Cerillion Plc ($CER)

Okay. Good afternoon, everyone, and welcome to the Carillion Interim Results Webinar. Presenting today, we have Louis Hall, CEO; and Gregory Price, CFO. [Operator Instructions]. Thank you for joining today's call. I'll now pass you over to Louis Hall, CEO. Louis, please go ahead.

Thank you, Garrison, and good afternoon, everybody. Welcome to the webinar. Just introducing ourselves in Cerillion Plc founded the company back in 1999 by long time ago, there's an MBA what was then a large U.K. software house called Logica. And we then IPO-ed the business finally in 2016 and have seen a pretty successful run on name since then. Greg has been with us leaks bear with us because he's still getting up to speed. But done a terrific job this week and in what's been quite exhaustive ratio, and it's already an old hand. So [indiscernible] was previously a census another aims to business and also check it, another in list business where he was also CFO. So we'll move into the meat of it. So highlights for the half. So One of the key points I'm making is that we're very pleased with the doubling of new orders, somewhere around GBP 40 million for the same period last year to -- sorry, from 20 million the previous first half to around GBP 40 million for this half year. And that significant jump. It's a new record that's largely facilitated by closing the large deal with Omantel that we announced in January. And that's a significant deal for us, not just in terms of setting a new bar in terms of scale. So it's almost double our largest ever contract win. But it's also a beacon for other telcos in the Middle East who traditionally buy from very large brands. And so for a large Middle East telco to buy really is really helpful. and that should give us more traction in that region. Also, you've got to bear in mind that the biggest shareholder in the same group, which is another regional telco which has, I think, 8 properties across the region, 8 other telcos across the region, serving 50 million customers. So that's a lot of potential for us to go after as well. So very important, we're not just inside of global scale and credibility we have from a much larger telco, but also [indiscernible] so all of that put the back water up 64% to a record of GBP 82 million. Obviously, that gives a lot of confidence looking into H2. And I think the other thing that we're quite pleased about is that the new customer pipeline as taking out a significant value of Omantel actually increased a bit from GBP 261 million to 71 million. So that gives us confidence that we can replace the pipeline quickly because there is strong demand in the market. Of course, there is a disparity between H1 and H2, which we flagged to the trading update. So revenue is actually down compared to the prior period, and that plays through into margins, obviously. And has a sort of disproportionate effect on margins because the shortfall in revenue in the first half is the largest part of that is license revenue where a bit last year, we expect most of this year's license revenue to be recognized in the second half on the first half and license revenue is not more profitable than services or other revenue. So that -- we feel confident that we have the backlog to deliver the H2 numbers. And we -- if we thought we were going to achieve that, we would have said something. So I think you can assume that we fully expect to achieve those numbers. And constantly, we pushed the dividend by 15%, large on the back of that confidence. In terms of operations, we've been working very hard on the implementation [indiscernible], the deal we closed last January 25. That's really through a bit longer to get started than we'd hoped, but it is now through most initial delivery phases, and we're moving into sort of final testing network integration on the cutover migration, we expect to happen in the autumn. That will be -- it's important to get that customer live because of other opportunities in the region that we'll be looking at this one and having that successfully launch will resonate. And man, there's been some concern, I guess, not people are concerned about the Middle East crisis and with Iran and what the impact that that is what facts having. What we're seeing is not really much impact. So we've had people on the ground there since we started this work in February. There are people there now. the planes are going backwards and forwards every day to London still. However, if we couldn't keep people on the ground, and we did have travel restrictions. We could do all this remotely just during the pandemic, we grew faster than average in endemic didn't no anybody on the ground anywhere. So we don't really feel as a problem. And that project is progressing well. We've pretty much finished the requirement as the hard part where we define exactly what we're going to do. and we're about to move into the heavy lift of configuration and so on. So that's going well. On the R&D front, we released our -- in the first half, 6.1. Our latest product release. And the focus there really was around agent KI and more functionality across that piece. So this is things same examples like supporting customers who choose products supporting customers to understand their bills, which sounds, I guess, a little bit is that really interesting. But I think the important thing is that the telcos, it enables them to offer much better customer service to their customers with -- we're not just talking about chatbots here. We're talking about dialogue with these intelligent agents be able to say, for example, I'm moving to Oman, I'm going to Oman for 9 months of the year. I'm going to get back in London for 2 months, and I'm going to be Australia for Christmas and by the way, like sports watch and sports channels and in family want mobile a few of those, please. And you're then in a dialogue with the agent, what kind of handset would you like? Is it Apple? Is it Samsung what kind of spot do you like base football? And this is really quite incredible stuff. And of course, that's generally better so as new gap from Anyone got the advanced experienced customer service agent as a person, and it's not a person. So you save on the cost of the person. We also make it easier for