Celebrus Technologies plc (CLBS.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the D4t4 Solutions Plc, Final Results Investor Presentation. [Operator Instructions] Before we begin, I'd like to send the following poll. And I'd now like to hand over to Bill Bruno, CEO.

Excellent. Thank you, and thank you, everybody, for taking the time today. Myself and Ash are pleased to be with you and we'll walk you through annual presentation of the results. As mentioned, please utilize the Q&A tab. We'll try to get to as many of the questions as we possibly can today. So feel free to utilize that. And so I think we'll go ahead and start off with the operational highlights. Ash, you don't mind jumping through the disclaimers and everything. From an operational perspective, it's been another busy year for the business as we sort of transform into a sales organization, and a focus on standing up our direct sales capabilities. You'll also notice, and Ash will call tension to this when he goes through some of the financial results. But if you participated in this last year, we talked about how we were onboarding several new systems across the business from finance, HR, to sales and marketing, recruitments' et cetera. And now that those systems are in place and the data is in a much more regional format, we're also starting to incorporate additional views into things such as the success of our sales channel. So there's some pipeline metrics in the RNS. And as you'll find mentioned in the annual report as well, that start to bring some of this to light. So namely that our pipeline value grew in the previous year by 27% and the amount of -- for the proposals grew fourfold throughout the year. Now I know there will be a lot of questions because we did get asked how would you manage standing up a direct sales business, that can be a quite expensive undertaking. And one of the things that Ash call out when he goes through the numbers is the OpEx expenses of the business as well being flat. And that's been through us taking a careful look at the business and ensuring that where we're investing is in the right places and also making restructuring and efficiency changes to the business across the board as well. Now from a direct sales perspective, because I'm sure these questions will come top of mind in the pipeline as it currently sits today, about 65% of our pipeline is direct with the remainder being through indirect channels and some of the partners that we've built over the years. We continue to simplify our messaging as a platform, and you'll see this come to life quite a bit in this year's annual report. But we now refer to it as a Celebrus platform, and I'll come on to that when we get into some of the strategy and I'll show you what that means, and I'll talk through a bit more about how we position and sell from that perspective. But that simplification and alignment of the platform is a necessary next step when building a direct sales business, because clients expect you to deliver on things that perhaps your platform wasn't asked to do before when you're solely standing behind an indirect channel for how you go-to-market. We do continue to not only acquire new customers, and we had several great wins in the previous financial year, but we also had some strong in upsell. And Ash will walk you through a new breakdown of our annual recurring revenue as our contracts are focused on a term basis, multiyear contract usually to the tune of 3 years on a noncancelable basis. And that's how we view annual recurring revenue. You also might remember that we acquired Prickly Cactus a few years back, and that was done to really start to stand up our customer success team and to start to drive growth from our existing accounts. Pleased to report that in this previous financial year, they met the earn-out criteria early. And they've now been fully integrated as our international customer success team. We've also stood up in this year, a customer success team for the Americas as well. And the driver of that is not only due to have a target and incentivization to drive a target goal of average growth in each market for all of our existing customers, but it's also to free up sales so they can spend more time selling and less time managing existing accounts. Innovation also continued to be a key part of what we do as a business. You might recall from previous conversations, that we generally do 2 major releases a year. We stay true to that. We have a release that is already in beta that we'll be going publicly live in terms of marketing and messaging over the course of the next few weeks. And another release that always happens in kind of the November, December time frame. Some key innovations from this previous year included a new patented capability in Celebrus, that we're calling CX Vault, which is a true cookie-less solution to deliver personalized experiences in a compliant manner for individuals who opt out of tracking. In addition, we further enhanced what we call our digital identity verification capabilities. And I'll just make note that of that -- the majority of our pipeline is driven by that feature. Because it is a core differentiator of our platform. And it is the foundational element of every solution that we bring to market with our various partners as well. And just one final note on the pipeline outside of the growth. Historically, D4t4 has focused primarily on financial services. We've expanded our focus considerably with the growth of our direct sales channel and our business development routes to expand significantly into health care in the U.S., which is a massive opportunity for us as a business going forward and a significant contributor to today's pipeline, in addition to retail, travel and insurance as well. So with that, I'll turn things over to Ash to walk through some of the financial highlights for you as well.

