Energy One Limited (EOL.AX) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Energy One Limited Financial Year Results FY '25. My name is Shaun Ankers, CEO. I'm joined today by Guy Steel in Sydney. He's our CFO; and we have the Chairman, Andrew Bonwick, on the line as well. We have a presentation for you, which I'll go through, and then we'll take questions at the end if that suits for an hour or so, so there's plenty of time for questions. Thank you very much. I'll kick off, disclaimer aside. So for those of you who don't know the company, we're in the wholesale energy trading business, software and services. What is wholesale energy? That's the usually bulk electricity and gas, which is a traded commodity and its derivatives and everything around that. Our vision is to be the world leader in this provision of this Software as a Service to this market segment. And we're certainly a leader in the Australian market and developing to leadership in Europe. What's different about the company? What's special about us that we have a unique selling proposition is that we are a one-stop shop. The energy -- wholesale energy landscape is very complicated and the customers are required to do a lot of complicated things, and we pride ourselves being able to help them with all aspects of that value chain. And it's a bit of a business model that we pioneered. And as far as we're concerned, this is a positioning for the market and our differentiators against our competitors. So without further ado, I'll jump into the presentation. Just some highlights here. I will talk about the financial in detail. But obviously, we consider this a strong growth in revenue and profitability for the year, notwithstanding that we've made significant product -- investment in products and services and about 50% of our salaries are actually in productive work on IT development. We've invested heavily in cyber. Those who have been following the company know we've invested heavily in cyber over the last couple of years, and we're expecting to get ISO 27000 (sic) [ ISO 27001 ] very soon and [Technical Difficulty] to that. On the customer side, we have now 360-odd customers in dozens of countries, in 450 installations, of which we had added 42 in the last year alone. We've made a number of improvements to our customer service globally, including global help desk technology for supporting our customers 24/7 and of course, building out our 24/7 operations support capability from Adelaide and Europe, a very important aspect of the business. Our people -- our most important aspect of the company is our people. We now have 200-odd people in 4 countries. We had 14 net new people joined. So those who work that out, that's about a 7% headcount growth, which obviously based on the revenue growth, you can see that we're achieving productivity gains by maintaining steady headcount growth in amongst good revenue growth. Again, trying to develop our people, we want them to stay with us for a long, long time. So we've instituted a number of initiatives, professional training and development scheme during the year. Our eNPS is a measurement that we've started in earnest this last 12 months or so, and it has increased over that time, which we're very pleased with, and we want to continue down that road. Technology front, we're now used in 30-odd countries, 2,000-odd global users, so a significant user base. We have a group technology structure that is working very well under our global CTO. There's a number of benefits that we'll talk about during the meeting. And we've made technical achievements in numerous areas. Thanks, Guy. Without further ado, straight into the results. So obviously, we are very happy with this result. Hopefully, shareholders are, too. It's right on target with what we said it would be in the operations for trajectory. Revenue is up 17%. Obviously, ARR 22%, had a bit of an FX tailwind there, but nonetheless, a great growth, particularly seeing strong growth in profitability, hitting cash EBITDA here, 57% and of course, NPAT up 74% on taking into account the FY '24 normalizations, which we didn't have any normalizations this year. So a very clean set of accounts for you to look at. I'll just go back to ARR. Particularly with ARR with us, we do -- our metric is ARR billed, not ARR contracted, which is a measure you might see. So if we sign an account on the 29th of June, for example, that ARR will not appear in the ARR billed because it hasn't been billed yet. But of course, it does flow into the following year. So we had a couple of larger accounts that sort of signed late in the year. We were perhaps hoping to get them in April, and they signed in sort of June. But the flip side of that is that you get them ready to go into the new year. So we would have had a stronger metric for FY '25. But of course, now we've got a good order book going into '26. This is a fairly detailed slides, so I'll just take you through it. So the blue numbers are the signed. We've got them signed and on book. And the orange ones are final stages, which we would expect to sign, and the left-hand column is ARR and the right is the one-off project revenue. So taken all together, all of those things signed and delivered in the orange, we're looking at starting the year with a 9% revenue growth head start. If we take CPI on top of that, it underpins our growth aspirations for the year, which we published to be 15% to 20% revenue growth with sort of 10.5, 11 months to go. We're starting off the year on a high. So very pleased with that, and we'll continue to grow and continue to hopefully sign orders throughout the year. So we'll keep you posted. And for the next slide, I'll hand over to Guy.

