to the aged care provider community and building on our work in disability, looking at opportunities in mental health as well. So significant growth opportunities based partly on the development of this new data infrastructure for the -- for knowledge networks. So I think broadly, that is the summary of where we've got to divisionally. Thank you.

Thanks, Tim. I'll take a couple of slides just to go through some numbers. This slide shows the growth in ARR over the last 7 quarters. We're taking the start point from Q2 FY '22 that was when we completed, in Q1 FY '21 -- '22 is when we completed our last acquisition. So what we're showing here is all the organic growth. It's been broadly tracking about $1 million a quarter. I think you'll see a bit of a change in Q4. So we had a very strong Q4 in FY '23 where it went up by $1.8 million to deliver about 25% organic growth year-on-year. So again, a good performance in Q4, and that will -- that does actually impact the sort of profitability business, which will come to the next slide. On the far right, it shows you the breakdown by the 4 segments in relation to that $22.8 million ARR and what we think it will look like when we get to our sort of long-term target of $60 million and the varying sort of growth levels in each of the segments. So this slide -- the next slide shows you the operating losses and the trend in those in the last 4 half years. And it's really what the story is around we made a significant investment in FY '22. We've talked about it before, but in terms of the organic OpEx growth was about 85% last year in FY '22. So that created these -- the loss of $4 million but that was to provide a foundation for us to grow both domestically and internationally. And the benefit of that is starting to be delivered in FY '23, where we've grown the top line by about 25% organically, and we've kept the cost under control. So the cost have grown about 7% organically because we've provided the foundation for the growth both domestically and international. So you can see the operating losses have gone from $0.9 million in the first half to $0.5 million and indeed, in Q4, because of the strong revenue growth, we actually delivered just a small operating profit. So a good trend overall. Hand over to Tim to talk through that.

Yes, so FY '24, as I've sort of indicated, we are very positive about the outlook for performance of the company. Just to repeat, as we've said before, we'll come to the slide in a second that the $60 million target remains very much on track. We are on track to deliver that. We are forecasting plus 20% revenue growth organically in FY '24. And I think you can see pipeline strength supports our confidence in delivery of that figure. Cost management is tracking towards a positive operating profit for the overall year in '24, meaning that we are balancing kind of ongoing investment in some of these new markets with cost control to deliver that profitability. In terms of divisional growth, so diagnostic technology, obviously, just really pushing hard on that momentum in both direct and indirect sales of RippleDown into global pathology, but we've got some very strong leads, and we feel extremely confident we'll deliver well on that clinical decision support. We're now moving into product sale of this excellent technology and initially focusing on the Australia, New Zealand marketplace to start, but also obviously building on confidence in the United Kingdom, in particular, around that product. Coding assistance, focused very strongly on the 3 core markets, as I mentioned before. So U.K., Saudi, Canada, growing those businesses and moving into recurrent relationships with those clients during the course of FY '24. And then in terms of the knowledge networks, domain of the business, delivering that new data platform, which should be delivered in the -- in quarter 3 of next year. And with that being able to develop a very strong pipeline up until over the next 2, 3 years. So that's the outlook. Back to Mark.

So this is a slide that people have seen before in terms of the target long-term horizon for the company. As Tim said, we are reaffirming our conviction around delivery of $60 million in ARR by end of 2026. We'll continue on that journey. You can see the kind of building blocks that drive us to get to that $60 million. It is the Abbott contract. It's also the international direct sales of RippleDown. Then we've got the greenfield site around the ADI product, the deterioration product, which is -- which we said is a greenfield site, but getting some strong momentum in that. I think the people who are -- study these graphs in a lot of detail will notice that we have tweaked some of the components. You'll see that the coding -- apart from the colors changing, but the coding segment have -- has increased. So that's changed over the last sort of 6 to 12 months, that's evolved. And we believe that based on the pipeline, we think that will be a bigger contributor to that $60 million ARR by 2026. And then you've got the foundation of the business, which is around the knowledge networks, which continue to do growth in that side of the business. So no change in the $60 million, and we're reaffirming the conviction around that $60 million.