Thanks, Bill. So on the financial highlights, I'll run through this very briefly and then go into a bit more detail further on. But in terms of highlights the ARR, annual recurring revenue is up 19% from GBP 14 million to GBP 16.7 million, and I'll go and talk later about the components within that. Software revenues is a new metric that we're reporting on, I'll explain why in a few moments. But that's gone up by 9.6% to GBP 19.1 million. And so this is essentially excluding third-party hardware sales, and I'll explain why that's important. Following on from software revenues as a headline, the GP gross profit percentage of software revenue has also gone up from 67.8% to 68.8%, and again, that's an important metric. And again, I'll explain why in a few moments. The adjusted profit before tax is up from GBP 3.3 million, up GBP 3.8 million. And the full year dividend falling on from that, we're increasing by 3.8% this year, so paying out 3.03p per share. And then the final highlight is the cash balance. It's gone up from GBP 11.4 million last year to GBP 17.2 million, and we remain with a strong balance sheet and net debt. Bill?

Thank you, Ash. So from a strategic perspective, our mission statement that we're aligning on is we're transforming into a sales organization focused on selling software is to improve the relationships between brands and consumers by a better data. On the marketing side or traditionally what we refer to as the CDP, that would be building better experiences. You come to a website or a mobile app and you're trying to perform a specific action and perhaps you've looked at certain products in the past. And when you get there, you see a tailored experience based upon the seller's profile to make that more relevant for you. On the fraud side, the way we're bettering those relationships is quite simple. We're protecting people's hard-earned money, and also protecting banks and others from being responsible to having to pay back for people who have fall victims to scams as an example, in the U.K. as a result of the payment regulators decisions. But to us, it's all Celebrus. And you will have noted in our previous year, we talked about Celebrus Cloud, which is our deployment of Celebrus on a single-tenant private cloud hosted basis. And it's, in essence, replaced what we've historically referred to as Customer Data Management as a business. And Celebrus Cloud is how we deliver analytic environments to customers. It's just that the reprioritization of how we do that, focusing on off servicing or in a private cloud or a client using their private cloud and having an on-premise installer in a data center installed being the last resort as a business. Now what we're choosing to deploy there largely ideally is the Celebrus platform, which is our software and intellectual property that has several patents around the globe. And you'll start to see us be more modular in how we're presenting these things. So consumer insight has historically been what we would have referred to as the CDP, in the fraud section is the broad data platform and the capabilities they're in. We're building very partner-specific solutions. So things like the CDI for sales force integration that we engineered with Salesforce and launched this year. CX Vault, more on the data activation side. But in this case, it's a cookie-less solution for personalization. And one of the newest sort of enhancements, if you will, is in web analytics and reporting. What we're finding, and this is expected, and it was all part [indiscernible] we continue to move this forward is when you start selling your software direct, customers start to perhaps understand the full breadth and depth of capability your platform can provide. And in a market like today, customers are not just looking to be additive, they're looking to replace other solutions or generate cost efficiencies by having 1 platform to do more and removing other platforms along the way. For our direct sales team around the globe, the point here is to have a suite of offerings in a modular format that are easy and simple to explain to customers have solved for key pain points and allow us to sell on a land and expand basis to where the sales team can land that initial deal and that initial logo, and the customer success team can then come in and nurture those customers and build a strategy for how we're going to get them to more globally adopt the rest of our features and capabilities on a year-on-year basis. And so this really does help simplify everything we do. You'll see this represented in the annual report this year, you'll see this in all of our advertising and all of our messaging, and you'll also start to see this represented across our digital channels like our websites as well. Next slide, Ash, if you don't mind. And I kind of touched on some of this, but the theme of simplification continues for us and has a culture shift in the business as well. I think first and foremost, with partners, we do continue to maintain our technology partnerships. They are critical to our business. We continue to grow them, enhance them and find new ones and we build very specific solutions. So we're being very laser-focused on how we do this. So the integration with sales force is a very specific use case that fills a gap that Salesforce has in their platform and provides a really great way for the 2 of us to sell together in an account. The same thing can be said for the integrations we have with Pega and with Adobe and Teradata and Snowflake and other platforms like that. And again, keeping it very simple, focused on the value makes it very easy to sell and very easy to onboard partners on the why they should sell it and their respective sales teams. For us, at the end of the day, all -- the only thing that matters is selling software. We have an internal services team. We've actually scaled that team in a very strong manner to support our clients around the globe and particularly in the U.S. and over the course of the past year, all while keeping the operating expenses flat. But the point there is to strengthen our employee base to bring in the right people, to continue to restructure the business based on efficiency so that we can free up the right funds to invest in the areas of the business that we need to drive forward that are more core to our mantra bettering those relationships between brands and consumers. The direct sales channel has been a success. I think at the start of last year, our pipeline was roughly probably only 10% to 15% direct deals, as I mentioned and alluded to earlier, our pipeline today is about 65% direct deals and the rest being it through indirect channels and partners. We'll also continue to innovate. I've talked about some of the new features. We have some very exciting things planned to launch here any day now as well as later this year, which will become part of a great topic of conversation for us at the Capital Markets Day, which we always hold towards early December, and that date is yet to be finalized. And then finally, just a simplification, I think I've hit this point home, but everything that we're doing is to simplify how we're selling. So a lot of vendors out there that confuse things and pray on that confusion. We're trying to be the vendor that makes it very easy to understand what we do, why we do it and why clients should care about it and why they should buy it. All again focused on the Celebrus platform.

