Getech Group plc ($GTC)

Good afternoon, and welcome to the Getech Group plc final results investor presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Chris Jepps. Good afternoon to you.

Thanks, Alex, and good afternoon, everyone. Thanks for joining us today. Welcome to the Getech Financial Year 2025 Results Presentation and Business outlook. I'm joined here today by my colleague, Simon Brown, our CFO. We're joined in our leadership team by Max Brouwers, our Chief Business Development Officer, who's not with us today. Quick walk through the agenda. We'll start off with a quick overview of Getech and some highlights from our results announcement. Simon will take us through the financials. We'll do a few slides looking ahead, and then we'll wrap up before doing a Q&A. So Getech, we have some fantastic USPs, and we're all about finding resources in the subsurface. We have -- personally, I'm really proud of our list of customers. We have a real mix of household name, oil and gas, mining, energy companies, but there's also some governments and some regulators and a very long tail of much smaller companies that a lot of people haven't heard of. And what we do as a business for those customers is we help them reduce risk and better understand their uncertainty. Obviously, a lot of what they're working on is under the ground. By definition, you can't see it. So before you start doing some really expensive work getting into the subsurface, it's good to be able to do as much analysis and modeling as you can. And that's where Getech comes in, and that's our core strength and what all our products and services are based around. And ultimately, we help our customers really enhance project value all the way through their resource life cycle. Getech is a decades-long trusted brand. I think we listed first in '94. We're known primarily for our earth science data. We have global data holdings. We have the largest gravity and magnetic database -- commercial database available. We use that to build our Globe earth model product, which is kind of a digital twin of Earth history, taking us back in time. And we overlay analytics onto that and sort of use a value multiplier with our geospatial expertise in order to derive insight for our customers. Ultimately, we're a products company. Last year, we achieved nearly 80% of our revenues from our array of various products. Obviously, energy market is a global market, and we work globally, unsurprisingly. So you can see the pie chart, bottom left there shows where we earned our revenues in 2025. Large proportions in the Americas, North and South, obviously, Europe, where we're largely based and increasingly Asia and then rest of the world making up nearly 10% from sort of Africa, Middle East, Australasia. So I just want to put out a few key messages from our results that we announced this morning. For me, the main one is we've returned the company to a positive EBITDA, first such result since 2019. And really proud of the new leadership team and all the effort we put in last year. We did this on the back of a reset of the business, including sort of rightsizing our costs and improving our sales team, and we managed to grow revenues as well through the year. So that's a fantastic result for the year and something we're all really proud of. Sort of the start of the journey for us. Along the way, we've realigned our strategy. We focused -- refocused the company on our core markets and propositions. That essentially means things like Globe, the gravity and magnetic data that I just talked about and really prioritizing our core markets such as oil and gas and other markets where we feel we have the best revenue opportunity. We do continue with some of our low-carbon projects, but in a very capital-light way compared to the way Getech's operated in the past. And going forward, we're really focusing on growing this business and being sustainably cash generative. So for me, my North Star for the organization is really growing our ARR. We'll hear that theme come back a few times during this presentation. And we've got a lot of opportunity for doing that. We feel there's untapped market potential within the super majors and also national energy companies. And perhaps for the first time in maybe a decade where there's been a bit of a lower investment in exploration. Exploration is coming back a little bit. There are record low oil and gas reserve replacement rates. And we've seen recently how geopolitical instability can affect energy markets. So we've got lots to go after, and it's a really exciting challenge. So what is our market? We talk about these different sectors of the market, which makes it sound like we're spreading ourselves quite a bit. And actually, we're not at all. We really just serve one market, which is the market of things that are underground that are used in the energy sector. And we've seen across this market that the recent sort of changes to the geopolitical situation are really reshaping the conversation and customers are starting to prioritize technology such as ours that help them reduce risk and improve their project economics. In oil and gas, I've already mentioned the record low reserve replacement rates. A lot of what we do was built for oil and gas, but it's also applicable to these other sectors. So we're fully expecting exploration to come -- the pendulum to swing back towards exploration. We feel it started to do that last year a bit. We delivered high revenues from our data sales last year, which is often an early indicator. And that was both for oil and gas and the mining sector. And the mineral sector has been talking a long time about having a copper supply shortage. That does seem to be becoming more and more real. And we're hopeful that we'll see a further swing towards copper exploration as well. On the low carbon side, we continue our work in natural hydrogen. Our grav and mag data is particularly useful for finding hydrogen systems. And while this is an early stage sort of nascent play, recent developments around changing project economics by involving co-location with helium, which is also in short supply as we've seen from recent events and also emerging parallels with the U.S. shale operations in terms of stimulated hydrogen plays give us a really good feeling that our revenue line from natural hydrogen will continue. We've seen energy transition projects execute much more slowly than expected, largely due to sort of a lack of -- or slower funding from governments. But then recently, we're seeing that being more balanced out with the structural shift in demand created by artificial intelligence and the computer centers required to run that. So things like geothermal that were maybe lagging behind a bit because of this slow policy execution are actually coming back into play. And we have a lot of expertise around geothermal as well. Again, our gravity and magnetic data and geoscience modeling helps us understand a lot about how heat flow impacts the subsurface, which is really important for geothermal. So I'll hand over to Simon, and he'll just walk us through the financials from last year, and then we'll come back and sort of look further ahead.