the customer to onboard onto our platform. So for telcos, this is really an important stuff. So that was the main focus of R&D in that release. In terms of our general position and sort of overview, nothing fundamental has changed and that we still have our main bases in in the U.K., India and more recently, Sufian bulkaria. In terms of the the revenue mix this in the first half, software was a bit lighter lowly be because of a relatively low license recognition. We'd expect that to adjust more to a higher percentage of software and services in the second half and in the full year outturn. As ever, a lot of our businesses in Europe, as you can see from this chart down here, and I think we'll see an ideas in Middle East and Africa, obviously, with the Omantel projects getting going in the second half. And as ever, we have a lot of customers in there for a long time. And the majority of our revenue in any given year comes from customers who already come to the start of the year. And they've been customers for at least 12 months before the start of the year. So that is an important factor in terms of visibility and the fact that we haven't got to keep winning new logos all the time to achieve our numbers in any given year. Just a little bit for those be going into the story. I appreciate apologies, you know the company already. But for those of you are new, what do we do? It's important question. We provide enterprise software that acts as the glue between telecoms businesses, network infrastructure and their customers. So it's a software that enables telco to define the products that they're going to so those are often quite complex bundles of TV, broadband, mobile, fixed wire, whatever, and you have all kinds of fun of cross-subsidy discounts here there and everywhere. So that's a complex thing to define and most helpers offer hundreds if not thousands of these different combinations. So all of that we have to model and manage our product catalog. Once we define those products, and we provide the software that enables telcos to onboard those customers. So we spoke about agentic AI, but we also have store collisional CRM, traditional self-service, mobile apps and so on. These are also very much the [indiscernible] Telco business. Once customers onboarded, we have the software that manages connection of those services on the network, what we call visioning and that's a complex sort of workflows that have happened in certain sequences and then once customers enables they're live, then we have the real-time software that manages their usage synergies, their balances [indiscernible] customer connect this internet sessionable balance and we've got enough cortile balance, et cetera. So that's that side of it at the end of the billing period where billing customers were collecting payments, we're handling credit control and so on. So a vast array of different functionality that really is the core of what telcos do. And we sell this through a suite of modules that address different areas of that piece, I won't go into them all in detail. We haven't got the time to get into all that level of detail, though. What is worth saying is that we generally -- most customers generally buy most of the models because one of our key differentiators is these modules are built to work together from the staff. So if you buy some different vendors, then you've got the challenge of having to integrate them, we'll make them work together. Our already loved together, say generally, most customers buying waste modules. But occasionally, customers will buy a single module, say, for example, it might just to the product capital or the most by the compare platform. And then, of course, we've got the opportunity to upsell other modules later on. In terms of differentiation, our key differentiators are that we are a product solution. So this industry has been dominated by very large vendors who typically deliver heavily disposed versions of their systems. And that is a much more service-heavy prior risk, longer duration, higher cost exercise we're starting on day 1 in a product, a solution of work so we can demonstrate real software straight away. We haven't gone to bespoke it or tailor it or build it this year. So customers can stop literally in meeting lower defining requirements, looking at real software. And that's quite powerful. And of course, it means that we -- our total cost of ownership for a customer is significantly lower our time to market is much faster and typically we're delivering these systems and getting them running in 12 to 18 months. That might sound on time, but given the complexities of configuration and data migration slant platforms that's actually pretty quick, whereas the bigger bespoke systems, so bigger vendors with the spot solutions will take 3 to 5 years generally to do the same thing. And of course, the decision to have at the end of all this is much more flexible, both in terms of ease of use and the facts on to be used by our customers. We don't require experienced software engineers to end products or introducing workflows, the customers can do a lot themselves with a bigger action, but also in terms of [indiscernible] so it's important these days to stay up to date with the latest security practices and so on. And if you have a dispose position, all that has to be done all that has to be done just city for that customer every time, which is very expensive, whereas our product corn approach, we're just rolling standard releases out to customers as we go along. So we provided the solution typically these days in the cloud, mostly private cloud because most telcos won't put their data in the public cloud. And we then -- 1 systems implemented, we support that system through stands for maintenance, but we're typically facing the lease of the customer private clouds and we're operating it for them as well, so we really managed services. So essentially, the customer is consuming the solution on a SaaS basis. And that shapes the way we sell them. So we sell 5-year subscription agreements, the customer signs up to a subscription fee based on the number of end customers they have. So if a customer has -- in the telco has 1 million mobile customers, they pay 1 million times ex the year if they