Okay. So let's talk about the financial results. We'll kick off with the key metrics slide, and this is slightly different to the key metrics that you saw last year. And as I mentioned, in the recent last year. We're evolving our key metrics. We're evolving our reporting of extra information. And so for this year, for the first time, we've announced our pipeline growth and our opportunity proposals growth, as Bill mentioned. And so as part of that process, we refined our key metrics. And so now we're looking at software revenue rather than headline revenue. And the primary reason for that is that the headline revenues include hardware costs, third-party hardware sales, and these fluctuate year-to-year. So in FY '22, the hardware sales was GBP 7 million in FY '23 they were GBP 2 million. And in FY '24, the current new financial year, it will be a different number again. It makes it very difficult to discern what's really happening below the surface. So software revenues will exclude those part of our sales. And this is the true revenues related to software, whether it's a license, whether it's support maintenance or Celebrus Cloud or some of the services work that we do as well. So with the software revenue, as an investor, you get to see a more smoother trend, upward trend. And so for this period, we've gone up 9.6% year-on-year. The other metrics we've reviewed, and we've decided that these are the ones which are particularly pertinent in terms of shareholder value. So software revenue for obvious reasons. ARR, clearly because it's a determinant of shareholder value. Companies are often valued on a multiple of ARR. Adjusted diluted EPS, of course, along with adjusted PBT is important because that's an indicator, almost like a proxy, if you like, for cash generation within the business and how much of that is kind of attributable to each share. Dividend very clearly attributable to shareholder value because that's what we're paying out every year to the shareholders. And then the cash obviously is a very important metric for a strong balance sheet that we need to have, but also an element of cash there to pay dividends and also to take opportunities in terms of M&A if they arise. So all these metrics, as you see for the year, have gone an upward direction, and I'll talk about some of these in a bit more detail in a moment. So starting off with the income statement. As I said, the headline revenues aren't particularly helpful in understanding what's happening in the business. So the headline revenues have gone down from GBP 24.5 million last year to GBP 21.4 million this year. If we strip out the third-party revenues, we see that software revenue has gone up 9.6%. So that's what we're using as a primary metric. You'll see also in the headlines that the GP percentage has gone up from 51.9% to 60.2%. Now a large part of that is the mix. So where you've got a high proportion of third-party revenues, these are typically at a much lower gross margin typically of around 10% to 15%. The software revenues, as you saw, if we strip out the third-party revenues, the margin is much higher. So as I said, 68.8% compared to 67.8% last year. The operating expenses, as Bill said, have been stable during the year. We've been able to do that despite a number of very significant changes within the business. So we have invested heavily into new systems. These are intended to systematize or automate what we do. That allows us to free up headcount, which can then be reinvested into more key roles. And so in previous years, we invested in a new sales and marketing system called HubSpot. We invested in an HR system called HiBob. We've invested in a contract management system and a license management system. And this past year, we've also then invested into a new finance system called Oracle NetSuite, and that allows us to have a lot more visibility and granularity in this business for our decision-making. And we've also invested in an applicant tracking system, which right now is very important because that's all of our sourcing candidates to join the business. And also streamlining that process, taking out a lot of sort of HR and managerial time in the process. So those OpEx expenses probably will go up in the next year or so. But for the past year, we've managed to hold them pretty tight. But -- clearly, as we invest further into the business, we will see some increase in the OpEx. So moving down the amortization as share-based payments are broadly the same as last year. These are generally noncash items. So the adjusted PBT, as I said, you can use always as a proxy for cash generation in the business on an ongoing basis. And then moving down into the tax line, we've seen the tax rate go up and the tax charge go up. That's because we've been more profitable, but also what we'll see in the coming years is that, that charge will go up for a couple of reasons, primarily. Firstly, we qualify our R&D tax credits in the U.K. The rating is being changed by the government. So overseas expenditure, we'll be qualifying. So the qualifying costs we have will be only those in the U.K. So our credit will be less, and our tax charge will go up. And then the second element to the increasing tax charge in coming years is that the U.K. corporation tax rate is going up from 19% to 25%. So that will have a material impact on the tax charge. So the amount attributable to shareholders. As of the end of the day, it's GBP 2.1 million compared to GBP 2.7 million last year. And the earnings per share figures you can see below there, and of that, those earnings per share as we're paying a final dividend of 2.15p make a dividend of 3.03p per share, and that's an increase of 3.8% over last year, excluding the special dividend we paid in the last financial year. Moving on to the balance sheet. A couple of items, I think, to draw to your attention. The property plant and equipment has gone down from GBP 4 million to GBP 0.6 million. And the reason for that is that we've decided to sell our property in West London that's our U.K. head office. So that's now on the market. So what you'll see is you see that go down into current assets. That's the figure is there of GBP 3 million revalued last year. Now we're hoping will be solved in the next 12 months or so. The other major item of change in the year is, if you remember at the end of the last financial year to March '22, we had a very high trade and other receivables balance. That was on the back of a very healthy sales figure in the final quarter of the prior year. That cash is obviously will come in and the trade and other receivables balance you see there is slightly more normalized number. And of that GBP 7.6 million