Calnex Solutions plc (CLX.L) Earnings Call Transcript & Summary

Good morning, and welcome to the Calnex Solutions plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to CEO, Tommy Cook. Good morning to you, sir.

Good morning. Good morning, everyone, and thanks very much for taking the time to dial in and listen to our results. So before we go into the results, I'll just take a few minutes to introduce Calnex to the people that are less familiar with the company, and then we'll go in and talk about the recent period, what the results were and progress we've made during that period across a number of areas. So Calnex Solutions brings clarity and confidence and certainty to the world's networks and applications. What we do is deliver test solutions that allow the equipment vendors or people building networks to prove the performance of the equipment or the networks and ensure it's going to work under all conditions. You can see on the left-hand side, the type of companies we've sold to over the years. We started selling a lot to telecoms customers. So you see the telecoms vendors, Cisco, Ericsson, Nokia, the key players there that are using our products as well as the operators like AT&T and BT and component manufacturers like Broadcom, Qualcomm, et cetera. But we also have been selling to the data center and enterprise market. And on the right-hand side, it shows just some of our heritage and where our spread of business is at the moment. So very much it started in telecoms where the company started. As I said, really proven performance of equipment to the international standards. But a lot of the equipment and standards that come out of telecoms are adopted by many industries across the world. And that's allowed us to move into places like cloud computing and data centers as well as moving more into government and defense type infrastructures as well, providing the same solutions. So we are a company that's sold in 68 countries around the world. We use a partner network, which we'll talk about later that gives us a global footprint. And we're in a lean model where we outsource our contract manufacturing to a contract manufacturer. So what areas of test that we generically focus on? We focus on design validation and conformance test. So this is -- you can think of this as somebody that's building a new switch or a router or a piece of equipment. And the R&D engineers as they're building the equipment and get the prototypes and the early production units need to put it through its paces to check that it's going to do exactly what they expected, meet the specification and also prove that it meets any international standards that they're going to claim conformance to. So that's really the area that we focus on. And it's an area where effectively having the right tools at the right time, you enable your customers to get their new revenue streams to market quicker. And it's not just about quick and time through, but it's robustness that they know that once they release it into manufacturing, they won't have yield problems. And once it's deployed in the networks around the world, it's not going to have problems in terms of operational problems. So the right tools at the right time, you can command a healthy price because you're basically enabling your customers to enable revenue streams. So that's the primary area that we focus on. The one other area we focus on is shown here in the far right, and that's a high-level maintenance and monitoring. So it's not so much about building networks, but once the network is there and running, either monitoring its performance or if there's a fault after you've determined it's not a straightforward fault that can be fixed by just replacing equipment, you have to do a deep dive to understand what's happening. We provide the tools to give that deep insight to allow that sort of work to be done. So that's who Calnex are. So let me take -- go straight into the review from the first half of FY '26. For the period, we closed revenue of GBP 8 million, which was up from GBP 7.3 million the year before. We made a slightly less of a loss this period than we did for the same period the year before, and we continue to have a healthy cash balance of over GBP 10 million, and we plan to distribute a dividend of 0.31p per share. Through this period, we've continued to innovate in our products and continue to push ahead with our building our market presence. So at the end of the last period, we launched our 800 gigs product, which was market-leading, and we continue to use that to build momentum in the telecom space. But we've also seen strong demand for our other product portfolios in the U.S. government and defense space. And we're doing a lot of ongoing activities, which I'll talk about