Envirosuite Limited (EVS) Earnings Call Transcript & Summary

My name is Jeremy Gaedtke. I'm the Director of Marketing and Communication of Envirosuite, and I will be your moderator today. I'm joined by Jason Cooper, our CEO; and Justin Owen, our CFO. We're very pleased to present our annual report for FY '24. Before we get into the presentation, a little bit of housekeeping around Q&A. We will be having time for Q&A at the end of our session today. However, we are going to run it a little bit differently. We are expecting and looking forward to a lot of Q&A in today's session and to make sure that everyone gets the opportunity to ask questions. We will only be taking questions in written form via the Q&A function in Zoom today. That's going to allow us to make sure that we get to as many questions as possible. [Operator Instructions] With that, I'd like to hand over to Jason to kick off today's session.

Thanks, Jeremy. Thank you very much. And we're certainly excited to be sharing the results here for FY '24. Let's get into the detail here. So the structure for today is we will come back over and certainly introducing Envirosuite and give a better context to the strategy that we have got in place and how we're tracking to that. We'll get into the FY '24 highlights, bit of an update on the product suite as we normally do. Justin will cover through the key financials. I'll do a bit of a close and then we'll move into Q&A as Jeremy has said. So a lot to get through. I hope you've had time to download the documents on there. We will be referencing page numbers to help you through there, and we'll also be continuing to share the screen. So Envirosuite is an environmental technology company at our absolute roots. On the left there, we have our emissions and environmental parameters that we are monitoring. We put that into a cloud-based platform, do our analytics. This is backed by science. We now have hundreds and hundreds of sites around the world that is using our technology, so strong validation in there. And then we're driving performance improvements and operational optimization for our customers. It's an important one just to spell out at the start, but we are an environmental technology company. And we believe we're really well positioned for future growth, and we're going to talk through some of the success that we've had in FY '24. It's a bold statement, but it's one that we actually hear back from our customers and from analysts around the world. Envirosuite is the world's most advanced environmental intelligence technology provider. We've used an image here on the right to highlight some of the variables that we are tracking in a mine site. You can see in here, we've called out a noise alert, a dust alert, emission alert and a vibration alert. That capability is quite significant to have within our software platform. And our customers are continuing to use this to drive real-time decision-making, but really importantly, predictive decision making. And what we're seeing is at an intersection between understanding the impact to the environment, understanding impact of operational performance and people, and we're really proud of what we do and what we've done for our customers around the world. One thing that we really want to stress on -- certainly on this call is the underlying importance of our technology for governments and industries all around the world. We don't want to say we're completely recession-proof. But certainly, this is something that we need to have to continue to support our customers for compliance and regulatory requirements. I want to start with some of the key metrics and then give context to why those metrics are an important part of the Envirosuite journey, which provides underlying momentum to be carried into '25 and to '26 . Our annual recurring revenue is now at $61.1 million, which represents a 2.8% year-on-year growth. Our customer size is now 435 and we've slightly gone backwards, but I want to talk about the why and why we've gone backwards because it's an important part, which moves to our next graph on the right, which is gross profit. When we came into the company, the gross profit was around 30%. We've now got that to 52.5%. And we will continue to improve that. The decisions that we've made in FY '24 proactively has led to the underlying 52.5%, but also the trajectory into FY '25 and beyond to make sure that we're reaching 60% and above in the midterm. Our statutory revenue of 59.4% -- $59.4 million, sorry, is another positive momentum that we're seeing in there. Closing off, and this will be the last time that we use the statistic in our financial report, is our adjusted EBITDA, which is a positive $1.1 million, representing 123% growth year-on-year. So we're quite pleased with the results that we have got in here. But let's get a little bit further into the detail. Our business model is really focused about driving high value and long-term customers in our core growth markets, and that heading is put in place to really highlight this. We want to have customers that are here for a long period of time. Back in 2019, 2020 and even early 2021, there was a different focus in the company, which was focused on shorter-term contracts. What we have seen in FY '24 is those fixed term contracts come to an end of life. And you can understand as well where the company was in 2019 and 2020 in taking any kind of revenue, because you're in that start-up mode. We're now will be in a startup mode and what we want to be focusing is solid underpinning team. And so that is all about increasing the gross margin in the business, which will then drive to a positive EBITDA moving forward. And sometimes, you've got to go backward before you can go forward. On the left, you can see a graph here, which is a really important journey that we've gone through. Back in June '20, the industrial platform, the average revenue per site was $61,000. We now have got that up to $99,000 per site as an average. Those are the bold decisions that we've taken in FY '24. It would have been easier to keep those contracts on the lower margin that were noncore from a simple revenue protection, but it would not have helped our gross margin and our long-term EBITDA. So I stand behind the decision that we made dating back to 2021, where we're going to focus on our core growth markets, and we will consistently apply those that lens. Importantly, we've highlighted on the right here, the scalable and flexible environmental intelligence technology. Our ecosystem is what's important in here. What we're seeing is customers come in using our land-expand-scale model, and they're actually coming at a certain point and that now are able to grow within the platform. Now on that first slide that we had, the environmental parameters and then the mining site image, you can see that you may start off with air quality and then move into vibration or into noise. We are empowering our customers to take actionable insights. And the more that our customers use that, they're actually driving their own operational efficiency. There's always seeing, as customers come back to us and saying, "How else can we use this