Energy One Limited (EOL) Earnings Call Transcript & Summary

Good morning, everybody. Welcome to the Energy One Limited half year results. If you can hear me, can someone just raise a hand or something?

We've got you.

Thank you. Welcome to our presentation for the half year. The meeting will be recorded. So if you don't wish to be on record, please e-mail your questions to Guy or put them in the chat. Please don't add any AI recording box to this. The meeting is recorded and put on the website. For those of you who don't know me, my name is Shaun Ankers, I'm the CEO. I'm joined today by our Chairman, Andrew Bonwick; our CEO Designate, Ben Tranier; and our CFO, Guy Steel. We've got some slides to go through, and then we'll welcome questions at the end. I will just jump over these early slides for our vision. So obviously, we're in wholesale energy trading, software and services business. We are a one-stop shop for all of our customers' needs, and our vision is to be the largest supplier in the across the globe. Okay. So we're very pleased with our recent trading period. We've got a few highlights to go through here, but we'll discuss each of them in detail through the presentation. Obviously, leading off with financial, continued strong growth in both revenue and profitability. Our recurring revenue now is at an all-time high, which is 91% of total, has been very high for many years now. And of course, we're pleased to the operating leverage coming through, which we talked about. Operationally, ISO 27001, which is the cyber certification, it's obviously a very, very big deal in the world today, certainly in our industry where we have critical nation-critical assets that everyone is worried about ensuring that they're protected from cyber attack. And with ISO 27001, we've got to differentiate that we can deal with the world's biggest companies in that regard. Significant progress with our one-stop shop signing and upselling large customers, and we've got some examples of that for you, particularly won a large account in Europe with our multiproduct and service solution. Strategically, our new CEO is smoothly transitioning into the role and has been doing it for a while now. We're working closely together, and we can take questions on that. And pleasingly, we've passed the Rule-of-40 now, both on cash and noncash. It's been on a noncash basis for a while. But with this recent half, it's also passing on a cash basis. Technology, you'll be surprised to learn that we will be mentioning AI today, but we have got lots of good stuff to talk about with AI. Not to mention that, just also our other products, virtual trading, our best solution, which involves automated [ battery ] trading. And of course, we have a customer data portal that we're very proud of as well that customers can self-serve. Next slide. Let's look at the financial results, if we may. So it's organic growth. I'd like to make that clear. We have had all organic growth for at least 3 years now. So that track record is showing up as organic growth revenue -- in revenue and in earnings. A little bit of a tailwind on the ARR because it's from spot to spot FX. And we had a little bit of a few one-offs about $0.6 million. But even if we strip out that, the NPAT was still up 61%, I think. So very small one-off adjustments. Guy?