later on, to really understand what's happening in the cloud and computing world as an effect of AI. We are not directly involved in AI, but we're in the vicinity of AI in terms of really trying to understand where the opportunities it's going to create as they try and build out the infrastructure to deliver the AI that's needed by the modern world. As I said, telecoms was a place we started. It's still a very key market for us, and it has been subdued over the last few years, and it continues to be. But we continue -- we are starting to see a slow increase in business there from our deals and in terms of engagement with customers, there is more and more deals coming our way in terms of customers want to talk about upgrading units or buying new units, which is a healthy sign. But we expect it to continue to be a subdued market going forward. In saying that, we've actually secured access to a set of chips that allows us to start working on a 1.6 terabit version of the Paragon-Neo. This is the next rate that's going to -- is already starting to get deployed. And it is technically a very complex product to do. So it will take us around 18 months. So we expect to release it towards the middle of calendar year '27. But it's a key for us to continue to follow the technology waves as we have over quite a few waves now from 10 gig right up to 100 gig, 400, 800 and now at 1.6 terabits. So an important part of our portfolio going forward. The other thing that we've been focusing on recently is on our internal structure and how we go about doing business. We'll talk about our channel partners in a minute that that's changing quite a lot, but we've brought some new leadership individuals into the company. We've recently just hired a new VP of Sales. And earlier in the year, we brought in a VP of Markets and Products. And they're really helping to look at the way we go about business, how we engage with our customers and how we engage with our partners, our sales partners to basically sell our products. So if you look at this map, it looks the same as it's probably looked for a few years in terms of the countries we work in, but there is quite a lot of change happening. If you're familiar with Calnex, you'll know that we used to work very closely with Spirent in terms of up to about 70% of our sales went through Spirent. They acted as a channel partner. So when it was announced last year that they were going to be acquired by Keysight, it was clear that we couldn't continue to work with them. So we've been migrating our channel to a different set of partners. So we've been successful in doing that and bringing on a number of new partners that basically give us the same coverage, but also looking to enhance the coverage that we get by bringing in new partners that, for example, are focused on the defense sector in North America to give us a much stronger footprint going forward. We've also invested -- while, Ashleigh will talk about how we've controlled expenses. We have done targeted hires, particularly in the sales and marketing side, and we've invested in partner manager in the U.S. as well as a person focusing on the federal market in the U.S., again, to give us better traction into that market space. And while we used to work with Spirent along the way from when it was first announced that Keysight was going to acquire them. If you're familiar with the market, you'll know that the regulator required Keysight to spin out part of Spirent and we weren't allowed to acquire the whole company. And that part is now part of Viavi, and that deal was just closed literally just 2 or 3 weeks ago. But the part that went to Viavi is the group that we worked with. And as we go forward, we have continued to work with them, and we hope to continue to work with them in a new way going forward because they've just really effectively arrived in Viavi, these discussions are just getting underway. But all parties are keen that we maintain the strength that we had the relationship we had before. It will be a refreshed relationship in terms of the way we want to go forward, but hopefully, it's a win-win for both parties. And it's interesting that Viavi is a company that we had already started working with early in the year. They approached us that they wanted to sell solutions to the customers in the O-RAN space, really using their product along with our product to give the market-leading solution to the market space. So we have signed a contract with them, the wireless group in Viavi to sell that, and that's just getting underway. And hopefully, it will bring us new business before the end of the financial year and definitely in FY '27. So at that point, I'm going to hand over to Ashleigh to talk about the financial results. Ashleigh?