have 2 million, it's 2 million times act year and so on and so on. And into that, they will buy a fixed price implementation project to put that software into use. And that's the sort of 12-, 18-month project that I'm talking about. a very broad range of customers across most geographies. We have some logos you've heard of, like BirgenMedia, Orange, Airtel, Liberty Global et cetera. But we also have some smaller telcos. Obviously, we've evolved over quite a long period, starting off with a very small telcos turn away with some of the these names in the industry. I think one of the key evolutions we've seen since IPO in 2016 is the gradual increase in scale of customer and scale of engagement. So if you look at when we POs typically a typical good deal for us in about GBP 3 million that's the total value up to the point today where $42 million and that's very important because the larger customers that we're more deeply engaged with drive a lot more upsell, a lot more current business. And our model does rely on customers carry on spending, whether that's upgrades or license expansion be clearly growing on acquire other businesses. We'll buy new modules or general consultancy, braiding, whatever those customers do spend heavily and the larger customer spends very heavily. So the more of these larger customers with deeper engagements that we can win, and the easier that it becomes to grow and to keep the -- keep our great meaning. In terms of market size, these are figures from last year from telcos IDC the forecast is that annual BSS/OSS market, revenue will grow to around GBP 60 billion by 2029. So I guess they're in the sort of mid-50s for '26, '27, for us, it's almost kind of the important thing is it's a very large market. we don't address all of our markets every sample. We don't sell to China for obvious reasons. But if -- even if you take out those sorts of things and said, we can [indiscernible] half that market, which is a bit of an extreme statement, but if we are investing half of that market, then it's still a huge market and we still have a very tiny share of it today. So it's a huge pace with grant, which is -- gives us a lot of cover. There are high barriers to entry, so despite the talk-out AI and displacement and so on. something we try to address in the RNS. But essentially, it will be very hard for a new entrant to build all of the some scratch with AI because with AI, you still need to tell it what to do. And the problem is that with this kind of software, it has to be 100% accurate all the time. If you don't send the right commodity and the right order to the network, you won't turn the services on. If you then -- you can't send a customer bill that's 95%, right? That's all the way it works. And so to get that level of precision, the amount of detail you have to go into an AI prompting is asked. And that in the end, all you're really doing is instead of writing Java, for example, you're writing prompt code because it's that level of detail you go into [indiscernible]. So once you've actually done that, in many ways, it's not much difference is starting to building a new seton from scratch in the titin way. You get some efficiencies in testing and so on, yes, but you're still getting the massive prices to go through. Once you've done that, you don't got to get a customer to adopt it and telco is incredibly conservative [indiscernible] reduction to [indiscernible] has not really proven in the market. But if you could get one of those customers on board, which would probably take a year at least then that's going to be implemented, which in most cases, is going to take another couple of years. Then you've got to see some proof. So we're talking in the 4, 5 years or more from a standing start, even where they are -- even assuming you can build this AI successfully to get something that becomes compared to for us. We're really not seeing any new entrants trying to do this. But whereas if your existing vendor, you've got an enormous advantage of being able to use AI tools to to improve what you already have. So you already have -- so the values and the knowledge that's in the software, the knowledge is in the biscuit software. If you're already a vendor that has all of that, then you can we can improve a solution that already has the embedded knowledge from that position. And that -- so things that architecture changes, technology upgrades, they become [indiscernible] simpler with the AI tool. And of course, we will be using those Its do those kinds of things. I appreciate a bit tight on time, so I'll keep moving talking about tradition. Just very quickly on the competitive landscape as we have seen quite a lot of change here recently. These are just some examples of transactions that have gone on -- in that landscape. So CSG is probably a #4 competitor acquired by Netcracker, which is part of NEC out of Japan, which is probably our #2 competitor. So that's produced in the short list on our fees by one I guess the top 4 is now a top 3. In terms of the people we compete with. Optiva, which is historically quite a strong competitor slightly got acquired by Quanta as a finish -- a relative small finish player. And I think Optiva obviously -- sorry, obviously for that, not obvious sealer [indiscernible] had hit the buffers and been in quite a trouble for a long time, [indiscernible] is about mall company probably some sort of size to us, say whether they've got the resources to turn that around, has been no investment there for a long time. It's hard to see whether that's going to happen, but maybe will Matrix was 1 of the was the last surviving stand-alone charging platform that's now been acquired by Amdocs. And that, again, reduces a number of options that telcos have to go to with [indiscernible] and finally, [indiscernible] a little while ago was taken private by CDC pact. And then we're quite a strong capacitor -- prior to that, we're seeing less from them since that's happened. And I think there's a lot of shuffling going on there to decide what business that business to keep. It's part of a larger conglomerate that CDC have bought. So there's a disruption there, I think, so again, I'm to the constant time key go. Greg, do you want to say a few words about the KPIs.