Thanks, Shaun. I'll quickly take you through the -- these are the key metrics that we use to track the business. So Sean has talked about the ARR right in the middle of our predicted range, grew by $10.8 million, 17.4% as I said, right in the range. Shaun did mention FX. So in total terms, the benefit of FX in the current half versus the prior half is about $1.2 million to revenue and about $1 million to expenses and accrued expense and increase revenue. So about $200,000 favorable to earnings overall. When we look at the individual businesses, Australia grew their ARR by 15%. Particularly the software business had a really good half in terms of both new logos and upsells. With upsells to existing customers, and Shaun actually talked to an example of one of those customers, an existing customer took significant additional products. From a Europe perspective, and [ Ben ] will go through Europe a bit later in the deck. ARR was up 28%. 19% at what we call constant currencies if FX rates did not change, which I guess goes to show the weakening of the Aussie dollar over that period, however, in a [Technical Difficulty] higher interest rate environment. The Aussie strengthening euro and the GBP. So we'd expect by the end of the financial year to be more consistent with where we were last year. From a retention perspective, a pretty strong result. You can see above our expected range, and I have talked about the upsell to existing customers. Shaun talked and you see our report about the pipeline. So the ARR pipeline is up 24%. So we're well positioned as we move into the second half and some of those into project work. We do get questions around our out-of-cycle pricing. There was some relatively minor out-cycle pricing, doesn't have a meaningful impact on the result. Again, gross margin, pretty consistently, we've stated the objective is to grow revenue, control expense and grow margin. You can see that continues to improve. And I think pleasingly for us, we've continued the upward trajectory of the cash EBITDA metric. As Shaun mentioned, we have adjusted for some one-offs, including the CEO recruitment plus Europe, France moved into a new building. So we've adjusted for that. I'm not going to go through this slide in great detail, but we have stated a number of times, we have a what we call a 20-10 objective or grow revenue by 20%, grow expenses by 10%. You can see the benefit of that. So pretty consistent set of results. From an expenditure perspective, was up 16% on a statutory basis, 15% on underlying if you take out the one-offs. One thing we would point out is the share-based payments are up $1 million year-on-year, which is 4% increase. So when you strip that back, cash expenses are up 11%. And you will see that in the employee expenses up a couple of million dollars of share-based payments. There is Slide 37 provides people growth breakdown if you want to go through that. And just on expenses, other expenses were up a little bit as well. One of the things that's in there is direct costs. We just reallocated them out of our employee expenses. So it's a little bit of inconsistency year-on-year. That's one of the main reasons. From a free cash perspective, typically, the first half is not as strong as the second half. A number of reasons, earnings probably the main driver, and we do see project revenue fall in the second half as opposed to the second and also staff incentives are paid out in the first half, which does obviously affect operating cash. The other point we would make as we work through our financial leverage, strong cash earnings in the second half of '25 and the first half of '26 allowed us to pay out a cash dividend, which I think is the first time we paid a cash dividend for some time we pay a dividend and a cash dividend. Typically, we've been underwriting preserve cash. And I guess just to finish off, I have talked about the financial discipline you can see there from a revenue and cash expenses perspective, it aligns to our 20-10 rule. Resource productivity continues to improve and our cash earnings are significantly up. So I think at that point, I might pass back to Shaun to talk about ARR. And also in the full year results of 2025, we published what we call a major deal pipeline, and this just reflects how we're progressing against that pipeline.

Thanks. So obviously, a key feature of driving ARR growth. Just a little bit of report on that and how that's going. It's driven -- starting out, of course, with effective marketing and sales, which is something that is really good for us in the last 6 to 12 months. We've got 53,000 website hits in the first half alone. E-World, the big trade show in Europe, 290 meetings, so well up on last year. We've upsized the sales team with industry experts as well and more to come. Investment in sales and marketing increased 13% over last year. I think you'll find the LTV to CAC is still very strong, but we are beefing up sales. As I mentioned, Ben has used his knowledge and experience to really reorganize our sales team, the way we do things more effective. I'd say it's best practice architecture now, and I think we can see that coming through in the results. Our IRR sales pipeline, so these are confirmed leads, is up 24% on prior period. It was up 22% in the last reporting period, I think. Generally speaking, we want to do land and expand to win and count for one new product and then cross-sell our suite of services and software. And you can see that coming through in NRR being up 111% now. So we're a one-stop shop, which means we're a long-term strategic supplier for our customers. We're not a one-and-done vendor. So the idea is that we do focus on things like NRR and cross-selling. The chart to the right discusses our pipeline of order book going forward. You can see that flowing through. And no doubt will get some questions on that. Next slide, Guy. So again, I go back to a recurring theme that has been for many years now, Energy One pioneered the one-stop shop strategy that's now being copied by others. Here's a couple of examples of how it's really working. In Australia, we've got an energy utility customer, existing value customer already using products and services, namely Nemsight, which is our class-leading analytics product. I think there's 1,500 users in Australia alone for that product now. EOT, which is a deal capture settlement, and now they've upgraded to include our best solution, which is battery -- grid-scale batteries. That's fully automated trading system with human loop to supervise and 24/7 trading services to support. And we're expecting some new ARR coming in H2 for that. Over in Europe, why don't you talk about this one, Ben?

Yes, sure. So in Europe, we've won in the first half, a very large industrial. It was a very competitive process with a lot of competition and competitors involved. I think the key aspect is why did we win? I think the key aspect to that is our one-stop shop strategy, as Shaun mentioned. We were able to provide a unique solution fitting their needs by combining our ETRM, by combining our gas portfolio management solutions, our nomination tools, our market access tools and finally, and it's quite important, our workflow automation tool, which provides the ability to run algorithms and functions. The deal is significant, $0.8 million in recurring revenue. and above $1 million in project revenue. So we're quite exciting. We're definitely seeing a trend. I'm going to talk a little bit more about that in the next slide, but definitely proving and validating our one-stop shop strategy.

