Enero Group Limited (EGG.AX) Earnings Call Transcript & Summary

I am Ann Sherry, and I'd really like to welcome you here to Enero Group Strategy Webinar. I'd like to begin by acknowledging the traditional custodians of the land on which we work and meet today, the Gadigal people of the Eora Nation and pay our respects to their elders past, present and emerging. I particularly today like to acknowledge the passing of Yunupingu, the loss of a great Yolnu leader and a great Australian. For those of you offshore, that's not as obvious, but to everyone here, it is. Today is all about providing a deeper insight to our group's strategy and the strategy behind each of the core businesses within the portfolio. You'll hear from our senior leadership team, including Group CEO, Brent Scrimshaw; our Group CFO, Carla Webb-Sear; and a number of our agency CEOs. The team will highlight our recent track record of group transformation provided deeper insights into our portfolio businesses and their growth opportunities and also share the Board's approach to capital management. At the end of the strategy presentations, we are looking forward to answering your questions in a live Q&A. Before handing over to Brent, I want to briefly touch on a high level summary of Enero as a strong and unique investment opportunity for both current and potential investors. We are unique in the Australian market. There are no other listed marketing services businesses like the Enero Group on the ASX. And through Enero, our clients and investors get the opportunity to invest in some of the world -- the most blue-chip global companies in growing industries around the world today. We've worked hard to transform the business into a diversified but strategically focused portfolio. This diversification, combined with our focus on long-term growth industry, helps us provide some resiliency to macroeconomic uncertainty as evidenced in our first half results. Our strategy continues to set the foundation for an ongoing transformation [ pipe ], and you can see the results in our operational performance over the past 3 years. I'm also pleased to announce that Brent Scrimshaw, Enero's Group CEO has committed to an extension of his informal contract to continue to lead the group evolution. The Board believes that stability in leadership is important in this time. You sit at the center of a market that is evolving rapidly and offers huge opportunity for growth. You'll hear more about our specific growth drivers from each of the business CEOs during today's presentation. Finally, we are absolutely committed to shareholder returns. This is manifested in the delivery of strong but sustainable earnings growth and also in a clearly communicated capital management strategy, which you'll hear more about from Carla Webb-Sear, our Group CFO. In particular, we're excited to announce a share buyback for the ASX today, underlying the Board and management's confidence in our financial position and our ability to capitalize on the growth opportunity before us. Thanks for joining us today. And with that, I will now hand over to Brent.