Thanks, Shaun. Just the following slides, I appreciate there's a bit of detail on there. So give me some time, and I will take you through it. So just with revenue versus cash expenditure and our cash expenditure is, as Shaun said, normalized to take out any of the one-offs in previous years, 2025 doesn't have any one-offs. So just when you look at 2023, you'll note there that's the impact of the acquisitions, the Belgium business and the Australian trading business coming into the group, impacting revenue and costs. It was also a year where we invested in global systems rollout such as ERP, global operations. And one thing about those costs is they go in once and they tend not to grow. So they're effectively a one-off step change, which obviously propels our growth going forward. [indiscernible] FTEs went into 2023. 2024, similar. We continue to invest in our resource base, rightsizing the business. Cyber also became a focus of the business, as we've stated a number of times. And as the business has grown, become more complex, I guess, matured, there's a significant investment in organizational systems such as CRM, ERP, I've talked about risk management, human resource management. But again, those costs go into the business and they need to be spent once effectively as opposed to increasing every year. Going into 2025, we think we've largely got the resource base in place that we need. And we're seeing, obviously, the revenue consistently grow and the cost leveling out. So that clearly provides a very strong platform for margin expansion moving forward. Looking at the revenue by FTE, one of the points to note is even though we have invested in the business through the years, the revenue per FTE has continued to grow. Profitability has always been a strong focus. So now that we're through the investment cycle, we see the acceleration in earnings. Just on the cash expenditure or the cash EBITDA that we've got in the last column, that's obviously significantly improved year-on-year, particularly in the last half of the year. So margins have gone from 14% in half 2 of '24 to 18% in half 2 of 2025. I think this slide is fairly self-explanatory. And what you can see is the very [indiscernible] expenditure coming down as a percentage of revenue and our margin going up. I guess what's pleasing is when you actually look down at the business level, Australia is at a 42% EBITDA margin, up from 32% and Europe is 27% up from 18%, yes, really pleasing. Australia is a more mature market, but Europe has shown closing the gap quite quickly, obviously propelled by stronger earnings growth. We've talked quite a bit about our aspiration for cash earnings of 30% by around about the end of 2027. And obviously, now that we've got our resourcing rightsized and we're in a good position from a revenue growth perspective, we expect to accelerate that margin improvement. From the perspective of looking at free cash flow, I think one of the comments we've had previously in the business was the business doesn't generate too much free cash flow. So just for people, that's operating cash less CapEx. But what you'll see is particularly in 2025, that's substantially improved. The second half is traditionally stronger, and that's -- it's really -- it's obviously improved earnings, but also a working capital benefit. So simplistically, we pay our bonuses in the first half. We grew them in the second half, which gives us a reasonable return. And just last slide I'm going to talk to before I hand it back to Shaun to talk about the investment in the business and the overall strategy is our leverage. So that cash, as we've said many times, has gone straight into deleveraging the business. So net debt down to $6.7 million, as you can see, leverage below cash EBITDA. And we would expect to be net debt 0 by the end of about 12 months' time, allowing for the dividend that we're paying. And obviously, we're comfortable paying a dividend from a capital management perspective, given the strong growth. So very happy with the reduced leverage. I might say maybe that, not so happy, but from a business perspective, very happy indeed. So at that point, I'll hand it back to Shaun to talk about the investment in the business and the strategy as well as divisional performance.