technology," which is great. We have a global footprint, which enables addition of new sites without any significant increase in our operating expense. And Justin will talk through the way that we've managed that through the year. But, not only does that help us in this year, but in '25, '26 and '27, we do not see any significant cost increase in our operating model. And so this is now all about adding ARR at the top, because this will drop very quickly into an EBITDA. We have created a brand, and I think you will be consistent with this, we're consistently stepping above in more -- how we communicate to our customers and how we communicate in the market. And so our brand is growing. And core strength continues to be product innovation backed by science and also customer needs. And you'll see in our strategic pillars why that's so important. The last point there I want to focus on is driving growth in areas where we can turn revenue on fast. So reflecting back on FY '24 new sales, we've had another consistent year resulting in $7.9 million of new ARR. And if you look through Q1, Q2, Q3 and Q4, it's all around the $2 million. What's actually important in those numbers is in each quarter there, we added around $1.4 million in industrial ARR. What we're focused heavily on in FY '24 is greater predictability in the sales pipeline and in the business. So if you look at the underlying growth in industrial, the top-line growth, we grew 24.8%. Now, I think, everyone will say that's a fantastic growth trajectory. Aviation had a slightly lower growth this year than what we did previously. And we'll talk through some of the wins in aviation later on, but that's going to be largely driven by the number of airports that do come into a market in a 12-month cycle. Mining and waste has certainly helped us grow strongly within the industrial sector. And so you can see on the first graph there, we're up to $24.5 million, which is representing a 6.7% growth year-on-year. Aviation, you would argue, is actually flat. However, let's cast our mind back to the churn event that we had at the end of Q3. What we've demonstrated here in aviation is that within a 12-month cycle, we've been able to absorb the loss of a key customer, and we've been able to add new customers in and they are customers in our focus, core market commercial aviation, where we know these customers will come in and now continue to grow with us and it's a need that they have in place. Our retention in aviation is around 98.5%. And so we can see these customers with us for many, many years to come. Americas is a fantastic growth story. When I first joined the company, it was around $15 million of ARR. We're now up to $25.7 million. Now we have controlled costs through the last 2 years, as asked by our major shareholders, and we have applied our investment cycle into key areas. The planet is a big planet, but we have really focused on getting traction in the Americas. This is both North America and South America. This has resulted in continued momentum coming through. Once again, America has shown, producing more than half the growth in our ARR number. APAC has been impacted by the Department of Defense contract, but you'll start to see an uptick there where we are going to be choosing selective countries to grow into APAC. And EMEA is in a good position now to start to grow. But let's not forget, EMEA has had the impact of a sustained war and political unrest in certain parts of the Middle East and North Africa. There is a little bit of -- we have had a little bit of uncertainty into EMEA, but we feel that, that is starting to steady out. Strong fiscal management. This year, we have been faced with one deviation to the plan that we did not really consider. And we have communicated this in the quarterly updates through the year and that is around the nonrecurring revenue. Our focus in this is to focus on customers and contracts that has a strong recurring revenue base. But in FY '24, what we saw is the deferral of some significant projects that we had been working with customers. Now, this isn't just economic. This isn't just political. This is big planning. Now, I'm not going to call out the customer names, but these are very well-known names that we've been working with. And we are confident that in FY '25 that, that will come through. What we want to do today, though, is disconnect the nonrecurring revenue as a leading indicator to ARR because the 2 are not connected. And what we've seen certainly in the second half of '23 and through '24, is more and more customers wanting to move to a recurring revenue model. Not all but some. And in that, what you're seeing now is actually a higher recurring revenue base. Now where this is very good for us is that this will actually start to have higher gross margin and contribution margin from years 3, 4, 5 and on. And so this is central to our strategy. We've optimized our inventory for that, and we've optimized our financial structure to support that as well. So you'll see the nonrecurring revenue is $1.8 million lower than last year. The other part to call out on this page is the 0.7 billion there under operating expenses. As we have commented on previously, there was some media speculation around our company to our shareholders. And we have come back to state that there has been a level of activity through the year. And I can confirm that, that activity has been going on through FY '24. However, this positions us well. There are a lot of companies around the world that are now recognizing the importance of the ESG, of environmental intelligence and the emerging opportunity comes through from greenhouse gas and sustainability. And so we are a focus today, and we will continue to be a focus. And so those one-off costs that are in there, Justin will talk to, has had an impact on our EBITDA. But what we have done in both David, in his letter and in my letter, we have actually navigated this in the interest of our shareholders, and we'll continue to do that. The one thing I want everyone to hear today is that when something becomes announce-able, we certainly will be giving that information and following the right course of action. The other part I'd like to call out on here is that there is a slight increase in our sales and marketing spend. And that has come through from what we call forum in '23, which was the aviation forums, one in Europe, one in the U.S. This is well attended by customers and has generated strong demand for our customers and our products, which has actually led to some strong renewals in place. Since FY '24, whilst maybe not the strong growth engine in aviation that we wanted, certainly reflected strong renewals with our core customers around the world. The other part is when we started to see the water wasn't turning on from a revenue perspective and that there was a deviation in nonrecurring, we as management and the Board took a proactive position to remove $2.5 million of costs from the business. We have moved the water under the industrial portfolio, and we continue to support turning revenue on in the water sector. Our growth strategy -- sorry, our company strategy is pretty clear. We