Yes. Thanks, Louis. So hi, everyone, and good to speak with you. I'm very pleased to report my first set of results as Civilian CFO. And while there is a significant weighting to this year's results, as Louis has said, we believe that we're well placed to deliver on market expectations for the full year. So in terms of our key KPIs, revenue was down 14% to GBP 18 million. and this reflected the phasing of new orders with minimal software license revenue recognized in H1. And the impact of this also as evident in adjusted PBT, which was down 41% at GBP 5.5 million and on our EBITDA margins as well at 34.5%. However, the underlying health of the business remains robust. And if we look at the bottom line of this chart, the recurring and annualized term license revenue, which is adjusted to show term licenses on an annualized basis rather than upfront when customers have the right to use the licenses in line with IFRS 15 and that shows growth of 5% to GBP 19.1 million. So that's probably a good metric to consider. And in terms of cash, our balance sheet is still really strong. So we have net cash growing year-on-year by 4%, which is then driving the dividend increase that we have. So a quick run-through there of the KPIs. In the interest of time, there are more slides on the financials that I can go into, to cover the P&L, the balance sheet and cash in more detail. But for now, I'll hand back to Louis and we can cover any questions that you have later.

Yes. Okay. So thoughts. Okay. So -- and finally, a look at pipeline orders backlog. So as I said at the beginning, I mean a significant jump in new orders, which is really, really important in terms of visibility for H2. We're also looking into 27%. And despite that, as I said earlier on, the pipeline with the prospective customer patent, it doesn't include existing customer business, and we have a separate pipeline which we don't disclose in this presentation for existing customers that have total prospects value is higher than this. And the weight is value that self we adjust percentage probability across all the prospects has remained fairly robust. And of course, that's pushed our back order up significantly -- so there's a new record of GBP 82 million, which you can see is quite a big step change. So all of that gives us confidence and -- just a quick summary. I mean, Omantel is a really significant change. Proofpoint, not just with other larger telcos, but across the region. We've spoken about the H1 waiting -- H1, H2 weighting and why we think that that isn't the problem, although it is a little unmute, appreciate -- we spoke about new customer in line just on the previous slide. And of course, the balance sheet remains very strong and cash is growing again by about 4% as Greg alluded to, I think. And that obviously gives us a lot of comfort. And I think generally speaking, we're well positioned to achieve expectations and look forward to doing a lot more. And not just for this -- the rest of this year, but to the next few years ahead banks around our overall ambition to grow -- to double the life business again in the next 3 to 5 years. So that's the end of our presentation. Back to you, guys.

[Operator Instructions] We have already had quite a few questions submitted, so I'll start running through those. First one, Louis, is -- can you please discuss the risk of customer concentration or, I guess, loss of customers based on the concentration?