Yes. Thanks, Guy. So this increased profitability, I want to point out, has not come at the expense of investment. So we do -- it's a knowledge-led business. It's a technology forward business. The industry is very technology-driven, innovation-driven. So we've regularly kept up our investment in the technology that we provide to customers. The run rate is about 11% of revenue. And you can see over the [Technical Difficulty]. Sorry about that interrupted services presumed. So 12% increase over the period. So it shows we are committed to investment in the product and our service and our technology. So profitability is not -- we're not seeking profitability at the expense of continued innovation. The chart on the right-hand side just give you an idea of where that investment is going. Obviously, a considerable amount of our investment is into that actually, what we might call, productive part of the business. So it's not overhead -- be on overhead. There's an awful lot of people working on the product or directly for the customer, well over half of our expenditures on that aspect of it. So we do invest in the product, and we do focus on looking after our customers, which is the cornerstone of this very important industry where it's very technical and service standards need to be high. Next slide, please. So I just want to touch on the individual business units. Essentially, we look at -- we have 2 now, Australia and Europe, Europe being incorporating the U.K. from a reporting perspective. So the message from our Australian business is growing consistently. We obviously got a decent market share here, but the market is growing itself, and I'll talk to that in a minute. And we continue to innovate and provide solutions for that market and look after our customers in more new and meaningful ways. I've just got some highlights here. But when we look at the revenue growth, it's sort of consistently in that mid-teens level over a number of years. And that's driven by, as I said, our innovation, but also the market growing itself. So we signed -- it was a good year. We signed under our GM for Australia, Rob Meyers. We've signed several Tier 1, Tier 2 clients, prestigious clients. We've got multiple battery customers now live. Now obviously, as you know, batteries are a major part of the new world we're all moving into, and we've got some good solutions out there with multiple customers now live. Our trading and consulting team, specifically out of Adelaide are helping customers enter the market and manage their risk while they're there, very important with a lot of new entrants into the market. We do terrific job in helping them through that and helping them to manage both their market risk, but also their input cost costs and the like. So NRR, those of you are familiar with acronym net revenue retention, was helped by our upsells and a bit of a price rise during the year. EBITDA margins, as Guy pointed out, now 42% for this business. So the focus for Aussie is continued growth and good margin expansion. We've got 12 new net installs with software plus services for the famous cross-selling that we're working on for many years. It's great to see our software and our services team going together on to certain projects, and that's actually being sold as a solution now rather than 2 separate things. And another interesting thing is we launched a trading portal out of Adelaide. So our customers can self-serve on market. The modern market is very data-driven. And our trading portal enables customers to see in real time their position in the market, which helps them to get comfort that they're in a good place, but also enables us to scale the number of customers that we can support again towards that leverage. So a good consistent result out of Aussie. And of course, Europe, as Guy has alluded to, it's the big runway, 600 million people in Europe, so a decent size market in a sort of financial sense, at least 10x the size of the Aussie market and growing even with a bit of an FX tailwind there. It's growing strongly. We've got a new GM for Europe, a gentleman called Ben Tranier, who's come from a Tier 1 vendor. He's been with us about 12 months now, really kicking goals there, working closely with our GM for U.K., Sunny, and then reconfiguring that Europe business to Europe, U.K. so that we have centers of excellence for customer service and for development and so on. So really pooling resources and getting greater efficiency and cross-selling out of those business units. So cross-selling has been good for us, $1 million of new ARR just from cross-selling alone in the last 12 months. That's obviously flowing that success flowing through. We're moving out of the [indiscernible] in Paris and moving into a proper office. So we are very pleased about that. It's some prosperity there. Again, much more installs out of Europe than that we will see 2 or 3x usually from our Australian business. But it's been helped by campaigns -- very successful campaigns we're running at the moment for industrial customers and for gas shippers. So industrials, the world over are suffering under high input costs caused by energy prices. So obviously, it's a much more serious problem than it used to be. The market is more volatile. Input costs have gone up. A lot more help required in managing those input costs and just managing the market risk and price risk. So we can help them with that, and we can also help gas shippers and the like. So we've got a couple of campaigns going. It seems to be going very well, and we'd expect to see some of that flow through into FY '26. Meanwhile, we've done some good things technically as we did in Australia. We've got numerous technical changes and functional improvements to our products under the new tech structure. Our CTO, Damien leads -- our team leads in each country. And we're making -- we're really kicking goals on some technical stuff as well as this market. For instance, one example I pluck out there, which is a market communications protocol for spot markets, we're able to deliver that ahead of time and get our customers live. A slight downtick in NRR. We had -- and it's really just a couple of -- we dropped about 18 months ago under some previous leadership sort of dropped the ball a little bit. And a couple of customers took some stuff back in-house. But from my perspective, I see that NRR as a blip. And now that we've got Ben and the team working and getting things going again. We expect to grow that back up again. Next slide. So just very quickly, our strategic priorities underpinning all of that. I won't go into these in detail, but we basically got 6 pillars we try and work on here. And I'll just call out a couple as we go. Next slide. particularly cyber here. So as we talked about at length in these calls, ISO 27001, which is the cybersecurity certification will be [indiscernible] correctly, in the years to come. It's a very data-driven industry. Data security is critical. Our customers operate society critical assets in the grid and so on. So it's a very important. Vendors are at the highest level. And we've made terrific progress under our CISO, Deepak, installed a lot of good state-of-the-art cybersecurity investments, at least $1 million spend. And our ISO program is going very well, and we'd expect to have that in place very soon. It might be before Christmas or it might be just after Christmas. But then we'll have -- from there on, we'll be able to give our customers greater confidence and our stakeholders as well. But also from a marketing perspective, obviously, it's a major selling point going forward. Next slide. I'm just going to take a step back real quick and look at the market. I know I've showed this slide before. But what is happening in the marketplace, basically we've got a global tailwind essentially called carbon transition. A lot of renewables need to go in. These are -- this chart shows government data, planned developments going forward. We're growing renewables in Australia by 18% and batteries at 40%. Now I know they had difficulty to get that stuff to market, but the tailwind is there. Of course, gas is critical. We love helping our customers with gas. Gas will be part of the transition for the foreseeable future. Importantly, for us, we supply mission-critical software and services to these customers. It's almost invariable that our software is gold or platinum tier applications to them. So of course, we need to look after them. And in return, they are very -- they treat us well and they're very sticky. So we have very low attrition on customers, and that's why we're trying to look after them as possible much as possible. Next slide. And of course, in Europe, even stronger. We all heard about Spain. There's a lot -- with renewables comes volatility to what they call nonfirm generation, which is why you need gas and things like that. It increases volatility and risk, but also opportunity and opportunity for vendors. And as I said, it's a much larger market than here. We have a more modest market share there, but we're planning on being a much stronger player there in the years to come. And as you can see from our growth that we're on the road. Next slide. So that's the organic stuff. Inorganic, we've always been on the lookout for good acquisitions and things of that nature. And in the year ahead, we obviously, what we would call -- might call, a renewed interest in this. And this slide just talks to where our interest areas are. Obviously, we think the services part gels perfectly with the software part. The market is expanding behind the meter and all of the things you've heard about, distributed energy resources, virtual trading, peer-to-peer trading, all of those things, virtual power plants. They are all things we're either servicing or will be coming forward. And so we'll be looking for any potential partners to work with there. Again, AI topic du jour, but automation and trading is very important in these fast start assets. It's all microseconds now, not 30 minutes. And we'll always be on the lookout for defensive or bolt-on or maybe tuck-in acquisitions along the way. The United States, we're strong in Australia and growing strength in Europe. There's basically 3 deep and liquid markets in the world for energy. There are other markets, but these are the 3 that stand out. We're very active in 2 of them, and it makes perfect sense for us to have a presence in the third. We've done some research on it. We'll continue to research. And if we find an acquisition that really works for us, and we explore a land and expand approach, that's what we'll typically do, then we will act upon it. However, home markets are still very important to us, by home, I mean Aussie and Europe. And so acquisitions that come up in those markets will be a priority for us. So we also operate a very disciplined approach over multiple years, any of those when following the company. It must be value accretive from day 1. It must bring something to us, be it capability or geography and so on. And very important for us must be a cultural fit. So we tend to pick and choose and we'll find the right pick before we act on it. And at this stage, the Board will decide to fund the acquisition as required. Acquisition funding mix will be determined by the circumstances, but it's likely with larger acquisitions. Of course, we will be having an equity raise component. Next slide. So just to summarize for you before we get into questions, business has a strong global tailwind that we're all aware of. We've got mission-critical software. So we've got a place to play in that space. We've got differentiated and a sustainable competitive advantage called our business model and our positioning. We're seeing the benefits now come through our work in a couple of years, 18 months ago to reshape the business and prepare for the next phase. We continue to do marketing. We're obviously seeing some success with that in this bullet point here, 19% up to support our sales teams. And as I said before, the order book going into FY '26 is in terrific shape, but generally, the pipeline overall has grown. ARR pipeline has grown by 18%, which means we've got good coverage for our growth targets and growth ambitions Talked about cyber, key for us, hopefully going to get that done real soon. Inorganic, back into focus, disciplined M&A, as always, or any other kind of strategic partnership. And we reaffirm our trajectory of 15% to 20% revenue growth and margin expansion as a key focus for us. So next slide. Thanks. So we don't -- we're not giving guidance. We are, however, giving a bit more detail on our trajectory and what we expect and we hope to look forward to. So this is a bit of detail in here, but I think you're welcome to look through it and ask questions. But essentially, as we've said before, we focus on good recurring revenue growth and margin expansion, whilst also keeping our options open to do inorganic and any other important development such as technology innovation if it's required. And questions?