Okay. Thanks, Ann, and good morning, everybody. Thanks, again, for joining our Enero strategy Webinar this morning. So firstly, I just want to make it clear upfront that the intention of this session is to provide all investors with an overview of Enero's Group strategy. A number of investors, both existing and prospective have specifically after a deeper understanding of key businesses within our portfolio, and that's what today is about. And so the opportunity this morning is also to ask questions of portfolio CEOs. And so that's where we're going to spend our time today. And then just to be clear, we're not going to be providing a trading update or commentary around Enero's current or future financial performance. Of course, as you will know, financial information about Enero Group, will be provided in our full year results, which are due in August. So let's start at the beginning. Who is Enero? Well, as you all know, Enero is a creative technology company. We provide integrated marketing and ad tech services, combined with deep vertical and industry expertise. And this represents a reimagined opportunity for both our clients that we work with around the world and our talented global team to redefine the expectations and results for success in modern marketing services in today's world. Now we're creatively powered and we're technology enabled, and we're going to demonstrate that to you through our webinar this morning. Our brands comprise a portfolio of category-leading businesses that provide differentiated marketing service offerings that enable us to create demand for our clients and to help solve the business problems of some of the world's leading companies. So let's walk through the portfolio very quickly. BMF is a globally renowned creative agency, famous as the home of the long idea and its delivery of enduring, effective and emotive end-to-end ideas. BMF has been responsible for creating some of the most high profile and talked about campaigns in Australia. Hotwire is now a distinctive global business and stands apart from the competition. By linking its existing tech expertise and communications capabilities with the account-based marketing credentials of ROI DNA and GetIT. And with this full suite now of integrated services, Hotwire is well-positioned as the preeminent B2B tech communications and marketing consultancy, providing reputation, relationship and now revenue-generating services on a truly global basis. CPR. CPR is a leading public affairs and communications consultancy that provides strategic and effective advice to influence perception, manage reputation and build public stakeholder and government support for its clients. OBMedia, you'll hear from Mike and Raja this morning, is a technology-driven for priority performance customer acquisition platform that helps publishers maximize the value of their ad inventory and provides advertisers access to untapped sources of high quality and most importantly, high-intent traffic. And then lastly, Orchard is our digital experiential agency based here in Sydney, but also with an office in New York that delivers connected experiences that enables some of the world's largest pharmaceutical manufacturers launched breakthrough therapies into the global marketplace as well as leading the digital transformation of Australia's leading consumer brands. So each of the portfolio businesses within the Enero Group is uniquely positioned, and we've been quite deliberate in our strategy there, which I'll explain more about this morning with a differentiated service offering in their specific industry vertical. Now the group continues to rapidly transform into a progressive world-class and globally competitive business. We now have over 900 people in our teams across 16 cities around the world. Our global footprint delivers numerous benefits for the group, including, but not limited to, enhanced capability to serve global clients with global remits and, of course, access to larger budgets. An ability to tap into and to deploy deep local market IP and, of course, local experience. Global mobility and career progression, which is really important for our growing group of talented people, optionality to use skills and capabilities from lower-cost regions, diversification of revenue across geographies and into higher-growth large-scale marketplaces. The clients we work with are also a direct result of our strategic focus with the group now working with some of the world's most progressive, respected and innovative blue-chip companies. There really aren't too many Australian businesses that can match Enero with these deep, growth-focused partnerships with top-tier global clients. Enero sits into the convergence of the 3 critical marketing services landscape required by any modern marketer in today's world. Each of our agency businesses are led by human-generated creative ideas that most effectively communicate our clients' product, service or brand and amplify its individual DNA. Through ROI DNA, GetIT and Orchard, we help clients navigate the increasingly complex marketing technology ecosystem. We help diagnose, install and operationalize the best data platforms and processes to execute their customer and business goals. And finally, through ROI DNA and OBMedia, we also help companies deliver impact and cost-effective media and content at scale that reach the right audience with the right message at the right time. Now in terms of our marketplace, we operate in a traditional marketing services marketplace. That's huge. It's $500 billion globally. So the accessibility to that has never been greater than it is today. But we're also rapidly expanding into new market of opportunity in both digital transformation and data and analytics across all of our businesses, which is dramatically increasing the potential client budgets we can access. So we see future addressable markets more than doubling to in excess of $1 trillion. So it continues to be critical that with many aggressive competitors, we have to be and we have to remain laser-focused in order to create a suite of services that will continue to grow our market share. So in a rapidly evolving and dynamic marketplace, technology is transforming consumer expectations. Data is driving faster and smarter decision-making, marketing leadership roles and responsibilities emerging and reputation and stakeholder management is increasingly important in a globally transparent and information-led economy. From a competitive perspective, upstart challenger competitors continue to search for opportunity to launch new offerings. So it's super critical for Enero to continue to evolve faster and deliver even more relevant services into the future if we're going to remain competitive. Our job is not to be reactive but in order for us to effectively deliver on our clients' expectations, in essence, we need to be a leader in our industry through the anticipation of changing client needs and then the implementation of those services. Our more established competitors are also evolving just as rapidly. This is the competitive marketplace that we live in. We need to continue to build our competitive advantage through those new and differentiated services. Now this could be both through inorganic or organic investment. But one thing is clear, standing still is not an option if we're going to continue to deliver on our growth ambitions. Enero's strategy is to provide an integrated offering of the most modern and relevant marketing services in those growing global vertical industries that we talk about all the time. Explicit in this strategy is the need to develop deep industry expertise with an end-to-end integrated offering that's tailored to each of those priority verticals. Now we know our clients are looking for modern capabilities around digital, around data and around technology while still delivering outstanding creative ideation. And there are 2 tenants that underpin us as a creative technology business. So underpinning that strategy, however, are 3 core enablers: our culture continues to be a magnet for world-class talent. Now we invested our people with continued focus on learning and development, modern ways of working, DEI and mental wellness. We continue to drive efficiency and effectiveness through refined and streamlined systems and processes that support our people and enable them to be more productive in the delivery of their work for clients and we efficiently manage capital to drive sustainable shareholder returns, reaching the right balance of investment and opportunities for future value creation and return of excess cash, and you'll hear more from Carla about that today. Next, we'll look at how the execution of that strategy that I've just outlined has delivered what we think are remarkable results over the last 3 years as we continue on our journey to transform the Enero business. So critical to the delivery of our strategy is our operating model. Now I'm sure some of you on this call have heard me talk about this operating model before, but it really is the foundation of our ability to deliver consistent and dynamic results over time. We segment our business into 2 strategic focused areas: brand transformation, and creative technology and data. And we deliver our services across 3 priority verticals. It would be really easy for us to focus on everything, but we're actually honing our focus around these 3 priority verticals: technology, healthcare and growth consumer. We believe that these verticals represent significant market opportunity for Enero. They're all strong in growing global industries that require specific and unique skills to serve. Now over the past 3 years, we've implemented also a global center of excellence operating model where the Enero team deliver centrally led services to support each of our global businesses through both people and culture, finance, IT, strategy, M&A and legal. And this allows us to create and share uniform functional best practice across each of our businesses that, in turn, enables significant efficiency and high-impact advisory to continue to drive our business performance across each of our brands. So at Enero, people are our most important asset and we see our people and the skills and experiences and capabilities they bring really as the x factor of our competitive advantage, globally. Over the past 3 years, we've invested to elevate our people in 3 key areas: in capability, in culture, and in tools and processes. We've brought impressive new talent and their capabilities to the group. We have new leadership working across multiple Enero brands around the world. We've also created a meaningful change and impact with the Enero centers of excellence that I just mentioned. And we're now seeing new and progressive talent actually attracted to Enero based primarily on our strategy, our performance and our career growth opportunities. So people are actually coming to us. Our employment value proposition is attracting global talent who, 3 years ago, would never have considered Enero for their careers. So that's a very healthy sign for our business. And we've also acquired additional specialist capabilities through our acquisitions. We continue to invest in our culture not only through -- centrally through talent, learning and development, DEI, as I mentioned, and our Reconciliation Action Plan or RAP for those of you in Australia, but also by continuing to support our businesses to develop their own unique culture equally becoming magnets for talent in their own right. Now a great example of this is the evolution of Hotwire's Thoughtful Working 2.0 approach, which many of you know about. So finally, we also understand the impact that tools and processes can have being able to unlock productivity for our people and make it easier for them to do their jobs, all in a creative environment that is purpose-built to ultimately deliver great work for our clients because at the end of the day, that's really what matters to our success. Notably, we've also transformed our portfolio across segments and geographies over the last 3 years, if we take a look back here. We've moved from 8 companies in 4 segments, predominantly in Australia-centric business in 2019 to 5 companies in 2 segments, with strong growth now being led out of the United States. It is a remarkable and it's a rapid transformation that's allowed Enero to move out of highly commoditized offerings like research and insights and divest of other poorly run or underperforming businesses while providing the group with the ability to continue to scale its integrated offerings against the strategy I've outlined this morning around the world. An example of our strategy in action I think, and to bring that to life is the Hotwire Group. And through our strategic focus and transformation, Hotwire now has the capability to deliver fully integrated services to B2B technology clients globally, following its acquisitions of ROI DNA in the U.S. and GetIT into Asia for the first time, along with the integration of Hotwire marketing team in the U.K. and Europe. So first of all, we identified a clear gap in the market to better serve our clients who are looking to directly connect the narrative from their reputation and relationship messaging to incorporate demand-based revenue-generating campaigns. And for most clients, this process had traditionally been inefficient often led to a disconnected brand and inconsistent results in both their [ comps ] and their marketing campaigns. Hotwire is now a distinctive flow of brand if you follow the evolution on the slide in front of you, and it stands apart from the competition, bang on our strategy by linking its existing tech expertise and communications capabilities with the account-based marketing services credentials of ROI DNA, GetIT and Hotwire Marketing U.K. So now with a full suite of integrated services, Hotwire is truly uniquely positioned as the preeminent tech communications and marketing consultancy on a global basis. So a great example of how our strategy is playing out in real time. The execution of our strategy, most importantly, has also delivered consistent revenue growth of 11% compound annual growth rate over the past 5 years and strong EBITDA expansion with accelerated EBITDA CAGR of 32% since FY '20. And as you've seen in our H1 results, we've continued to deliver strong growth momentum this year. In fact, in H1 '23, we delivered more EBITDA for the Group than we did for the entire fiscal year of FY '20. On Slide 21, we demonstrate the diversification of our revenue streams across industries and geographies. Revenues continued to reflect our strategic focus and are, again, well diversified by injury -- by industry, I should say, with the largest categories being technology and digital media. So if we double-click into this technology-based revenue, we're largely operating in the B2B segment. Now you've heard me talk about cloud, cyber, digital transformation is the key sweet spot for us in the past which has accelerated also due to the acquisition of ROI DNA and GetIT. Geographically, we're also well diversified, like I talked about being an Australia-centric business back in 2019, with nearly 70% of revenue now delivered outside of Australia. And again, these are in markets of infinite scale. An important point to note here, if you still think of Enero as an Australian business, as many have done historically. Now we've also built revenue stability with 47% of our business on fixed retainers and another 11% of our business, primarily through ROI DNA, enjoying minimum spend thresholds, which you now see on this slide under the new variable retainers category. So the Group's diversified strategy is to deliver synergy as well, and that's a key thing in any portfolio business with an impressive 28% of our revenue now from clients who have relationships with more than 1 Enero Group business. [ Steve McArdle ] going to talk a little bit more about that later on this morning. Now most importantly, it's also really critical to reflect that our transformation is delivering consistently outstanding financial results, particularly within our industry. So on an economic basis from the slide in front of you, the past 3 years really has delivered a few things that we're very proud of: one, net revenues increased by 61% in that 3-year period. EBITDA at the same time has grown by 119% in that 3-year period, and our EBITDA margin has expanded by 7 percentage points. Now again, remembering that those numbers are on an economic basis. This has translated into industry-leading EPS growth over that period, where we're at the very top end of performance when compared to our global competitor set. And that's translated to TSR only vested by next 15 who are based in London, as many of you know, which is again something that we're really proud of, when you compare us to the global marketing services businesses around the world. Now this chart is for the period to 31 December 2022, which obviously is the period of our last reported financials. Now I think many of you know, our share price since then reflects the impact of a more challenging trading environment for everybody, not just us, which we are proactively managing and as we've discussed during our H1 results. But let me touch on that just a little now on the next side. I think one thing is clear through the entire industry, the global macros have certainly impacted client investments since mid to late 2022. And I'm sure everyone on the call today is aware of the media headlines surrounding the broader technology industry and we've obviously got the opportunity to hear from some of our leaders particularly those who are based in Silicon Valley here the Kernahan and Matt Quirie are joining us this morning, who are literally right in the middle of it. And so you'll hear from them later this morning. Obviously, the opportunity to ask questions for some firsthand insight at the same time. Now we're generally seeing, as we've expressed at the end of our H1, some conservative approach to ad spend from some clients with project timing delays and in some cases, some scope reduction. Some clients are pausing as they look for clear signs of economic recovery. However, we do fundamentally believe that our vertical focus and deep expertise, particularly in technology, will deliver strong growth over the medium to long-term particularly as conditions improve. But in the interim, we've also made hard decisions around cost to protect our margins across the entire Enero portfolio. Now I think for those of you who we've had discussions with as part of our ongoing market communications, these decisions are going to be largely reflected in our H2 results. Importantly, we've also made strategically focused FTE and freelance labor reductions using this time really as a chance to reevaluate the critical services that our clients care most about whilst, of course, delivering profitability for the Group. And then lastly, we've also transformed Enero's agency business EBITDA margin, which includes OBMedia to consistently outperform key competitors over the last 3 years on the chart in front of you. Now this achievement reflects our long-term aspiration for ongoing industry-high performance. So to summarize, we're achieving some fundamental milestones on our transformational journey. We're investing in the right capability and leadership to execute our strategy. We're showing leadership and resiliency through uncertain times. If you think about the last 3-year period and the recap on, not only our strategy, but our results in that last 3 period. We've all lived through COVID-19, the uncertainty that provide. And of course, now everybody is experiencing some slowdown from a global macroeconomic perspective but we continue to ensure that our culture remains our strongest competitive advantage along that journey, and we're very proud of that. We're building differentiated and uniquely positioned businesses in long-term growth verticals and we're focused on commercializing our recent acquisitions. So as I mentioned earlier, really pleasingly for us to call out 28% of Group revenues come from multi-agency clients served across our portfolio of businesses. which is further evidence of the growing synergy effects of our portfolio model. And then lastly, we're taking strategically focused cost action. I just referenced it on the slide prior to preserve our unique capabilities, most importantly, and our performance whilst of course, improving productivity. And you'll hear from the OBMedia leaders, Mike and Raja today, as we continue to enhance that business to drive strong growth and margins for the group. So in closing, we continue to focus on the transformation of our business. Hopefully, this morning, certainly from a group perspective, some of the insight in terms of the strategy that I've laid out. And now track record from a results perspective is definitely interesting, and we will continue to ruthlessly edit our opportunities to amplify our unique point of difference. And I guess the final thought for me is, I think Enero has never been better positioned than it is today. So that ends the Enero Group business and strategy overview. And now what we're going to do is move directly into our portfolio business strategy overview. So you'll hear a little from each of the CEOs of the key businesses within the Group. We're going to start with OBMedia. And then in terms of order, will be followed by BMF, by Orchard and then Heather and Matt from the Hotwire Group. Before we all come back together and we'll return for probably around -- we've allowed about 30 minutes of live Q&A. So just lastly, before we do, we've pre-prepared this morning's OBMedia webinar overview. And then as I mentioned, CEO, Raja Gupta and CTO, Mike Lynn are going to join us live for 30 minutes of Q&A direct from the U.S.A. during this morning's winter. So let's kick it off with the OBMedia business overview.