have a vision, a world where people, planet and industry can prosper in partnership. And that's an important part. That is our North star. We want to revolutionize sustainable industry growth through environmental intelligence technology. It's not just having a small deal, but we want to revolutionize. Now, with over 400 customers globally, we know that we're in a really good position to accelerate this through. So our 5 pillars of growth, customer, product, scalability and people focused, and this has been consistent. I want to go through each line here. I'll give you the opportunity to come through. But what we have done is given an update on our strategic goals. And you can see there where we're on target and what's in progress. Our strategy is to leverage an accelerated awareness of environmental intelligence to build a platform for growth. What we have seen through '23 and '24 is we've been in very much a cost controlled environment. We've had to use our money selectively and very, very important to make sure that we get a return for our customers and long-term shareholders. We have invested in the growth in the Americas, leveraging that legislation. We have accelerated EVS industrial growth and time-to-value. As government and industry customers require environmental management solutions to operate their critical facilities, this is an important one I really want to harp on to. You can't just turn this off on [ one eve ] because you don't have a budgets on. Our scalable business model is a key component of our competitive advantage, and this will transition us to profitability. Our operating costs will remain largely flat and very controlled. We support customers in over 40 countries around the world. An investment from our core sectors into environmental optimization of operations, net 0 and greenhouse gas reduction, we will continue to expand in the midterm. I have just done a trip into Europe and North America where we're meeting with certain customers. This represents one of the most significant trends in our society. And almost every company I know is wanting to start to accelerate this investment. Our industrial portfolio is strong, $18.2 million in recurring revenue, up 10.9%. We added 40 new sites. As we mentioned before, $99,000 average revenue per site, which is a 10% jump. However, our total sites went backwards. Now, this was really the controlled part of fixed term, low-margin, noncore and non-instrumentation support of customers. Yes, there was some churn in there, but it's not because they're going to a competitor. Importantly, where we had lost customers in a previous cycle, we won them back in the same 12-month period. It's an important step there that we want to start reporting on, which is average sites per customer of 1.2 which shows that we have got from its land-and-expand scale, significant expansion and scale capability. And we have got proven product offerings, demonstrated market traction, particularly in mining and waste. Newmont is a company that many of us here in Australia will know. The Cadia Valley operations up near Orange in New South Wales. We recently had a team in our office in Brisbane having a working session. But this is a company that recognizes the need to have a community engagement. They've been incredibly proactive on actually reporting how their mine site is impacting the site and the community around it. They recently expanded on their capabilities. So they now have dust, noise and odor permissions as well as water management. If you actually Google on to Newmont, Cadia Valley live air quality monitoring, you will actually start to see how they are actually reporting that and that is our underlying data that they're being proactive in supporting the community. Moving into aviation. We're a global market leader. We are incredibly well positioned to pursue emerging opportunities. $34.6 million in recurring revenue, a strong business. And this is 1 that is an absolute household name within the aviation sector. Airports around the world will knock on our doors to come and talk to us. Our 194,000 has remained consistent ARR 3 to 4 years, and that is something that we pride ourselves in. It is a high average revenue per site. We did win 10 new sites, and you'll see that, that's a bit of a drop. There is always going to be some volatility in the number of new sites that you win in aviation. We have 35% market share of all commercial aviation. Our next nearest competitor is a 1/4 of the size of us. And so we are a strong player in this market segment and we will continue to operate. The second [ dog point ] I'd like to call out there is our recurring revenue, 4.6% growth. However, it's $11.7 million when excluding the abnormal churn backing with DoD. So that represents that the underlying business is really growing and to absorb that and to get that trajectory moving forward positions us well. There are also some other parts that are starting to come through. And so we have worked with Nav Canada on our -- the ANSP there. And this is incredibly interesting technology. We certainly are now considered selling in Nav Canada's eyes, the world leader in this space. Now this is the first ANSP that we've done. We're certainly glad to say that we've had incredibly positive feedback from our customer, and we're certainly well positioned to support Nav Canada for many more years. They are using our technology on a daily basis to make informed decisions. It's really exciting to see. Certainly, here, we saw this with the FORUM23, net 0 and the focus on the reduction of greenhouse gas emissions for aviation is certainly going to be a strong thematic for the next 20 years in aviation, but there's a short-term opportunity here that we do need to capture. Dublin Airport is a great example where we've worked with them over the period of time. This is an airport that's going through an expansion opportunity that have got to deal with the community. And so they've worked with us and our [ EIS ] team and our product team to work through what is the right way to do change management in the community and to leverage our technology. Another great example of a long-term customer. Now they have re-signed with us, and they have grown in their portfolio. I'll finish off here on our product innovations. It's an important one to call through. What you see here on the left is the sectors that we operate in and the recent innovation that we have brought to market. What -- why is this important. Each bucket here represents new technologies that were brought to market, which is driving revenue enhancement. If you go back to our first slide with the graph on the -- a bridge revenue per site, this is underpinning that. We want to continue to see that ARPS improve over the years. We are leveraging AI and machine learning in areas where it makes sense. Moving to the emerging opportunities, net 0 and GHG can be applied across all of the sectors we focus on: Noise and vibration, methane and sustainable airspace as well as an AI-driven operational decision support. And so these are areas that will drive additional revenue into our existing market sectors. Justin, I'll pass to you.