Thanks, Tommy. So just in terms of a summary overview and just to reiterate what Tommy just covered in his introduction, our financial performance in the period was a steady progression on the prior year in terms of revenue growth and profitability. So revenue grew 9%, as Tommy just mentioned, with growth experienced across all regions, and I'll go into more detail on that on the next slide. Gross margins remained resilient and came in 2 percentage points above prior year at 76%. And that's really just driven by product margin mix rather than anything else, our gross margins do tend to fluctuate 1 to 2 percentage points year-on-year depending on what bundles we've sold and what products we sold. And then as Tommy mentioned, we continue to manage overhead costs and R&D investment cash costs tightly with those costs coming in, although above last year, very much in line with plan. The revenue growth and a slight uplift in margins dropped through to the other profit measures with underlying EBITDA and loss before tax showing improvements on the prior period, as you can see. And cash was neutral on the prior year before dividends, and we continue to manage -- to maintain a strong balance sheet. We do expect those cash flows to be positive in H2 in line with expectations. So just before I take you through the next few slides on the current year, I just thought it was useful to briefly remind you of our revenue model as I've done in previous presentations. So as some of you may know, we have 2 revenue streams. Our main revenue stream is what we call bundled hardware and software. And we also have a smaller revenue stream for software support program revenues. So on the bundled hardware and software piece, a typical customer will purchase one of our hardware products with a number of software options included at that time, and that's invoiced as a bundled sale to that customer. And that customer can come back for upgrades or additional options that are added to the existing hardware through the provision of a license key through their time dealing with us. And we sell these as stand-alone software sales or upgrades. The bundled hardware and software sales pricing and combinations can differ from order to order as it really just depends on the hardware product being purchased and the numerous software options that the customer can choose from and each customer, as you might expect, and purchase different combinations of software options for each hardware product, just depending on what they need at that point in time. So as that -- as a result of that variability, the average revenue earned per bundle can vary from order to order. And that revenue is recognized on point of sale effectively on delivery to the customer, so either the delivery of the hardware or the delivery of software license key. And that, as I said, makes up the majority of our revenues. And then the second revenue stream comes from software support programs. So each of our products comes with a standard warranty period, but that can be extended for an extra fee, and customers can also buy software support programs. And that revenue is recognized over the life of a product because sometimes they can buy it for more than 1 year. So if a customer purchases a support package that spans, say, 2 to 3 years, the revenue that's associated with those future years is deferred on the balance sheet and then released over the relevant number of years that, that package covers. So hopefully, that gives you a little bit background on our revenue streams. Just on to the geographic and product revenue performance in the period on the slide here. As you may know, we've got 3 regions. So that's the Americas, North Asia and Rest of World. And within Rest of World, we include Europe, Middle East, India, Southeast Asia and Australasia as well. So as you can see from the disclosure notes in the RNS, the split of revenues across the regions was broadly in line with the prior period. Americas took up 38% of total revenues. Rest of World were 36% and North Asia were 26% in the period, so not too different from last year. The Americas region does continue to be the most impacted by the subdued telecoms market, but we did see a 5% growth in revenues from that region in the period compared to last year. And that was driven by sales into the cloud-based and government sectors, which have been the focus for us while the telecoms market was -- has been slower, as Tommy was saying. We also continue to manage the U.S. tariff situation, working with our resellers to agree pass-through of these costs to our end customers through transparent discussion upfront through the sales cycle. The Rest of World region was the least affected by the slowdown in the telco end markets, if you remember from previous presentations and is able to take advantage of a more diverse end market non-telco sector mix, which has assisted with growth in the period, that region came in 9% higher in this half compared to last half in terms of revenues. Timing of shipments at the end of Q4 mean that, that region benefited from opening backlog roll-off in the period as well. And the North Asia region continues to operate against the backdrop of the U.S.