Gentrack Group Limited (GTK) Earnings Call Transcript & Summary

Good day, and welcome to the Gentrack interim results announcement 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Gary Miles, Chief Executive Officer of Gentrack. Please go ahead, sir.

Thank you. Hi, everyone, and thank you for your time and attention. I'm going to start today with the slide on Veovo. I'm here in Auckland, which is great to be in the region. I was in Australia for about 2 weeks, and New Zealand for the last 2 weeks, and the news is that businesses are flying, passenger flows are up. We see leisure travel has returned to pre-pandemic levels as people are spending more on experiences than things prior to the pandemic. And the good news is airports are starting to turn back on to full force. And I think, for the last 2 years, we did a good job managing the revenue declines to a minimum. Despite the slowdown in the industry in the period, we won 3 new logos. We did 4 upgrades and extensions with our current customers. We are an essential service. I'm really pleased with the Veovo team. We have a top team there. And as we've said before, we're investing in the technology to come out of this pandemic stronger. And airports are going to need strong partners as they move to Airports 4.0 and turn the engines back on with the operations. So we're pleased with this. Now we are not predicting this -- the Veovo business declined 4% in the period. We are not predicting when this turn on will occur, but we feel like we're already seeing some really positive signs around that in terms of licenses and tenders and other activity. The other reason I'm starting with this slide is I do believe that this is a growth area prepandemic, a sizable growth area for us. That is a bit maybe potentially underrecognized by investors, and we are bullish on this space and excited to see as this -- we think we're well positioned. So let's move to the Utilities business. I've told very consistently about 4 things that are going to make all the difference for our leadership position. The first one is a winning DNA. So I'm going to have a scorecard on each one of these. The second one is building a high-performance, highly engaged organization. We have 5,000 person years of experience in utilities. This expertise is -- we know the industry inside and out. So if we can get this entire organization running all in the same direction towards the same strategy and goals, we really have what I believe is an unstoppable leadership position. I've also said before that I'm a tech CEO. I believe that great technology will help us move to a greener planet that utilities have to transform, the great technology will make a big impact on this. But to the fourth point, in a B2B business, particularly a B2 few customers business, B to 100, 200 that's doing major transformations, the only -- the technology is only as good as the delivery. So I'm going to spend some time talking about these 4 main points, and then we'll move to the numbers. So hold tight. So let's go to the first slide. So we signed 5 new service providers year-to-date. Now we signed 7 new service providers last year. Some of those were assurance customers, some of those were billing customers this year. From the 5 new logos, 4 of them are new billing and metering and customer experience contracts, transformation programs. One is an assurance one. The main thing I'd like to say is that the team is doing a great job articulating our value, the confidence of, we're planning to win, we're learning how to sell better and how to really articulate this to our customers. So this is a super positive and a mentality of leadership that is becoming ingrained in the organization. This has led to revenue growth. The Utilities business was up 15% in the period. We did have some headwinds from the insolvencies in the U.K. John is going to talk about that. If you net out the insolvencies, it was a 25% growth in the period. So we're pretty bullish on the growth. We do believe that the worse in insolvencies is behind us, and we'll talk more about that. A lot of this growth also comes from doing more with our existing customers. In general, the pipeline is growing across the whole business. We're pleased with it, and we're confident in our guidance. So -- and the last thing I'd like to say, one of the big focuses here, that is, is we're hunting for bigger fish, so to speak. So we're really engaged with the Tier 1 suppliers to make sure that -- because we have the scale and capability to deliver to them, and I think that's a key, key focus of ours. Now let's move to the people. So the number that I like -- we call it our people power, the Gentrackers that work here, our engagement, we had our first full engagement survey that I had -- that we rolled out with our new Chief People Officer in October of last year. Since October engagement survey, which was very detailed about what's happening inside the business, we had a poll survey about 3 weeks ago, and engagement is up 14% year-to-date. It's up to the utilities benchmark. It's moving fast. We think we're going to blow past this quickly. What does this mean? It means that the people like working here. They're highly engaged. They understand our strategy. The purpose resonates with them, and they know the role that they have to play on the march that we're on. We're very, very, very pleased with this result. This is probably the #1 thing that's going to impact the business and the numbers moving forward. The other thing that's happening is Gentrackers are talking to other talented people, saying come work here. So we onboarded 30 people last month alone. You can appreciate this is in a very, very tight market for talent and the tech space, and we're able to hold on to our Gentrackers. So our attrition is lower than the tech industry benchmark. So our retention is high, and we're keeping our people. So I'm really pleased with this. And so -- but we're putting a big, big focus in this space. Obviously, we have continued room for improvement across all these factors. Now let's talk