Sorry about that. Just shutting the blind, hopefully, the camera picking us up a bit better. To go for the questions, there's a few in the chat. I'll look to pick them out. First one is great result. Thank you. Question is, have any of your multinational customers requested showing interest in you providing services in the U.S. market?

Yes, that is absolutely true. One approach to entering the U.S. market is to go with a customer. And there's nothing wrong with that. But U.S. being a big market, you really have to -- you're in danger of being too big or too small, if you're not careful, you have to be very careful. So yes, we would do -- we would enter with them. That's a low-risk approach. But to get scale and get it quickly, I would think you complement it with an acquisition.

Next question is, why pay a $0.075 dividend now? There was a capital raising in May, June last year. Why not pay all debt off first and keep gearing lower as a buffer in case another bolt-on acquisition presents. Aussie love dividends. Are you comfortable that you can maintain this even if macro conditions sell?

I think that one is for me, Guy, from the Board. The dividend is partly a long-term process, which we have adopted that shareholders should be rewarded for acquisitions, particularly and that we've made in the past using shareholder capital. While that's not been a large amount of capital, we floated with 20 million shares in 2007, and we've got 31 million now. But nevertheless, the dividend policy says 40% of net profit is the dividend, and that's a payment to shareholders for our success. It's part of capital management that we're using the capital partly to pay down debt and partly to reward shareholders. So it's a balancing act. I hope that helps.

Thanks, Andrew. In Europe, Europe EBITDA margins of 26%, the Australia at 42%, any structural reasons why margins in Europe cannot approach Australian margins in the long term? I mean, I'll let Shaun answer in more detail. One thing I would note is the Europe margin this year is not far off what the Australian margin was last year. So it's chasing and chasing hard.

Yes. The answer to that question is absolutely no reason why that shouldn't happen. I think the Aussie business, it's been more stable for longer, so you can work on things. Europe is sort of rapidly expanding, if you like, in a big and wider market. So obviously a bit of a price to pay in terms of getting all of that humming. But that's what we're doing right now. As Guy said, we're making significant progress in that. And as we continue the discipline that we make -- keep our costs under control compared to our revenue, the rest will take care of itself. So yes, there's no reason why we can't get there.

Next question is what percentage increase was the price rise in Australia and Europe that was implemented? And what was the effective date of this price rise?

I think we'll keep that generic, if you don't mind. We have a variety of customers at different price points. But certainly, where it was called for appropriate, we increased prices where perhaps they hadn't been increased for a while or something. So yes, the blended price rise part of it came through in January you saw. And of course, some of it will come through from July onwards.

Yes. I mean July is typically the date that a lot of our contracts roll. So that's very typically a price increase point.