Good morning, everyone. I am Raja Gupta, CEO of OBMedia. On the Line 2 is Mike Lynn, my co-founder and OBMedia's CTO. We founded OBMedia back in 2001 when we sold a majority stake to Enero in 2007, it has been a story of growth with Enero ever since then, with our business evolving significantly over that period. Back then, we were a simpler search and e-mail marketing business. But today, we are a diversified omnichannel advertising platform with some pretty cool technology and partnerships powering our performance. We have more than 50 people helping to drive our growth. Both Mike and I appreciate the benefits of the cohesive working relationships of being part of the Enero Group. It is the perfect balance of entrepreneurialism within a strong public business operating environment. We are excited to share more about OBMedia today and our confidence in the significant growth opportunity ahead of us. Today, we are going to explain OBMedia through 3 simple lenses. The value we deliver to our customers, our economic model and our growth opportunity. For those unfamiliar with the ad tech ecosystem, we benefit from a simple business model in a digital advertising market that continues to grow at pace. Our technology is differentiated. Our partner relationships are long-term and strong, and we see multiple levers for future growth. Let's start with the customer value we deliver. Put simply, we are a customer acquisition platform for digital advertisers. We work with the world's largest search engines, Google and Bing to acquire, qualify and monetize high-intent customers on behalf of their advertisers. First, when we acquire customers, we do so from a range of digital omnichannel traffic sources such as display, native, social and e-mail. Then we use qualify. We use our proprietary technology to qualify customer intent and quality. We identify the traffic that is most likely to convert to a customer of the advertiser. We monetize these customers when we deliver that traffic to the end advertiser, who pays our customer, the search engines for those high-intent clicks. Google and Bing share data with us on the performance of our advertising, which enables us to continuously optimize our performance. You'll hear the word optimization over and over today. It is an important one. At our core, we are a data business, generating millions of clicks every day and using data science to optimize the conversion of those clicks. The higher the conversion, the more profit we generate. So what does that look like in practice? Well, here's an example of a typical OBMedia advertising journey. To start, our media buying and publisher partners develop an app that is configured for the particular channel where we are acquiring customers, using data provided by OBMedia to determine the best ad vertical channel and format. Here you are seeing a display ad for air conditioning on a relevant CNN article. In this instance, our partner has placed the ad via display advertising network, such as Outbrain, Taboola or GDN. We give our partners data to optimize the ad imagery, tagline and copy, based on our near real-time intelligence of ad performance. If the potential customer clicks on the ad, they are taken to a hosted OBMedia landing page. This click is the first sign of customer intent around air conditioning, we may then further qualify intent by asking them to click on the most relevant keywords from a selection of options. Again, these keywords are dynamically optimized by our proprietary technology. The customer is then shown a list of search results as if they have typed in those exact keywords in a search bar. This is still an OBMedia page, but the search and results are direct fee from the search engines. By the time they click on the link and the search results and are taken to the advertisers' website, they have proven that they are a high-intent customer and the advertiser pays the search engine for the click.

Underpinning this, advertising journey is our OBMedia technology. We have 10,000 of ads across multiple channels, verticals and formats running at any given time pointing back to our landing pages, producing millions of visits a day. As you can imagine, this creates a lot of data. We take this data, and we combine it with many other sources, some from third parties and revenue data from Google and Microsoft. We have to organize this data, make it available to all of our media buyers, applications and partners that we work with. We've spent years optimizing our attribution models. We consider them a leading edge and key to optimizing profitability and working with search partners. In order to do all this, we've built a pretty robust data and analytics and infrastructure platform. Our transition from legacy SQL technology to Snowflake's cloud platform has unlocked new levels of performance for us. Now we're providing reporting to partners of 15-minute increments rather than both processes. This allows applications and buyers to adjust their spends based on market dynamics and dramatically improves profitability. One full thing we're testing at the moment is using generative AI to develop more effective advertising campaigns. For example, we're trialing AI image creation and ChatGPT for content creation. We use our own first-party data to identify audiences. We don't use cookies. So what this means is we're -- given the changes come in online privacy. We are using AI to optimize and generate original ad copy, ensuring we maximize the click-through rate in our heads. In a qualifying stage with customers on -- I know we need landing page, we have a range of high [indiscernible] technology running. AI is deployed to optimize the keywords search for customers, and we have a number of different technologies and processes running that identify robotic traffic. We are known amongst our partners for our conservative approach. We aggressively filter out suspect traffic and Google and Bing value us as a trusted and high-quality partner. Because of all this technology and analytics at work by the time a customer hits the advertisers' websites. We are delivering traffic that converts at an equal or higher rate than the advertisers paid search traffic. In essence, we have unlocked new sources of cost-effective omnichannel traffic with conversion performance equal to or better than high-value search customers. This is a critical point of difference in a crowded ad tech market.

To expand on Mike's last point, if you think about Google and Bing, they generate revenue for consumers who search for something in a search bar, click on a paid search ad and the search results, and then land on the advertiser's website. The industry calls this pull marketing. [indiscernible] add to what the consumer is actively seeking. This is a huge $300 billion market, but it's a market that has been growing. But we need to enable search engines to access incremental growth by converting push marketing customers for browsing on websites and social media into customers with the same conversion performance as pull advertising. By placing the right ad in the right place for the right customer, we are unlocking intent before it has surfaced. Now one question you might ask is, why don't the Google or Bing just do this themselves? The answer to that question is simple. Firstly, we are a very different business model. We collaborate with hundreds of publisher partners, media buyers and ad networks, whereas the search engines operate large-scale industrial ad markets. Secondly, we have access to data the search engines don't. We have years and years of first-party campaign level data that informs our optimization and advertising performance. Lastly, the search engines trust our ability to deliver high-quality traffic. We have a proven track record and technology that manages fraudulent traffic on behalf of the search engines. We are in constant dialogue with Google and Bing about product improvements and data enrichment and we continue to see them invest in new capability to fuel our mutual growth. We'll talk about growth in a few slides' time. But first, we will spend time understanding our economic model in more detail. Okay. So how do we make money? The best way to think of our economic model is as a trading business, just like a high frequency creator of online traffic. But simply, OBMedia makes money by buying cheaper clicks from omnichannel traffic markets and then selling those clicks at a premium to our search engine partners. The fundamental truth to our business is that the amounts the advertisers willing to pay for a search like conversion is higher than the typical cost of placing an ad in a nonsearch market. That said, on both the buy side and the sell side, we operate in markets where prices vary constantly. Therefore, it is critical that we manage our trading performance by optimizing our advertising based on live market dynamics. For example, right now, dental advertising might be underperforming relative to home improvements and we would, therefore, be adjusting our activity to stop dental campaigns and focus on home improvement campaigns. In any market, liquidity is important. On the buy side, we continue to add liquidity by diversifying our channels across social, display, native, e-mail and others. This lets us not only dynamically optimize our industry vertical but also a traffic source and ad format. And on the sell side, the search engines have almost a limited appetite for clicks. And there are only a handful of competitors in the world who have these valuable contracts, allowing us to sell clicks to search engines. In a normal trading environment, the arbitrage opportunities appears over time. But the difference in our model is that we add value to those clicks by uncovering intent and improving the conversions and therefore, the value of the traffic.

How this flows through to our P&L is quite simple. We pay traffic acquisition costs, usually recorded as cost of sales to ad networks, publishers and parts. And we often have credit terms with these partners after qualifying the traffic and then feeding that traffic to the end advertiser's website, to searches pay us for a pre-agreed rev share of revenue each month. It is important to note that we do not have a direct relationship with the end advertisers, the search engines are our customers. OBMedia's net revenue is simply gross revenue received from the search engines less our cost of traffic acquisition. We collect revenues from the search engines ahead of paying partners, which allows us to maintain positive cash position. To finish today, we'll talk through some of the opportunities ahead of us that will continue to grow our business. We have built a very robust technology and data platform that has delivered strong performance for us and our search partners. But we are just as excited about the growth that we believe is ahead for us. If we look across the 3 phases of our business: acquire, qualify and monetize, there are a number of opportunities that will drive continued growth. On acquire, we continue to diversify our sources of traffic as well as our media buying partners, publishers and those who place ads for us on behalf using our technology. This will include expanding into new geographies, such as Europe and Asia over time. We also have attracted a team of leaders from one of our largest competitors to build an audience development division, which is focused on building OBMedia's own content network of sites to grow organic traffic. We are seeing early success here, and this team is already generating incremental profit. We are always working with our strategic partners to enhance the quality of our data, and we have a number of live initiatives that we believe will materially improve our ability to optimize our advertising performance. Lastly, we continue to look for opportunities to diversify our revenue streams with new monetization partners and products. So if I was to leave you with a few key points to take away here. First, we are a technology powered data business, benefiting from decades of experience in this market. We are valued by our search engine partners. We give them access to incremental growth they couldn't otherwise access. We -- our economic model allows us to adjust to market dynamics to deliver profitability. We are industry agnostic, and we're able to optimize across channels and ad formats. And last, we have growth opportunities we're excited about and continue to diversify and enhance our business performance. Thank you for listening. And Raja and I are looking forward to any questions you have at the end of the webinar.

Okay. Thanks, Mike and Raja. Hopefully, that's given everybody a deep understanding of OBMedia. We try to make that, really, as simple as we can to give everybody a really good understanding of the fundamentals that power that business. So now we're going to keep moving this morning. Next up is Steve McArdle. Steve is the CEO of BMF and he's going to give you an overview of BMF's business and strategy. So over to you, Steve.