-China geopolitical tensions, which hasn't changed very much since the last time we presented. So as a result, China still remains challenging for us as a country. However, we have seen some really good performance in Taiwan and Korea as we continue to focus on growing business in the other regions within North Asia outside of China. From a product line perspective, so Lab Sync, that's our Paragon Neo and Paragon X products. That does continue to be impacted by the slowdown in the telecoms market, although the demand for the 800-gig Neo remains encouraging, and we have seen some good demand for our more mature Paragon products as well, which is encouraging. Our plan for Sentry sales, so that's our Network Sync product aimed at use in data centers are continuing as planned. And we received a significant repeat order at the start of October from a major hyperscaler, which gives us a good start to H2 for that product line. And the NAA product line, that's the SNE and the NE-ONE is seeing good traction in the government and defense sectors where we're seeing use cases for both the -- potential use cases for the SME and the NE-ONE for those customers. So just on to the income statement itself. I've covered quite a lot of the main drivers in the previous couple of slides, but just to kind of walk down the bullets here. So as I said, revenue growth of 9%, and that's coming from all the regions. That's effectively driven quite a lot of the performance in the rest of the P&L, but it's been supplemented by that slight improvement in the gross margin at 76% compared to 74% last half. As I mentioned, so admin costs, we show that -- we show that separated out from R&D amortization in this table here just to aid disclosure. Admin costs did increase as a result of planned headcount additions, and that's those targeted hires that Tommy was talking about earlier and just inflationary cost increases. But as I said, they are very much tracking to plan. And R&D amortization has increased slightly on last year. That's very much due to R&D headcount increases in the prior year just due to our prior years, sorry, just due to our 5-year amortization cycle. We haven't seen a huge uplift in heads within the R&D team. So that's effectively that R&D amortization of 5 years coming through to the P&L. And just one last thing to fill out here is just so you've got more information. The effective tax rate is 25% here. It's shown as a credit just because we're in a loss-making position. As that loss-making position flips into profit, that tax credit will become a charge. Then just on to the cash flow. So net cash flow from operating activities was GBP 2.8 million compared to GBP 0.1 million in the previous year, GBP 0.1 million of an outflow, sorry. So -- and that's been driven by the improvements in the EBITDA and the profitability improvements I just talked about and positive working capital movements. The working capital movement of GBP 1.2 million is really predominantly due to movements in the debtors' balances. So we had a larger debtor balance at the end of last year just due to the timing of shipments and orders coming in at the end of Q4. So that was just larger than normal. That's all kind of rolled off in this half. So that's creating that good cash inflow there. An investment in R&D of GBP 2.8 million, that's the cash cost of R&D, the cost of our R&D engineers, slightly above prior period, up GBP 0.2 million, but that's very much driven by inflationary cost increases, nothing else exceptional happening there. GBP 0.5 million of dividends paid in the period, very much in line with prior period trends. We are awaiting a GBP 0.7 million R&D tax credit due from HMRC in relation to last year's tax credit due. That was originally expected before period end. So we're expecting it very shortly in this period. Continued -- and that continued improvement in revenue volumes in H2 in line with expectations will generate positive cash flows as we go through H2. And just to pull all that together, revenue, we've seen good revenue growth and gross margin improvement supports the improvement in the profitability through this half. We do continue to invest in our R&D programs where we see revenue growth potential, and we are keeping a tight control of overheads and overheads are tracking to plan. We are making targeted hires in the front-end global sales and marketing teams, as Tommy mentioned, to support our continued growth. And we are confident in delivering continued growth in H2 and the FY '26 results in line with market expectations. And I'll hand you back over to Tommy.

Thank you very much, Ashleigh. So let's just have a quick look at the strategy and then take a bit of a more deep dive into a couple of areas that we thought would help to give you a bit more color in terms of what we do and how we go about doing the business. So the strategy, if you've joined us before, looks pretty similar because it's exactly the same as it's been for a while. We really see 2 big market drivers that are not disconnected from one another. The first is the build-out of the mobile network infrastructure to provide that connectivity into the telecoms network. As we say, the telecoms industry is a bit slow at the moment, but it's still key in terms of what's happening. And recently, there was an announcement that NVIDIA have invested in Nokia to really look at the next generation of mobile infrastructure, that kind of O-RAN network. That's the network that sits beside the radio towers. So we still see this as a very important area that it will come back. It's essential. And a lot of the technology that's used there is used in the other sectors that we focus on anyway. So from a technology point of view, it's important to keep in touch with that area to make sure we're well aligned with what's happening with network technology in all segments. And then the second area we're looking for is to expand in the cloud computing and data center world and in the government and defense sectors. As I said, this is different in areas we all know there's significant growth happening. And it's really an area where we feel that there is an opportunity for us to expand our footprint and grow our business in these sectors. And thirdly, it's about acquisition and partnerships is the third strategy. We have done acquisitions in the past, and we continue to look for acquisitions, that will actually enhance our product portfolio or enhance our route to market to get us to new customers. The ones we have done in the past, there have been -- there's always an element of just right