So I'll just cover off on Australia before getting back to Ben. Australia, as you know, as we know, has been moving along at a mid-teens clip for quite a few years now. So a little uptick here, thanks to the efforts of the team and again, focusing on that strong sales and marketing approach that we're doing, up 15% on ARR. I mentioned that a significant account that we won, some really good upsells. The trend in the market is very much batteries going forward. There's a lot of renewables being built, but batteries are also very topical at the moment. And we do see on the other side of things a little bit of gas market uncertainty here, which the government is hopefully moving to address now with the gas reservation scheme. But obviously, industrial customers have struggled with the gas prices. But within the next 18 months or so, hopefully, that's going to resolve itself, and we'll get back to normal business. Ben?

Now back to Europe. So our European business continued to really gain a strong momentum in the market. We had a few multiproduct wins, which is quite important and really leading to strong growth metrics, as you can see. Our revenue is up 20%, reaching $19.6 million. And again, it's mainly due to recurring as part of our core growth. We had a strong adoption of our solutions since it results in a growth of ARR by 28% and through a few upsells. Actually, we keep our net retention rate at 111%, up 10% compared to last half year. Now as I mentioned before, our customers are not engaging in multiproduct deals. We not -- they don't want a single modules. They actually want fully integrated solutions, combining [ enFlow ] workflow engines, nomination tools. We also were making major progress into large industrial clients, right? As I mentioned, we've signed one. We have a few others in the pipeline for the second half. So really, really strong into that. Then on the integration and upsells, I think both France and U.K. have delivered very large upsells in the first half. We continue to see that trend. We now also operate as a single unified business unit. So we replaced the old country-based GM models with European-wide functional leadership, right, for hub sales, delivery and training services, increasing the efficiencies, the productivity. And we're now having a consistent execution on our operations. So Europe is really advancing from being a collection of different entities into a unified growth engine for Energy One, right, for the group and really translates with the adoptions of the multiproduct and the one-stop shop strategy, right, with larger enterprise wins than we've seen before type operations and now consolidated operations into Europe, and that really position us strongly for the second half.