I would also note adding in, Andrew, that we also have CPI across the breadth of our customers. So these out-of-cycle price rises related to changes in the cost base and changes in the way that we're resourcing up things like ISO for the benefit of customers. So there's a variety of things going on there, generically.

Thanks, Andrew. Is there still a direct correlation between kind of project revenue and the following periods license support revenue? I'll answer that one quickly. Yes, there is. Through Q4, we saw an uptick in project revenue. Half-on-half, it's increased, and that obviously leads into the ARR. So the slide where we talked about the current order book, a lot of that ARR that's due to go live over the next couple of months, manifest itself in project revenue through the last quarter of the year. Here's one for the auditors. Regarding impairment testing assumptions, revenue growth assumptions across CQ and Europe have increased from 9%. What is the thinking between those revisions? I mean, typically, we look at them, so I put together the impairment model. Typically, we look at them based on book performance. I mean one of the other things we also look at is market valuation, where the market values of the business and getting the impairment model, I guess, somewhat consistent with that. So that was -- that's behind some of the raising, but it's pretty much based on 2 years performance. The other thing we did increase is the terminal rate to 3.5%. And again, that was really as a result of market valuation. Regarding the behind-the-meter markets, could you please give us some examples of what you mean by this? How much revenue is currently derived from this sort of end user?

So I'll just explain what behind-the-meter means. Typically, in wholesale energy, the meter is the meter at the gate, if you like. And if you're grid connected, so you're a large player and you actually got an involvement in the grid, or you're a wholesale player, you will trade -- no you're trading in front of the meter. So if we're a big generator, they're all in front of the meter. Behind-the-meter refers to those embedded generation. Let's take a large factory with a bunch of solar panels on the roof. They don't actively maybe participate in the market, so they're not a participant. But they still have a trading capability, and they're either a generator or a user. So virtual power plants, for example, can incorporate both elements of it. You could be a consumer who's willing to switch off. And so those are being captured at the moment on the innovative contracts offered by, let's say, retailers. There's a few retailers in the Aussie market, who are attempting to stitch together those guys who don't have, if you like, a market license. They are putting -- aggregating the load and then being able to trade that. So you can do that in a physical sense, distributed energy. But the virtual aspect of it is when you're trading rights to power and also things like, as I talked about containable load. So we're talking about things that, if you like, Tier 1 is the people who are market connected, Tier 2 would be large players who are not in the market, but they are significant and material in size. And the Tier 3, and these are my terms, no one else would be mom and dad and getting all those solar panels where you can trade with your neighbor and get a fungible load that you could trade into the market. And that's the future, right? All this peers to peer trading in the future, behind-the-meter is where is the long-term global future. Great thing for our company is when that power comes to market, it goes through our plumbing to get there. So we're offering that ability to trade that power into the market, however you aggregate it or however you organize it. And there's some very clever structures out there and very clever retailers in the market doing stuff like that. But we're offering that as well. So -- but the big thing we're seeing at the moment is this virtual trading, where we're literally just trading rights and not physical power, we're trading the ability to switch on or the ability to switch off because it just provides what they call flexibility in the market. So we offer that already. It's still -- to answer your question here, it's still a smaller part of the business. But in 10 years' time, it will be a huge part of the business because, of course, you don't need me to tell you that, that part of the industry is expanding. So at the moment, we're still nascent, but we are -- we have high hopes for it. And of course, as I talked about on the inorganic slide, if we've got someone to partner with, it's already got some of that behind-the-meter wiring going, then that's exactly what we will do.

Thanks, Shaun. I do notice there's a couple of people who have got their hand up online. John, apologies for missing you, but I'll -- if you want to go ahead now.

Yes, excellent. I appreciate the time. Great results. And I mean, firstly, obviously, Shaun, not quite raising the that as yet, but congratulations on your tenure and all you've achieved. It's obviously been a hefty amount to see the share price like what it is today. Congratulations. So moving through that, maybe just a couple from me. Just one sort of more specifically on the ARR. You've called out sort of the order book growth, and we've obviously seen a positive start to the year, predominantly also because we've seen a spillover from last year. Can you give us a bit of a feel for the mix of what's in that large, small, what sort of customers and also the time line for that to sort of be implemented and start billing?

There's a few questions in there. It's a multi -- it would be fair to say that we have higher -- in any given year, 2/3 of our customers might be on that kind of medium, small ticket and 1/3 or less might be larger. And Europe, particularly our French business picks up business at that kind of steeple price, perhaps $100,000 a year or something. So it's a mix. It will usually be a few large ones, some mediums and a tail of what we call smaller. But when I say small, and we've said this for many years now, small is perhaps $100,000 of ARR per year. Obviously, the smaller guys come to market -- come to fruition quicker from signature. And some of the big ones might be ages because you do a bunch of work for them particularly with enterprise level customers. It's usually a slower burn. But I guess if you -- and this isn't a scientific assessment, but if you want to do sort of a blended time from signature to billing, what would you say, 4 to 6 months or something?

Yes. I mean, in enterprise, it's, I think, longer than that, getting out towards 12 months...

Blended basis...

Yes, on a blended basis. France, 3 months or 6 months.