about transformation. The decision to transform the billing and metering customer experience system, which is effectively the system that automates the operations of a utility, okay? It's like giant robot that runs the business processes of the company. It's not just a technology transformation, it's a business transformation. It's probably the most important decision a CEO will make in his tenure as CEO. I mean that, arguably, together with his hedging strategy, his or her hedging strategy. If it's -- if there's a wrong decision and a transformation goes sideways, it can distract the business for 4-plus years. It can lead to huge cost overruns. And it's a very, very dangerous decision. So being able to find a partner that can get you through to safe harbor and run a transformation is a certain skill set. We have 100% success in transformation. We just finished the transformation program in the U.K. of putting 2 major, major businesses together in the I&C space or the industry space. Two legacy systems that we put together 2 companies. We completed that. It's arguably one of the most complex top 3 transformations in the utilities industry today. Moreover, we're able to support customers across different geographies and segments. So we have 50-plus customers running 15 million-meter points across water, gas and electricity in 6 countries and 15 regulatory segments. This is far from trivial. I can tell you, if you're a new start-up trying to do what we do in one country, to go from 1 country to 3 is a lot harder than to go from 6 countries to 18 because you have -- once you've done it to that scale, you have the muscle to do it to larger scale. The other thing I'd like to say is our discussions with our customers are improving and our potential customers. So on this road show, we met the 3 biggest energy suppliers in Australia. We're having the right discussions with them. The main thing is to have a seat at the table to start to try to evolve some of their strategy. We met some of the leaders, CEO leadership in the New Zealand landscape for utilities. We are -- I think that here in New Zealand, we helped TrustPower with the Mercury transaction do that divestiture. We're moving Pulse into the cloud. We have other programs. So we're having the right dialogue. And I feel very good about this because it's kind of a strategic partnership that we need to evolve our business towards. And so this is an important foundation upon which we are growing. Now let me move to the next slide on the technology side. So we said that we were going to invest in technology. Now I am not releasing -- we're not releasing our new technology stack, which we call G2 here today. So this is a preview of a preview, so to speak. But in the coming months, we are going to release our next-generation technology evolution. It's got some amazing new capabilities in it, modernized. And we believe it is the leading stack that will take the industry into the new era. I'm not going to get into a lot of details, but I would like to say that I think we've executed well on ramping up this organization, land down the right code in a smart and strategic way. And we look forward to sharing more with you in the coming periods. Now the last slide before I get to the numbers. So the world has 2.3 billion homes approximately. And many of these homes have 3 meters: gas, water and electricity. And then you have all of the SME and industry that's out there. So there's north of 5 billion meters, easily north of 5 billion meters in the globe. So Gartner came out with some information that said that some of the legacy players will shed about 25% of their meter points in the coming few years, 2025. Now you can argue whether it will happen in that period of time or not. But as they move to modern systems to support the new era of prosumers and variable rate charging and active control and better customer experiences, the market is shifting. And we think the first step, we call it, 400 million meter points are going to recontract. So we want to look at attacking this market opportunity. So we came out with a Strategy Day a year ago in June where we talked about the financials in our core markets. We did not talk about moving outside these core markets. I would like to say that we think the opportunity is sizable. We spent time with the team, getting the organization in a strong spot to be able to go attack this. And we're looking at how to expand and to take advantage of this opportunity because this is the first step on a global transformation that will own the high ground for the industry for the next 15 years. So -- and we've got some early signs of this. We have a new win in Singapore. We have an exciting early phase pipeline. Once again, this is early days on this global move, but we want to let you know that is in our sights, and we're orientating on how we can go tackle that and lead in that space. So we're pretty excited about it. Now let's go to the numbers. I don't want to be repetitive because John is in all the details and he's going to share with you many more details about each of these. But I would like to say that the good news is revenue is up 12% for the group. I mentioned that it's up 15.2% for utilities. ARR is up. We have some significant bump in NRR, which will lead to ongoing ARR. John will talk about that. EBITDA is down. Now this was planned. We said we were going to invest in tech. It's the right decision. You heard what we have to say about G2. So I think the investment will pay off with the large opportunity that's in front of us. Cash is also down. Some of this is cyclical that happened in that period. Cash in the bank today is north of $20 million, not at the $16 million that's written here, $20 million. And we have the facility. But I'd like to hand over to John to let him talk to you about that in general. Before I do that, I would like to say that I'm pleased with the effort, we have more work to do. But we're excited about the opportunity and the team that I have around me, I think, is top class. So John, let me hand over to you.