Okay. So this is just really a very quick overview of what we actually do as a business as those who perhaps may not realize it. So Beamtree is one of the -- a leading provider of artificial intelligence technology in healthcare, particularly focused on pain points and the automation of clinical and administrative process. Next slide, please. The hypothesis behind our platform, the way it all fits together is encapsulated in this graphic. So if I just quickly take you around that. So the first 1/3 of this says that without the data, you can't have good healthcare. And our product PICQ and related products are field-leading in the assurance of data quality in healthcare. So we support the development of the foundational confidence in data, that data being used to both support billing of services and the analysis of their quality and so on. You move around the circle to the second domain, and that is let's say, well, if you've got good data, then you can start to use it for comparative analysis. And it's in the comparison of fiscal and clinical outcomes that you learn how to improve your service, a really important priority for healthcare providers globally. This is obviously where we have Health Roundtable and other analytic services. You move -- once you're analyzing the data, and then, of course, you can identify areas of unwarranted variation, things you do not want to happen in the future. With that insight, you're able to start supporting decisions made by clinicians and other frontline staff. This is where RippleDown comes in as we move to the final part of the learning health system, which is really supporting really efficient decision-making on the frontline of care delivery. And that's the platform we support. We have many -- we have some clients who will participate on 3 components of our Beamtree platform and others moving into come in at 1 angle and then deploying across the whole service. Next slide. So I won't spend too much on this. I think we've probably been through this, that a very well-established business in large parts of Australia, taking its know-how and inventions to the rest of the world. Again, don't need to discuss that been through the prior segments. And so this is for those who may be interested, and we can perhaps take any questions on this. This just explains a little bit about the method for -- the sort of the pricing arrangements for the products we return. Next slide. Highlights '23 we'll go through that. Obviously, annual report is available online. Thank you.

I won't be as quick as Tim. There's -- we've got probably 5 or 6 slides just a bit more insight into the financials. So reported revenue grew by 38% year-on-year. The key thing I'd highlight on that was if you look at the top 2 lines, there is a license subscriptions and usage fees, which is our recurring revenue type part of the revenue. That grew by 51%. The consulting side of the business contracted by 48%. That was really driven by the fact in FY '22, there was a large Saudi contract. So that side of the business wasn't as strong in FY '23, but we see that part of business growing in FY '24. In terms of OpEx, that grew by 18% year-on-year. There are -- in the prior year, there's 9 months of Potential (x). So if you adjust for that, the actual underlying growth rate was about 7% for the OpEx versus an organic growth rate of revenue of 25%, so a positive trajectory in that. In terms of profitability, I think we've covered the fact we've gone from a loss of $4 million to $1.4 million of a loss in '23 and then our targeting a profit in FY '24, really leveraging the investment that we've consciously made in certain parts of the business to do international expansion and invest in certain capabilities and products. If I go into a bit more around the revenue, this is the components of ARR, it's gone from $6.7 million to $18.2 million to $22.8 million. You can see the organic and non-organic parts of that. The key thing I would call out in here is, you can see that the organic growth of $4.6 million compares to about $2 million in the prior year. So more than double last year. That's been driven by success in the diagnostic side and also coding and knowledge network side. In terms of reported revenue growth, you can see the trajectory is a strong trajectory in the last couple of years, FY '23 growth. If -- the 2 components I've shown in the bar chart, the dark purple is the Australian growth or the Australian revenue and then the light purple is -- the international side of the business. So the growth in the international side is 78% for FY '23 and in the Australian side, is 24%. Broadly, overall, the growth in terms of reported revenue on -- more than half of it was from the international growth. So we've talked about wins in South Africa, Saudi and Canada and U.K. So they're driving that international growth. And in terms of Australia one, there's obviously still growing at 24% healthy, also boosted by the acquisition of Potential (x) in the prior year. OpEx has grown from $20.6 million to $24.2 million. So a bit of a change from the prior year where it grew by 174% or 85% organic. That's, as we said, driven by the investment decision we made in FY '22, which has provided that platform to deliver the growth. In '23 we've really been focused on costs and trying to limit the increase in costs that we've seen across the business. You can see the main driver of the cost increase has been around employment expenses that gone from $14.2 million to $17.4 million. So that's grown by 22% year-on-year. Employment expenses are just over 70% of our total cost base. The non-employment has only grown by 9% year-on-year. And in fact, if you -- organically, it's much lower than that. Now this slide basically tells you that the operating profit trend, we've sort of been through the FY '22 operating loss of $4 million versus $1.4 million, and you can see that improved trajectory where we expect that to be for full year FY '24 to be a positive operating profit. I would call out that we will -- we do expect to have operating losses in the first half, but then offset in the second half. So we will have losses in the first half. And on the right-hand side, you can see the reported EBITDA and the trend in that. And then there's more detail around how you get from operating profit to reported EBITDA. I won't go through those line by line, but the big ones were around share-based payments and any fair values of the deferred consideration, they do sort of make a noise in some of the numbers. But it's -- the reported EBITDA is following the same trend as operating profit. It's kind of a key point. Balance sheet. It's a fairly simple balance sheet. We had strong cash at the end of June '23, so $8.8 million of cash. We've got $5.3 million in receivables and $47.2 million of net assets. I would call out in terms of liabilities, we do have deferred consideration of $2.8 million that is due to be paid at the end of September in relation to Potential (x). That is about $11.7 million of shares sort of not a cash item that we will have to set up at the end of September. Cash flow. Again, the most important thing is the trend that's happened in terms of going from FY '22 to FY '23. In terms of operating cash flow, we had an outflow in FY '22 of $2.3 million. We had an inflow in '23. So that's a positive trend, a swing of over $3 million. So that is a key thing that we're focused on internally around management of cash. In terms of where we've invested some of that cash, the big thing is around software development. So it's broadly consistent in the last 3 years, investing in our products the 4 -- sort of 4 or 5 main products that we've talked about. We also did a capital raise in FY '23 of about just $5 million. So that resulted in the cash going from $6.4 billion to $8.8 billion. I would say overall, the cash burn in FY '23 significantly reduced versus FY '22, and we anticipate that trend to continue going into FY '24.