Thanks, Ben. Okay. So obviously, AI is very topical at the moment. We included a few slides here to talk about it in the context of our business and our industry. Hopefully, you find it quite useful. So the context, for the wholesale energy, AI is fantastic innovation. But obviously, we're dealing in a market that's very regulated and very governed. It's, for instance, starting off with 50 hertz in the grid. So 50 hertz is operating frequency that we have in our grid here and in many other markets. The tolerance for the grid is 49.9 to 50.1 hertz. When we switch goes to half time in the ground on the kettle, what happens to that is that, that demand causes the frequency to drop. That's how it manifests itself. And anyone has been on the camping holiday and see the lights dim, that's frequency in the electricity in a small circuit. So as you can imagine, if that gets out of whack too much, substations start tripping out and all that kind of thing, that can't be allowed to happen. We get brownouts, that can't be allowed to happen. So the grid operator, very, very strict about this. If you're a participant in the market, you must do what you were told, you don't necessarily with the operator. So there's very [indiscernible] for noncompliance. If they phone you and tell you switch off, you better be there and you better answer the phone. So these are things that there's a lot of regulation attached. We're talking about critical infrastructure here, highly regulated markets. I talked about cybersecurity a little while ago. There's no way the government can allow our grids to be hacked and power stations to be hacked. So there's laws now that they've done about making sure that this is a protected area. So that's the critical side of it. We've got a lot of markets involved. It's not just one market in energy. There's so many markets and a lot of them are OTC. They're very liquid. And price discovery in certain areas of the market in gas, pretty much got to phone someone up to get price discovery. So there's not a lot of data that's available. There is market data, but most of the data in the industry, I'd say about 90% of it is proprietary and private data, and there's not a lot of -- there's a limited amount of public information. So a lot of that regulation and so on flows through to our customers in terms of risk and governance must have proper systems. I'll talk about a bit in the middle here, the very large financial and physical assets. We obviously all understand about the physical side of the market in terms of the plant and equipment. But the Australian derivatives market, that's the traded market for derivatives that swaps and options the futures market, that face value of that Australia alone is $110 billion per year goes through that market. So there's a lot of financial assets on a lot of balance sheets. And of course, there's a lot of associated risk for that in terms of market and price change, 5 minutes here and 15 minutes in Europe. So you've got a lot of market risk and of course, a lot of credit risk. So that's the context. If we want to use AI, we have to do it inside a very regulated and controlled and governed industry. Next slide. So in the context of ourselves, the company, we see AI is extending our competitive advantages that are already there, notably system of record. So we are the ground data for our customers, a single source of truth, auditors, market regulators, all of them use the information. There's a lot of reporting that goes on. We have to have reliable information that you can stand by. I mentioned cybersecurity already, I mentioned the data. We control much of the data that goes through us, and we use our tools to synthesize and improve on that prop data that we hold and manage. We're embedded in the system already. Our customers transact through us on the way. So they're embedding, they're putting the orders through us to market or their availabilities or their scheduling or whatever they're doing. So we -- in many ways, we're the plumbing of the industry. It goes through us to get to the market. And that shows up in network effects as well. We have strong market shares and growing. Like in Australia, I think we have about 60% of the power in the country now goes through us in one way or another. And in Europe, it's, I think, about 15% and growing. And lastly, on this page, we have supported systems. I talked before about the need for proper systems in a regulated environment. We're talking about governance-oriented businesses here with risk committees and appetite for risk and all the rest of it. And we are able to provide them with some certainty that our system will work and we'll do what's required. And in fact, it's one of the reasons why we won't work over the years because the auditors will get involved and say, "Well, you can't do that in a spreadsheet anymore. You need a proper system," and that's how it wouldn't work. And so this is more of that. We intend to see AI as an enabler, and we are actively using kind of next slide, please. So we are using AI already. We've done a lot of groundwork in the past. We've selected our preferred tools. We've built things already, including proprietary AI forecasting modules for price. Our NemSight product is already class leading in terms of data, and our AI assistant layer gives it an easy-to-use way for dashboarding and so on. Currently, we're working throughout the business with it. It's installed on every developer's IDE [indiscernible] particular and the other ones. We see some really good productivity gains there that I'm was alluding to now, 50-odd percent gains at least in some places. We are in the stage, I would call it, adopting and embedding AI as a business-as-usual process. And that's showing through. We're already over, there on the right, 1.6 million lines of code generated using AI already. Our next stage is to really sort of move to a full AI factory capability over the next 12 months or so, and that's something that Ben is very passionate about. We want to -- we can really see some gains coming through for our customers. I've talked in the past about we can -- with our current automation systems, which are excellent, manage 50-odd assets with 1 trader supervising. We want to get to the point where there's 1,000 assets in the system that this is when super scaling really will pay off for us, and we intend to do that, particularly with fully automated. But the main benefits for us are faster deployments, quicker to market. There's no end of things that we can build for the market, and this enables us to get there quicker. Obviously, productivity gains across the organization and the big one for renewables in which a fragmented market is happening. More customers can be managed with scaling and less reliance on kind of semi-automatic tasks. And next slide. And this one -- this slide here, we've used before. It's a little bit defensive, but I just want to make a point that wholesale energy trading isn't one thing. We don't do -- customers don't do one thing, they have to do 20 things. And we focus on looking after them for all of those things. We spent a lot of time building a very diversified customer set and by size and by participation. So that gives the resilience of the business. That means that, for instance, a few years ago when the U.K. had 50% of their retailers go out of business, it didn't really affect us because we're that well diversified. And the last point here is we don't price on seats. I know that's been going around. So we don't do that. We price on size and complexity. Happy to take questions on that. So as far as we're concerned, AI is absolutely an enabler for what we want to do, and we're looking forward to using it even more. Thanks, guys. So just a quick update on M&A. As we well know, we talked about it for years, our long-term strategy includes growth from organic and disciplined inorganic. We're not a roll-up type company. I've been the CEO for nearly 16 years, and we've made 5 acquisitions. And the last one was more than 3 years ago. And each of those have been well considered and have added to the business. So when we find a really good acquisition or strategic partnership, we will take that, but we're not going around just to bring up companies and competitors. We are looking with our advisers, Lazard Australia. We're active in reviewing those opportunities wherever they may be, although we have an emphasis on our home markets, which we consider to be Europe and Australia. We do have opportunities in development. No timeline or guarantee at this time. But to answer the question we received beforehand, there's no financial commitments made at this time. So we will, of course, when the time is right, enter into any agreements on that basis. And of course, as I step away from the CEO role, my ongoing role here is to help Ben and the team with M&A projects and as and when they arise.