Thank you, Jason, and good morning, everyone. Now turning to Page 20 on financial performance. As Jason mentioned earlier, FY '24 has seen a strong 25.5% increase or improvement to EBITDA over '23. While we have seen an increase in recurring revenue, as Jason mentioned, nonrecurring has dropped compared to last year. And while there are a number of ongoing projects that we are expecting to be pitching up in early FY '25, we continue to drive our gross margin improvement. We remain very much focused on cost management and cost -- and being prudent in our cost -- in our spending. What is clear through the improvement in gross margin over recent years is where we're seeing scale providing benefit in our cost of sales. People costs, within cost of sales, represents around 60%. And with the improved tooling and processes that we're putting in place will enable us to remain -- to retain our head count at that level and not increase as revenue opportunities come in. Effectively, we'll be retaining our head count while growing revenue, which will be a key driver in our gross margin improvement. With regard to our revenue split, we are aiming for long-term recurring revenue to represent in the range of 87% to 90% of total revenue. While in the short term, as we transition to profitability, we're seeing that the nonrecurring revenue being around that 85% to 87%. There -- that's our thinking in terms of ongoing or short-term opportunities in the next 12 months and then as we transition to a more sustained recurring revenue base that Jason spoke to earlier. Cost management remains an ongoing focus. Our increase in sales and marketing result is -- sorry, sales and marketing is a result of the aviation spend and Jason mentioned our FORUM23 event. In relation to our industrial segment, we have continued to expand our customer service managers and support -- which support our expand-and-scale strategy. G&A has been impacted by both restructure costs that we've spoken about earlier and the costs that we've taken out of the business, along with costs associated with the corporate activity that has been undertaken throughout FY '24. The full impact of the restructure of our costs will be rolled out or be impacted through FY '25, where we'll get to see the full result of the $2.5 million savings. As mentioned, our adjusted EBITDA measure has increased significantly over last year and what we're demonstrating in our adjusted EBITDA is the removal of these corporate activity costs and restructure costs. So again, providing an underlying position of where the company has progressed or how the company has progressed over FY '24. We will be shifting our focus to EBITDA going forward, but we will still provide the analysis around underlying performance as defined by adjusted EBITDA. Moving to slide -- Page 21, where we talk key metric by products. As mentioned earlier, we continue to improve our revenue per site within Industrial, reflecting again that expand-and-scale initiatives that we've undertaken. We also note that within the industrial sector, our mining sites, on average, tend to be significantly higher than this particular rate, reflecting the size and scale of those types of projects. And of course, as we mentioned, the aviation revenue per site has remained stable over the period. We continue to focus on revenue growth -- on recurring revenue growth. And we note that our customers continue to request or some customers can ask us within the Industrial segment to bundle their instrumentation requirements for their stuff in -- with their platform access. So again, we maintain a fully costed measure on ensuring that the funding that we provide against that instrumentation is appropriately captured in our contracted revenue rates. Moving to our annual recurring revenue. Reminding that the -- our investors and those listening today, we record our annual recurring revenue as a combination of both monthly recurring revenue annualized, revenue that we have waiting -- awaiting renewal. We don't recognize projects that are awaiting renewal until we have the signed renewal in place along with sites that we sold that remain pending commencement. We see ourselves as having a very strong opportunity and pipeline of implementation over FY -- into FY '25, and we continue to improve our implementation, tooling and processes, both regionally and centrally to ensure efficiency in getting this revenue turned on in a timely and effective manner. Moving to Page 23, where we talk about our operating leverage. Operating leverage we define as the percentage of our cost when compared to the revenue for the group. As we can see, there had been a slight uptick in our sales and marketing costs, again, reflecting the impact of initiatives that we've undertaken, including our FORUM23 event and our customer success and sales enablement activity, again, setting ourselves up for pipeline build and growth into 5. On G&A, we've seen a slight reduction there in our G&A costs and again, there is an impact on those actual costs where we've incurred restructure costs in FY '24, along with the corporate activity costs that we've incurred. So again, representing very strong cost management within our -- in our underlying G&A cost base. Within the product and development, we've seen a slight reduction to total. If we were to think about a longer-term percentage of where our total product development being expensed and capitalized, we would expect that to be -- over the next short term to be around 20%, but reducing from there. But we have got an aim of around 20% in the short term, but longer term, around that 15% to 20%. But again, the product development initiatives are all about [ strong ], I mean, the product initiatives that are outlined in the roadmap and -- that Jason went through earlier. Moving to our cash flow and where we're seeing our trends and performance. Certainly, the operating activity or the operating cash flow, we continue to see the positive trend working across our working capital reform -- working capital activity. So thinking about our receivables collection and receivables management. We continue to improve -- or not improve, but maintain the improvement we've adopted in prior years in terms of aging of receivables. And in terms of managing collection. So very much aligned and strong management across that, both through our central activities in the Philippines, where we have our Center of Excellence along with the input that we have from our -- in our in-region finance team. So very strong receivables management there. Moving to what we're calling our underlying operating cash flow. As outlined earlier, we have had a number of cash impacts as reflected in our restructuring costs and also our corporate activity costs. In relation to our restructure costs, we had a number of high expense sort of cash items where we had payouts in relation to some of our employee entitlements. So otherwise adversely impacting cash while not having the same impact through P&L. As we see there, our underlying improvement in operating cash flow can be demonstrated and represents the opportunity for us into FY '25. Within our operating cash flow and development cost slide, the last one there on the right. What we're seeing there is the investment that we continue to make in our product development, reflecting the initiatives that we have been through -- or Jason went through previously, but really being driven through the customer requirements and the customer-led innovation that we're putting in place to ensure that our product remains leading edge. Turning to our balance sheet, for FY '24, starting at our cash and debt levels. We continue to actively manage our cash balance. I've mentioned in previous sessions on cash and cash management that as a whole, Envirosuite would typically require cash and cash balance of around $5 million to upgrade given our global footprint and operations by country. The flexibility provided, through our debt facility, has enabled us to reduce that balance and -- where we can rely on the repayment and draw down facilities within our borrowing facility. Within the facility we mentioned during the year, that we increased that facility from $7.5 million to $12.5 million and the borrowing covenant that we have on that one is a measure against our recurring revenue, monthly recurring revenue, where the limit is set at 3.5x. So while we have a limit of $12.5 million, we have the option to extend that in discussions or requesting the extension of that with our provider based on that 3.5% revenue model. In simple terms, that would give us the potential to request an additional facility up to -- sorry, a total facility of up to around $15.5 million. So that represents an opportunity for additional funding along. However, we already have locked in our $12.5 million. As mentioned in our facility, we also got improved terms on the facility in terms of cash management and cash held within regions, again, allowing us to manage our cash balances within the total of the business. Moving to receivables and working capital. We continue to monitor that very closely. We're maintaining very strong aging and very, very strong collection in that regard and are not experiencing or have not experienced any significant deterioration in our receivables balance. Inventory continues to remain a focus of the company and of our procurement sales team and as I've mentioned at the half year, we see our inventory balance has been optimal, but around that $3.5 million, $3.8 million. So that represents opportunity for cash to be unlocked in our inventory balance. On our monitors and sensors, we mentioned monitors and sensors being the instrumentation that we bundle up. This is only for our industrial customers, but where some of our industrial customers are looking to bundle up instrumentation into a 1 contracted amount of recurring revenue over the life of the contract. We continue to see that increase over the period. And we -- our expectation is around the $120,000 to $150,000 a month of inventory being applied to those opportunities. During the year -- during the year at 30 June, in line with our accounting standards and the requirements there, we undertook a review of our intangible assets, notably the goodwill that we called on our balance sheet. Following the requirements, as outlined in the standard, we undertook the impairment test, applying very conservative growth rates that are reflective of historical rates, again, as required in the standard and ended up adopting an impairment of our goodwill of $18.3 million across our 2 cash generating -- 2 of our 3 cash-generating units, being the Americas and APAC . Our approach to the impairment was very much based on historical growth rates that the company has experienced. And in no way, unfortunately, as required by the standard. allows us to take in the strategy that we've put in place, where we've invested in growth and growth opportunities within sales, sales enablement, and more importantly, around the regional growth in the Americas. So we're confident that we've taken a very conservative approach to our impairment of our intangible asset for the year, noting, of course, impairment being a noncash charge. I think it's fair to say that in summary, FY -- we have finished the year off in FY '24 with a rebalance of our cost base, where we have seen a reduction in revenue, particularly through the nonrecurring along with the restructure that we undertook within EVS Water, we did make a conscious effort to reduce our cost base. We have and continue to monitor the costs as we go forward to ensure that our cost and cost base is effective and maintainable through the growth in FY '24 and '25. I'd now like to hand back to Jason.