Maybe do a little wrap up?

Yes, sure.

Mark and Tim, thank you for the presentation. So hopefully, everyone got a lot out of that. What I wanted to highlight, just in closing was the conviction that the team has around delivering that longer-term target, the first point to the top left of that screen. How is that done? You can break that down into the 4 divisions you can see under the divisional growth slide. But you can -- you've heard from Tim earlier today across each one of those divisions, there is some significant steps forward, and that gives us sitting around the boardroom table that the shared conviction on this business really does have a long way to go. You've heard today, for the first time, the second win of a revenue share deal with Abbott on the RippleDown contract. You've heard today for the first time, the direct sale of the RippleDown contract into the first NHS hospital. We know how big the NHS is and a significant move to take that RippleDown product into pathology in the U.K. is a very significant step forward in the diagnostics technology team division. Clinical decision support you've heard for the first time today, the move towards expanding the Australian footprint within -- into the Gold Coast. You've heard today the implementation now into the Asia Pacific opportunity, which is quite a significant opportunity. And you've heard today the implementations of 2 of the NHS hospitals in the U.K. So again, like with the RippleDown business, that expansion into the NHS is not just with 1 single division, it's across multiple divisions. The coding business was the lowest in growth profile. If you look backwards, probably it has some of the biggest opportunities sitting in front of it, and that's because of the team and their hard work in working through places like Saudi Arabia, where they completed audits and are now moving forward on implementation opportunities of the software coding products. That's expanded further into adjacent hospital opportunities in same country and same region. Similarly, with the U.K., again, NHS opportunities. Similarly, again, with the move into Canada, not to leave behind the opportunity that sits in Australia and New Zealand as well. So there's 3 divisions with some real positive sales momentum. We tried to bring that out in the early slides. We hope that sort of was delivered. And I'm not going to leave behind the knowledge networks business. There, again, is some significant opportunity sitting within that business, and we were lucky enough yesterday to share a joint strategic session with the Health Roundtable and the Beamtree Board to talk about some of those opportunities like, for example, aged care that Tim mentioned earlier. So all I can say is there's been a solid set of results put on the FY '23 calendar financial year, but the FY '24 with that momentum that we're talking about across the 4 divisions is really the sort of exciting part about showing what the hard work of the team has generated. So maybe now with that in closing, we might try to bring up some of the Q&A. Mark is just changing screens so we can bring up the Q&A tab. Here we go.