Yes. I think it's -- I mean, we have very little churn. So once the customers are on board, it's a big process to move. And typically, a [indiscernible] spend 18 months, 12 months, 18, it's maybe even a couple of years, choosing a new solution. And once you've done that, then it's as I'm saying with us, it's 12 to 18 months what makes the competitors, it's 3 to 5 years. So it's a long, long process. And if you're not looking to move almost as soon as you've started started. Obviously, you've gone live with us, then you are going to achieve that in time to hit the end of the initial 5-year term. But obviously now it's important that we have to do a good job, we have to maintain strong customer relationships. It doesn't fall off a log and that is a big part of what we do on an ongoing basis. customer concentration, we do get when a customer is a new logo, a new customer, and we're doing all that services revenue typically in the first year or 1.5 years, that will have a significant concentration impact on that financial year. But it -- once that project has gone online, that services part drops down that customer comes a lot ignificant in terms of revenue concentration. The same thing happens with a license on recognition [indiscernible], has a big impact on 1 year's revenue, but it doesn't then recur. And so customers can be quite large related in our mix in the first year, but then not in subsequent years, kind of more normal, if that makes sense.

Okay. That's great. We've got A few questions actually on the subject of Oman. So I'll go through those one by one, but I'll cut them to get it. So the first one is what are the major challenges in terms of payment conditions or cash collection and implementations in the Middle East customer like Amanda?

So cash I think is -- there's a lot of bureaucracy. But fundamentally, this is a company that's very well funded in campaign. I think so -- and of course, ultimately, if they don't pay, there's always the ultimate sanction that we can turn it off, which means that they can't do the business. So not that we would ever use that, but that's always there in the background, something we could use -- so we've been paying various skill plate in the past there. And we always do. So I'm not really too concerned about that but the is quite complete. I think that also goes for implementing in man, it's a fast organization. I don't think there's any particular rig why it will be more difficult than anywhere else.

Okay. The next one on that subject is what was it, in particular, about your offering that on the deal?

Yes. I think the customer like the product-centric model, they like the fact that they can connect to IP do other things around the other age cases. I think we were significantly cheaper than the other options. And I think the fact we could for example demonstrate AI features as important, where the others were able to do that. It doesn't mean they won't be in the future. Of course, they're all saying they can do that, but the rates is the fact you've got there today, I think it's helpful. And we had a good sales team that new houses get around the organization. So there are a number of factors, I think. But I think fundamentally, they show the product-centric approach with those all those advantages, the lower TCO, fast time to market, more flexible solution and designed to be -- not to need an army of people from the vendor on site at time, which is what a lot of the capacities would require. So our approach as we implement and we've gone and then we operate the solution for you, but we're not -- we don't need now many people on site. So I think all those sorts of things made a big difference.

Okay. And then a sort of related question on geography. The question is, looking at the MEA region performance, obviously, you've won Omantel, you've described the holding of the Zain Group do you have other significant pipeline opportunities in the Middle East and Africa?

We have some. I think we'll have a lot more relatively seen as an progresses and we get the chance to build that out story. But it's not -- that's not a particularly strong weight in our pipeline right now.

Okay. Next question is, have you noticed any real efficiency from AI in making new implementations?

Yes. So some of the -- I mean the thing about imputation is a lot of it is communicating. So a lot of the information we need is not necessarily written down anywhere or any data systems. So -- so a lot of it is talking to people. How exactly do you -- I mean how do you interact with that department so we can build up workflow? How do you provision in that particular service on the network and what sequence they step -- some of that is in systems in data. Some of it's written down, but a lot of it is. So a lot of the work is that interviewing and ligating nation. But when it comes to the kind of spreadsheet stuff, obviously, we can automate. So a lot of data migration tasks, which are quite labor intensive in the past, we can use AI to expedite. So it's making a difference. -- but it's still -- it will remain a significant task.

We also had a related question saying, have you noticed any tangible R&D savings related to these sort of AI and product development?

Absolutely. So we're kind of fully engaging with these tools. And of course, they are all in so fast at the moment, we'll be making local example. But that may not change in the when it served by something else than other or whatever. But it is -- we are getting savings in the nobody in silencing a new line of code themselves. The tools are used to generate code, but they're generating the function level, take the parameter and do lift and now put these parameters. we're not saying build a new module. The level of detail required us to great that. But what is really helping is in the testing process. So what the tools -- what we think AI for is to look at a module -- sorry, a function and build a test fleet and then run those tests. And then when the tests are being run tell us what the errors are, what's caused the failure and why is that test failed. I think we'll then actually going change care. So that is a big signs about half -- at least half of the effort on software development is generally testing and fixing only about half software development is actually writing stuff. So if you can say there's a big chunk of about half, then that's a massive volatility saving.