Thank you, Gary. So I would like to take you through the results for the 6 months ending March '22. Starting with the group cost and loss account. Our revenue is up by around 20% compared to the prior period. So that's been driven by strong growth at our Utilities business, and that's both from new customers coming on stream, but also from the growth of existing customers. And there's been a slight offset by lower project revenue in our Veovo business. Our costs are up a little over 27%. So as well as increasing our delivery capability to support that growth in business volumes. This reflects the decision to invest in strategic R&D and sales and marketing. So our EBITDA at $1.2 million is down $5.8 million compared to the prior period. And that reduction reflects that increase in R&D spend and sales and marketing investment. So moving on to utilities revenue. I wanted to clearly set out the impact that the insolvencies in the U.K. have had on our half year revenue. So this slide separately identifies the revenue from such customers. Now overall, our total revenue has grown around about 15% compared to the prior period to $48.9 million. Of that revenue, $4.6 million is from customers that have been lost to insolvency via that supplier of last resort, SoLR process. It does mean that our underlying revenues are up by almost 25% compared to the prior period and our recurring revenues by almost 14%. In the second half of this financial year, we're expecting around about another $1 million from a revenue from the customers that are in that SoLR process as they wind down and then formally exit this as customers in the second half of the year. Now our project revenue is also up, up to a little over $12 million. And these are projects that are implementing new customers or upgrading or transforming our existing customers. And we expect that to lead to additional recurring revenues. So those projects would lead to roughly a $7.3 million uplift in our recurring revenues spread across the balance of this year and the next. I provided some further analysis on that utilities revenue. So in terms of the split by region, the U.K. represents around about 60% of our revenues in the first half. Australia is a little over 30%, and the balance is from New Zealand and the wider APAC region. In respect to our client concentration, our top 10 customers represent around about 50% of our half 1 revenues. Now as we've noted before, Bold, which is a top 5 customer, went into special administration at the start of this half year. Now it remains an ongoing customer as the U.K. government seeks a buyer for this business. Now importantly, as well as regional diversity, we are diversified by market segment. So that mix of B2C Energy, B2B energy and water customers, has allowed, for example, our U.K. business to continue to grow in spite of those insolvencies that we've seen in the B2C energy space. And moreover, that diversity market segment provides us with a higher addressable market and a greater scope of opportunities for us to proceed. Moving on to Veovo. Now revenue at our Veovo, our airports business at $8.2 million in the first half of this year, and that's down around about 4%, which really just reflects the impact of the general industry downturn. And you can see that in our project revenue. However, pleasingly, our recurring revenues are up. They're up by around 8% over the prior period, and that is new customers that move from implementation and across into operation. And we look forward to the opportunity that the recovery in the aviation market will bring to Veovo. So looking at our cost base and the main movements within that. Now as we set out at the Investor Day back in June and as we reiterated at our Annual Shareholders Meeting in February, we have substantially increased our investment in strategic R&D and in sales and marketing as we position the business for growth. Now this is reflected in that $9 million or so increase in personnel costs. So alongside the increase in our delivery capability to support the growth in business volumes, we have increased the spend on our R&D team by around $5 million compared to the prior period. And we've increased the size of our sales team by a little short of $1 million compared to the prior period. That step-up in headcount has also required higher recruitment costs in the period. And it's those investments that really are underpinning the growth in our cost base that you see in the first half of this year. So moving on to our cash flow. Our cash balance at the end of March was $16.5 million. In addition, we have a $25 million credit facility with the Bank of New Zealand that currently remains undrawn. Now across the half year, our cash balance did fall by $9.4 million, and that was driven by an increase in working capital of $6.7 million, and that was mostly our trade receivables. Now that reflected the phasing of a number of large projects where the milestones are weighted towards the end of the first half and where payments were received in April and early May. It does mean that we expect our cash balance to improve across the second half. And in fact, our cash balance was back above $20 million mid-May. So I wanted to go back to the external metrics that we set ourselves at the Investor Day last June, as a reminder of the medium-term targets that we've set for the business. For example, to grow our revenue to around about $130 million by financial year '24. Now since the Investor Day, the impact of U.K. insolvencies was a little more than we set out. It's a little over $13 million compared to the $10 million of customer losses that we set out that day. Although in total, our financial year '21 revenues did end above that forecast last June, which compensates to some degree. In addition, uncertainty does remain as the position evolves. It remains an ongoing customer, but it is currently in that U.K. government-led sales process. However, in the context of the strong revenue growth in the first half of this year and the growth that we expect across the entire financial year, our 24 -- our financial year '24 target remain in place, and we remain confident in our outlook. That takes us to our outlook update. So at the Annual Shareholders Meeting in February, we advised that revenue for the current financial year would be around $115 million and that our EBITDA would be in the low single-digit millions. Today, we confirm that there is no change to this guidance. We also confirm that there is no change to the financial year '24 targets that we provided back in June on the Investor Day. That brings us to the end of the results presentation. We have also included as an appendix to this presentation a reconciliation of our EBITDA to the net results on a statutory basis as reported in the financial statement. And secondly, an analysis of what our half 1 results would be using a constant currency basis, i.e., the exchange rates from the prior period, and they are both shown as appendices to this deck. So that takes us to the Q&A part of this presentation. We would like to start with audio questions and then go live to any webcast questions. Thank you.