Thanks, Justin. Thanks for walking through those numbers. A fair bit of information there to unlock Look, I'll finish off in the last 2 minutes here, just talking through the outlook. As I said before, we're supporting customers in over 40 countries. We have a "Land expand and scale," with Glencore, BHP, Teck, Newmont want us to go in a particular area, we're clearly going to support those customers. We've built out a deployment model, where we do not have to have people on the ground. You'll see there on the bottom of Africa. We've got South Africa, which is grayed out. We're using partners on the ground to help us both with the go-to-market channel and deployment. But let's focus on those 3 areas here. Americas, this mining waste, wastewater, industrial and aviation. In South America, we're purely focused there on the mining and industrial sector. North America, U.S. and Canada represents a really strong market opportunity for us where we now have got a known brand in place, a strong value proposition. EMEA is focused on Scandinavia, U.K. and Mainland Europe. But we can also support the Middle East through there, and we have got emerging opportunities, quite significant opportunities, which we are focused on into that part. And as I said down in South Africa, our support structure. So again, EMEA mining, wastewater, industrial and aviation. In APAC, Australia and New Zealand, clearly is a primary focus for us. Whilst we do have a footprint through different countries in the rest of Asia Pacific, our focus here really is Australia and New Zealand. But we have highlighted India as a part where we know that there is a significant growing opportunity. There are 1.2 billion people, and its economy there that is going to continue to grow investment and infrastructure. We already have airports in India, and we will continue to support, and legislation certainly is going to support rapid growth into the Indian market. I'm going to close off on this slide, and then we'll go to Q&A. But look, we're really well positioned heading into FY '25. We would have all of the right parts here, market leader delivering environmental intelligence and ESG solutions win, significantly having an impact into this part. We're having Tier 1 customers and governments around the world. This is not just an Australian operation. This is truly a global operation. We have got continued investment in the Americas, but also we're going to start to accelerate now in a manner. We've used our very tight control on sales and marketing to support the Americas. We're now going to transition and support the acceleration into EMEA, and as I said, into certain areas within APAC. We know Industrial is a growth engine. We know net 0 initiatives are going to continue to drive market opportunities for us. We have got a scalable business model. And I think that's one thing that I've said on Justin has backed up on the finance side. We've got an incredibly scalable business model. This is about adding recurring revenue '25, '26 and '27, improving the average revenue per site in there. We've got a clear product roadmap. We're not trying to do everything. We're very focused on where it's going to drive meaningful revenue contribution to our customers and also support retention. Our company vision is absolutely aligned with our environmental intelligence play. But what we're starting to see now is a stronger play within sustainability, intensifying regulations and also the ESG trends. We've heard direct from our customers, we're being asked by this. So we're really well positioned to leverage that. And we are committed to delivering strong returns to our shareholders. Certainly, our share price does not reflect the valuation of the company. It's disheartening to see that. But what we have got is the absolute underpinnings here for an incredibly successful global company which is already probably known as the world leader within ESG and environmental intelligence at mining. So with that, Jeremy, I'll pass to you for Q&A.