Thank you, Brent. Hello, and thank you for joining us today. My name is Steve McArdle, as Brent said, I am CEO at BMF. I'm here to give you a little more insight to the BMF business, who we are, how we operate, the client partners we work with, where our industry is going and why we're uniquely positioned to win in an industry that continues to evolve at pace. On a brief personal note, I've worked in creative agencies for over 25 years in London and Sydney and have been fortunate enough to lead the BMF business for 8 years, the last 3 of those as CEO. So about us, who are BMF? Simple terms, we're a Sydney-based fully integrated, globally awarded creative agency with over 150 people working across 30 businesses. Those businesses are based across both Australia and internationally. Our core capability is brand transformation, which includes launching and relaunching brands. But over time, we have built out substantial capabilities in other areas to ensure we drive overall marketing effectiveness for our clients, something we'll talk about in more detail shortly. So our client partners, who we work with. 30 clients on an ongoing basis, some with the portfolio of departments within them, like the federal government or a portfolio of brands like George Weston Foods. In a number of cases, we benefit from any long-standing retained relationships. For example, our 2 biggest clients here by revenue, ALDI and the Australian Federal Government have both been with the agency for over 20 years and have recently signed 3-plus year extensions to those agreements. As you can see from this slide, our client portfolio is highly diversified and strong in high-growth verticals such as retail, financial services, travel and media. These are complemented by consumer staples and government, which I mentioned before, both federal and state government. More recently, we've also been successful in winning more progressive digital first and online marketplace brands such as hipages in Australia, Turo, the world's largest car share marketplace and Afterpay. So moving on to how the marketing world has changed and continues to change for all of our clients. There's no doubt there's been a seismic shift over time. Traditional paid campaigns that focus solely on channels like TV, out-of-home and print no longer exist in isolation. As media fragmented and digital channels rose up, they were subsumed into fully integrated campaigns delivered across multiple channels. Owned channels like websites and social media platforms and earned media channels worked alongside paid but became increasingly important and this trend has certainly continued in pace. And with improved and increased marketing technology, the power of customer data has now been truly unleashed to deliver hyper-personalized communications that complement and leverage brand-building work. This means today, the conversation is focused on what role marketing plays in the overall experience a customer has with a brand referred to as the CX. And this has become the key to demand creation and demand conversion for businesses. I should refer back to this as I talk about what BMF point of difference is and what our road map for the future looks like. So what makes BMF different? What sets us apart? The answer is a combination of 3 critical elements: capability, creativity and culture. We focus on going broader and being better than our competition across all 3 of those. But first, I'll just talk to capability. We've obviously been responding to and certainly leading the industry changes I've just spoken to you about. We've done this by significantly evolving and in certain areas, transforming our capabilities way beyond the traditional core skill sets that you see on the left-hand side of this slide. This has helped us extend our remits and deepen our relationships with current clients and broaden our appeal to potential clients. The next 2 slides talk to the second critical differentiator. Our approach to creativity. BMF positions itself in the market as the home of the long idea, and positioning that we've had in place for 8 years now. It refers to the enduring highly effective brand platforms we develop for our clients. The formula for building those ideas was developed using a blend of neuroscience, data science, marketing science and a bit old-fashioned imagination. But rather than talking you through the theory, let me take you through a few examples of how it's been applied in practice through our clients' businesses. So these 4 examples, starting top left have ALDI Good Different, an idea that has guided their entire business over the last 6 years and helped ALDI become Australia's most trusted brand, and most effective advertiser for 3 consecutive years. Secondly, there's the Department of Social Services of Federal Government, Let’s Stop it at the Start campaign. It's been running for 7 years and is the Federal Government's most successful behavior campaign of all time with 8 out of 10 adult Australians taking action as a result of it. Bottom left is TAL. TAL Life Insurance. This Australian life is the platform is in its seventh year and has helped that business regain the #1 spot in life insurance. And last but by no means least, Tasmania, Come Down For Air, and absolutely stand out in the tourism travel category in its fourth year, it's been able to drive 39% increase in visitation. So a really successful long-term platform. These examples provide irrefutable proof, we believe in the effectiveness of our creative approach and continues to drive client retention, organic growth and new business wins. The awards listed on this slide further reflect that BMF's excellence in those 3 areas: creativity, culture and capabilities. You'll see here, creative aspect is absolutely critical. We have built a reputation as one of the world's most effective creative agencies being named #3 globally in the WARC 100 recently. Culture and talent. Winning Mumbrella's award for culture 2 years running, proved our reputation for having one of the strongest cultures in the industry. It's creatively driven, caring, progressive and ambitious, which means we retain and attract the best talent in the market. And then there's a modern marketing capabilities we've developed, we have recently recognized as the best in the industry in disciplines beyond created advertising being awarded BMF's CX Branding and Design Agency of the Year. And finally, what this list shows is consistent quality, 5 years as one of the industry's top performers and named Ad News Creative Agency and overall Marketing Agency of the year just a few weeks ago, a first in our decorated history and something I'm incredibly proud of. So moving on to our revenue model. How do we convert reputation and momentum into commercial success. In its simplest form, we grow our business by increasing our client base, by attracting or winning new clients and, of course, retaining those that we have. Organic growth comes from extending our remit or scope of work with those clients. We do this by offering up a range of complementary services, which you saw earlier in the early chart that helps drive greater ROI across our clients and marketing mix. In terms of -- in bulks of making money in the majority of cases, it is selling our time to deliver on an agreed scope of work. Cost of time depends on the blend of skill sets and experience required to deliver the agreed outputs. Our rates are benchmarked to make sure we're competitive. But I will say we do operate at a price premium to reflect the quality of the people and the product that we deliver. Part of or more rarely all of our revenue can be attached to an agreed outcome. This is classified as performance-based remuneration, PBR or a value deal, which refers to the value we create for our clients' businesses. This will be aligned to things like increased sales, visitation and customer spend as a few examples. So lastly, where to next for BMF. We continue to evolve our capabilities to deliver on the varied and complex needs of our marketing clients and their customers, whilst further building a positive, progressive and ambitious culture that retains and attracts the world's best talent. Key to these evolved capabilities is technology as an enabler to deliver a more personalized customer experience, CX and drive innovation. This also means further leveraging customer data automation low-cost, high-impact content to drive engagement, all areas we continue to invest in. Whilst pursuing these, we never lose sight of what really put us at the top of the industry today and that is the power of strategic brilliance and creativity to provide a marketing effectiveness multiply it for our clients. This will always be the biggest driver for their business, we believe, and for ours. Thank you. That's it. I look forward to any questions you might have at the end of the presentation, and I'll now hand on to Wai from Orchard.