Okay. We've got a question about people actually. How do you incentivize local employees in India and make them feel part of the Cerillion culture? Would it be fair to assume that the employee turnover rate is higher in India. versus other pieces like Bulgaria or the U.K?

That's a really good question. I mean, actually, we've got really low show in India. So I think it's probably only about by the 6%, maybe many a little bit more 7%, but depending on very bit from year-to-year. But amongst the senior people have been for a long time, it's very smart about 3% of things. So -- so we don't have big churn. I mean I think what we offer in India is the ability for people to be -- to make a difference to be engaged in real cutting R&D was dent or whatever else it is really charging platforms and to kind of own things. And that's quite different to make Indian software service business as, I mean, there isn't much put business in India. So that was a quite unique space that most need software working in near is services. And if you're member of the 5 teams are working on 1 part of a function for Citibank or something, you've got available to engagement with with friendly, the user as a customer and what the whole purpose is, whereas if you're working with us, you'll very much engaged with customers with the product salespeople in ceiling, et cetera, you're working on projects with customers where you're seeing real difference being made in your delivery systems that are changing their business. So I think I think we haven't really banca smaller firm. It is actually -- it's contracted because, of course, the conventional wisdom is that people in India generally are drawn to the big brands and big firms. I think increasingly, people are finding the big firms are just a bit sales,and they are communities.

Okay. Next question. relates to the order book and performance. So saying while the doubled order is good, profit before tax is down 41%. What can you say to reassure invests both for H2 and particularly beyond that? Also, what is expectation -- sorry, what is the FY '26 expectation for profit before tax?

[indiscernible] I answer that, Louis?

Please.

Yes. So in terms of the FY '26 profit before tax, consensus from the analysts is for GBP 22.3 million. So I'd point to that. And in terms of how we look at the second half, I guess the best thing I can say is that if you think of our first half as a foundation, so we had revenue of GBP 8 million in the first half, then on top of that, we can expect to recognize license revenue on the mantel deal in the second half. So as I said earlier, we recognized very little software revenue revenue relating to licenses in the first half. So that will be quite a shift. We also -- the profile of our services of our projects means that we expect to recognize more service revenue in the second half. And the -- finally, there are also existing customers where we are talking about renewals at the moment. So we expect more license revenue relating to renewals in the second half. So when you add all of those things together, that's where we get our confidence related to the second half.

Okay. That's great. Next question is what's stopping you currently from considering acquisitions as a way to accelerate geographical expansion and expand into new customers.

Yes. I think we do look at acquisitions, but we look at bolt-on opportunities where we can buy product that is adjacent business or product which is adjacent to the modules that we offer so that we can upsell that new product to our existing base, but also with our acquisition, bringing other health care customers. And typically, niche players will have more midsize or Tier 1 that goes that across the board provider like ourselves. And then attribute cross-sell, upsell into those new customers are bringing on board. I think just acquiring the geographic expansion doesn't really help much. So the telephone market is completely globalized. So the same solutions work in any telco in any country because it's a completely standard based business. So for us to buy another billing founder say, in the U.S. It would give us some U.S. customers immediately, but it would give us the problem to overlapping product lines and how we have merged those and so on. And I think just sort of not really practical in terms of trying to keep growing at this rate, probably slows down while it will speed us up.

Okay. Next, we've got a couple of questions around pricing. So first bit is, do you follow a similar pricing strategy approach for all customers? Or do you segment them by budget and value add? And then sort of aligned to that, our business development managers or salespeople restricted from offering discounts even in tough negotiations, which I guess sort of goes together.

Yes. Sorry, I think the loss to track on the first was the first 1 again?

So,the first 1 was, do you follow a similar pricing strategy approach for all customers or segment by budget and value add?