Thanks, Jason. Thanks, Justin. [Operator Instructions] First question from [ Robert Rawson ]. Robert for our long-term outlook and our strategy, the potential of the company. Biggest concern for Robert is around how we're going to fund that growth in terms of borrowing large amounts or those capital markets. So can you give a little bit of commentary around how we're planning to fund that growth?

Yes. So great question, and one, obviously, that consumes us as well. Certainly, the difficulty we've got with plans for growth is flexible, and it is the right option here. We did think about doing a capital raise many months ago back until last June and we felt the dilution was not right for -- certainly for shareholders. So we've gone down that path. We see a clear runway through here. We have started to pick up in the growth rate and the MARR that we're recognizing. So that recurring revenue on a monthly basis will continue to grow through. Clearly, and I hope everyone hears this, clearly the way forward is around growth. So if we can add recurring revenue in here, a huge portion of this will drop down into driving towards an NPAT result. So our focus for '25 is grow in the industrial sector because we know that there's a clear addressable market, where we have got a strong competitive differentiation. Support our aviation, it's not going to grow as quick, but it's an important part from the cash generation of the business. So it's around retention and growth in there. So we know that we have the right funding model in place, and we have the right debt facility with partners for growth. Anything you want to add?

No. Look, there's nothing to add there. Again, that's reflecting the position that we've got on debt facility, but also the impact of the prudent cost management that we've undertaken during the year. We did make our reduction in costs in the back end of FY '24, and the impact of that is now starting to be filled through our cost base moving into '25.

A follow-up question to that one from [ Mark Carey ] from Wilsons is -- just going back to the corporate activity and the release on June 13 and then the speculation we responded to. So [ Mark's ] question here, provide an update on June 13 around hiring advisers to deal with the [ InBev ] Corporate interest. Can we get an update on whether that is still going? How many parties are we talking? Are they interested in all Envirosuite? Or parcel?

So a little bit of sensitive question. So I'm going to be guided here certainly by our governance charter here. So we're not going to comment on the number of people that are in there. But what we can say is that Envirosuite is an incredibly attractive company to a multitude of different players, whether that's private equity or strategic partners in place. We are one of the largest, if not largest, ESG platforms today. And what people can see is you want to follow where the market is going to go. They know that we have world-leading technology and they've gone out and they've independently validated that. They know that there is a significant addressable market, whether it's TAM or SAM. And I know that we've got a strong team in place that's ready to execute. So what we will do is we'll continue to engage with these different parties in the view of maximizing shareholder value. We have an obligation to go and talk to these people and to run them through to ground to make sure that we are doing this on behalf of our shareholders and it does cover whole of company and even part of the company. And some parts of the company are more valuable to different, but sum of the parts is incredibly valuable as well. So we won't comment on to that, but we can take a discussion. Once we are in a position to disclose something, certainly, then we will have and follow our governance and reporting obligations around that.