So thank you, Shaun. So I'm going to talk a little bit about the market evolution and the company strategy and the evolution of the strategy. Now what I wanted to do is to step back a little bit and to analyze what's happened in the market in the last 25 years. So the market has gone through 3 different phases, right? The first phase from 2000 to early 2020s, that was the development of the market. Everything was centralized, all the utilities were vertically integrated, limited market access and the trading was very manual. The technology really supported the trading but did not drive it. For the last 5, 6 years, what we saw is really an acceleration of the electrification and the development of renewables, large scales and smaller scale. We've also seen new commercial models through the PPA, or power purchase agreements, to actually sell the production of renewable assets. We've seen the development of the [ flexibility ] markets. We saw a lot of different things like negative prices or an increase into the intraday trading volumes in the short-term markets, right? So people started to want availability, speed, compliance, automation. Now when we're looking ahead for the next 5 years, well, first of all, the comment is the large scale is not going to change, right? We're still heavily rely on fossil fuels or gas, we rely on nuclear plants and nuclear power in certain parts of Europe and also in the U.S. So that part is not really going to change. The big trading firms, they're also going to continue to chase every new opportunities, and we'll be there to support them. Now we're also seeing from a portfolio perspective, it's becoming more distributed and asset rich. We're seeing DERMS, so aggregation of smaller generation assets, more batteries, electrical vehicles, flexible loads, the ability to cut the loads very quickly. We're also seeing the DSOs or the distribution operators becoming active. They're moving from a passive role to an active role since they are now procuring more flexibility than accessing the wholesale and trading markets. So looking at it and talking a little bit more about it, so our wholesale and trading in the market, so the natural gas remains strong. We're seeing new supplies with biogas and LNG due to geopolitical constraints. From a buyer perspective, right, they do not buy tools, they want integrated solutions, they want availability, compliance, right? And the fact that the volatility and the complexities are increasing, they want to take faster decisions and they want to automate. We're also seeing a new class of participants and new entrants, right, called the virtual trading parties or DERMS or independent power producers who have different names in different parts of the globe. But it's really this ability to aggregate smaller-scale assets and start accessing the market, right? We've talked -- I've talked a little bit about the DSOs, right, about aggregating and buying flexibilities, coordinating with the wholesale players in the markets. Right now, we're also seeing that there is a lot of different tools, fragmented tools. It's still very manual and that's changing. From a technology perspective, it's also evolving. Security is key. We've talked about AI, but companies, they want AI with limited Internet connectivity. Data security, data resiliency is really key. A lot of API integration, as Shaun mentioned, our tools, it's really to provide that plumbing and this market access with connectivity to the market, and our customers are asking more and more API, which we already have. Now human in the loop remains essential, right? You don't want to dispatch a power plant and be right 99.9% of the time, especially if it's a nuclear or hydro plant. We still actually call people in the mountain to activate some power plants. And that's not going to change because the mistake will cost actually human life. So it's very important. We see that with our customers, and it's not going to change. So yes, I'm passionate about AI. I definitely see it as an opportunity and a great opportunity, right, to be more efficient, but human will remain. So let's go to the next slide. Just about the market analysis. So our core market is in front of the meter. It's wholesale and trading, it's how you access the market, you trade energy, gas and power, renewables, you distribute it, you control the risk and you settle. Now our core market is actually growing. It's growing with new entrants, always joining the market, but it's also growing in terms of increased spend. Due to the increased volatilities, the existing players, they actually need more technology. They need more tools. And that's really where we are, and we're seeing definitely the market growing. Now, we're also seeing new entrants, and that's really the exciting part. We're seeing people traditionally sitting behind the meter, aggregating the loads, aggregating the assets, creating what they call virtual trading parties, VTP, different names in different parts of the world. But it's really the aggregation of all these different assets and loads and crossing the meter to access the trading market. So we're very excited about that, and that's really generating a new target market for us. We're also having new solutions to respond to the market evolution, batteries, carbon capture storage, biogas, LNG, so again, increasing the TAM. And last but not least, we're also expanding into new geographies in Southern and Eastern Europe, so new markets also joining the core market and potential expansion also in APAC and Northern Asia. On the right, you can actually see the energy storage deployments and the future. So we're seeing an exponential increase in new deployments of energy storage. And on the bottom, it's actually the increase of the trading volumes on EPEX, the major intraday markets in Europe, so confirming the new entrants and also the increased spend in technology to support that. Now in the market evolution, I discussed what's the need of modular and orchestrated platform. Well, this is exactly the core value of Energy One and our value proposition, the one-stop shop where you can actually see software plus trading services, right, and how we map high level the business processes on the left with our solutions and how they're actually used by human at the customer side. Again, we do not price per user. So we're not affected by the number of users at the customer side, but the customer they are interacting with a lot of different Energy One products being part of the Energy One ecosystem, including trading services. So what's -- next slide, please. So what's coming next? Well, it's the strategy we're having of the one-stop shop and it's actually working. So I'm not planning to change it. So that's why I'm calling it an evolution. We're going to continue investing into our product, the Energy One platform, approaching Tier 1 customers, right? I spoke about that earlier in Europe that we're getting traction with larger customers. They want a fully integrated solution, combining all our products. We're going to continue investing in it, delivering a single user experience and a simplified customer journey through the integration of all our divisions into functional teams. Nonetheless, we're still going to continue with our global leverage. We're going to expand into new markets. We're going to build global go-to-market capabilities with investing in sales and marketing, growing our target markets. From a productivity perspective, we're going to continue focusing on center of excellence across regions, Australia and Europe, ensuring no duplication of functions, so getting more productive. We're going to push the AI adoption, keeping human in the loop. And then on the inorganic growth, again, through expansion into core and adjacent markets and consolidation of competition, I'm supporting with Shaun on that topic. So thank you.

