Credit Clear Limited (CCR) Earnings Call Transcript & Summary

Welcome to our 2025 Annual General Meeting. Thank you for your attendance today and for your support and interest in the company. I also welcome investors for reviewing the meeting online. We have a quorum present, and I declare the meeting open at 11:03 AM. I'm joined by our CEO and Managing Director, Andrew Smith, my fellow nonexecutive directors; Michael Doery; Hugh Robertson; and Jodie Bedoya; and our Company Secretary, Adam Gallagher. I also welcome [ David Patterson ] from PwC, the company's auditor, who joins us online; [ Grant Rogers ] from Computershare is coordinating our registration and to over today. Profiles of directors and the executive team are available on the company's website. Voting and questions. Shareholders and proxy holders will have the ability to ask questions to make comments during the meeting as we work through the formal items of the business. During the meeting, the shareholders of proxy holders will be able to ask questions and provide comments as we can see out each item of business. We will endeavor to respond as many questions as possible. As a result of these resolutions decided by a poll, I will not be declaring the results and the resolution during the meetings of the meeting, I should say. When we finalized and launched the results of the meeting with the ASX later on today. It is the meeting of shareholders of Credit Clear Limited, and as such, only shareholders or their duly appointed proxies or corporate representatives are entitled to make comments, ask questions or vote on any items of business. During the meeting, when I write questions or comments, please direct all your questions or comments to me as the Chair. Voting at today's meeting will be conducted by a poll for each resolution, and I now appoint [ Glenn ] from Computershare as the returning officer for the poll and declare the poll open. Please note the name in which you're registered today will not only -- will be the only name in which will be entitled for votes. If you have previously lodged your votes via proxy, you do not need to vote today and then was to change by. The notice of the meeting was lodged with the ASX on the 19th of October and dispatched to all shareholders and will be taken at risk. Individual resolutions and the associated results of the providing will be displayed on the screen as we worked through the business of themes. Before we move to the business of the meeting, I'll read my chair address, which was released to the ASX prior to the commencement of the meeting. FY '25 was a year of growth, underpinned by our proprietary technology on expanding client relationships across Australia. We delivered record revenue of $46.9 million a 12% increase on the prior year, driven by higher volumes in our core debt recovery services, enhanced client retention and successful starting of our digital capabilities. This performance marked a significant step towards a significant step forward in profitability with underlying EBITDA reaching $7.4 million, a 76% increase on FY '24. As Chairman, I'm immensely proud of the resilience, innovation and execution degraded throughout FY 2025, a year that solidified our position as a leader in the debt recovery and financial technology sector. Over the last few years, we've built a business with a strong foundation that is well positioned to capitalize on growing opportunities in the domestic collections market. As I stand here today, as a fellow shareholder, I'm pleased to share my excitement about the future of our business. I'm personally committed to the next phase of growth, having subscribed for $8 million in the October 2025 capital raise, subject to shareholder approval. We will continue to grow Credit Clear into a market leader, a business with the ongoing ability to convert revenue into bottom line gains, turning strategic vision into tangible results. We've made meaningful investments in our technology infrastructure, enhancing data analytics and automation to position us for even greater scalability. These efforts have delivered financial benefits and also strengthened our competitive plant in a market increasingly demanding agile, tech-enabled solutions. Domestic demand for collections across our client base continues to grow, and we've built a business with foundations that provide the best of human interactions with AI-enhanced solutions, which is primary capitalize on these industry tailwinds. As we look