So it does -- the answer to all these questions, it does depend. But hopefully, that gives you something.

And just another one for me. I appreciate the answer to the question. You previously sort of, I think, sort of widely spoken around geographic expansion, particularly with the charts around Europe and you're now sort of talking towards the U.S. Can you talk us through the advantages of the Australian business, potentially what that allows you to do in the context of Europe and also the U.S.A., noting things like the batteries, the follow the sun model. What sort of advantages do you feel like this sort of gives you internationally?

Well, we obviously have great products and services. One of the key differentiators of the company is its business model and the ability to provide a solution to customers, if you like, no matter where they are and whatever they're doing. So it's key for us to be able to transport both technology and services to customers. We service European customers out of Oz and likewise, which gives them comfort that we've got -- let's take the night shift, for example, with someone always was on day, dealing with their day shift, dealing with their needs. We can look after them with that and we can transport technology around. We do have cross-pollination of technology, not wholesale product moving, but tools and new tools. Let's take batteries, for example, that technology can be reused in other locations. So we get efficiency from that. And at the end of the day, no matter where you are in the world, you're basically trying to manage risk and increase profitability as a participant. So in the U.S., for example, their needs, although the markets -- there's multiple markets and they all got different rules, they're essentially doing the same thing as anyone here, which is to try and, if you like it, [indiscernible] the factory gate at the best price or sell their power into the market at the best price or manage a portfolio risk or market risk or counterparty risk, any of that sort of thing. It doesn't matter where you are, you've got a common set of needs. So although the market rules different, the business need is similar and providing that business need across geographies enables us to offer solutions for both multinationals, but also to U.S. domiciled companies. Obviously, it's necessary to have a presence in that market, hence, the acquisition idea. But the needs are the same and the business model that we constructed and all elements of them are vital, although we represent these are 2 geographies from a reporting perspective, operationally, obviously, they form part of the global solution, and that's what we're particularly proud of.

Thanks, John. Next question I'll take is Cameron, who's got his hand up. So Cameron, if you want to ask your question.

All right. Great numbers again, well done. I suppose if I can just start around the healthy growth in ARR that's been recognized. Obviously, FX tailwinds helped, but excluding that 16% growth year-on-year constant currency, could have been even better if some of those deals you've highlighted that dropped in July, fell in June. So I suppose just around the July ARR contribution you've highlighted, can you help us just understand the split? Is that a bit more Europe focused than Aussie or vice versa?

It's actually -- there is a bias towards Europe and Australia actually, batch pretty well in that mix with larger enterprise customers. So it is a bit of an even blend. And probably what's pleasing as well is it's getting up towards 60% new customers, new logos.

And I guess just on the procurement front, like to see Australia, which is quite mature in terms of its market share, but it's growing well. You guys continue to win new business and Europe is really sitting fire, which is great for you guys as well. I guess is there anything to call out you think just beyond particularly where Europe is concerned, the traction you're seeing there beyond the successful promotion and cross-selling campaigns? Is there perhaps some larger accounts signed through the period or any key products sold? Just some further context would help.

Look, certainly with -- certainly, our aspirations, Cameron, are to pick up more and more Tier 1 customers, right? I suppose the business -- when you're starting up a business, you have Tier 2 customers and you get some Tier 1s and that's good. And then you want more. Tier 1s obviously are much bigger accounts, where we love the Tier 1, Tier 2 and even the Tier 3s. But when you get a couple of whales in the boat, and you're -- it's good, right? So we do target these guys. It's very important with these larger accounts that you do have the bona fides and the credentials to deal with them. A good example of that is cybersecurity, like you literally will not get work in a few years' time without that cybersecurity ISO accreditation. So the investment there has been worthwhile. We are positioning ourselves to be suit all customer sizes, but there's no doubt that obviously bigger accounts are desirable and our level of professionalism increases year-on-year with the company as we get ourselves better organized and corporatized as we get more mature, and we set our caps of getting those bigger guys. Our European business is under Ben, is really going to professionalize the aspect of our sales and marketing. He's come from a big company and he knows what, he knows how these big vendors work and brought some insight to us for that, which is great. And we're setting our cap at global accounts. There's no doubt about it. And happy with what we've got. But we can come back next year and report a couple of major accounts, we'll be very happy.

Yes. And I suppose then on your outlook and your pathway to that 30% margin that you're targeting, particularly for the forthcoming year, if you're looking at really only a modest headcount growth target again, but the top line looks to be certainly coming through at a rate that you're targeting. Is there a point where you perhaps need to step on the accelerator in terms of reinvestment a bit more just to continue to hit those 15% to 20% rates, I suppose, particularly wanting to win more enterprise, right, that might take just incremental people. So just trying to understand that a bit better, I suppose.