Somewhat sort of a connected question to that is around cash runway and cash cost. So, first, Jason, any sort of commentary on what our cash runway is?

Yes. I mean we do cash flow forecasting, obviously, like any business, right? And it's really important to map that through. So -- we have set a budget which has got strong collaboration with our regional sales leads. We're in -- understand what our customers are spending through in the cycle. We understand when projects are going to turn on to move that through. So we feel the cash position and our debt facility certainly supports that trajectory. So yes, we're in a highly confident position today.

Agreed. And I think, again, it's looking at our cash management, our working capital, how we treat opportunities that are existing within our inventory balance, as I mentioned earlier. We have an inventory levels that are higher than what I would call optimal. And that, again, represents an opportunity for us to unlock further cash to provide to the runway along with the existing facility and potential [ pruning ] for us.

Excellent. One of the questions that were submitted ahead of time from Charlie [indiscernible], Thank you, Charlie, for reaching out ahead of the session. Does company has a plan to reach net profit after tax positive results? And would we share in that plan?

Great question. So NPAT is an important part of the business, right? So we want to be getting to NPAT. And as soon as we have free cash flow coming in, it helps us in so many different ways. You can't cut your way to -- in our business. And so there will be some people, at the end will believe we need to cut the business. That's not going to work through. We've done the cost optimization over the years. Since Justin and I've been here, we had proactively made those decisions, always hard decisions because it's affecting people, so we've made those decisions in the view of transforming the company to have the right gross margin moving forward and certainly to be attractive then to private equity and strategic investors at some point in the future. So the driver there is around supporting growth. We won't be publishing guidance. So for Charlie's question, we won't be publishing guidance. But what we do have is we have a multiyear strategy, which the Board has signed off on, the management team has signed off on, which does have a clear line to NPAT. And so we're all focused about NPAT and producing that well into the -- not well into -- in the short to midterm in the company.

The piece that I'd add to that is thanks to our track record of what we've achieved, where we have not seen the performance at the levels that we have wanted them, we have made conscious decisions around our cost base. Not ideal, but decisions, nonetheless, that we've had to take. We also continued to leverage our locations of labor. So we've spoken about a Philippine Center of Excellence, which continues to expand at the level of 25 and -- 23 head count and what we can do with adding additional corporate activity and functionality within that group as well as looking in other locations around South America, where we also have the opportunity for effective use of labor.

Very good. Question from Ross Barrows. In respect to Industrials average revenue per site increasing over the last few years. What can we expect in terms of increases around that average revenue per site for Industrial into the future? Should we be expecting around that sort of $8,000 to $10,000 per year? Yes.

Good question, Ross. Absolutely. So certainly, from a product strategy, if you look at this in here and the chosen sectors that we have got, that's a clear part. So Andrew, who runs our product has got certain tech guys in place to drive that. And so we will be continuing to focus through -- around product innovation. One of the reasons we've chosen mining and waste is 2 key parts is the ability to scale on mining because of the huge operational improvement that we can have and I want to emphasize the huge. You are coming in here to operate assets that are generating hundreds of millions of dollars, if not billions of dollars each year. We are helping those mine sites improve their productivity performance. I'm not going to go and give you a statistic, but the ROI in what we do is compelling. We had some significant wins in FY '24, and we want to protect our customers from a confidentiality perspective. We were now generating incredibly significant revenue per site in mining. That is a clear strategy. In waste, and I want to reemphasize this point, I've said it before. Waste in the U.S. is the third largest contributor to man-made greenhouse gas output. That is something that, as a society, we have to tackle. And so we're really well positioned on that. It's an area that we have growth. You would have seen here from -- in Australia and also in the U.S., the market traction that we had. So Ross, to your point, we're focused on sectors that we know that we can have an operational improvement, where we're solving a meaningful problem and the roadmap will support continued growth in that.

I think the other piece to add on to that is we will see improved gross margin percentages as we scale from those sites. So moving it from the 90, 100, 150. That's where we'll get the scale coming in and the gross margin improvement. Similarly, the product innovation that's been put through, again, utilizing existing instrumentation across the same footprint will again improve gross margin.

Good. Thank you. A question from [ Reece Vander Maiden ], Reece, I hope I pronounced your name properly there. Are you expecting churn to decrease this year with fewer or low-margin noncore contracts running off?