Yes. So we do have geographical or regional pricing on the subscription base. But in terms of -- we don't generally tailor pricing to budget. We can say if a customer don't have the budget for the particular thing of the tendering full week and often tweak the scope so we can look at reducing the scope of what we're providing to hit the budget work show with the customer takes on the chunk of the implementation work, for example, so that we due to the cost. And in terms of discounting, so it's not like we're selling vacuum cleaners and the sales process is long, and it's a team effort, lots of people are involved, and there are lots of review steps. So it's not the case if there's 1 sales guy going to the doorstep, and you've got to go a deal that afternoon, there are lots of rents of this. So we will typically responding and some headline numbers and then there'll be a specific created RFP response. And all the time, we're getting guidance through our channels as to where the budget is and what the pricing needs to be. And if the customer then come up and say, yes, Funtime we need 10% off and then there's a discussion. So it's not -- when the sales guys to need to be empowered going to give any clip discount. It's the deals are such a size that there's full engagement from management all the way through.

Okay. Next question actually is going back to AI. It's a different take. How do you factor AI-related product features into your pricing?

That's a good question. So the way we look at this is that's we are charging for consumption of API is about AI agent, our policy it's not to lock out other agents and other vendors, but to have a sort of open mall policy where our customers can use our agents in which case, they're paying for essentially each time they activate that agent, but each of the agent communicates our APIs through our MCP server architecture, which won't get a little detail, but it's essentially a gateway that enables our APIs or external APIs to connect into our environment, access our API, our business logic and data and a safe that -- that's on the consumption basis say if another -- if a customer's own AI agent or third-party AI agent wants to come across and being plugged in we charge a fee for that access as well. So whether you're using our agents or be seated, you're still going to pay a consumption fee and that's quite different to the main platform model, which is based around a number of subscribers. So the point here is, of course, that if you have 1 million subscribers as a telco the only 100,000 lots are going to use the AI agents to start with, in which case, paying a percentage of the overall platform fees, it's hard to manage, but also this takes obviously expected in a consumption-based charting model should be very big. So we're kind of aligning with what the AI providers that they are and providers are doing. So they're all printing a very similar model.

Next question is how do you differentiate yourselves from local competitors to attract and retain the best talent.

Well, again, it's going back to what I was saying about India. I mean, I think if you're a product business offering obviously to build new technology and be engaged in some of the leading-edge technologies of the day, then it's an attractive place to be. And we do pay good -- we don't pay crazy salaries, but we pay at least the high end and top end of the market salaries. But I think it's mainly around the option the work we have to give people and the opportunities they have to not just do interesting work, but also to move on quickly. So if you're ambitious, I want to be progressing your career we have a pretty flat structure and we encourage people to push themselves. And I think that's also important, especially younger people.

Okay. Next question is -- are you actively considering I guess it means a main market listing. What would be the adoption of listing there relative to aim.

Well, I think we do look at this at time to time, but aim has been very good to us really. I think we're not a company that's been marine on. And if you look at where we started about at 6p a share in 2016, we can't really complain too much, even though the last couple of days, he's been a bit of a breezing so I think there's a little bit of a concern that we don't want to be the last texture and it looked at 1 time that that was maybe where it was going. But I think the advantage you get maybe to aim really around the to comment of time the automated trading where there'll be more liquidity potentially, there will be more training, and that will benefit everyone in theory. But the ETFs I'm talking about, so that those are obviously more focused on main market. But I think unless we are confident we would be in the 250 in stay, and we wouldn't make that move. So we're still a little bit away from that.

Okay. Next question is -- can you speak about potential new logo wins and the size of those potential wins versus Omantel and were not any 1 or more of those are needed to meet consensus or could that lead to upgrades to numbers?

Yes. So we're online with any new loan wins really to do the 26 numbers because we're quite late in the year now and there's any limited impact on new logo we would have at this stage. For 2017, it's important. There are some opportunities in the pipeline that are the same scale or larger than [indiscernible] I think if we close 1 of those, then we probably would be looking at upgrades to 27.

Okay. Next question, is services as a percentage of revenue expected to decline over the next 3 years? And if so, does this mean a rise in margins given the higher software mix.

So the answer to that is yes and yes. As we -- as the larger customers with bigger licenses grow and the license book expands the proportion of services, a lot of which -- I mean a lot of it is the right position us, but a lot of services comes from new customer implementations that proportionally will decline, hence, the mix will shift more towards software, and that will inevitably push margins up over the medium to long term.

Okay. Next question. Have you noticed any risk of potentially customers starting to in-source their software development.