That's a fair question. So the answer -- the short answer is, yes. The long answer is, we operate a balanced approach and always have tried to do that because obviously, we're not just investing for the sake of it, and we're not sweating the assets either. So if we see -- if we get a larger account that requires investment and we've carved that out of our trajectory and our lengthy disclaimer, we've carved that out. So if we need to invest, we absolutely will, and I won't hesitate for a second, and that's what we'll do, and we'll come back and tell you about that. But sometimes you've got to do those things to get the big guys like you have to commit to do things. Otherwise, because we're dealing with people with tens of millions of customers, perhaps. It's a very -- it's a different client base. So yes, if we have to, we will. But the BAU is to maintain fiscal discipline. On a separate subject, if a couple of years go by and there's a pivot required, then again, we'll make that very clear to everyone that pivot is required. But as we talk about our short to medium trajectory, which is fiscal discipline and steady growth.

All right. Maybe one just last one, if I could throw back to Andrew, just around the dividend, that's sort of great to see for investors. Is that something people should begin to think about a little bit as well on an interim basis as well? Just the profitability is clearly ramping up, the cash flow is good, assuming no M&A is interim and the final dividend is something people can be considerate of or just a final dividend for now?

Let's keep it simple, Cameron. It's outlined that it's an obligation to shareholders based on a percentage of profitability. We've always paid finals. If it's appropriate to change that in the future, we'll do so. Otherwise, yes, there's a lot of things that go into the level of and whether we change the dividend. So I'll keep my flexibility there, if I may.

We'll try and rattle through the questions as they've come through the chat. Can you prioritize existing shareholders for any capital raisings to encourage new ones to buy on market? I think that's more of a comment than a question, maybe. I'm not sure, Shaun, if Andrew, do you want to...

I'll handle. Yes. Look, we have -- you will notice in our past financing of acquisitions has been done by a mix of banking, placement to large investors or placements to existing shareholders in various mixes at various times. So we do it to balance up cost of capital and the rights of existing shareholders, yes, definitely.

Regarding the U.S. acquisition targeting value accretive from day 1, should we interpret it as a target being earnings positive? Yes.

100%.

Yes, it will be. Does the ARR growth trajectory factor in the head start of 7%? Yes, it does. Regarding acquisitions, is there a particular hurdle rate or return on investment for potential acquisitions? Maybe, Shaun, if you want to quickly comment on. I mean we've obviously touched on, got to be value accretive, consistent. It will give us something we don't have culturally.

It's all the price, right? It's all about price. You would -- as you -- as people on this call know, you've got the fundamentals of the business and then you got the price you have to pay for the business. And sometimes they don't -- they're not always complementary to each other. But absolute high floor is this earnings [indiscernible]. But we'll also be trying to get over the hurdle rates of return on equity and all that sort of stuff. So -- but nonetheless, we assess the value of the business in terms of its long term, not necessarily short term, whereas try and be long term thinkers here. So pay a bit more for something because you know in the long run, it's going to come out for you. Next question.

Can you please talk through the reasons why clients took the service in-house? This relates to our French business, and the primary reason was the customer got to a certain size where the scale benefits of doing it internally and setting up their own team made economic sense. I think it's as simple as that. We have a couple more online questions. I think Caleb -- I'm sorry.

Claude.

I think Caleb had his hand up before Claude. So Caleb, fire away.

Congrats on the results. Just, I guess, is there normally much seasonality in the business where a lot of these contracts get sort of begin billing around June, July? Or is that sort of how could -- how we should see the run rate going forward?

I think it's defied -- it's the business defied that kind of analysis for the year seasonality. Yes, it's usually a bit strong in the second half, but I don't know, I wouldn't -- I'm not willing to sort of say that, that pattern exists, Caleb.

Okay. And just on the churn rate, when it spiked up a bit to 4% this year, is there any particular reason?

I pulled out a couple of notables, but I think about 18 months ago -- 12 months ago, we put a new GM and it's just tightened up a few things. I do see that as churn. That 4% number is a little bit of an aberration, and I would expect it to get back down again.

Yes, I think that's fair. I mean it has bounced around over the years. So yes, we expect it to perform within a band.

And just, I guess, on the gas market, you guys are quite excited about that. How is the competitive environment there? Is it similar to existing markets? Or are you guys a bit more well positioned there?

Well, gas is a critical energy source for the world, and it's changing as well. I mean go back 20 years, it was -- I've got Ian Tannebring on the call and he's expert in this area. Go back 20 years and it was a bit more predictable. But now we're in a world of global energy crisis. And so that volatility is flowed through all sectors of the market. So volatility equals risk, but also equals opportunity to help people manage that risk. And so that's what we do really well. Of course, there's always competition. You shouldn't be afraid of competition. But what we do is provide solutions to people that incorporate more than one thing. And traditionally in the energy space, vendors got good at one thing and just pump that one handle. We give you more than that. We'll give you a solution made up of various aspects. And so that's the high-level answer to your question. If you want a detailed one, we can take it offline and talk to Ian and get some more information.

I'd also add note, Caleb, we've been in the gas markets in Australia and in Europe from the get-go. So it's not a new thing for us.

I believe Claude has a question. So Claude, feel free to go ahead.

Great. Can you hear me? Yes, cool. Thanks for the great results and informative presentation, as always, and congratulations on deleveraging the balance sheet massively since you use that debt for the last acquisition. The first question is more for you, Andrew. Can we rest assured, given the way you use debt that last time in the -- if you ever did a future acquisition, you'd also use debt in order to minimize dilution from that kind of thing?