So I'm just going to walk through these series.

Yes.

Described the IP strength of the AI clinical decision support. What is the differentiating factor to competition?

Okay. Should I take that?

Yes.

Okay. So the deterioration index, it predicts the likely deterioration of patient based on an analysis of the vital science data within the electronic medical record and other data feeds like pathology. It provides a long-term prediction, so somewhere between 24 hours and 48 hours in advance of that event of deterioration very accurately and very reliably, so with very little false alerting. We tested it in trial situations against the other early warning systems that are currently deployed in Australia and in England and Asia Pacific. And those systems like -- are called EWS or MEWS between the flags, that's the system that's used in New South Wales and Queensland in Australia. Our -- the algorithm outperforms them very significantly, the further away from the event of deterioration that takes place. So we currently are not aware of any other algorithm or products of this kind with those results. We haven't seen anything like this in the literature. And we -- as a result of this is why these leading hospitals are trialing the product with us at the moment. So in terms of competitive advantage, we think we have a very, very significant competitive advantage in providing clinicians with the chance to actively intervene patients before they get very sick, just to explain that point.

So I've got another question around what are the components of the substantial depreciation and amortization amounts? So I'll take that. So the amortization charge in FY '22 is $3.6 million and it was $4.9 million in FY '23. There're 2 comments I'd make in relation to that. One was the previous year, only had 9 months of Potential (x) amortization. So that's one element. The other element is as a result of the Potential (x) acquisition, we capitalized some customer contracts, and they are being amortized over a 5-year period. So that's why you can see that increase. The other component part on that is around software development. So you can see the software development spend has not really changed in the last sort of 3 years. It's been about $2.5 million, but that is amortizing over 5 years. So that's a reasonable size component of that. Next question is, what is expected profit margin outlook for FY '24 and potentially beyond? I'm happy to take that.

It's yours, Mark.

So we always said around profit -- we're not disclosing it around profit margin, but we are targeting a positive operating profit for the business. We will continue to have an internal discussion around reinvestment -- investment in some of the country expansions that we're undertaking. So to the extent we start to make profits, we will look to reinvest a large chunk of those. In terms of -- so I think the margin will -- that broad breakeven position will happen towards the end of FY '24 and probably going into FY '25. In terms of overall margin, we've had that a number of times. If I look at some of the products, they are -- like RippleDown and like PICQ, they are high-margin products. But while we continue to invest in the business and grow the business internationally, the overall sort of operating profit of business will be somewhat reduced because of that investment.

What are you saying is your main competitor.

Yes.

So that's -- obviously, we operate in 4 related product domains, but obviously, in each domain, there are different competitive contacts. The main capacity we actually have is generally the internal solution or doing nothing. It's what we offer is a set of services which cut costs, reduce waste and automate process. And sometimes the competition is simply inertia to take advantage of those solutions in terms of commercial competition. In the coding segment, we don't really have a very much direct commercial competition. The PICQ product is a very unique instrument and no complacency, of course, in relation to that. And we are investing in development of that product into markets which are currently occupied by players like 3M, a little bit further down the coding pathway from where we currently sit and others in that spectrum. So that we will emerge into a more competitive environment over the coming couple of years. In Health Roundtable, again, no immediate competitor in Australia and New Zealand, other than state governments and others developing their own analytic capabilities, but we still strongly believe and certainly [indiscernible] as the fact that Health Roundtable is able to provide insights that cut across the borders and the jurisdictions is a very important asset to them. So just to give a quick glimpse there of the competitive landscape.

And I'm just conscious of time. I think there are a number of other questions and I don't think we'll...

Try and do a few [indiscernible].

With Abbott having more than 18,000 clients globally, what would be Beamtree's total addressable market target within this 18,000?