Thanks, everyone. So I'll just summarize now before we take some questions. So the business continues to grow well with an increasing leverage. As is mentioned earlier, Rule of 40 exceeded on both methodologies. Very proud of the team and the ISO 27000. It's expected to be a tailwind considering data security is a global focus for our customers. Pipeline is in good shape helped by a lot of the initiatives that Ben's brought to the company, up 24% on the prior corresponding period. I mentioned the hits on the website and the web generated leads. 53,000 website hits for a company that's in the B2B space is significant. We've got a global tailwind called the energy transition, which isn't going anywhere. We -- renewables are here to stay. Gas is going to be here for the foreseeable future as well, which is one of the reasons why it's such an important transition fuel. And there's a lot to like about the industry in the way it's going. We definitely see AI as an enabler not a threat. As I mentioned, we're in a deeply regulated and sticky industry with mission-critical solutions. And we see ourselves as being the natural users of AI to increase productivity and increase our customers' user experiences. Inorganic growth is in focus by disciplined M&A and any other partnership types. And of course, the new CEO is continuing and refining our successful strategic direction. So that's the presentation for today. I'd just like to make a couple of personal remarks, if I may. This is, I think, my 32nd half. It's been a while, but I'd just like to thank everybody, our employees, Board of Directors for their support and of course, our shareholders for -- a lot of you have been with us for a long time. Thank you very much. questions.

Thanks, Shaun. We've got a couple online. I mean, if people have got questions, they can put them in the chat. What I'll do is unmute people and they can answer the -- ask the questions. So I think there's a few queued up. So I think hopefully -- hope they're coming in order. Maybe unmute yourself and you can ask a question. Claude, you're the first question.

Thanks a lot for that. And thank you very much, Shaun, for your service to the company and the shareholders. You've done life-changing work for many of us who've been with like investing in the company for quite a long time. It's just huge, like made a massive difference in my life personally. So thank you. Just regarding questions on these results, I had three quick ones. The project implementation revenue was down in Europe, not just on the prior corresponding period, but also on the most recent half. With some companies, and I think maybe to some degree with Energy One that project implementation revenue can be a little bit of an early indication of sort of, I guess, the license sale growth in the next half or in the next year. Is that something that we should be prepared for because of the lower implementation revenues? Or is there something else going on there?

Yes, I think good observation, Claude. Obviously, with projects and Ben talked to one of the major, the industrial we've recently won, our expectation is we will see that project revenue in the second half approach the previous half and then that will turn to recurring revenue as you know now. Whether that makes it in June, given it's a spot number, or not is yet to be seen. Customers typically don't move as quickly as we would like. But we've certainly got a solid book of projects and also some good customers in the later stages of the pipeline as well.