towards FY '26, early indicators are encouraging. In October, we announced the landmark acquisition of ARC Europe for approximately $10.9 million. ARC expands our total addressable market and marks our entry into the U.K. where ARC's established debt collection operations complement our technology expertise. We see a clear compounding of value ahead and believe there is an opportunity to overlay Credit Clear's sophisticated automation and data analytics on to traditional collection workflows, creating service standing seeds wide lease approach to deliver on its own. The U.K. insurance market is significantly greater than Australia's. We believe the opportunity in the U.K. is immense, specifically given the capacity within the U.K. insurance sector, where there is an opportunity to develop long-term intact relationships. ARC is expected to contribute earnings accretion in its first year of ownership, while unlocking cross-selling opportunities and operational synergies. We have a proven model and provides us with established foothold and platforms of road map and digital solutions across the traditional book to drive efficiencies. This acquisition is not just additive. It's transformative, diversifying our revenue strength, positioning Credit Clear as a truly international player. Our recent $20.75 million capital raise has bolstered our balance sheet with a cash position of $25.7 million as at 31st of October 2025. This injection provides is ingestion of capital provides us with the flexibility to pursue both organic initiatives such as further platform enhancements and market penetration in Australia as well as driving growth within our existing customer base by capturing a greater share of wallet, especially in the insurance and utilities, both where we see a multiyear organic runway. Domestically, we see ongoing opportunity within the sectors we service, which are currently -- which are under digitized and hungry for faster, cheaper, friendlier debt collection outcomes. Additionally, we will add growth add to this organic growth opportunities that align with our M&A to the pipeline. We remain disciplined in our approach towards inorganic opportunities and detect significant opportunities within the industry. Our historical integrations have highlighted that we have the opportunity to combine strong organic momentum all times that materially steepen our growth trajectory, especially if we can target strong traditional flagship businesses and overlay our AI-driven solution to deliver outsized efficiencies that leads to revenue growth and margin expansion. As we navigate FY '26 and beyond Credit Clear is better positioned than ever to capitalize on the structural pane within the debt management sector, rising digital adoption regulatory evolution and the need for efficient recovery solutions. Critically, it's a very good business today and the opportunity to grow is growing significantly here and abroad is unmistakable. I'm confident that we can deliver significant value uplift to shareholders in FY '26. I like to extend my gratitude to our dedicated team, its unwiring commitment strengthened our business. Thank you once again for your continued support. I look forward to updating you on the progress in the coming months. Thank you for everything. I will now turn to the business of the meeting. Okay. Thank you, everyone. The first item of formal business is to receive the company's annual report for the year ended 30th of June 2025. The financial report and the reports of directors and the auditor nonlabor the meeting. There will be no growth on this item and it is a discussion item only. As introduced earlier, we obviously audit [indiscernible] David Patterson is available on to take questions relevant to the conduct of shorter and the preparation of the content of the independent audit report. Are there any questions or comments on the annual report or the conduct of the audit? We will proceed to the resolution set out in the notice of meeting. As the resolutions were set out in the notice of the meeting that is taken as read and each resolution will be displayed on the screen, unless asked otherwise. I will simply announce the title resolution as we work through them. Resolution 1, adoption of remuneration report. Are there any questions or comments on the resolution? I now put the motion. Please record your votes if you haven't already. The next resolution, I'll stand aside for Michael as it involves me, so I'll hand to Michael.