of trade and other receivables, GBP 4.9 million was trade debtors. And right now, as of the end of June, in fact, GBP 4.8 million of that GBP 4.9 million has been collected. You may know that we don't generally have debtors' issues. We have customers who are primarily large multinationals, and so the challenge around those isn't so much whether we are going to get paid, but rather when we're going to get paid. And we have seen a bit of an increase in terms of when they're paying us. So more and more companies -- large companies now moving to a 90-day payment cycle. The final item on the balance sheet. As I said, the cash GBP 17.2 million that's gone up from 11.4%, driven by the collections we made during the year, but also netting off the GBP 6.2 million as dividend to be paid. So of that GBP 1.2 million is the normal dividend, if you like, and the other GBP 5 million was a special dividend of 12.5p per share. Moving on to the cash flow. I think I've referred to most of these items actually. But if you look down gain for the GBP 2.4 million of profit before tax, very positive movements in working capital. That's the collection of the debtors at the prior year-end. The depreciation and amortization fairly stable at around GBP 600,000 to GBP 700,000 per year. The share-based payment has gone up that's a noncash item. There's no cash going out as a result of that. But that's the number relating to the number of share options issued in this year and prior years. And that brings us down to a cash generation from operating activities of GBP 13.7 million. As far as investing activities go, we have an ongoing investment of around GBP 0.2 million in property, plant and equipment. A large part of that is IT equivalent for internal use. One new item in the cash flow this year is the process of intangible assets. So all of the systems I mentioned earlier that we've invested in, many of those are being done on an account basis. So this is effectively a capitalization of the setup of those cloud systems. And we are required to do this. And those investments will be written off over a period of 5 years. So this is a charge which will probably grow a little bit in the coming year and then stabilize at this sort of level for the next few years. Capitalization of development costs. So going to our income statement, we have around GBP 2 million of R&D investment. Some in R&D were quite capitalized under IFRS. Frankly, we've got it not, but we're required to. So this represents that element, which we -- which is captured under IFRS. So it's stable at around GBP 250,000 per annum, and that then gets amortized over 5 years or so. So pretty stable for the time being. The other item on the investing activities and there you see interest received. Now obviously, we have a healthy cash balance and what we've seen over the last year as interest rates have gone up, we've spent a bit more time just being prudent in terms of how we invest that. In some cases, overnight, in some cases, 3 months forward, but obviously looking for the best rates and the large part of that is in GBP. So we tend to hold only as much in USD currency as we need to, to reach our ongoing obligations. But obviously, the large part of our inflows in cash are in USD because a large part of our revenues are in USD as well. But we've managed the [indiscernible] USD really on the base that we needed, and the rest is converted into GBP. On the financing activities, I mentioned already the dividends paid during the year. The next item is all around purchase of own shares. So during the year, we have had a share buyback program in place. The primary driver of that is to net off the potential dilution from share options. So we try to match the number of shares that we bought back with a number of share options in issue and that accounted for GBP 1.5 million of cash out during the year. And obviously, that's in all shareholders' interest because it means that shareholders won't get diluted when the share options are exercised. So that brings us down to the cash at the end of the year of GBP 17.2 million. Okay. Final slide on the finance. As I said, we're trying to be a little bit more open in terms of the granularity. We're able to do that because of the new systems that we've implemented. And so what this chart shows is how our ARR has grown from GBP 14 million at the start of the year to GBP 16.7 million at the end of the year. Now the biggest component of that increase is that third column, the upsell of GBP 1.7 million. And that's significant because that's really a testament from our existing customers of the value they see. So this is all of the upsell we've done across our existing customers. Another important part of that is that it also takes into account the customers we've converted from being on a perpetual license and moving to a term license. So on a perpetual license, though paid a large amount upfront and then they'll be paying us , support and maintenance amount on an ongoing basis. Obviously, when we convert into a term license, it's good for them because it gives them access to all the recent features, but it's also good for us because we got a term license payable every year, and we also get the support and maintenance on top of that as well. So that's the biggest component. The other part of that, the new logos, we sold GBP 0.4 million. We've had a churn reducing our ARR of GBP 0.3 million. That increased to around a churn of 2.1% on the opening balance of GBP 14 million. And then the final component, you see there is the GBP 0.9 million of the FX impact. So during the course of the year, we've seen the dollar strengthen and of course, having a large part of our revenues and ARR in the form of U.S. dollars has had a positive impact. So if you're looking at this, excluding the FX impact, you say that actually the underlying growth is excluding that GBP 0.9 million take us down to 15.8%. But with that FX impact, which we'll disclose every period from now on, gets this up to the ARR of 16.7. And then my final point really looking at the pie charts below that, this is breaking down the opening of the closing balance between 2 numbers. One is the license revenues, and the other is the support, maintenance and hosting. And what you see there is that the support, maintenance has gone down from 7.7% to 7.6%. Now there has been growth in the support, maintenance, but then it's been reduced by the fact that we've taken customers from perpetual licenses on to term licenses. And that's why you see the term licenses go from 6.3% to 9.1%. And that's a healthy indicator because obviously, the licenses have a much higher gross margin than the support and maintenance. Bill?