Yes, I'd like to comment there. In all the years we've been doing this, it's defined sort of any kind of logic attached to it being a lead indicator. It does go up and down. You've got bigger customers, smaller customers, as Guy alluded to, they do their own timing. So we've got to get them live, got to get them signed, got to get them live and then the ARR starts to flow. So whilst it's good to see a good pipeline and good bookings for installations, we still focus on ARR. Again, I think, as I said earlier, I don't know if it's a very good indicator. I think we still have to execute. We still have to get them signed and we still have to get them live.

I do also note, I mean Australia sort of counters that to some extent up on the prior half. So we are diversified in that respect.

Yes, definitely. So just on to, I guess, bigger issues. With the sell-off in software companies worldwide, does that improve the M&A prospects, do you think? And also, given that there might be a better opportunity set, would you take that into account when maybe that might make you want to say, pay less out as a dividend, so you have a stronger balance sheet to make acquisitions if that is looking more prospective. Like could we talk about -- is it really best to be -- do we want to be paying too much dividends if there's going to be potential M&A opportunity ahead?

Thanks, Claude. Straight to the point. The Board has a number of avenues of financing an acquisition. The balance sheet is very strong. The banking market is very attractive at the moment. The people that we engage with and have bought over the journey have been interested in our equity as well. Most of our acquisitions have been cash plus equity. And we have the opportunity to raise capital in the market. So the dividends are paid to reward shareholders for the prior success of the company, very proud to pay the dividends. But the Board will evaluate all options in deciding how to finance an acquisition and when and if to pay the dividend.

Yes. Okay. Cool. I guess part of my thinking as well is when the software companies are on the nose, it's a less attractive time to raise capital as well. So that made me think maybe it's better to conserve cash.

Yes, look, Claude, we are quite confident that Energy One's profitability, our growth opportunities and continuing to operate as we have in the past will lead to us not being on the nose. So I think we're always in a position to take advantage of the opportunities that are presented to us.

Yes, no, thanks for that comment. Yes, these things do go up and down over time.

Maybe Cameron, next question from yourself.

Well done team. Great result and echo the thanks to Shaun for everything. It's good to have you around for a little while longer. Let's start around customers and the activity that you're sort of seeing in the market. Obviously, AI has been a big thing, and thank you for the color you've provided today. Have you seen from your customer base and prospective customer base in terms of opportunities. Any, I suppose, stalling or reevaluation of their intentions to procure just as AI sort of shifts the balance a little bit on certain projects?

So not really. Our customers, what they want is a reliable solution. Again, it provides the planning. So they may have AI for their forecasting or they may have to use AI for their own algorithm, but they still procure our software services because for them is it needs to be deterministic. It needs to be reliable and a proven solution. So we haven't seen any customer rethinking their decision to acquire or continue with our services due to AI. Again, and I would not expect that in the future either, right? AI is more about the orchestration. It's about processing data we provide the plumbing. And as I said earlier, it needs to be right 100% of the time, 99.9% is not a possibility. So to answer your question, the answer is no. And I'm quite confident that's going to continue like that in the future. Not only in the near future, but in the future.

Second one I'd just like to ask on is probably one more for Guy. Looking at some of your guidance for the full year, the first half has clearly started quite well with where your cash EBITDA margin is sitting, your ARR growth and the net revenue retention number was absolutely stellar. So I guess just framing the reiteration of full year guidance, are you being a little bit conservative there for the second half? Or are there some other factors we need to consider?

I'll get that. It's not guidance. It's trajectory, if I may. We don't -- we're not in the business of giving guidance, but I appreciate where the question is coming from. We prefer to stick to trajectory and where we're going and our goals. Things do move around a little bit. We're talking about big customers here. And it takes time to sign and they've got their own internal processes, which is we talked about the stickiness for many a year. But it's obviously got the other side of that is that it does -- it can be -- take on a cadence of its own. So we prefer not to try and treat it as like just adding subscribers in a kind of controlled way. It sort of moves forward a bit and slows down a bit and then lurches forward again. So again, we prefer to keep a range. Obviously, you can see on that slide near the front, we talked about ARR growth and how we go about doing it and the pipeline being up. So we're very pleased with the progress in that regard. But again, as I always say, we've got to actually deliver it. So execution still remains one of the things we want to do. But yes, the goal of the company is to grow. And that's -- we're a growth-oriented company, and that is our ambition, and that's what we'll keep doing.