things at the right time. So it's not something that we can plan to do, but we continue to speak to many companies. But in the group that actually focuses on that, they also look at the partnerships. So the partnership that I talked about we've just done with Viavi Wireless is really that group to look to see how we can extend our reach through partnerships as well as acquisitions as well as what we're doing in terms of the other markets and products. Our product portfolio really has 3 main parts to it, the Lab Sync, network sync and network and applications assurance. Just quickly for people are new to us, the Lab Sync is really where Calnex started. This is very much into this R&D test in the telecom space, and it's proven performance of transferring high accuracy time through the network, which is required by the mobile network. What we're seeing is, of course, a lot of the -- that technology is also going into other places. So it was interesting in our 800 gig sales, whereas in the past, when we released leading-edge technology, it was always the big telecoms vendors where the first 10 units were sold into there. This time, we're actually seeing a lot of new names in there. People are actually servicing the data center world. So people are Arista, NVIDIA, Dell, they were actually buying 800 gig because that technology is now used in the data center world. So the move to -- this is a product that we have market leadership in. We've had for a number of years. We have a very strong position. And obviously, going to the 1.6 that I mentioned before is really important to keep moving that forward and show our customers that we're staying in the market and give them reassurance to invest in the platforms that when they need future technologies, we will be there and be able to offer them what they need. The network sync is more about -- started really on the telecom space with the Sentinel, which was really focused on testing networks, again, the transfer of time through live networks. But we actually find that in some data centers, they're actually using time -- transferring time across the data center to synchronize all the servers because they actually find that they're actually far more efficient in terms of the bandwidth utilization that they can get from the servers. So the Sentry and the Sentinel product actually has about 80% technology leverage between them. They're actually virtually the same inside one another. There are differences, but they're relatively minor. But really from a market positioning, they are very different products and going to a different set of customers. And then we have our network and application assurance products. These are effectively network emulators, the emulator network. Networks don't always work correctly. They have problems, things go missing, packets get lost, packets get repeated, packets get reordered, packets get delayed by different amounts. And that's what these products do. They emulate the failures to get in real networks so that if you're developing a new piece of equipment or a new application, then you can prove that once you've deployed it, it's going to work well. And we have a whole array of these products from the Ignite, which is a hardware-based solution, which really provides a high-end performance, a very accurate control and high-speed performance to the SNE, which is more about the low speed interfaces, but provides a far more complex network simulation. And all these products are platform products in that when we produce our hardware-based customers, as Ashleigh described, can buy a new platform, they buy a number of software options and they can come back in the future and buy additional software options to enhance the capability they have. And we continue to invest in all the products that you can see here. I thought it was worth taking a few minutes here to just look at the 3 segments that we talked about at the beginning, the telecoms, the data center cloud computing world and the government and defense and just kind of look at these markets and all these products sell into all these sectors. So it is a bit of a matrix format. But just to kind of give you a bit more color into them. First of all, the telecoms market, this is where Calnex started, and we have a very large installed base of over 1,500 units in the timing products. So what that means is we can very much continue to work with these customers. We can sell them upgrades. We've started looking to offer trade-in and upgrade programs. So if they've got earlier versions of the platform, move them to the latest version of the platform. That means when they need 800 gigs or 400 gigs or some other capability that's coming soon, they're in a stronger position to move to that very quickly. They just need to buy the option. They don't have to upgrade the platform at that time and replace it in the stand. So that gives us a chance to effectively sweat that asset of a huge installed base out there and continue to show that we can add value to our customers. We're also looking to promote more strongly what we call our support service. So it's like a maintenance program where the products are under maintenance and you get software updates as well. Again, in the world of maintenance, it's like insurance, there are people that want it all the time. There are people that just won't buy it and the group in the middle that can be persuaded. And obviously, it's the ones in the middle that we're looking to persuade to take it who don't have it at the moment. And as we all go forward and more and more worried about software security, getting the patches, getting the software updated is something many companies are wanting to do more and more with the equipment. So again, hopefully, that is part of that revenue that we see as the only part that's repeat revenue in terms of the maintenance part. But of course, we want to keep moving