Okay. And so jump into -- so I thought I just walk you through just a few quick case studies. And again, just as a reminder, please, if you've got questions. I see some people utilizing the Q&A tab, but don't forget it's there if you want to submit some questions for us to review at the end here, as we're nearing the completion of the slide portion of the presentation. So the first is from a health kind of the client of ours that we actually post in Celebrus Cloud. It's a large health care insurer. And there's 2 stories here actually. One is the value that they're getting from Celebrus data to build better experiences for their consumers going back to the mission statement I gave you before. But the other is in the reduction of the number of people picking up the phone and calling. And we're finding a lot of this and actually about 1.5 years ago or so before things started to get a bit tumultuous in the market. We decided to adjust the sales cycle to not just there is the sales approach and not just focus on the use cases and the value we provide, but to also start to identify the cost savings that we can generate as well. We wanted to get out in front of that, and that's worked quite well. And you can see in this particular use case. Call center being such a large, fixed cost for a lot of our customers having a reduction in need there is very beneficial. Jumping to the next use case. This is an interesting one because it's a particular retailer have several brands. They've been using Celebrus for consumer insights or what formerly we'd refer to as a CDP for quite some time. But they've now also started to leverage the fraud features to identify and save the customers money from identity theft fraud or things like account takeover, falling victim to scams and people getting access to their credentials. And finally, this one at the front of it, when you read from this banking customer, you'd read this as a marketing use case. They're increasing click through, they're having a savings generated in their cost per acquisition from a marketing perspective, which is a common metric. But there's an underlying piece to this because this is actually marketing and fraud as well. Because in this space with click fraud and things like that, there's a lot of ways that organizations have very difficult time identifying and that the machine learning and Celebrus can provide things like bot detection to a much higher degree than any other application can, and that's really been the sort of beginning of our journey over the last couple of years and using our data to build better machine learning or generative AI to use a buzzword, but to basically bring the data to life in a meaningful way that not only helps them achieve better success, but also reduces the money that they're spending by not spending it on fraudulent clicks. And so finally, just to kind of wrap up before we open things up for questions. From an outlook perspective, you'll continue to see this focus on new logo sales and maximizing our existing customer base. That's why we've stood up the customer success team in international and in the Americas. We continue to find ourselves on the forefront of really 3 common gaps that customers come to us with, either the data they currently have is bad, inaccurate or it has gaps. Their digital identity solutions for anonymous consumers, whether that's for marketing or for fraud is heavily broken and unable to be fulfilled by their existing technologies, and they're worried about compliance, and they want to be able to capture data in a true first-party manner in a way that allows them to own and control the data versus sending it to a third party. And that's the continued mantra and every deal in our pipeline continues to evolve around one or multiple of those 3 gaps as we've simplified our messaging. We'll continue to invest in our marketing and sales to bring that message to bear to be even more aggressive and how we're bringing that message to the market. And given the existing pipeline and giving the diversified pipeline that I've alluded to before, where it's not just financial services, it's travel, its airlines, its health care, its leisure, it's retail, et cetera. In addition to the traditional financial services model. We believe we have a Celebrus platform that can be easily tailored to any customer in any vertical. And that's where we're testing and learning in different conferences, in different verticals and different sales cycles, as we've stood up that direct business. But given the view that we have today, and the pipeline that we already have in motion, we're confident in our ability to deliver this current financial year's expectations that you would have seen published earlier today from the analyst community. So with that, that brings us to the end of the presentation, and we'll turn things over to the Q&A portion of today.