Thank you, Paul. The next resolution is the reelection of Paul Dwyer as a director. As there are none, are there any questions on this resolution? I'll now [indiscernible].

Okay. Resolution 3, approval to grant share rights to CEO and Managing Director, Andrew Smith. Are there any questions or comments on the resolution? I now put the motion. Please record your votes if you haven't already. Resolution 4, approval to issue an additional 10% of the issued capital of the company over the 12-month period pursuant to Listing Rule 7.1A. Are there any questions or comments on the resolution?

Yes. Is that due to further perspective of acquisitions or what is that?

Well, I think we've used and tell me reduce significant amount of our capital in acne we're refreshing them through essentially. There are some acquisition opportunities obviously provision factor is the opportunity. Okay. I'll now put the motion. Please cast in your votes if you haven't already. That concludes the formal business of the meeting. I thank all shareholders and their representatives for their attendance and declare the meeting closed at 11:16 a.m. Please hand your vote cards to Glen. So that completes the poll. As advised earlier, the results of the poll will be lodged with the ASX later today. I will now hand over to Andrew for his presentation.

So welcome to those online and those in the room. Credit Clear is transforming the debt collection industry. I get asked quite a lot a time are we a tech business sophisticated debt collection technology company. I think that what best describes is where an organization has to our clients and the community go between today, which is a digitally enabled collection space to transformative environment where technology is the primary way that businesses and their clients used to resolve open to get. So we are the conduit that are taking our clients on that journey and their customers. So I think that, that's always something I'd like to clarify with clients, shareholders and certainly anyone who's interested and as part of what our core value is finding a better way to resolve debt. So for jump in the presentation. Firstly, as Paul mentioned, very exciting announcement of the U.K. acquisition. We've been looking at this business for almost 2 years I know that the number of shareholders at the briefed on it. We've spoken about income presentation. That was certainly the combination of a lot of good due diligence. But fundamentally, we need to be ready as a business to be able to broaden our horizons outside of the Australian market. Now the Australian market is one that we're still with a lot of runway on. So we've now established ourselves as a really Tier 1 provider of debt resolution through our software technology platform. through our services platform deliver through ARMA and also our legal platform [indiscernible]. So what this allows us to do this, we've got a strong foundation in Australia with great relationships with clients strong credibility in terms of performance and service as well as customer engagement. And that's meant that we can now look a little bit broader into new markets. And I think 1 of the new markets that represents a really strong similarity to Australia, both strongly in terms of regulations and both strong in terms of consumer behavior. Those are 2 very important components because it means that the cost deploying technology in that market isn't going to be too high. And it also means that the success of the technology and our strategy is going to be more likely to succeed. Now whilst nothing is guaranteed exit. The reality is that a lot of the behaviors, payment patterns, technology adoptions, competitive landscape is very, very similar to a to Australia. And whilst people think going to the U.S. could be a much bigger price. The reality is I think it's is still a substantially bigger market in Australia, rent 4 to 10x as big as Australia from a total addressable market, but the reality is that we can leverage really strong customer relationships in Australia or in energy's ownership of Optical Energy. We just have about 3x as many customers as are energy. Vodafone, we do work with in Australia and lots of other clients that we can leverage to really, I think, turbocharge our launch into the U.K. market. So just a bit in this. It's been around for 24, 25 years. I've got to know the largest owner of that business renewal. We spent a couple of weeks out in Australia, getting to know our business, getting to understand what we're about. [indiscernible] and myself, we're heading over to the U.K. on Saturday and 10 days meeting with their staff, a number of their key clients to establish relationships, I think to set to standards around what we are wanting to achieve in that market and hopefully generate some goodwill and some excitement around the future of bringing what was a transformational technology to what was in this group and did the same in that market. So we're not reinventing a new strategy. We're just deploying it in a new market, which I think is going to be very successful, and I'm very, very graduated 2025 was certainly a very, very strong year from our perspective in growing the business. And FY '26 has continued to I think made this happen, and we're certainly not context, but it's been a good result. It's something that we want to continue to grow. And whilst we made a mistake last year of annualizing our Q1 results. We don't want to make that the stake again this year. What we want to do is continue the momentum into Q2 and Q3. And at that point, we'll be at a point to really reestablish what our new revenue and EBITDA targets to be hopefully incorporating Arturo numbers, which we will complete once we get NCR approval. Underlying EBITDA guidance of $9 million to $10 million, revenue guidance of $50 million to $52 million. We expect to continue performance across the Q2 quarter, which were well truly into. And once we have completed the FCA approval process at A Europe will be voting those numbers, both on the revenue and EBITDA into the overall group forecast. Cash position, as Paul mentioned, $25.7 million. I'm sure there's a few questions that are coming through about that later in the call. I'll leave that on finance today. Just once again, a question I get asked a lot is what's the conditions like in Australia for our business. And a little bit of a moving target. There's obviously a big place ship, which jumps quite quickly. Unemployment started moving up slightly. But overall, we're seeing very large volumes of debt being held on balance sheet at our major clients. I always use the ATO as a great example of businesses that have allowed their balance sheet to get bigger and bigger in terms of account receival $25 million pre-COVID to $50 million [indiscernible] about [ $105 billion ]. So there's lots of organizations that did nothing or did very little over this period of time and let the whole business community and also the consumers with very large debt balances at our household. And why I say that is it's meant that we have favorable trading conditions when it comes to the amount of work that's out there. And there's been a lot of debt buyers that have effectively topped out of the market. There's been a lot of consolidation within the contingent collection space and that thing that we've got, I think less competitive and more worries. The sales growth has been very strong. We've almost picked up all the major names within insurance markets. A couple still go with Mayor way or in the banking finance base. We're sort of leading in terms of our performance in the major bank that we're working with, that's creating some really good opportunities with other major banks. We're still yet to penetrate per government. I don't know people saw the article, no federal government had $42 million of one of our competitors in assistance of recovery. So it just shows how the bigger opportunity is to move into that federal governance space. We've got huge adoption of the digital engagement strategy each year, we're seeing the percentage of people that are resolving that digitally only grow much faster than the rate of growth of the business. And minus, we've got a strong cash position. It gives us some really good flexibility to execute on our future strategies. And once again, we'll talk about whether that's through acquisition or acquisitions they could be. But fundamentally, they need to be ready, they need to be strategically aligned to the type of business we are and if they certainly need to be complementary to the services that we offer currently. Sure there's been a few questions come in. So I'll do my best to answer them. Yes, we've got one in the room.