It's a balancing act, Claude. I think it would depend on cost of capital versus cost of debt versus opportunity for other shareholders. And obviously, at the moment, our cost of capital is low. So that would...

And [indiscernible] correctly thinking, if anything, that's probably gotten lower, like in the last couple of years?

Certainly, in the last 6 months, Claude, yes.

Okay. Great. And then the second one more for you, I guess, Guy and Shaun, is casting your mind to a situation ideally in Europe, but in Australia or Europe, I'd be interested to know a situation where you've gone for some business, gone for a tender, but not being successful. What's the reason that you're not successful in that kind of scenario?

It sounds like a behavioral event, interview.

What are your strengths and weakness? At enterprise level, and it's not unique to us, there are a lot of factors at play in dealing with a customer at an enterprise level. And it's not just functionality. The customer might have 100 things, they want the new bit of software to do. No one will ever do 100. I don't care who they are because the customers invent requirements as they need them, that may not exist elsewhere. But if I've got -- if my competitor has got 60 things out of the box, he will tick boxes full, and I've got 70, then we've got whip hand, you've got functionality. And then you need to show a pathway to close that out. If they do better at showing the pathway or they've got a higher number than you on the first tranche, then you've got all kinds of behavioral human-type things as well. The trading manager used other software at the old place. They know it, They like it. They're sticky. These kinds of things come in. We'd love it to be fully methodical, but there's an organic human nature to these things as well. We're dealing with trading entities and the front office in any trading entity obviously is a key decider. The traders get to decide what they like to use. So there's all these kind of moving parts, certainly in enterprise. At SaaS, what we call SaaS, which is a bit more like licensing, sign up for a license, it's out of the box. So you're not doing customizations. Again, it's a similar story, but perhaps a bit more the landscape, so it's smoother. The guy used it before, they used it before the old job and they really like it. They have a particular way of operating and that bit of software that someone else has got does it for them. But again, I go back to our portfolio offering, which is that it's not necessary to have, I don't believe, philosophical point, necessary to have the best of breed in every single department, although we do have best of breed in areas. The solution that you provide to the customer is increasingly important. We can provide the software and the service. We can provide you a contract, denominated in euros under French law with a French help desk. These kinds of things become important. The landscape of our customers, they're operating in multiple markets with multiple vendors. So that solution called simplifying the landscape for them is itself a virtue. So we can -- you don't necessarily have to have 100% on the requirements because you can offer them overall a solution that suits their needs. Does that help?

Yes, cool. That does help. Yes. I think -- I guess my next question regarding the product then would be, like, how can you improve on that advantage? And is, I guess -- do you think you're making progress in that sort of competitive advantage in building out the entire solution? Or is there increasing competition from somebody else by any chance?

Well, we invest -- slide 13 is the answer. We invest heavily in innovation to improve the products, improve the services, give a better outcome. It's absolutely something you have to do. You have to -- if you're not going forward in this game, you're going backwards. So you need to be working on it, getting better, a better module, a more useful thing, refreshments to the front end, improve it, improve the UX/UI, all important stuff, all important stuff. There's always competition. But I talked about before, the nature of the business is that competition in this game traditionally comes to someone who comes along with a new thing that's strong in one area. And they might have a good bit of gold rush, a bit of a land grab in that certain area. But it's pretty much after a while, the realities of the business is that customers have portfolios of assets and portfolio of risks that they need to manage and not just one thing. So they do need to have an increasingly sophisticated outlook. Now I'll give you a very simplistic example. If I build a battery, I can just operate that battery on its own. If I've got 2 batteries, now I've got a portfolio. If I've got 3 batteries, now I've got a complex portfolio that all have to balance off against each other. You've got a different set of problems. And also, you've got a compliance load and with the markets themselves. You've got to deal with vendors who've got cybersecurity. It gets very quickly away from a purely functional conversation and into the solution. Hopefully, that helps.

Yes. I really enjoy hearing you explain the business. I guess final question for me then on the operation, just while I've got you talking about it. With implementation processes and implementation times, could you please talk a little bit about that? And I guess, specifically whether implementation times are increasing or decreasing?

So I'll answer the second one first. No, they're not. SaaS software are packaged products on that...

Sorry, no, they're not. Sorry, are they increasing or decreasing?

They're the same as they've always been. Enterprise customers. Smaller SaaS customers. SaaS products are usually out of the box. You just take it as is. So it's quite quick and always has been. Enterprise customers can vary from a few customizations to 2 years of work before they go live. But that's right. So we did say a blended if you put them all on the mix them up and say what's the average from signing to billing might be 4 months or something.

I was just going to say in terms of implementation, obviously, as the product matures has more functionality in it, obviously, implementation naturally is easier. I think that is all of the questions. I don't think there was any more questions online. So I think at that point, Shaun, we can probably close it out.

Any final questions Thanks. Thanks, everybody, for listening to us. And enjoy the rest of you day.

Thanks all.

Thank you all.