forward. And as I've mentioned a couple of times, the next big thing in the world of synchronization is doing it over 1.6 terabit interfaces. There are lots of other smaller enhancements. The standards are still really active in terms of -- in this area. So we continue to add enhancements. But we want to get to that 1.6 terabit. And we've just recently agreed an early access program to get access to our chipset that allows us to support these interfaces. This is a key thing because in terms of -- for us to do it, we need to get access to the technology that allowed us to build a test solution, which is not the same as a piece of the network equipment. So getting the technology is key for us. So we now have access to that. It's a very complex product. It will be hopefully an attractive product to our customers, high-margin, high-value product when it comes out, but it will take around 18 months to bring to market. So we're looking at the middle of 2027 or into FY '28 before we see revenue on that. But this is still an important market. A lot of the technology that other sectors use really comes from the telecom sector. So we continue to stay in touch with customers. It's a base business that we want to continue to grow as the market grows, but we also want to extend our footprint looking into other areas. The first one of them is the cloud computing and data center world. Now we've been looking to work in this area for a number of years, and you can see that we already are quite successful. Almost half of our business is coming from this area. And we've had success with our timing products into the data center world, where, as I mentioned, some of the data centers and one hyperscaler in particular, has timed all the servers, and we provide the monitoring systems that ensure all the servers are received in accurate time. And that's been successful for us, and we look to replicate that with other hyperscalers. We also have been successful selling the network emulation products for allowing them to prove performance of their infrastructure. And that's something we'll continue to build a footprint with and look to expand the people that we work with. As an aside to that, the standards have just approved a profile for the PTP protocol. The PTP protocol is a time stamp protocol that's which used to transfer time through Ethernet interfaces. And there's an overarching standard called 1588. But what they do is they create profiles, which is effectively like a subset of the standard that you want to use if you've got a particular application or sector. So like in telecoms, there's 3 profiles, there's a power profile, there's a number of profiles. So hopefully, this will encourage the data center world to adopt PTP more widely than that at the moment. But of course, the whole data center world is being disrupted heavily by the arrival of AI. And what we are seeing is this huge change happening in terms of the architecture within these data centers, how are they going to be architected? Are they all going to be just in one big cloud wherever that is in the world? Or is there going to be edge data centers or edge computing sitting near the edge sitting next to the towers, again, referring back to the Nokia NVIDIA link up that they're doing some of the computing at the edge, so they got for machine-to-machine communication, they get far more predictability in terms of latency and response times and things. And there's also things like inference testing. That's once you've built the model and it's working with the real-world situation, it uses the data that it collects from the real world to basically respond to. So there's so much change going on there. It's been quite a challenge and a lot of our discovery activity, this is when we're looking at right at the very end, front edge of our marketing. We do product marketing from the point of view with our customers that have our products sitting down and asking them what they need next, where they're going. But there's also about just looking at the market in general. And trying to understand where the opportunities are because there's a huge amount of money everybody knows that's flowing into this infrastructure. And it can be quite challenging to understand where we can see opportunities because they're just trying to move so fast that they want everything yesterday, let alone tomorrow. So I think there's still a huge opportunity. There's so much change going there, and we made real progress over the last 6 months of trying to segment that opportunity and find real opportunities that we can take our current products to and start to engage with customers that will also help us understand future opportunities that we need to direct our road map to. So we are starting to do programs in the rest of this year in terms of engaging with customers. And hopefully, we'll see revenue from that in the next financial year. And of course, we're utilizing that customer engagement we've built over the years of being able to go in with engineering teams when they ask for something and say, well, we don't quite have what you want today, but we have this, let's come in and sit down together and we can try and see if we can adjust your test plan to allow you to do testing along the lines of what you want to do today, which helps them, and it also helps us understand what's happening. So a really exciting area, a challenging area, but an area that we really spend a lot of time on our discovery activity to look for new opportunities going forward. And lastly, the government and defense. Again, as we know from what's happening in the world, there's a lot more money going into these areas. And at the end of the day, they are just using network technologies that are coming from telecoms coming from other spaces. And we realize there's programs happening there that we can sell our current products in. So to date, it's