What I'll do is, I'll just bring your camera up to full screen now. [Operator Instructions] I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A can be accessed by your investor dashboard. Bill, Ash, as you can see, we received a number of questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so. I'll pick up from you at the end.

Yes, absolutely. So there are a couple that were pre-submitted. So someone is nice enough to give us time to prep. So thank you for that. But the first question was we announced the delay in 2 contracts at the end of the year. Is there any update to those? Yes. So both are actively being worked and both are actively on the goal line at the moment and in legal negotiations with sourcing to finalize. So we're -- while it was frustrating that those contracts delayed as we outlined in the trading update, and I believe it was April 3rd. We're happy to announce that those 2 continue to move forward, one of which is a Celebrus platform software deal and the other is a mix of software and hardware. So that's kind of the general update from that perspective, but hopefully answers your question. The second pre-submitted question is that we've made significant investment in bolstering direct sales. You tell me what percentage of sales is now direct in comparison to a year ago? So I've mentioned this earlier, but just for the -- just to make it clear, again, the pipeline started last year around 10% to 15% direct sales. Now the pipeline is about 65% direct. So we -- in a very short period of time without a material impact to our operating expenses. As we've outlined, we've been able to stand up a direct sales staff. And now we're just testing and learning as we go, same to be said with our marketing investments. Let's see. Next question. Can you put a value on your pipeline? We can and do. We don't disclose that yet. I'm not being cheeky, about it. We do actually have a significant number of reports that we look at on a weekly basis and that we'll review at the board level on a monthly basis, but the system is still new. As we're vetting out all of the changes to that and getting that linked with our financial system and some of the integrations that we're doing. You can expect to see more from us in the future, but hopefully, you found that to be a good first step of us at least discussing the growth in the pipeline and the stage and the amount in the proposal stages as well. But you can -- as we find the opportunity in, as Ash is governing all of these numbers, as we get more comfortable, we'll continue to disclose additional numbers as we get comfortable with those. If there are certain things you'd like to see, feel free to funnel those through finnCap or Canaccord and we can look to see how we might include those over the coming years. Let's see. The next one. You want to pick from here?

Yes, I'll say the next one. So the question is, you talked a lot about becoming more sales focused, what prompted this change? And why is it required? And how has it been received by some of the more long-standing staff? We're not be creating the thinking that the company is becoming more American that and its marketing sales predictive, so it's that by design. I'll let you answer that.