[Operator Instructions] We will take our first question from Joshua Dale with Craigs Investment Partners.

Gary and John, first question, just wanted to talk about your FY '24 targets to start with. They are unchanged from, let's call it, $130 million of revenue and $20 million to $26 million of EBITDA. Now the cost base implied by that is $104 million to $110 million. Now looking at today's result, your cost base for the half was $56 million. If you double that, you're at $112 million. It looks like your cost base needs to decline from current levels to hit your FY '24 targets, which seems at odds with your focus on lifting R&D spend. Can you help us understand your thinking there?

Yes. Thank you, Josh. So I think that we are certainly in that growth phase of investment in the business. And I think as we move across the balance of this year into next year and into financial year '24, we need to make sure that the value that we can get from that R&D spend is then being reflected in our revenue growth, in a little bit more than we've seen across the balance of this first half and the end of last year. So really -- so Josh, does that -- I mean does that give some color?

I suppose what I'm asking is do you expect your cost base to decline because that's what's implied in your FY '24 guidance numbers?

Yes. Look, I think there's a lot of areas that we can improve upon and, in particular, improve upon the value that we're getting from the R&D spend. And also, the -- also making better use of the increase that we've seen in some of the other cost areas of the business across the first half of this year.

Okay. Perhaps I'll come back off-line about that question. Just the second one on Bulb Energy. Does your guidance [Technical Difficulty] did you generate revenue from that account?

You broke up, Josh. Can you say it one more time?

Sure. On Bulb Energy, it's a fairly material account. Does your guidance for FY '22, assume you continue to generate revenue from Bulb?