Yes. Yes. Good question. There are 2 arms there. Yes is the simple later. Is a reduction right. So if we -- it's a 2-speed answer. Aviation, we have gone 1.5% churn on the aggregate. Department of Defense, as we said originally, there was 5 sites. We churned those 3 back in FY '23. The other 2 sites will come off in the first half right into '24. So that's soft -- sorry, FY '25. And so you should certainly build that in -- we already built that into our model. So we knew that was happening. We have got good engagement. One of the things, as you go back into our scorecard, last year in FY '24, I'll push the agenda that we want to have strong technical customer success teams out in the regions, focused both in Aviation and Industrial. That's really been positively received by our customers and both in upsell, product adoption and usage [ to name a few ] back into the roadmap. And so those are some of the levers that we're seeing. One of the parts that hopefully we can start to track soon is net revenue retention. I think that net revenue retention will be an important metric in our business, because we're actually starting to understand our customers in the increased speed in there and break that down to different segments.

A couple of similar questions here, one again from Reece and also from [ Steve Nelson ]. So I have both of them together here. So how much contracted ARR is not yet in the billing phase? And the connected question to that is how much of the $61.1 million in ARR are we expecting to implement by the end of FY '25?

Sure. Okay. I'll take that one. In our -- in the finance slide, we included a -- just going back to the page, we included a $6.6 million, thanks, Jason. So we've got $6.6 million that sits in our to-be-implemented bucket. As mentioned earlier, we continue to increase or improve on our implementation tooling and our implementation processes. We have a dedicated global project manager who focuses on assisting regions in implementing either the aviation customers or their industrial customers to get the most efficient time between contract signing to revenue recognition. So we anticipate a large majority of that $6.6 million will be implemented. Of course, it's a rolling amount. Each time we go through a quarter, we win work. It comes in and our operations teams, both domestically and regionally -- sorry, regionally and centrally assisting in driving that number down. So I'd certainly be expecting that number to rotate through. However, as we grow, as sales increase, that number, too, may increase with time.

Thanks, Justin. I'm crunched to the time, I'm going to make this the final question. As I mentioned, we will come back. Any questions that we haven't gotten to answering today, we will come back to you via e-mail with a response. But the last question we'll make for today is around. So if we believe the company is on the right trajectory, why isn't the Board and management investing more of themselves into Envirosuite?

Yes. I mean, that's a tough question. There's certain parts of the year that we can buy, as you appreciate, but certainly with the level of activity the company has had, it certainly prevents us from doing something. So I'm sure once we get through that and we're given sort of the green light to go do that, that's something that -- I certainly think it's incredible value and can only see significant upside into the share price. So the first opportunity that I have, I certainly will be -- we'll be taking that.

Very good. Jason, Justin, thank you very much. Jason, I might pass back to you for some closing comments.

Great. So I'll sort of go to this slide because I think it's an important one. We -- really what we solve, right, it's not a problem in Australia. It's a global problem. I recently did a trip around the world into the U.S., into Canada, into the U.K., Singapore and home, exhausting the importance to talk to customers, strategic partners and what. What I hear firsthand is that what we do is incredibly unique in the world. What we do is also incredibly meaningful. And so we are driving a significant change. We will look back at this company in 5, 6 years' time and say this is one of the most impressive technology companies that Australia has built to solve what is a significant global problem. GHG's sustainability, our environmental play is incredibly important to governments and businesses all around the world. We read an article this week around CVA making an announcement, they're not going to fund dirty businesses that do not have a plan. What you're going to see around the world is people fire CVAs lead. So this is not something that's optional. This is not something that you want to buy because it's in vogue. This is a core fundamental for people living on this planet. So I want to thank, first of all, the staff in Envirosuite for what they've built and the vision that we have moving forward. It's -- I get out of bed every day exhausted, but I get to get out of bed so excited about what the future holds for us. So I think we're really well positioned. I want to thank David, David is Chair, David has been a steward of this company, and he has navigated incredibly tough situations. David has got a deep understanding of the business and the challenges that it has faced. So I want to thank David for being certainly a supporter of the company. He's certainly given strong strategic direction to the company, but also to the other Board members here. I've enjoyed working with him. A little bit tough at times, if I'm honest, but it is also what you want to achieve. And look, as we transition to the new chair, I think it represents a great opportunity. And we are talking to people in that place that -- the new chair, you want to have someone there that believes in the vision of growth that really understand what we're wanting to do, that can get in behind the trajectory that we're on, and this is about maximizing shareholder value, and this is about growing the company. So I'm really excited to what the next phase can have. And having someone in place that really does get technology play and could provide some strong acumen around how we can accelerate our growth, I think, is going to be really key to that part. And then lastly, I want to touch on to the shareholders. I apologize for where the share price is at. I don't think that's a result of us not working hard enough. I don't think it's a result of the wrong strategy. I certainly think microcaps have been hurt in the last 18 months. What I would say is, and you can see it from what we've spoken through, the numbers support the trajectory that we're on. The validation from customers supports the trajectory that we're on. And so yes, FY '25 is a positive year. The steps that we've made through the year in '24, some of them were tough, but they were the right decisions to make, and we will continue to make the right decisions for the company moving forward. But I want to thank everybody. Obviously, there's a huge amount of effort through the year. It culminates in a 1-hour presentation. To everyone that's worked again in the Envirosuite team and for our customers, I shouldn't forget our customers, our customers who have the trust in what we do, I think it's fabulous. So thank you very much.

Thank you, everyone, and good morning.