Great. Thanks, Chris. So I'll start off with a high-level overview of the '25 results, which represents a clear step forward financially. Revenue grew by just over 7% year-on-year to GBP 5 million, and that reflects improvements in both recurring and nonrecurring revenue streams as illustrated on the chart to the left, and I'll come on to that in the next slide as well. Importantly, this growth in revenue translated into a return to positive EBITDA of GBP 0.5 million, as Chris has mentioned, and that compares with a GBP 0.6 million loss last year. So as mentioned, that's the group's first positive EBITDA result since 2019, reflecting the cost base reset and improved revenue delivery. In terms of cash, we ended the year on GBP 0.2 million, and that was affected by timing of receipt from a U.S. organization following the U.S. government shutdown towards the end of the year. But through to Q1, cash generation has certainly improved, and we ended the quarter with cash in the bank of GBP 0.8 million. So that reflects continued cost control and strong working capital discipline, although we do continue to manage cash carefully. On to ARR, which Chris has touched on already. We landed the year at GBP 2.8 million, which is broadly stable year-on-year. Pricing uplifts have certainly helped, but we were -- this was offset by foreign exchange headwinds. Strategically, our focus remains on growing ARR to a level where it meaningfully underpins and covers fixed cost base of the business. And then finally, on to order book where we ended at GBP 3.8 million. And that in addition to cash that strengthened through Q1, supported by major global renewals. Of the GBP 3.8 million, we expect GBP 2.5 million of that will unwind into '26. So that gives us forward visibility on cash and revenue generation. And then on to the income statement. So looking back to the revenue mix, we saw an increase in both recurring and nonrecurring revenue. Nonrecurring revenue increased by 16%, which is largely driven by grav and mag data sales. Recurring revenue also increased to a lesser extent, but it obviously represents a slightly lower percentage because of the stronger data sales and project activity. As we set out to achieve last year, we reduced the underlying cost base by GBP 1 million, which is circa 20% of the cost base from the previous year. And we did that without compromising customer delivery and operational capability. It was a deliberate reset designed to align the business with a more sustainable revenue base. And that flows into gross margin, which, as you can see, increased to 52% compared to 35% the year before, and that demonstrates the operating leverage we have in the model as revenues recover against a much leaner cost structure. And then flowing further down into EBITDA, we posted a GBP 0.5 million positive EBITDA, which is GBP 1.1 million better than the previous year, again, as mentioned, returning to positive territory for the first time in 6 or 7 years. And this improvement is primarily driven by the higher gross margin and lower fixed costs rather than any one-off revenue effects or any accounting adjustments such as development capitalization. And then on to the bottom line, operating loss reduced by GBP 0.9 million. As you can see there, we are still posting a loss at that line, but that's largely attributable to noncash items such as depreciation and amortization. But as we move into this year with the strategic plan to increase ARR, we're looking to reset that and bring that more to a breakeven level. So back to you, Chris.