So yes, it does. So we're assuming that all remains an ongoing customer for the balance of this financial year. [indiscernible]

Just last question from me. The number of energy retailers in the U.K. has more than halved since the start of last year. Do you have any comment on, I suppose, the shrinking addressable market and implications for your ability to grow in that market?

Yes. So I'll take that. The -- there were 70 suppliers on the B2C side at some point. The market shed 29 to 33 suppliers in the recent history, depending on how you count it. I don't think a lot of new entrants are coming into the space right now. There's some new players looking at bulbs book, which is interesting. Obviously, existing players are looking into that book. The B2B business and the SME business is not affected by the price cap. So we see that there's some opportunities there. I don't think there'll be a lot of new B2C suppliers on the energy side in the short term, besides maybe coming after Bulb. The other thing that's interesting is we're pretty active in contested water. We have more than 50% market share in contested water in the U.K., which is basically the B2B business. The B2C business in the U.K. needs to transform. So that's a pretty sizable opportunity for us. So with the guidance projections that we have in the numbers for our core markets, I'll just repeat that the numbers we came out with in June were for growth in our core markets, we feel confident that we can reach the growth needed to make those numbers.

We will take our next question from Shezad Okhai with Pinetree Capital.

Just to start off here, I wanted to ask about the difference between the CMMR growth that you show in the presentation versus the annual fees that you show in Note 3 of the financial statements. So in the presentation, you're showing between Utilities and Airports a total of about $3 million in CMMR growth. But when you look at the Note 3 in your financial statements, annual fees declined by about $1.5 million. Now that's offset by about $1 million growth in support services. So I'm wondering if you can help us understand the link between CMMR and the annual fees and support services in the statements.

Yes, certainly. So in terms of our recurring revenues, they are actually split in that note that you're referring to in the financial statements. There will be a split between annual fee and support fees. And actually, some of our managed service revenue we record in the other category in that table at the moment. So that's why when you just look at those top 2 lines, maybe it's hard to sort of reference and hence check to the presentation.

Okay. So are all of your managed services revenues within the other line on -- in the revenue split in the financial statements?

Yes, they're large -- I mean the largest portion of them are, yes.

Okay, okay. And then just another clarification question. In the presentation, you report $42.4 million in ARR. I guess that split 32.20 in utilities and 5.9 in airports. There's been a gap of about $4 million, which I'm assuming are from the customers in the SoLR insolvency process.

Yes, that's correct. So I mean, you can see on the slide that there was $4.6 million of total revenue from those customers in a SoLR. So those insolvent customers the majority of that, I guess, would formally be recurring revenues, except, of course, they're now in insolvency. So there is where the difference lies.

Okay. And then just a quick -- just wanted to confirm the $4.6 million excludes the Bulb.

That's correct. So for us, Bulb is the ongoing customer.

Got it. And then congratulations on the 5 new name utility wins. That's great performance. I wanted to understand what the typical ARR per new customer is on the utility side?

Sorry. Can you repeat the question?

The typical ARR for the utilities customer.

Oh, I see. In terms of the quantum?

Yes.

Right.

Yes. I mean, a few hundred -- I mean I say, typical, I guess, it really depends on the tier of customers. I mean you can go to some very large recurring fees. For some of those smaller customers, they would have been a lot more than that.

Okay. So if it's a few hundred thousand dollars or even lower for some of the new names, if we think about the ARR growth of $7.3 million that you expect over the remainder of this fiscal and next, is a lot of that growth then from existing -- growth in existing relationships?

Actually, it's real balanced, that $7.3 million. So you've got some existing customers that are transforming their business -- quite substantially transforming their business and bringing on effectively large additional pieces of business into the software. And you've got customers that are changing their functionality. And again, the range in terms of recurring revenue uplift can be quite a few hundred thousand to a much smaller amount. And some of those will be the implementation of new customers that we received that we secured last financial year.

Yes, but -- sorry, let me just add some comment here also. I mean, some of the customers, when you get into Tier 2 customers, and also, you have a difference in the currency. So if it's in pounds, if it's GBP 500,000 to GBP 700,000, you translate that into New Zealand dollars, it's north of $1 million. As we talk to the larger customers, we're talking about significantly larger ARR than that. So it really depends on the range. And by the way, we're trying one of the things that also we're pushing more as a higher ARR with some of our positioning and reducing NRR accordingly. So I think that's a trend that we're going to see shifting as well.