Do you want me to answer that one? Yes. And the Board was quite happy to take a much more American approach to how we sell and how we market the platform. That's probably the easiest way to do it. That's why we've got me with the funny accent now running the business, right? But from our perspective, the U.S. market is a massive opportunity. When I joined D4t4 about 5 years ago, I started by running the U.S. business. and starting to grow that in a significant way. So that -- it's a marketing and a mentality as a software business, and it is a lot of change. We have become, obviously, more sales focused as you rightly called out. But that change was required because we want to control our own destiny and the Celebrus platform deserves to be in the hands of many more brands. I've had the pleasure of working with Celebrus through many names going back almost 20 years when I was running a consulting business at the time in the U.S. It has been a transition. It continues to be a culture shift. We have had to make unfortunate changes in structure in the business. We've moved away from projects that were not profitable so that we could instead focus resource and investment on the core initiative, which is selling more software. And we continue to monitor. We've invested in a global HR team. We've got a strong team and systems now in place to monitor employee satisfaction and concerns and to create a much more open and communicative dialogue across the business. And we continue to make sure that we're making the best use of our staff around the globe that we're continuingly looking at how we apply our resources in the right ways, but also how we openly communicate that to the business. So everybody is part of the journey. They're not just being hit where "Hey, we're making this change." These are conversations that we're having now on a quarterly basis in town halls and on a more regular basis and one on ones, and we've also established a strong management team of 10 people across the business that represent all of the areas of our business that meets on a weekly basis, and we make sure that we're addressing that appropriately. I don't know, Ash, if there's anything you want to add to that.

No, I think you summit that well. Okay. We should go next. So the question from Malcolm. I'm not sure, I understand it Malcolm, 3.8%. So software sales up 3.8%. Perhaps you can just elaborate on that, if you don't mind, in your -- in the questions? Let's go on to the next one. Peter, could you comment on the maturity of the acquisition pipeline?

So for acquisition, Laurence, if I don't answer this correctly, please feel free to write a clarifier. The acquisition pipeline, I'm assuming you mean new business pipeline. So the proposal value over the course of this past fiscal year increased fourfold, which means that we're moving more deals more quickly to the negotiation phases from a direct sales perspective, which we're quite happy about. I'll be very candid. We're still learning. Ash and I have been in businesses that have sold in indirect capacity. So that mantra is not new to us. But the approach is new to Celebrus and D4t4 as a whole. And so there's a lot of learning. There's a lot of events and things that we've gone to same have been good, some have been bad. But for us, it's all about learning quickly, using data to drive decisions. And when we find something that's working, we continue to invest heavily in that. And that speaks to our partners as well because I know we spend a lot of time talking about direct. But with our partners, we've changed that engagement model as well. And we -- again, the partners where we're having more success are going to be the partners that we invest more with. It's going to be using that data to drive where we're investing and how we're growing that pipeline. Now acquisition can also mean M&A. So just to touch on that. I'm sure we'll get some questions on this list. But for us, there is nothing imminent, just to be perfectly clear, but we do have in mind what we would like to acquire if we can find the right scenario and it would be more on the data activation side. So what you do with the data? And we've done a lot of development on our own here. We've launched CX Vault. We brought machine learning and things like bot detection as -- on a subscription basis into our platform. We've launched what we call our Celebrus analytics platform, which is all the reporting and dashboarding for customers to use our data in real-time from a marketing and business perspective. And we've built some pretty great integrations from a fraud and case management perspective to do more end-to-end fraud detection and prevention. So there's a lot that we're doing on our own, but there are things that were already that we've been actively exploring given the cash that we have on hand and what we might acquire that might make sense to be additive as a module to the Celebrus platform.

Okay? Why don't you take a break and I'll answer.

Yes, that sounds great.