Thanks, Simon. So yes, looking ahead, we've been working on our business strategy, as I mentioned towards the start. And as I said, we're sort of focusing on our key competency on our key markets where we've got the best revenue opportunity and leveraging all of the great stuff and unique stuff that we have in-house, like our geophysics data, Globe and our expert skills. We have fantastic IP within Getech. We really feel our share price absolutely does not reflect the value that we have in our IP and our huge database of gravity and magnetic data in Globe itself and our software and continuing to develop that IP is important to us. And ultimately, our new ambition is to be the world's most trusted source of subsurface and geospatial insight for the global natural resources sector. There's a number of pillars that underpin our strategy going forward. I'm just going to walk through a few for you now on the subsequent slides and they're listed there on the right. The first one being sustainably cash generative. So as Simon says, we've taken quite a bit of cost out of the business. And we've also made a lot of operational changes, and new leadership team, enhanced our sales capability. And really, the way I look at it is we've kind of rightsized the cost base of the business. And that's allowed us to increase revenues, as we've seen from last year and also get that EBITDA into positive territory for the first time. So definitely sort of starting to turn that corner or sort of well around that corner. And we've carried our sales momentum into this year. We've had one of our strongest Q1s in recent times with 5% up from last year, which was also quite a strong Q1. And we expect to increase revenues further and expect to increase EBITDA further through 2026. And really, this is hopefully the start of many years of consecutive sustainable cash generation for Getech. The easiest way for us to do that is to increase our ARR. And obviously, we had some ARR headwinds last year. And the best way for us to materially add to ARR is to land new Globe clients, for example. Globe is very strong in our sales pipeline, but it's also quite a long sales cycle, usually 6 to 18 months. So we have some great opportunities for Globe deployments in our pipeline. They haven't come through as yet, but we're working very hard to land those, and that's going to be the key kind of lever to our ARR growth. We feel there's a lot of untapped market potential out there in terms of new super majors, large independents in the oil and gas sector and also within national energy and oil companies, especially across Africa, where countries are starting to look at sort of Globe -- national inventories for sort of natural resources and also looking at where they can find the materials that maybe they don't have within their own borders. Another great way of driving ARR is through our software products. We have a very popular product for the unconventionals market in the U.S. onshore. That remains a key focus for us to add new logos there. And as we see that pendulum swing back to exploration, for more conventional exploration, sort of offshore traditional oil and gas rather than sort of shale-based. We're also seeing a little bit of uptick in interest in our Exploration Analyst, which is play-based exploration product. And then finally, leveraging our existing contracts to grow ARR. We made an announcement earlier this year that we were able to renew one of our recent Globe contracts with about a 30% increase. This was the state-backed Asian super major. So by including new products or extra products in those contracts, adding inflationary uplifts, adding uplifts for new capabilities, we're able to upsell within our existing customer base, which also helps drive ARR. Product enhancement is very important to us. I'm just going to touch on a few areas here. First of all, Globe, that little picture of Globe floating around in space there. That's actually a screen grab of the product out of the product, if anybody has ever wondered what it looks like. You can see Africa and South America are much closer together than they are in the current day. This is sort of back to the Cretaceous time. And it shows an example of some of the layers that some of our geoscientists use to extract value from this tool and insight from this tool. And Globe itself has tens of thousands of layers of data, a few of which are shown in this image. So adding new data to Globe is important to our clients, which we continue to do, adding new ways of delivering the data, keeping pace with, for example, different cloud technologies, embedding AI and machine learning. These will help us to land new clients, expand contracts with existing clients and drive ARR growth. On our grav and mag data, again, a little visual there showing the kind of data that we have. This is in contrast to the Globe one, which is showing the whole globe. This is a very small area of data. And you can see how we've interpreted that data to drive some insight about the structure of the subsurface there. And this is the kind of thing