Yes. So that's what we touched following the 1 that we spoke about AI development. No is a simple answer. So the thing is there's a lot of talk about this in sourcing and so on, but you have to look at the context where a lot of businesses Pitco for the last couple of decades have been trying to outsource as much as possible. So they just don't have the people to do this stuff. So AI is not magic. It requires people to direct it very specifically to do what we wanted to do. And that requires technical people, whether they can program in Java whatever. It still needs technical input. People understand the real detail of the legacy of networks and and all of that. So if telcos don't have these people to the same extent, then in-sourcing means not just doing itself, it means finding people can't do it because most of our versus don't have these people.

Okay. Understood. Another question, actually, in terms of the listings or looking backwards. So the question is looking backwards, is there anything you would have done differently nowadays compared to when you listed the company?

And it's a good question. That's a good question. What we have done differently. I think if you're not so much when we listen to the company as we are pretty -- we've been going 15 years by then. But if you go back to '99 and 2000 headydays.com boom, I think there are definitely some things we've done differently Tokio then, the accept of raising equity funding and then there was a sort of real focus on just spending all the money as fast as you can or in big team, they will take the higher rate. And if you create the team and burn the investment, then the sales are coming, of course, that's not really happened. So I think we want to take a more cautious approach for example, back in 2000, 2001, if we were hold ourselves. But we traded through the dot-com collapse, and we didn't raise new money again. In the IPO, we only really rate -- the money we raised we paid off the funds, and there wasn't to bolster the business. I think we got through -- we traded -- we made it harder than the years at be.

Okay. Okay. A question about some of the competitive landscape. You mentioned numbers 42 players in the sector, which number is Cerillion.

Well, number one, of course, what I said was not so much the number of not polishing the market, more people we compete with the most. And so that my ranking is not where they sit in the market necessarily, but where they are relative -- relative to competition to us and Amdocs is the biggest competitor we have in terms of number of times that come across them and number of times beat them and then net crack is probably second after that.

Great. Another question better than that competitor actually. The question is why do you no longer meant Hansen Technologies as a competitor? What's your view on the telecom-related products?

We don't really see them anymore. It's a simple answer. I think the handset model is quite different. So they they're an acquisition roll-up vehicle, and they're constantly buying new businesses in this space somewhere, but tenders then focus on cutting out costs typically sales costs, not really too focused on new logo winning new logos, but I want to be point here. making the most existing customer nation, we say. So it's a very different model. It's been very successful for them, but it's a very different model. So hence, they're not as active in terms of new customer acquisitions. So I think that's commonly why we don't see them. That's my take on it at least.

Okay. And then we just got the last couple of questions given the time. 1 question. What is your current position in North America? And is this an attractive market for Cerillion?

It's a market that we haven't exploited enough. And I think there's a lot of opportunity there for us to exploit it more so we've -- we've recently hired another results and other key leaders in North America to head up that and build more prospects there. And we're going to be creating more presales people there, so it is an opportunity for us that is yet to be fully exploited.

Okay. And then I think we'll make this the last question given the time. Just looking at 5-year license renewals. How does the renewal license for those customers compared with the original license cost.

So the essentially where the way it works is that we have we agree a subscription fee and at the start of the essentially contracts and that file escalates inflation index every year through the term so we get to renew the term, we generally just roll another year of inflation. I mean we're not trying to be small and doubling the price, whatever ashes are long-term relationships. So if you do that, it resonates around the market and next customers are going to select you. So to be quite careful about how you manage. We do it in a transparent way. This is this is -- it's just kind of given the cost go up, therefore, we're going to increase these fetal inflation. But we're not going to guarantee. The other thing to say, of course, is that the fees go up with -- as customers grow because as they increase their subscriber numbers, we increase the subscription fees and that's all program into the contract as well. So a lot has been negotiated. So the fact that we at going to negotiate really on the renewal is actually helpful. It means it's a more seamless process. whereas it has been negotiated every time they were just take longer in the hard to what type of seeing harder to get done.

Okay. Well, that's great. That's a nice note on which to end and we have now unfortunately run out of time. So there's no time for further questions. I'll just hand back to you, Louis, for any final closing remarks.

Well, I just want to say thank you all for listening. Appreciate your time. We come on our way. I think we've got a long way to go, and we're very confident about the future in seeing our product-centric model continue to get adopted by larger later telcos in the market.

That's. Great. Thank you very much, both. Thank you all for attending. This is the end of the webinar.