That's fine. So what is the rationale in say in the building is you obviously don't need the cash? John, you're absolutely right, we don't need the cash. However, the building is 17,000 square foot. We did make a decision last year to move to a hybrid working model. So teams are coming into the office on a regular basis, but not every day, but we do want people to get together. And really 17,000 square foot way too much for an employee base in the U.K. of something around 70%, 75% or so. So we will sell the building. We've already identified an office, not far from where we currently are. That will be leased off is of around 6,500 square foot, which I think will work better for us. And also actually it provide us with a kind of a fresh start in terms of branding and the culture and look and feel as well. So part of the journey that we've been on over the last 18 months has been around changing the culture, and Bill talked a lot about accountability an investment. So the building is an opportunity to kind of reinforce that. With the GBP 3 million that we'll get or hopefully GBP 3 million we'll get, that will stay on the balance sheet and again, reinforces the strong balance sheet that we have and assist also in the previous question in terms of the M&A opportunities. Question from Laurence, is there any update on ESG initiatives at [indiscernible] ties in your office conversation as well?

Yes, no good point. So ESG initiatives, there is a slide in the appendix, if you like, have a look at it. There is again in the ESG report in our annual report, which is now live on our website. So what have we done over the last year. Well, we've reduced our carbon emissions. So we had a carbon audit for calendar year '22. It showed emissions lower than calendar year '21. In this forthcoming year, we'll be doing 2 very important things. Obviously, the office move in the U.K. is key, moving down from 170,000 square foot to 6.5. And then the other high polluter in the group last year was our India office. So we will now be moving our Indian office as well, sometimes calendar Q4 this year. And Laurence, if you're interested in this, if you look at how the split is in our carbon emissions between Scope 1, 2 and 3. Really on Scope 1, we are very low now. We've done as much as we can. So now we're pushing down on Scope 2 and Scope 3. And another question out here, please explain the value of proposals out, increase portfolio in further detail? So Martin, this is essentially literally the value of all the proposals we put out to customers. And that could be at a stage where we've had the meeting. We've done some scoping, but there might still be some more scoping to do. So we use that as an important metric internally. And as I said, we've started to communicate that externally now as well because the value of proposals is quite important when you look at what the conversion is going to be at what you all -- is a leading indicator, obviously, for the revenue for the coming year or the coming years. So that's essentially what it is. So what's the value order proposals currently with the customers, also when a customer signs up that comes out of that value proposals because -- proposal, it's a win. But as we get through meetings with customers, we get to the point where we have a solid proposal that value then comes into that value proposal number that we count in.

Yes. I'll take the next one for Martin because this one is one that I'm quite passed about. So Martin asked to explain the security operations center or SOC is a separate 24/7 global support service pricing market. This is not a software that we offer, but it's -- we've invested significantly. We brought on the Chief Security Officer who sits on my management team, and we've expanded that team and capabilities because, candidly, that our systems, whether we're hosting it in Celebrus Cloud or just simply working with customers on a daily basis, we are helping them capture and contextualize some of the most important data for their businesses. So security has to be at the forefront of everything that we do. That goes to not only what we do with independent audits of our code and platforms and the independent security audits, but also the ongoing monitoring. So this is actually a system we subscribe to monitor our internal systems as well as all of our external customer hosted environments. To monitor and spot weaknesses or issues so that we can address them before they become any -- a larger issue. So it's a much more proactive approach to what's important to us as a business. If customers are going to trust us. We have to invest appropriately to warrant that trust.

Sorry, my eyes are feeling a huge competition in [indiscernible] cybersecurity. How does your solution differentiates is there a USP? Yes. So we've actually divided it into 2 main conversations when it comes to fraud. So there are organizations that are very data mature. They have models in place that they're using for fraud detection. They have potentially massive data science teams engaged. The USP in that is that we provide behavioral biometrics and a data model that can easily port into what they're doing today, but gives them a much more information than they're used to having. Now on the flip side, you have organizations that are in like that Tier 2 and beyond level that don't have very mature teams that are just trying to get started. And for us there, the USP is more end-to-end. So what we're selling there, in some cases, even linking with other case management systems that we offer to the client is an end-to-end service where we're capturing and contextualizing the data for them, helping them identify what is fraudulent and actually letting them use our platform to intervene at the moment and try to stop the fraud before it happens. So that's kind of the 2 swim lanes that we find ourselves in with fraud with a lot of our more mature banking customers. It's that first one. It's us providing the data as an extension of what they're already doing today that's filling some gaps that they have as a business. And then for some of our more mid-market customers, and newer logos, it's more end-to-end where we're playing that entire fraud journey for them where they're actually using Celebrus to intervene and actually be more automated and how they're -- on how they're responding to things because they don't have the team and the ability to invest to the level that perhaps some of the larger organizations do.