that geoscientists use in early exploration before drilling a well or shooting seismic. With our grav and mag data, our plans are to integrate new data sets as they become available. Some data sets are constantly being updated, for example, from satellites that are going around the world all the time. And with data that we're able to integrate that's constantly being updated, that flips us over to the opportunity of selling our data by an ARR model as well. So that's something we've got in R&D at the moment. Unconventional Analysts, we're adding enhanced analytics to help its kind of customer base of E&Ps, but also financial institutions. We have seen a couple of logos at the start in that sector. And again, that helps us drive ARR. And then finally, AI, machine learning. We look at this in kind of 3 ways. First of all, how can we gain efficiencies internally using AI in particular. So we're rolling that out. There are a few of us -- fewer of us now than there were. So how do we do more with less? Embedding AI and machine learning into our own offerings, so into our products, into our services and also being aware of deepening our own moats to the, if you like, the threat of AI. We've seen how some sort of software sectors have been under pressure from being replaced by sort of vibe coding approaches and those kind of things. We don't think we're under any pressure there. We have very deep moats around our proprietary data, which has taken decades to put together, to interpret to painstakingly piece together. But we're aware that from an external perspective, we need to show that what we have is indeed truly unique, and we are protected from that threat. So we're always mindful of that. And then finally, the fourth part of our strategy is around diversification. So I think in recent years, Getech has been all about diversification. We've taken the company back to its core markets, and they remain the priority. So we're focusing on our core markets, oil and gas exploration, mining, where we're able to generate the most revenue. But we are looking to diversify just so that we're not -- we don't have all our eggs in one basket. So one key area of diversification for us, which we're starting to look at is actually within oil and gas, but just downstream from exploration. So we have a number of solutions that are applicable in things like appraisal and development and potentially all the way through to abandonment, if you take our geospatial expertise. There's a few listed there. And we believe that there's a potential strong revenue opportunity here, particularly initially maybe around consulting and then moving into more of a product-led play. Similarly, our GIS revenues, we have a very well-respected GIS brand, but our revenues have kind of been flat. Meanwhile, the market has been growing sort of the double digits annually. So there's definitely a revenue potential here, and I think we just need to go back and focus on revitalizing our offering. So last year, we've identified some new solutions for things we can offer the market, and we're in the process of launching those now, and we're hoping to expand those GIS revenues. And then finally, our low carbon opportunities, which is where we've traditionally thought of our sort of efforts around moving ourselves out of this oil and gas sector. So as I said, our data is very applicable to the natural hydrogen sector, especially with the co-location with helium helping the commercial model. I've already explained, we've got a strong presence in the geothermal market. And both of those sectors have started to really deliver material service revenues for us over the last few years, and we're continuing to work on those. Sometimes we come across opportunities where we will engage in a very selective exploration joint venture where we contribute kind of our own data and expertise along with a partner who maybe bring some of their own expertise or sort of local presence in order to move that project along together. And we've talked about a few of those in the past, and we'll hopefully be updating on developments in those areas as we go through the year. So just moving on to the last slide. So in summary, last year, we returned the company to positive EBITDA and grew our revenues. We've maintained that sales momentum into this year. We do feel that market conditions are becoming increasingly favorable for the kind of products and services that we have. We're continuing to prioritize the oil and gas sector. Obviously, we've seen oil prices spike in recent months. That doesn't automatically filter through into the kind of oil services sector. But it will eventually, as these companies have a bit of a sort of windfall from some of their revenues, then they're likely to start putting more money into exploration, especially on the back of the low -- record low reserve replacement rates. And as we said, our kind of midterm focus is to increase ARR. This is the best way to help us drive our revenues and to increase our EBITDA. So with that, I say thank you, and I think we'll move on to the Q&A.