not about changing our products, it's more about route to market, understanding how to sell into there. The first place that we address that we've been trying to increase the penetration, as we talked about at the last discussion is into North America. We've basically hired a salesperson with experienced selling into the federal. We've hired a channel manager to set up the right channel because you need different channel partners to sell into these customers than you do into the other ones and really trying to understand how the whole ecosystem works there, how we get part of these programs and ultimately sell into these programs. So we're starting to see reasonable progress in terms of deals starting up here. So good progress there. And very much, we do believe there should be all the dynamics thinking about -- whether you're building for a federal department, whether you're building in a defensive environment, there's far more networking going on between assets. So that just means that there is a need to prove that it works under all conditions, whether there's problems with connectivity, et cetera. So everything tells us there's real opportunity in there, and that's what we're starting to see. And of course, this is not just the U.S. It's increased its government spend. It's happening all over the world. And the next place that we will look is to expand our footprint in Europe. And the first 3 countries we're going to do starting really as we get into the next calendar year is the U.K., Finland and Sweden, which may seem a strange set of countries, but it's because it's where we have people and we have already got connections to partners that are working into these government spend programs. And so we'll build from there. It's not that you can just decide to do Europe because Europe, as we all know, is 20-plus, 30 countries. And especially in government spend, they all have different ways of working. So you really have to look at each country in turn and figure out how it works, who are the right partners we need to work with, how do we get part of these programs. And of course, in the future, we'll extend that in Europe to some of the other big countries like Poland, Germany, France, et cetera, to expand our footprint and hopefully build our business going forward. So as we enter the second half of the year, we feel there's encouraging momentum in terms of what we're doing internally, both in internal processes and improving our sales channel, the whole way we market our products as well as in some of these initiatives that we've talked about in terms of expanding things. We expect to hit -- anticipate that we will hit market expectations at the end of the year. And we've continued to expand our market footprint. Telecoms will continue to be an important focus, but it's about building and expanding into other areas as well, not defocusing on telecoms, but increasing the focus on other places. We have a strong balance sheet, and that allows us to continue to do this sort of targeted investment Ashleigh talked about into sales and marketing. And we believe we're well positioned with our products, with our operations and our contract manufacturing partners to respond when the market starts to grow and be able to deliver product as and when orders come in. And we believe we'll start to see through this next period better traction in some of these new areas where we've put significant effort in to expand the footprint. So at that point, I shall stop and see if there's any questions.

I have a question Tommy, I can answer. So we've had a pre-submitted question before the webinar. The question is, what are the forecast growth rates for revenue/profit for the next few years? So [indiscernible] published the forecasts for our current year that you will be able to get access to. But just in terms of just to give you a kind of sense, we aim to grow at a low double-digit rate over the next few years, just given everything that Tommy has talked about in terms of the new end markets and the existing markets that we work in. That will then obviously then drive profitability. Our cost base is largely fixed. If you ignore direct costs, obviously. If you think about admin costs and our R&D amortization, those costs are largely fixed. There are some variables in there. But effectively, if that growth starts to -- if we start to gain traction in that growth target, we should start to see that drop through to profit being very healthy. So that's effectively where we're aiming for the next few years. I hope that answers that question. There is a second question here from James. How is the broadened partner network helping you deepen customer access in new markets? And what influence have you seen already in the quality of your pipeline? Tommy touched on that through his slides on each of the end markets there. But effectively, the broadened partner network, and Tommy, you might want to add to this -- the broadened partner network gives us a lot more flexibility into these different end markets that we're facing into. So effectively, as Tommy was saying earlier about that sort of matrix of end markets, products and our partner network just gives us that flexibility to kind of move and shift into these end markets a lot -- the new end markets a lot easier. And a good example there is that the defense slide that Tommy was talking about, linking in with resellers that have and distributors that have that connection into the prime contractors and the defense conversations just allows us a lot more accessibility into those conversations. And we are seeing that coming through when it comes to our pipeline and the conversations that we're having with our sort of longer-term view on forecast. So it does -- absolutely gives us that expanded view and expanded flexibility across the sort of global partner network. Tommy, I don't know if you want to add to that.