Got it. And with the new name -- with the high level of new name wins, Gary, who do you view as your key competitor in the utility space as you're competing for new business?

It's tricky to talk about the competition. First of all, we respect the competition. I would say it's a changing landscape. We have different types of -- if you look at cracking on the B2C side, they're really a different model they've taken Octopus' operating model. And that's a certain kind of set way of doing business that they push. So if energy suppliers interested to do it the Octopus way, then that may make sense for them. If you're looking at people that are doing B2C and B2B multiplayer, you see a lot in the -- in New Zealand, some of the service providers are also getting into communication, Same in the U.K., by the way. Then you need to be able to support multi-play. The people that support multiplay are not that many at all from the new entrants. You have more of the traditional suppliers like SAP and Oracle that do that. I think a lot of the new entrants are really mostly focusing on B2C. We saw some high activity from 2 or 3 suppliers over the last 2 years, it got quite a bit of recognition, but then ran in some delivery hiccups that this is hard to do. So suddenly, you have to spin up and do scoping in another country and delivering another country, it's tricky. I'd really rather not get into names out on a public -- about our competition in a public forum like this. We have a strong competitive desk. I think we've started to understand how to articulate our value vis-à-vis our competitors. They each have different strengths and weaknesses. And we'd be happy to have a discussion with you about that.

Okay. That's really helpful, Gary. It seems like a fair amount of the ARR growth is managed services. If I'm reading in between the line, John, from your previous answer of a fair amount of the growth coming from that other segment being managed services, could you help us understand what type of gross margins you're selling managed services at relative to typical software support maintenance gross margins, which are typically very high?

Yes. I mean, actually, the gross margins really do range across our customer base and in practice aren't so different from the gross margins that we're seeing in other parts of the business.

Okay. As the utility segment stabilizes, and you referenced you believe you're at the trough in terms of the SoLR process, do you plan on starting to disclose churn figures, maybe gross churn figures in line with a lot of other mission-critical software providers? Is that a metric you use to report to your investors?

I think -- I mean we're not talking here about churn in sort of subscriber base. I mean this is sort of a much more limited number of customers, isn't it, than hundreds of thousands of subscribers where you might talk about churn rates. And it can be a little misleading because you could have churn of a customer or two that doesn't have an awful lot of impact, frankly, on your business compared to churn of a significant customer that would. So I'm not sure that it's -- I'm not sure it's something that will -- that is quite so relevant for our mix of customers. It's probably more relevant to look at individual trends as we have done with those customers that are in insolvency.

So just to add to that, one of the things that John did, which we heard a request to do, is we clearly articulated this revenue loss from the SoLRs in the U.K. from a churn perspective. So we've been very clear about it. I think in the past 4 or 5 years ago, there were some losses of customer announcements, even 3 years ago, that had gone to some internal competition or some other solution. We've had no such announcements and no such news since I've been in this role. All of our customers are with us, besides the insolvencies that we are undertaking.

Okay. That's helpful. Could you help us -- just on the cost side, could you help us understand how much you're investing in R&D today? I think it was really helpful to see the dollar increase in R&D. I think it would also be great to understand how much in total you're investing in R&D today. And Gary, you've discussed being a tech-focused CEO. I guess how do you measure -- what's your framework on how you measure the return on your R&D spend?

So look, just in terms of the sort of quantum, we have set out that we're looking to get to around about 15% of revenue mark for our strategic R&D spend. So that's really what we're focused on for this current financial year. And that's required a large increase across the course of the last 18 months.

Yes. And then in terms of ROI. So we have 2 types of development. We have core infrastructure and technology development around the core of our system, which we're modernizing, and that's part of the G2 release that we've shown you. The ROI on that is a longer-term ROI that's across the overall global market opportunity in line with the numbers that we presented for our core markets in the 3-year targets. The -- let's say, the innovation engines that we sell alongside our core technology stack like data analytics and things have an investment thesis associated with each of our investments, and we build a model on getting the right ROI for that accordingly. And I think we run a pretty good shop in that regard. We don't publish the individual statistics for each of those, but I think we run a pretty good shop where that's concerned.