All right. Very clear. And just last one then would be around the net revenue retention for this half that we saw. Like that's a really strong number as opposed to what you're targeting for the full year. Is that just a reflection of some of those deals you mentioned back in August that fell in that sort of July period? Or there was just really good broader upsell over the half that we need to consider?

Yes, it's a mix of all of the above. And I think it reflects the good team -- the good job both Australian and Europe teams have done with their existing customers and selling to them some of the deals that we had in there actually got larger. So it's a good result from that perspective.

Yes. And that bundling is what's driving the gross margin up, yes?

Exactly right. It's a result we're very happy with that given the strategy is the one-stop shop and to land customers and then sell them up. Thanks, Cameron. Before I go on to the TV questions, I might just knock up a couple of the ones in the chat very quickly. Was there a backlog of potential deals waiting for ISO? No, I do not believe there was. What is the potential number of the opportunity for European industrial customers? I think Ben answered that question earlier when he talked to the fact that they are seeing more deals in that.

So without giving information on our pipeline, we definitely see our pipeline increasing with potential deals in the industrial sector. So we're focusing on that. We can expect more deals in the future in that sector.

I can comment on the ISO. In a couple of years, say, 2 years ago, we did lose a couple of jobs because we weren't ISO because literally they liked the software and the service, but you're not ISO, so sorry about that. But -- and we've got -- to specifically answer that question, we do have a prospect here that the remaining thing -- the remaining hurdle was the ISO, sort of large European customer that we're dealing with prospect. So it's a sort of thing where it's an enabler for what you need to do to deal with the larger customers, particularly who are constrained by their own internal governance and also in many jurisdictions by law. So again, if the electricity networks require ISO, then you better have it.

I think just in the interest of time, if we could maybe limit the questions to one or 2 questions. Stephen, if you want to go next.

Stephen Scott from Veritas. Just on Slide 27, talked about the new geographies of Southern and Eastern Europe. Can you just give us a little bit more detail just trying to track like the interval changes and the arrangement changes over there and where they're up to, particularly in Europe?

Yes, absolutely. I'll try to keep it quick. We can spend a lot of time on that. So all the European countries, it's like in Australia with the States, they are all connected and you can actually trade and move power or gas across all these countries. The most liquid markets, it's really Germany, France and Netherlands, so it EPEX. And then in the Nordics, like Sweden, Norway and Finland mainly. Now what we're seeing is an increase in trading volumes in Eastern Europe. So we're seeing 2 trends, western companies moving power and start selling power into eastern countries and the other way around eastern utilities moving and trading into the Western European markets. So it creates a lot of opportunities. They need system, they need nominations, they need market access. So that's the first part of it on the Eastern European market. Second part is the Southern European. So Spain, Portugal, Italy, Greece mainly. Historically, these countries, they were kind of not able to access Russian gas, and they had to build LNG plants to import gas into the grid. Now with the shift obviously due to the tension between Russia and Ukraine, the war and all the sanctions, then the gas supply in Europe completely shifted from Russian gas to LNG, mainly U.S. gas and have brought back these countries into -- on to the table and also being key markets now to import gas. Now they operate quite differently. So the systems required to access the markets are different. We do support them. And we're definitely seeing an increase in software demand to import LNG and move gas from Spain, Portugal, Italy and Greece into the European market.

Hopefully, that answers your question, Stephen. Do you have further questions? Caleb, fire away.

Congrats on the good results. Just quickly on the attrition rate. That spiked up to 5%, and you guys attribute that to market exits. I mean there were a lot of trading houses that opened up in the past few years. So probably a lot of them will probably go out of business. Do you kind of see that being a bit more elevated for the next few years or...

I think it's a feature, not a bug, right? So it's people coming into the market looking to make a quid. Sometimes they do, sometimes they don't. It's just the way of it. As you can see from the pie chart, Slide 40, we don't really lose customers to competitors. They'll go inside again, they might stop trading and just go back to spreadsheets. That's sort of what happens. I'd say it waxes and wanes. It did spike up a little bit, you're right. 1% of that was caused by a manufacturer in this country who exited the market fully, right? Household name, unfortunately, couldn't get through the gas price spikes and so on, the volatility. So yes, that's a bit of an uptick. That's why we put the pie chart in so you can see where that attrition goes. But we don't -- as I said, there's not really churn. We don't really lose customers. It's more economic. We don't lose to competitors.