Good morning, I'm Wai, CEO and co-founder of Orchard. Really looking forward to giving a view of the Orchard business. Firstly, if we make in 2000 with [indiscernible] strategy and held leadership roles in a number of a digital agencies, ZIVO, Spike and Grey3. From there, I cofounded Orchard and together really proud to have an successful digital and healthcare agencies in Australia. Unlike BMF, which at its core is a brand transformation agency, the value Orchard provides to clients is to really help them for their digital transformation chain. We are known as a connected experience agency, which really at the heart is using a combination of data and creative activation of technology to bring to life the customer experience for brands as the most important part of Orchard. If I explain Orchard by numbers, we're over 100 talented individuals headquartered in Sydney with a satellite office in the U.S. to service some of our global pharma clients. We've been operating for over 16 years, but one key belief that's really been consistent from the whole start of this that with the smart combination data, creative and technology, we can bring better outcomes for our client partners. And we've done that. We are only known as a digital agency, one part I really want to focus on is that we are, by far, Australia's leading or largest healthcare marketing agency by head measure. Headcount, revenue clients, with the split approximately 50-50, we work with some of the largest global pharma companies to launch blockbuster drugs into this market. And especially with our connected experience approach which is really resonating with the pharma clients, bring it on board, setting new pharma brands this year. And in fact, we work with 3 and soon to be 4 of the top 10 reimbursed brands on the Pharmaceutical Benefits Scheme. So what this really allows us is a much higher barrier to entry than any normal digital agency. You can't just set up an office in Sally Hill, buy some laptops and open the door with such a high requirement of medical and science talent and a much more deeper understanding of the regulated marketplace dynamics and the talent pool so much smaller. On the consumer side, we continue to work with one of the largest digital accounts in Australia, Hyundai. We partnered amaysim, the fourth biggest telco and we're just onboarding and working with a new bank, which we hope will bring to a much bigger scope of work for FY '24 as well as work from our B2B customers such as Salesforce and Epson. What's most motivating and exciting for me, though, is where the market is heading. It's very evident that we are in a new era of brand marketing, in era in which influences really given way to experience. At our agency, creative technology and data has always been the core of our DNA. It's how we started. However, in recent times as we've witnessed 3 profound shifts that underscore the need of our services like never before. These shifts have redefined the foundations upon which brands operate and exist in today. Firstly, I see change in customer expectations, driven in part by the pandemic shift towards comp expenses, the advent of digital therapeutics and the transformation on very traditional industries like banking, retail, travel, they really [indiscernible] an entirely new power line for customer engagement. Then we look at the rise of emerging channels. If you think about the way we communicate we market to our audiences now. TikTok characterized as a search engine, Facebook and Instagram's evolution as a digital marketplace and the advent of AI-powered search algorithms really transforms the way we now discover, consume and engage with content. And what we actually around this is we are witnessing an unprecedented level of customer intelligence. We've got access to more data than ever before and we have the ability to predict and anticipate customer behavior with a very high degree of accuracy. This intelligence allows us to create a truly personalized experience that are tailored to cohorts and individuals, driving loyalty and revenue growth. And at the heart of this is creating and connecting brand experiences is no longer optional, but essential in doing business in today's world. So if we look at, I guess, how we are differentiated, at Orchard, our mission is to unlock the power of connected experiences. If we go to the next slide, please. And there's three things that really set us apart here with brand experience specialists. So we have a team, strategy and experience consultants who look at a ramp of them both through the communication possibilities, but also through experience design. So this makes us a very valued partner for our clients who not only need an agency from reaching audiences but take them through that funnel from prospecting we can lead and beyond. I talked about it before, but we're also a category specialist. We can't be everything to everyone. So that are the categories we really focus on health, B2B and finance. This is in point, specialist talent from medical writings with PhDs to [ auto ] experts in loyalty and retention. So this commitment to doubling down in the category means that, for example, in health, we've become, yes, the most effective health agency, but we partner with pharma, biotech, government, NFPs and beating some of the global health networks at their end game. And finally, platform specialists. We've always prided ourselves in being technology agnostic, so that means we design the experience first and then select the technology most fit for purpose. That said, we're also specialists in emerging and enterprise data platform, launching Australia's first Optimizely data platform for Tourism Tasmania. This unlocking of connected experience means that you'll continue to see great work at Orchard such as changing the way GSK educates its audience with social or lead platform in amaysim, so it can utilize the full power of its tech stack, as well as developing a companion app for Tourism Tasmania, which is launched this week as long as the website we develop there. Tourism Tasmania, ALDI and [indiscernible] clinics are shared with BMF clients that we work together. And we're seeing greater and greater synergy and opportunity by partnering together, so we can orchestrate both the brand story with a brand experience, and that's something we -- I think we'll continue to do that further. So more than just developing a website, I think a really good example here of the end-to-end connected experience and how it works across the whole customer journey. For some of the brand assets, the customer can see and obviously can't. So if you think about our automated virtual augmented reality experience, then we moved on as a first OEM in the sector to offer an AI-driven smart assistant and dual innovation with Meta. We developed an e-commerce platform for Hyundai to sell its innovative [indiscernible] range. And then finally looking at the retention part, a portal, the retention of its existing customers. All touch points that enhance the overall brand experience beyond just developing the web plan. But what a customer doesn't see is the work, the technology and data infrastructure to ensure the product information, pricing, stock is up to date, centralized to have one single source of truth that can be updated through the whole dealer network and other third parties. Essentially allowing us to offer a layer of personalization to the brand offering, driven by the customer data path. And when we look at west, it's disconnected experience approach when applied to a very regulated and compliance-driven pharma industry, which is making us a very different proposition in the market. COVID-19 was a wake up call for pharma. They needed to evolve the way they went to market beyond the traditional rep-driven sales model. And there's now a huge appetite for this. Our work for CSO brings across APAC, and it's a good demonstration of our supply and digitally-centered techniques across an array of traditional touch points. to communicate the hard-to-reach specialists in some very rare disease populations. From conferences to medical education and patient support, we're finding new and more effective ways to augment the traditional marketing mix with great effect. And this is what I'm particularly passionate about growing. In terms of our business model, our client mix, we've got a healthy mix of contract arrangements and master services agreement, which is still exclusive as well as project-related. The split around the exclusive predictable around 70% compared to that 30% of the project work. But essentially, our business model is based on a headline model and service fee. People and time are our leaders in a service-based industry. And we're trying to evolve this in two ways. One, we have some movement in productization where we've identified key repeatable processes, for example, pharma detail ads, which are what -- that's used to educate drug benefits to doctors, a quick way how we can productize that and also like entry platforms, landing pages using our code library and templates to deploy the solutions more cost effectively. So I guess, in summary, the biggest growth opportunity, I believe, for Orchard is that we are in that double sweet spot post-COVID. We continue to ride the wave in digital consumer behavior, and we invested in the latest marketing technologies to remain relevant and useful for clients. We're bringing this bleeding edge approach to the more traditional pharma industry, helping them to modernize their marketing approach. This is unique globally and one that we believe will fuel our continued growth. Thank you for your time and listening to me. And now I'll pass you on to Heather Kernahan, who will introduce you to Hotwire.

Thank you, Wai, and hello everyone. I am Heather Kernahan, CEO of Hotwire Global, and I'm here today with Matt Quirie, who's the Founder and CEO of ROI DNA. Hi, Matt.

How's it going?

For the past 2 years, I've been CEO of Hotwire, but I have been with the company for 7 years. And I came to Enero through an acquisition Hotwire did, Eastwick, U.S. tech-based consultancy. Before my current role, I was running our Hotwire U.S. business. For my entire career, has been in the technology industry. I saw more than 20 years inside technology start-ups fast growth, start-up companies and global tech organizations before coming to Eastwick and now to Hotwire. I'm based in San Francisco, named the center of the tech universe, but I'm happily in Sydney this week visiting our clients team. And welcome, Matt.

I'm Matt Quirie, nice meet everybody, CEO of ROI DNA. I spent 27 years working in online companies, 25 of which in marketing. So I grew up doing the digital channels, each one by myself for a while until I graduated to running global teams for Roxio and TrialPay. We got lucky enough to found ROI DNA in 2009, and it's been an awesome 13.5 years, and now we're just getting started with Hotwire and Enero Group.

Thank you, Matt. So today, Matt, I want to take you through the Hotwire Global business. We're going to talk about who Hotwire Global is, our clients and the problems we solve for them, our differentiated market proposition with details on new capabilities we have now that we have ROI DNA and GetIT Marketing as part of the group and our future growth opportunities and our long-term plan for growth. We've been in the process of transforming the Hotwire business over the past 3 years, and we're continuing to execute on our strategy. We are a global communications and marketing consultancy that powers the world's most innovative tech brands. We operate in 11 countries across 15 offices. And with the addition of ROI DNA and GetIT Marketing last July, we now have 400 employees around the world. We have long-term partnerships with tech companies as Matt is going to talk about later. We also partnered with more than 20 consultancies that give us regions that any country our clients need us to extend it to. Now for more than 20 years, we have worked with the technology brand names you know, and those are names like Dell, Salesforce and LinkedIn, and we also work with the behind-the-scenes technology and innovation companies creating the future. Tech leaders, innovators and creators turn to Hotwire to tell their stories that help them build and manage their reputations, develop relationships with their most important audiences and deliver revenue to help them grow. And we do this for companies spanning the tech ecosystem, everyone from enterprise technology companies and software as a service companies to financial tech, consumer tech, telcos, industrial, marketing and advertising technologies and retail and leisure tech, just to mention a few. Importantly, we work with leaders in cybersecurity, cloud and digital transformation, which continue to be technologies that companies around the world need to operate in a modern business environment. An ongoing trend is the expansion of tech innovation into every industry as machine learning, AI and digital transformation are requiring a change to businesses everywhere. You've probably seen the headlines that say every company is now a tech company. While our work is expanding as well. For example, we are working with one of the world's largest retailers, helping them tell their innovation story to attract tech talent to their business. And we're working with one of Europe's largest home [ goods ] manufacturers to tell the innovation story of their products for a tech savvy consumer audience. Those are two examples of how our core expertise of tech and innovation is expanding into new industries. Now if you look at our clients, today is marketing and communications leaders who are the clients we work with, they need to do more with less and business requires them to find simple solutions to very complex problems they're all facing. The work of marketing, sales and growth, which used to be siloed, are coming together to form a new role. And if you haven't heard about it yet, you will, in the rise of the Chief Experience Officer. We see this role emerging as companies put their customers at the center of their business strategy. Now companies with a customer of our strategy are orienting their organizations under this thinking, and they're using data about their brand perception and leadership position, the relationship sentiment, pipeline, sales conversion and renewals to meet their growth goals. But they're also managing an efficiency focus in the years ahead. They're managing transformation of digital marketing, which continues at a rapid pace. They're managing back-to-back reputation issues, COVID recovery planning, cybersecurity concerns, supply chain and ESG topics, but they're also being required to predict and deliver ROI for marketing. This is becoming a new normal.

And those are the same exact demands that our customers are feeling pressure to deliver to as well and why we're excited to be part of the Hotwire Group and really deliver a holistic approach to all these pain points together. At ROI DNA, we help B2B companies transform their marketing efforts and achieve sales goals they need. We help cross the boundaries between their internal teams as well, too. As part of what we're seeing in the market is a massive transformation of the evolution of the Chief Marketing Officer the Chief Revenue Officer and the Chief Sales Officer into the Chief Experience Officer or office. So by following that experience of the customer from that first brand messaging, all the way to the web interaction, all the way to the multiple interactions with sales and then renewals eventually, you're really building brands and communication and customers' trust. So the B2B companies that we think will experience the most growth in the years to come are the ones who embrace the customer experience holistically.

Three years ago, we were setting out our long-term plan, and we set a course very purposely to expand our capabilities to help our clients meet their most important goals, and we've used this model now to differentiate ourselves from other consultancies. So this model is our reputation, relationship and revenue service model. The reputation services are brand awareness and strategy, narrative development, company positioning and thought leadership. Our relationship services help clients develop, grow and manage their most important relationships. And that can span relationships with media, influencers and analysts, to their employees, which is an incredibly important target audience to prospects and clients. And then we have our revenue services. This is new with the addition of ROI DNA and GetIT. With revenue services, we can support sales pipeline, go-to-market strategy, digital marketing and account-based marketing programs.