Okay. That's helpful to know it's ROI based. And likewise, how much are you investing in field and marketing post the recent increase in the sales team?

I mean, look, we've increased our investment to -- by a little under $1 million. So I mean it's in the -- it's still in the, I guess, the sort of low to mid millions that we'd be expecting to invest in sort of the sales and marketing teams across the period.

We don't publish the numbers.

But it's not something that we really set out.

And gentlemen, at this time, there are no further audio questions.

I have some questions from the web chat. And what I'll do is because some of them are related to the same topic, I'll try and group them together as best I can. So a question is, in the utilities revenue, there was $4.6 million of SoLR revenues. And in the U.K., this represents 15% of revenues. Is this revenue that could be lost or, in some cases, revenue won from SoLR? And then a similar question is, could you please clarify the proportion of receivables related to customers in SoLR, please? Are these customers generally paying on time? And is it likely that no material provisions will be required?

Okay. So in terms of the first question, so just to confirm, the revenue that we separately identify from those SoLR customers, that $4.6 million, that revenue is from customers that are exiting the business. So that's really why we set that out. Now what we see is that, in terms of our receivables from those customers, we're already fully provided and have been against all of the risk on receivables before any of those companies went into insolvency, and we would have been at the end of the last financial year as well. They remain an ongoing customer, maybe running by an administrator, then those receivables are paid as normal.

Thank you. There are some questions relating to Bulb, which is already being discussed and so I'll group those again. Any update on the timing of resolution of Bulb. Centrica was interested in customer base but no new news. Does revenue guidance for FY '22 includes Bulb? Could you clarify that Bulb was included in your $13.4 million FY '21 revenue subject to installment fees? And one final one. On Page 15, the bottom left graph shows 9% of client concentration is coming from SoLR customers. How much of this is attributable to Bulb? Is this 9% included in the FY '22 and FY '24 guidance?

So there were a lot in there. a lot in there. So let me just take it. So when John specifies, when we specify SoLRs, that is not including Bulb. Bulb is not actually in the SoLR process according to the U.K. They're in a special form of administration being run by the government. There is currently -- we are not aware of the exact timing of the sale process of Bulb. I don't think this is clear to -- we're not unique in that. Centrica, there were some news articles that talked about Masdar and Centrica interested in that asset. We believe there's others interested also that's going to play out through the Lazard sales process, and we'll see how that gets resolved. Right now, it's not clear to really most people, probably some insiders. So that's the situation. We've been very clear in the past that Bulb could go to a company that has a new stack, and then we would probably lose that base over time. It takes time to roll that off. It could be bought by somebody that has some of the best metrics in the U.K. market, operating metrics by far. So it could be bought by somebody that runs that independently or it could be bought by somebody and then they would take that as a transformation engine to transform their existing customer base. So we'll see where that goes. We do have it in our numbers this year, which is, we think, was very kind of reliable. And we did not have it in the $13 million that John specified. Because once again, that $13 million was for SoLRs and it did not include Bulb but it included all the other players that we've referenced. I hope I answered all of those. If I didn't, please ping in another question accordingly, please. Thank you.

What is the impact of Ofgem's plans to change Price cap every 3 months? The positive for more retailers, more smaller retailers find it more difficult to pay stabilization charge that was recently introduced.

So we welcome the price cap review on a quarterly basis. It makes sense, particularly with the current volatility on the market. It's kind of tricky that if now that it starts going down, the price that suddenly -- the review is more frequent. It's not necessarily the best news. But I think -- I mean it's just bad luck a little bit that it was less frequent when it was going up for the retailers. But in general, having an agile price review makes a lot of sense in volatile markets. So I think that will be helpful for the industry and help with the head strategies. In terms of smaller, there's -- if you look at the B2C landscape, there's not that many B2C players left in the U.K. Most of them are pretty -- have pretty strong balance sheets. So I think we don't hope not to see a lot of additional activity. I don't think it will affect us. If one of the other players, it's a bigger player goes into SoLR or in that case, maybe special administration, then that will have some shifts in the landscape and that will also represent opportunities. We'll have to watch that space.