So they have a -- so the fact that the onus to us that is 18,000 current clients is the total addressable market for clinical decision support. So Abbott is providing core diagnostic services to that very large footprint. In fact, Abbott is only the third largest provider of those services in the world. So Roche and Siemens both have larger footprints. So Abbott's strategy is to not only grow the -- to expand the value of its making to its existing market, but also to grow into the -- is to take market share from those 2 other competitors. The immediate -- our core immediate target, however, our laboratories that either are currently clients of other digital health solutions division. So we are 1 of 3 products that they are retailing in that division, and they currently have hundreds of clients that already-- that have one or other of those other digital products. So in a sense, our core market focus at least initially is to look at existing clients of those services and value expand RippleDown into those contexts. So I won't give you the -- I don't actually -- I won't give you the number of that, but that's a significant subset of the 18,000.

I think the interesting thing to was the recent launch into the USA.

Yes.

But previously, I'd have been focusing mainly on the European and some Middle East opportunities.

Yes.

But through the endorsement of the partnership agreement in December of last year, that's now being officially launched into the U.S. and all of a sudden you've seen Mexico turn up as the first sort of Central American opportunity with some great opportunities also bubbling away up in Canada, not to mention the USA. So again, there's a very large footprint, and it's about maneuvering that very large partner with Beamtree.

Yes, I'd say that -- so an important point for those who haven't been tracking this in detail is that the new contract means that RippleDown is promoted under its own brand name. Historically, RippleDown is promoted simply as Abbott's clinical decision support network. So now the rubric is sort of Abbott supported by RippleDown. So an important validation of Abbott's commitment to the product as well.

Just around a few more questions...

Yes.

There's one question about what is the forecast total expense in FY '24. So I think what we said in the outlook is that we expect the percentage cost growth to be lower than the revenue growth percentage uplift. So that's what we're tracking towards. I think in terms of -- we had OpEx of $24.2 million. I'd see that if we deliver 20% of revenue growth, I think that cost growth is going to be near about 15% for us to deliver that positive operating profit kind of broadly where we're -- how we're thinking about it.

Which is to us what you did last year?

Yes.

But we continue. I mean it's important to put out, we continue to invest in the business. We've hired a senior RippleDown Sales Director, who came from Abbott. So he's based in Europe. So he's been with the company probably 4 months.

Yes.

We've just recently hired a Chief Growth Officer, so -- who's going to help us drive this international growth. So we continue to make investments in order to drive that top line to get to the $60 million. But at the same time, we're not -- we're keeping an eye on the costs as well to -- in order to sort of deliver that profitability. That would be the message I'll leave you with.

Yes.

The Health Roundtable's commitment to a new system was originally $1 million right and now $2 million, that's simple. So the upgrade to the data platform infrastructure will cost $2 million. We are effectively funding at 50-50. So Beamtree will provide $1 million and Health Roundtable will provide $1 million. So that's why there's a $1 million versus $2 million difference. But overall, the project is $2 million, and we're funding half of that. You mentioned you had another direct sale. Any color and context you can provide on this to determine materiality.

So the -- so I'm not -- okay. So we talked about the direct sale in the U.K. It is -- I'm presuming its RippleDown. So the direct sale of RippleDown to Coventry & Warwickshire is our first -- is the first direct sale in the NHS. But I think what you may be referring to is that, in fact, not the direct sale, but the second co-sale with Abbott that we've made. So that's a co-sale in Australia actually, a major hospital group and is significantly in terms of revenue in advance of what you might otherwise expect from a license fee. So the point of the co-sales is that the revenue is actually is -- the sale is made on a revenue share basis. We have agreed a kind of threshold for what that sales will look like and then thereafter, there's a revenue share that follows. So that's the nature of the sale.

And I think maybe just to point towards, we've announced in quite a bit of detail the partnership arrangements and the pricing between a revenue share sale being the larger lab sales, which that -- what Tim was just talking about was one of those versus where Abbott going directly to a smaller lab business and sales that will [indiscernible]. So there's 2 tiers.

Yes.

The big one is the revenue share opportunities.

Yes.

I think we're done.

Okay. We might wrap that up there. Again, I appreciate everyone joining us today. The team have a lot of one-on-one meetings now with either new investors or existing investors. So we'll let them move to the next series of meetings. But I appreciate you dialing in and are always open to questions directly should there be something from the results that you have a question about. Thanks very much for joining, everyone.

Thank you.

Thank you.