And that's where we come in. There's two awesome front ours in terms of the revenue side ROI DNA lives and breathe. So we take all that brand goodness and that created content and develop the digital ABX strategies, the channel implementation, the management and optimization of services and we really build that digital backbone of these companies and help them drive sales, they need to achieve the next level. And I'll go more in depth. So when we look and sat down and looked to the market 5 years ago, we basically threw in all in ABX and ABM. We broke our company into these 4 different distinct pillars so that customers understand how we can help them. So in the digital strategy portion of ABX, we go through and really look two-fold. One, not only what media plan we need to build for you and how to reach the ideal client profile that you need to go after. But two, what is the technology stack you need to succeed as a business. So our consulting is continually evolving with that. On the analytics side, we build bespoke dashboards so our clients can actually tell the return on ad spend. So every dollar we spend, we can say this is what I brought back to you. On the digital media side, we run millions of paid media on a monthly basis, and we put that dollar where it's next best spent, whether it'd be LinkedIn, whether that be a demand-side platform, Google, the Trade Desk, whatever that would be. And then to round it out, we've got design and creative. So we do about 25 major websites a year, and we have engineering to actually really round that out. And when you think about this Hotwire's capabilities combined with ROI DNA's brings that whole holistic digital picture together. One of the funnest things about working here and now working with this awesome group is that we see clients for a long time. AWS, that person we worked with for 10 years through three companies. We've moved with their career. Salesforce, 20 buses, we still run the -- all the digital for the app exchange over 10 years. Drift started out as a partner, became a client pretty quickly. We did their latest website. We run the paid media as well as our ABM. Cisco. Worked with them for many years, many departments we now help launch new products to market for them. Elastic started out as go-to-market strategy. We now run their global paid media. And BeyondTrust is a great example of a client that we run the paid media, but with a partnership, which we'll talk about a little more, we were able to increase their high-intent leads by 32% and their AOV, their average order volume for marketing allocated sales by 62% using partnerships. And that's how we've actually really inflected our growth as well, too. About 2 years ago into this full on 5-year ABM program for us in terms of what we're focused on B2B, we said partnerships are going to be key to our growth, and we established those pretty deep. So we're a Google premier partner now. We're also a Google international growth program partner. They put us in there because we're growing so fast internationally. Also, we're a premier partner for 6sense. We're one of only three companies that they do enterprise consulting with, they co-pitch with. Same thing with Drift. We're only two companies with Drift. Those are 2 of the top B2B SaaS applications and account-based marketing on the market today. And we are in the top echelon of both. Salesforce, Salesloft and Trade Desk are some awesome partners for many, many years and consultancies. And then we always look to that new program that we're going to kind of build out and look to what is going to help our customers grow fast. [ Muliny ] is a great new tool out there that does conversion rate optimization, and are one of our newest partners we just brought on board.

Our data and analytics solutions underpin our reputation relationship and revenue services. In February, we launched a new suite of IQ data solutions, which use artificial intelligence to quickly get to insights and effectiveness analysis for our clients. We are now providing real-time insight into program performance and already indeed, NTT and Honeywell among the clients using our IQ services to support their business goals. But what I'd really like to do now is take you through an example of a client who's using reputation, relationship and revenue services to meet their business goals. I'm going to talk about Honeywell, one of our clients. So Honeywell came to us as they were looking to grow in the retail sector. And we set out a reputation relationship revenue program that utilizes account-based marketing to design and deliver the results. So with reputation, we aim to increase their brand awareness from a specific set of target accounts. For the relationship portion, we aim to help them develop relationships with those prospects and then both directly and indirectly build a relationship. And then with revenue, we needed to support revenue generation across all their targeted accounts and build an active sales pipeline. So our program focused on a specific list of prospects from each retail company, and I'll show you the specifics of those. So in the first step, the reputation portion, we use intent data to understand what target audiences were searching for online. We then worked with retail influencer Steve Dennis to develop content that we knew would be of interest to the Honeywell target buyer, and we deployed that content and a campaign starting with the podcast. What we found as we rolled out the campaign is that we work -- within each target account, we saw that the buyer started to increase their searches for Honeywell, and it ended up being 2x more than for their top competitors. So we're getting traction. As we move on to relationship. As I mentioned, we had a set of target accounts we were working with them on. And this example, Walmart, there were five potential buyers who we focus on reaching via LinkedIn with content that was tuned to their challenges. Once the potential buyer opted into their content, they entered into a nurture program, which then turned into a sales opportunity and then closed. The 17% of the total campaign revenue came from this activation with a specific set of buyers using content and social media. And moving to revenue. The account base marketing program turned into a sales pipeline that converted and led to overachievement of the revenue target by 281%. It's also become an award-winning campaign within the industry. So this is just one example of a reputation-relationship program revenue program we're running today, and we continue to expand these services into other clients across our portfolio. Now turning to our business model. Our model is a combination of retainer revenue, project revenue and paid media revenue. So to retain our clients, we have ongoing programs with the core team who can then grow with that client as we take on new work with them. An example is Atlassian, who we work with across multiple countries in Europe, and we support them with reputation and relationship strategies. For our project clients, they have continued programs and those can run from a few months to multiple quarters and often renew. An example of our work there is with IBM strategic alliances. We support their partnership program with events, content and campaigns that help meet their relationship and revenue goals.

And on the paid media side, we have two aspects that we do in the paid media. One is building out the paid media program for them and really planning out what they're going to go to market with. And then two is running that for them on a retainer basis as we go. Cisco is a good example where we basically devise and launch paid media programs for them and an ongoing management for them as well, too.

As a global business with expanded capabilities from the addition of ROI DNA and GetIT to Hotwire, we are very focused on bringing value to our clients to serve growth partners. And we have three main areas of growth as we look ahead. The first is expanding the reputation, relationship and revenue services model by cross-selling across our client base and working together to sign the clients.

And also on the new services and geographies, we've got several things going on there now. So one of the fastest growing ones with, in ROI DNA is a marketing stack consulting. So no longer are we just running the programs for them. We're actually going in before these programs are even conceptualized, picking up the martech stack forward that's going to work across their businesses.

We're also going to continue to innovate on our data and analytics solutions. As I mentioned, we had a launch of our IT services in February, and we're building a pipeline of new services that will come throughout the year. Also as we look ahead, we're really excited about expansion into Asia Pacific now that GetIT Marketing is part of Hotwire. So they have offices in Singapore, Japan, Malaysia and India, and we'll be taking our core reputation relationship services and expanding more into those countries over the coming year. And lastly, global growth. So in January, we named a new Chief Growth Officer and have tasked her with activating the Hotwire network along with ROI DNA and GetIT to build offers that are focused on attracting new global clients to the business. So in summary, over the past three years, we have been transforming Hotwire and have significantly differentiated our global business with the addition of acquisitions, most recently with GetIT and ROI DNA. We now have the capability to deliver reputation, relationship and revenue services globally, and we're already deploying these services within large companies, and we're going to continue to accelerate in this area with organic wins and new clients. So thank you, everyone. That's Hotwire, and I'm going to pass it now over to Carla Webb-Sear, Enero Group's CFO.

Thanks, Heather. We've been listening over the past hour to Enero's business leaders and their operational and growth strategies. I'll now talk about our financial framework and capital management perspective. We aim to strike the right balance of investment in opportunities and future value creation and prudent return of excess cash. We expect that our capital management strategy will give shareholders confidence that the Board is focused on disciplined management of our balance sheet and cash position. The Enero Capital allocation framework is similar to what you'd expect to see in a maturing company of our size. As outlined in our recent half year reporting, we continue to focus on driving strong cash conversion above our targeted 85%. Over the past few years, we've exhibited the ability to manage costs and drive efficiency, and we continue to remain focused on returning to our industry-leading margins in the near term. Now talking through this slide. On the left-hand side is our annual commitments made from cash flows over and above our low CapEx requirements. From a bank debt perspective, we remain very comfortable with the position reported at the 31 December 2022 half year results, being leverage of 0.7x following our recent acquisitions of ROI DNA and GetIT. We continue to report leverage, including both bank debt and contingent consideration. In the medium term, we expect to maintain a net debt-to-EBITDA ratio below 1.25x as we look to pay down our debt facility within Westpac Bank's 3-year arrangement. Another element of our framework is the dividend policy, where we look to share earnings with our shareholders. While each dividend is subject to Board approval. We have committed to a dividend policy of at least 40% and up to 60% of our adjusted net profit. On the right-hand side, we highlight both annual and multiyear levers we used to invest capital or cash flows in order to create shareholder value. This includes both investing and releasing capital. As Brent outlined earlier in the presentation, we continue to build our competitive advantage through new and differentiated services. This includes investment of both organic and through M&A. Our funding of recent M&A has included consideration paid over a 3-year period and is contingent on business performance targets. Finally, the Board periodically assesses the potential for returning excess funds to shareholders. I will now turn to the next slide to outline the on-market share buyback announced today. reflecting our confidence in Enero's balance sheet and business outlook. The Enero board today announced that it will be conducting an on-market buyback of its ordinary shares commencing from 1 May, 2023 for up to a 12-month period on the term specified in the Appendix 3C lodged with ASX. We plan to acquire up to a maximum of 8.8 million ordinary shares being up to 10% of the lowest number on issue during the previous 12 months. Enero will maintain a strong balance sheet following the completion of the buyback and the Enero Board will continue to assess the merits of this capital management plan as market conditions evolve. I will now hand back to Brent for some closing comments.