I have a couple of questions relating to personnel. Could you talk to the timing of personnel hiring in first half? Was that evenly spread or back-end-weighted? And of new recruits, can you provide a breakdown by role or job description?

Look, we definitely don't break it down by role and job description, although you can look on our website and see where we're hiring. We're hiring a lot of technical people and delivery-orientated people. Actually, we were hiring across the board. We are at a place right now where we're comfortable. We have -- we had quite a bit of backlog of work that we needed. I mentioned getting 30 people in the last month that allow us to capture some revenues that was there for us as some of our customers asked us to do some specific work and to deliver some projects in this year. But I think from a staffing perspective, we are where we need to be this moment. And I don't foresee the ramp-up. Right now, pushing really heavily because the machine is working well as it is against our pipeline and our current projects. I hope I answered it. It's -- yes, it's in good shape and stable.

A couple of questions relating to sales. Can you talk about the sales pipeline in both Utilities and Airports and how they compared to 12 months ago? Does the pipeline include any managed services-style engagement? Can you talk to the quantum of price increases you're putting through your airport and utilities contracts?

So we definitely don't detail that out for competitive reasons and something that we won't do. I would say that -- the airports business, I really want to -- we're not coming out with details on this right now because it's such an uncertain space. But all of us are business people, and a lot of pent-up travel is happening. I think you can see that the market is returning. So we'll have to see what that turns into in regard to tenders. So as I said, we'll watch that space. In terms of utilities, the pipeline is improving across the board. Across the board -- and we're -- like I said, we're pretty bullish about it. I think the real issue is how do we go and get our -- more tenders on the global opportunity, and that's something that we plan to come back to the investors about the current -- at the appropriate time.

What is the outlook for the Australian business given rising wholesale energy prices?

Yes. So the price cap in Australia is once a year. There's definitely rising prices. The Australian market is really interesting because, in some ways, it's the Wild West in terms of over-the-top supply, prosumers. There's major -- it's not just about energy supply. It's about energy reliability and intermittency. So I think, in many ways, Australia will pave the way for energy management for the future around the globe as we move to less consistent supply of fossil fuels to renewables and the consistency that comes with wind and solar and other capabilities. So that's a pretty interesting space. There are some small suppliers in the U.K. that make -- I'm sorry, in Australia that may come under risk. We'll have to watch that. I don't think it's the same scale as we saw in the U.K., that's for sure, but there will be some pressures in the Australian market, which has better margins also in general compared to the U.K. So it should be -- but it depends on players' hedging strategies, and we don't really have access to all of that visibility. So we'll see.

Okay. Would you be able to quantify the level of costs in H1 '22 that you would consider one-off in nature? Would you be able to provide some color on timing of onboarding of additional headcount over H1? Was it spread evenly over the H1 or more weighted to the end of H1?

So I think you're taking the last question. The headcount growth was actually spread across the 18-month period. So both across half 1 of financial year '21. I mean the second half and then, to some extent, a little bit spread across this half. But I think as Gary has just set out, we sort of reached the level that we're expecting in terms of the level of headcount at the end of the first half of this year.

Could you elaborate on the NRR that is expected to translate into $7.3 million of ARR? What are these projects? And are there for new or existing utilities customers?

Yes, certainly. I mean it really is a mix of projects. So a portion of it will be from new customers or large increases in customer business often from projects and customers that were won in the preceding financial year. So it is new customers. It's also upgrading customers, too, say, transforming them across to the cloud, expanding the size of the business that's using the platform. It's spread across a whole range of areas.

Okay. There are no further questions. So thank you, everyone, for your interest and participation. And simply, I think you can now close the call, please.

Thank you.

Very good. This concludes today's call. Thank you for your participation. You may now disconnect.