What do you think as [indiscernible] huge evaluation for us [indiscernible]?

Yes. Well, there's a few others trying to acquire them. And I think the preference for us was that they saw our technology as a superior proven technology within the market. They I suppose, like myself went on what by Credit Clear and ARMA. They saw the need to adopt new technology as a way to evolve with the industry rather than stick with the fashion line. So those are 2 really key things that I know that a shareholder told me. But I mean, fundamentally, from a cultural perspective, we were very aligned. My first business in Australia was elections. And their slow was almost the same as [indiscernible] back then. So we wanted to resolve that in a positive way to the traditional new debt culture. I constantly get to but I've got a baseball bat with me, but I introduced myself and I tell people in feet. So I think the team has been trying to change that perception for a long time, and that really resonated with doing its team. So I think, culturally, we were trying to deliver a service in a better way, not just in terms of collecting more but collecting or the fine way the way that's engaging with consumers. And culturally, we'll be able to come together and there's going to be no friction.

And also be able to stay invested at all?

Yes. Yes. So look, so it's definitely on enough agree to take substantially more stock than what we gave in because we thought it's probably a lot to achieve deal. So is it 12% in terms of the process of the sale. And idea 100% stock. So he's very excited in the future based on the stock value going up, both just the process. Yes?

Andrew, within the business, can you comment if there is any seasonality? Or there more business you recently in the first half?

Well, it'd be fair to assume that we're buying a growing business, and they are coming off the back of a record month and record what we call referrals, certainly had a leading indicator looking at we dedicate that they should have a better year of next year to end of this year. but that's certainly not how we got into it based on FY '25 numbers were. And from a budget perspective, we just got a budget for what we expect to deliver based on still here is to work in Mainland or port U.K. and we have another question in relation to our European investments.

Does the company expect to attract further investment from European institutional hold invested to credit to?

So the first question may exclusively to work within the United Kingdom. They only were in Europe a low 1 of the major clients based in Europe, and we're meeting with that client also over it. So the opportunity to expand into those markets is certainly there, once can want to make sure we get down this acquisition. We do a great job for their existing clients and they're comfortable with our new ownership. And then we'll start to look at opportunities outside of that market.

Okay. Does the company plan to offer for swine services, digital collections transitional collection set leading to cover in Europe in the future?

No, in the short-term plan. Our business is that's almost exclusively into the sugar which means that it's very much aligned to the digital adoption of the credit card technology. And typically, to take legal in against consumers. It's not as common is taking legal action against business-to-business providers like in Australia, where a tire or steel provider or concrete provider. So it's not going to be a short-term strategy for sure, but depending on clients we have in Australia and have operations to high demand, we'll certainly take retaining efforts investment. It's an interesting question. I think we're always open to different investors if they could bring not just capital to the table, but other types of benefits. It's not something that mine. I'm sure there is people on our Board that are very fair with certainly reliable on those when it comes to those opportunities will be presented.