Okay. Thanks, Carla, and thanks to all of our presenters this morning. Hopefully, everybody has found it both educational and enlightening in terms of the strategy across not only the group but also in terms of each of the individual businesses and hearing directly from the individual business leaders in our portfolio. So I'm going to just quickly wrap it up here with a couple of closing comments. And then what we'll do is go into a live Q&A. So I think just to recap, I think hopefully, what we've demonstrated today is just the excellent financial profile of the group, the health of the group against delivering clear results, against an even clearer strategy. And the fact that we have continued to transform the business and the rate of transformation certainly makes us feel good about future opportunity. And when you think about growth and future opportunity, Again, you've heard from each of the leaders today around the agency foundations that we've built and how we've differentiated really our offering into core long-term industries that are healthy and growing for the most part, certainly in the near to long term. And then secondly, the ability for us to continue to work and partner together with Mike and Raja at OBMedia, and our ability to continue to grow that business. And then lastly, just in terms of the focus that we have on people the way that we believe culture and the capability of our team that we've really done a lot of work on over the last 3 years continues to be an engine to transform this group over time. So we certainly thank you for your attention, and with that, what I'm going to do is move to -- move away from slides actually, and go to Q&A. All of the leaders of each of the businesses, along with our Chair and Sherry joining us today now for live Q&A. So what I'll do is ask everybody to come back on camera and then we'll direct some questions that we received over the duration of this morning's presentation to each of the individual presenters as they unfold. So let's go with our first question.

Thanks, Brent. Just to remind everybody, please put your questions in the Q&A box and identify yourself. We've got a lot of questions that are coming, and we're referencing those people that are not writing anonymous. I'll start just first with a question for Ann. We know that you have announced the buyback today, why are you doing a buyback at this point?

Thanks. Yes. If you heard from Carla earlier, Enero is committed to a strategy that accelerates growth and shareholder returns. So fundamentally, the Board believes the current share price does not reflect the fair value of our business. And as we maintain a strong balance sheet, we have committed debt facilities available, we've considered our cash flows under various growth scenarios. I think the buyback represents a prudent opportunity to create some value for shareholders. So it's been long discussed, well discussed and the Board has agreed we think this is the best way forward in terms of just creating some value.

Thanks, Ann. Question for Matt. What do you see as being the benefits of being in the Hotwire and in Enero Group.

Yes. The benefits, I mean, one is clearly a global footprint. We were looking expanding beyond North America and to say we're looking for resources within North America. So we're really excited to have feet on the ground in EMEA and APAC, and I think the core benefit as well, too, is a very aligned culture. At ROI DNA, we have 80% identified female as a culture, both Enero and Hotwire, very far along that bench as well, too. And we felt the synergies between the people and the ethos and spirit of the companies would really benefit each other and grow together extremely well.

Thanks, Matt. We have a number of questions on OBMedia, and we'll try and do the question by business division now. And so I'll start with the question for Raja. Can you tell us about your relationship with the two large search engines and your thoughts on risk and revenue concentration.

Sure. We have worked with Google for 10-plus years and with Microsoft for 6-plus years, our relationships are very collaborative, and we work with the search engines to monetize our intent customers on behalf of their advertisers. They like us because we continue to add net new traffic to their search revenue business, and they continue to invest in their products to support our growth. We have a renewed contractual commitment for multiple years.

Thanks, Raja. Maybe we'll have a few more questions on OBMedia first, this question comes in from Matt Jose, how do you expect your business to be impacted by a broad economic slowdown or recession?

Well, it's a dynamic marketplace that we operate in, but we have years of experience, and we continue to look for opportunities with new channels.

Thanks, Matt. A couple of -- sorry, thanks Raja. A couple more questions from Matt on OBMedia and I'll let other questions from others. How does the Apple anti-tracking changes impact your business?

That's probably one for you, Mike. I would have thought.

Yes, definitely. Well, we don't believe that it will materially impact that IDFA will materially impact our business. The spending that's happening through, say, Facebook, is at an all-time high run through our network right now?

Yes. And maybe just to clarify there because we do get that question quite a bit, actually. So OBMedia does not use cookies, right? So just to clarify that for everybody on the line.

A question for [ Matt ] on OBMedia. If you unintentionally left robotic traffic through what would happen with the search engine block you altogether or just reduced pay for that traffic.

We have a very low history, and the quality is monitored closely. The minimization of this is what we're most proud of.

Yes. I was just going to add, I think one of the key things, and we've spoken about this in the past, too, is the notion of OBMedia and Mike or Raj, feel free to make any comment on this, if you think I missed anything. But the notion of a really deep focus on quality traffic sets you apart from experiences, let's call it, of some of the competitors in the marketplace. And I think that is kind of sitting at the heart of the partnerships you have with the world's largest search engines, right?

Absolutely.

And a question for [Indiscernible] how the emergence of ChatGPT and generative AI potentially impact the OBMedia business model.

Mike, I would say that's one for you, given some of the things you're working on.

Absolutely. So we see ChatGPT as an opportunity. We're already experimenting with using generative AI to make ad copy better and improve click through rates. We have strong relationships with both Google and Microsoft and they are investing heavily into generative AI as well as we are. Fundamentally, we don't believe that the business model of the search engines of driving high intent traffic to advertisers will change, and we believe that we're well positioned for incremental growth.

And maybe just a comment from me, just across the broader group because I probably don't need to make any comment on it, hit around that. But I think as a broader comment from Enero perspective, I mean, we're leaning into the opportunities that ChatGPT represent or any other AI for that matter. But it's important to recognize that it's still really early days. So we want to be optimistic about what the possibilities may be. But we don't think that there are any hard facts or data points at this point that would lead us to talk about it in a more robust way other than to say that we're always embracing new technologies and how that can help scale and monetize our businesses around the world.

Question from Kate. Could you explain the competitive landscape for OBMedia, who you think are the largest competitors, what is [indiscernible] build a barrier to entry in terms of, for example, customer relationships, technological agents and so on.

Sure. I think System One would be the most visible. Digital advertising is a large and highly competitive industry, and we continue to be focused on delivering best-in-class return on investment for advertisers. I think we have a long history of relationships with the search engines, and we're collaboratively with them to do so.

I mean I think the other thing I would add too is just the barriers to entry if that was part of the question, if I'm not mistaken, was just the deep relationships that we've built and that Mike and Raja and the team have built over time with our search engine partners and the way that we work together with them and the fact that there are only a handful of the specific technology feats that we enjoy in the world makes the barrier to entry incredibly high or almost impossible for folks that don't enjoy the same depth of relationship or technology enhancement.

A question from Nicholas O'Shea. A bit more conceptual on OBMedia. Could you provide a bit of detail on what macro factors influenced the demand supply dynamics of traffic versus ads?

You want to repeat the question maybe just...

So could you provide a bit of detail on what macro factors influence the demand supply dynamics of traffic versus advisements.

Yes, I'm not quite sure if traffic versus advertisement is a question that's particularly insightful in the context of explaining the business. Maybe what would be helpful, Raja or Mike, is just talking to the current macro environment, I think maybe this is where the flavor of the question is going. The current macro environment as you're experiencing it today relative to traffic flows that you're seeing as part of executing from an OBMedia point of view on the day-to-day. So maybe to reframe that is, are you currently experiencing more challenging ways to secure traffic given what's going on in the world today from a demand point of view, more broadly in digital advertising I would expect.

It's a really dynamic marketplace, ever changing, ever evolving. So it's hard to give directional answer to that question one way or the other. But we have years of experience operating in the space, managing this type of a dynamic marketplace. And we're always looking for new opportunities and new channels to experiment with diversify. And we'll continue doing our best regardless of the macro environment around us.

Okay. Thanks, Raja, Thanks, Nick. I hope that answered your question.

A question from Roland Shanda. As the Board considered demerging the marketing division and OBMedia as 2 separate companies, this will create significant value to holders in Roland's view.

Thanks for your question. It's a question that's been asked a few times. At this point in time, that's not a path that we're interested in pursuing because it may create some short-term value, but we've got a long-term frame here as well. So hence, the decision to do the share buyback at this time and focus on our capital management rather than breaking the business apart.

Thank you, Ann. Maybe whilst we've got an [indiscernible] buyback question from Matt Jose, the buyback is happening because the share price doesn't reflect fair value. What share price will be more reflective of fair value in Board's view?

I won't answer on behalf of Ann and the Board, but I want to say somewhere north of where we are, quite frankly. I don't think I'm going to put a number on it, but I think it's pretty fair to say that we're completely aligned in terms of the value represented today versus our ongoing performance. So I'll let Ann comment.

Look, I don't want to put a number. I thought we were undervalued at $3. So I'd say north of $3. And hopefully, at some point, given the performance of the business, the mix our exposure to the growth sectors, I think well north of $3 represents better value, quite frankly.

Thanks, Ann and thanks, Brent. Another question on the buyback that's coming as you were talking on [Indiscernible] where does the balance sheet sit close to December year-end, cash flow in the half due to receivables issue, but that was timing. So interested to answer, [indiscernible] pick up in the net cash balance.

Yes, I'll let Carla take that one.

Yes, as [ Heather ] pointed out, that is right. We had a timing of receipts that affected the December position. I guess the best point in time I could probably give a bit of a stature is we have to update the market as a result of the Silicon Valley incident. And at that point in time, we did disclose to the market, we were sitting at $41 million. And so yes, that's a point in time. Obviously, we'll update the market again as we get closer to June, but as reinforced by some commentary around the buyback that we're looking to instigate from 1 May, it's a very healthy cash position.

Thanks, Carla. Maybe one more question on OBMedia, there are questions on the other parts of business as well. This question comes from Al Stewart. And some apply speaking in general terms about whether OBMedia customers commit to contracted minimum spend or any other sort of ongoing sustained arrangement.

Raja or Mike, do you want to take that one? The question was just around do any of the advertisers commit to any minimum spend as part of engagement with OBMedia.

Everything we do is a pay-per-performance basis. So there's no commitment with us.

Okay. We'd like turn to ROI DNA, the question that's coming from Nick O'Shea. Could you provide some color on how partnerships, relationships help the group, making use a customer example of how or why the partnerships of you win or add value to our client above what competitors may be able to do.

Yes. From our perspective, there's just a twofold of this. There's one, we've already started extending our partnerships with Hotwire and our new feet on the ground internationally, which is awesome too. So we think those partnerships can help them grow in country as well as in EMEA. 6sense is pretty well established. We're helping getting some inbound from that. Also, I think one of the obvious growth things from the partnerships is we're now getting enterprise-level leads direct and co-pitching with both Drift and 6sense. So they're choosing us to actually co-pitch with net new coming in net new business because of the expertise in ABM. And while Drift and 6sense are amazing at their own consultancy of getting the product on, they want the ABM expertise to really go deep with the product and the client, and that's really helping us grow our business.

Thanks, Matt. A question from Eduardo. Is the retainer revenue holding up better than project revenue in light of the current macro headwinds, is there any focus to increase retainer revenue as a percentage of revenue going forward. And that was for Steve, sorry, not Matt. Sorry, I know you are looking at the screen. Steve?

Yes. Thank you. It's an interesting one. I suppose just in terms of retainer projects kind of balances, I mean, since I've worked in agencies, which is a long time, there has been a swing away from retainers into more project-based work. But every time we have a conversation with the client, you are existing looking at our contracts, we're always looking at nailing down that scope of work and making that kind of suppose work and therefore, revenue is reliable as possible. So in the context of our clients, we're very lucky. We've got some re-scaled clients. Therefore, we have kind of in terms of reliable revenue, predictable revenue retainers and work attached to those retained clients. We're 70% there and 30% in terms of projects. So to answer your question more directly around kind of how we've seen this sort of the current environment kind of affect that. We've been pretty lucky. It's been very solid. The projects themselves more than -- they don't tend to go away. But what they do tend to become is sort of moving targets. So, and similar in the world kind of when COVID hit when businesses are changing their focus pivoting as the famous word, then those risks can change quite quickly. I mean, essentially, it can mean that we end up doing more work rather than less. So from our perspective, our business has been -- hasn't been affected by those sorts of the recent macroeconomic headwinds. And again, back to probably a good, solid, reliable retainer work and then the necessity, we're always talking to our clients about, but they still need to be out there. They need to be active in this sort of environment, it's the clients who are still spending and doing visible work, they will come out the back of this in much, much better shape than those that start to pull back. And most of our clients, I think, a kind of fairly sophisticated quality marketing businesses that kind of understand that.

It might also be a good, Heather for you to just give a little quick point of view on that as well because I think it's clearly relevant for you as well.

Similar to see, we've seen the transition to increased project work over the past probably 3 to 4 years. So we're -- the core Hotwire business is about 60% retainer, 40% projects now. But the projects tend to be a renewal on a renewal basis. So we complete one assignment and then the next assignment gets land up right behind it. I think what's most important about our business is that we are a consultancy business. So we're working with clients to meet business goals in their business. And because of that, connection to what's most important in their business and moving it forward, we get quite sticky with them, and we just continue to help them with new challenges that emerge.

Thanks, Steve and thanks Heather. A question for Orchard, this is from Matt Jose. Can you please expand on the economic model? What is Orchard's typical gross margin, i.e., is there much cost of goods sold from buying ads on behalf of clients.

Wai, I think you're on mute, so you might want to start again.

Our economic model is very traditional. And cost is our largest part of our cost of goods, so to speak. And I've already said, we're looking to work towards both productization, if we're looking at margin, but also a huge amount of time spent in digital projects and actually developing project definition documents to give customers scope of whether that platform is 500, 800, et cetera. And that's something we're working on accelerating. In terms of the question directly, exposure from buying ads and cost of goods. We do -- it's a very, very small part of our business, really more strategic decision to do that when we're controlling the whole campaign or the whole end-to-end experience, but it's immaterial in terms of cost of goods, in terms of essential buy. And I'll let Carla provide an update on margins, et cetera, thank you.

We sort of talk in broad ranges with our margins across the agency business in the sort of mid-teens as Brent showed in one of the slides up to the sort of mid-20s, that Orchard sits within that range. Obviously, the first half results are one of the results, it has been a little bit more impacted by margin reduction. But as we've steered the market, we've talked about moving back to those more normalized margins as we come out of H2 and into FY '24 and beyond.

Thanks Wai, and thanks, Carla. A question from Vincent, how come Australia generates more net revenue than the U.S. and produce less [indiscernible] return.

Vincent, I probably just point in the direction of the way in which we think about our segments, in particular, most importantly, the Australian business holds agencies, which sit at a different margin profile. OBMedia sits within the U.S. and also is part of our creative check and data segment. and OBMedia has a very different margin profile, which you can see from our reporting, and so that's really creating the distinction between margins across geographies is the contribution of OBMedia within that region.

Thanks, Carla. A couple of questions from Nick Wheel from Evanston Partners on OBMedia strategically. What is the benefit to OBMedia staying in the group? And then secondly...

Well, let me just answer the first 1 first. I mean, hopefully, Nick spent, indication for you this morning to understand more about OBMedia's business. And clearly, we operate in marketing services, which is a pretty broad definition. I talked to the total addressable market today in terms of both digital advertising, the creative and content services we provide and the opportunity within that marketplace. So I think not only does that represent opportunity. But what I would say is the synergy between OBMedia and Mike and Raja on the call today as we have co-invested in this business over the last 3 years, has delivered exceptional results. And right now, we continue to partner together and have great entrepreneurial founders who operate within our Enero centers of excellence, which means we provide significant assistant, significant advisory around everything from financial relations to IT, to people and culture to employee transition. So I think if you look back on the performance of this business, since that integration and synergy has come to life and understand a little bit more about why the synergy of that business combined with our portfolio makes sense, then I think that will become pretty apparent.

Thanks, Brent You probably answered Nick's second question around how OBMedia able to line up strategically.

Yes. Well, again, I would say, hopefully, today has been educational. And so therefore, you'll have a better understanding of how that business works and of course, how we work together with the founders of OB as true partners to continue to grow that business as part of our portfolio.

I've just got some time and we're heading up to the half hour very shortly. So maybe one last question from Annabelle Holden from Canaccord. Can you expand on the shared client revenue how much in your pipeline with existing clients looking to expand across other brands or agencies within the group and how this 28% figure evolved over the past 6 to 12 months.

Well, I might take a crack at that first and then maybe, Carla, you may want to add some comments. But obviously, it's been part of our strategy, was not fundamental to make sure that we are providing sticky services to clients. And those sticky services don't necessarily need to be just within one brand within the group. Obviously, in Australia, as we're all co-located here in one building, and we have representation of some of our core agency services here together that becomes something that I think in the past had kind of been ad hoc or relationship based. And now is a much more deliberate strategy for the group as evidenced by the results over the last 12 to 24 months. So I don't have the specific number in terms of what it was 3 years ago, but needless to say, it is a core part of providing services that more importantly, certainly lead to stickier revenue within the group. And for us, it is about making sure that we have the best available capabilities for clients to provide them with solutions regardless of which particular brand, an employee or a capability might sit in. So for us, that's just a maximization opportunity to grow with existing clients. And I think Steve and Wai mentioned a couple today, Tourism Tasmania, ALDI as examples, but also it's an important proposition, particularly in this part of the world when you think about new clients. Now obviously, if you go to the United States, we've spoken a lot about the reputation, relationship revenue service offerings that both Matt's team, Heather's team and obviously GetIT come together to provide solutions for clients holistically on a truly global basis. So you'll continue to hear more about us as it relates to the United States and how those -- the integration of those acquisitions is progressing.

Anything you want to add?

I'd probably just add that most of that growth has happened in the last 2 to 3 years. There's definitely been an uplift, and it's been as a result of a fair wins and opportunities, as Steve and Wai have referenced today. And also, as we've talked in the past, when we've talked about the ROI DNA, GetIT and Hotwire acquisition, there was lots of complementary clients but not necessarily a significant amount of crossover as we highlighted in the performance webinar we did with Matt and Heather a few months ago. So we're looking for more opportunities. We anticipate that number to be growing as we're seeing some of those client opportunities come to life within the broader Hotwire group now as well.

Okay. I think that's exhausted all of the questions that we have. We want to thank everybody for joining us today. Obviously, as mentioned at the beginning, we had a lot of requests for people to get to know the businesses as part of the portfolio more deeply, certainly to understand the strategy. Hopefully, that's been clarified for you today. So what I'm going to do now is just quickly pass to Ann, who is going to close the meeting and wrap it up.

Thanks, Brent. And can I say thanks to all the business leads for making time at various times of the day and night today to come into this call. To all of you online we do have a commitment to continuing to create value out of this business. And we are in a segment that's hard to compare, we know, with a set of businesses that are fast moving in the sweet spot of what everyone is talking about in the new world of technology and part of changing a lot of what's happening in big other big companies around the world. So we're both an enabler as well as a driver of business. Hopefully, today has helped you understand better what we're doing. And we thank you for your time and look forward to our continuing dialogue. Thanks very much.