That's great. Chris, Simon, thank you very much indeed for your presentation. [Operator Instructions] I would just like to remind you, a recording of the presentation, along with a copy of the slides and the published Q&A can be accessed via investor dashboard. Chris, Simon, if I may now hand back to you to take us through the Q&A session, and I'll pick up from you both at the end. Thank you.

Great. Thank you very much. So we've got a few questions to go through. First question, you mentioned several large Globe opportunities. What make these deals particularly transformational versus historic contracts? That's a great question. Some of the new opportunities we're working on, we kind of -- we call them Globe plus. So they're not just Globe. They're Globe plus a bunch of other stuff that we're offering a particular client. And in that way, we're able to make them much larger than the Globe opportunities that the company was working on sort of, say, maybe 10 years ago. So that's why we're looking at those as big potentially transformational deals. When do you think ARR will fully cover the cost base? So this -- yes, this isn't a 1-year thing. This isn't something we're going to do in 1 year. It would be great if we could. That would need us to kind of double our ARR in a year. I think we have to be realistic. That's not going to happen. But I think over a time scale of sort of 2, 3, 4 years, we should be able to really materially add to our ARR such that it gets up to that level. That's my hope anyway and ambition. How much scope is there to introduce tiered pricing premium modules, or usage-based pricing across your platforms? Usage-based pricing in energy is not that popular, I would say, because the kind of work that we do is very useful, but it's not -- it's very cyclical. You do it at certain parts of the process. It's not maybe something you're doing necessarily every day. So usage-based pricing often doesn't work for suppliers such as us. But there is a lot of scope to introduce tiered pricing. We already do have tiered pricing and premium modules is also something we're looking at. So yes, there's lots of scope for that, but we probably wouldn't move to usage-based pricing. How confident are you that you can fund the business going forward without needing to raise cash? That's almost like our #1 rule. The whole idea is that we're self-funding. And I think those words were very clear in the recent annual report, if you look at it. So there's a couple -- well, at least one here for you, Simon. Maybe I'll take the technical ones first. If new Globe opportunities come in, is there potential for revenue to exceed Cavendish forecast for '26 or '27? Absolutely. I mean, if we are well ahead of our kind of budgeted revenues, then there's lots of potential to exceed those forecasts. What would success look like in 3 years' time? Any chance of GBP 3 million in the black on the balance sheet rather than a GBP 3 million micro cap. That's a fair challenge, to be honest, and it's a pretty good way of framing it. I think when I think about what success looks like in 3 years' time, I'm very focused on the fundamentals that we put in place to ultimately drive value. So for me, success would be a business that's reliably cash generative, recurring revenues really coming up and covering the cost base and cash generation being able to fund growth. We're already sort of moving in that direction, returning to positive EBITDA, materially resetting the cost structure. And the next phase is all about building on that momentum by sort of building up the ARR. So if we execute well on our strategy, I'd expect over time, we see a much stronger balance sheet and for the market to better recognize the quality, resilience and cash-generating potential of the business. We're not going to set specific financial targets like that. But we're confident that the direction we're on is the right one. And ultimately, our focus is on building a business whose performance hopefully will make that comparison less relevant over time. And then I think one last question for you, Simon. What was our FX exposure at the revenue level in 2025?

Yes. Okay. I don't think I'll go into the percentage of what our revenue is denominated in terms of -- it's primarily USD outside of GBP. There's a proportion of that, obviously, is in USD where from 2024 to '25, we did see a sizable adverse variance in the exchange rate. But this year, obviously, we haven't seen that. I think it's moved back in our favor. But yes, I wouldn't want to go into too much detail about what the makeup is of our revenues in terms of percentage-wise.

Sorry, it's not a number we've put in the public domain, Simon.

Yes.

Perfect. Well, look, guys, you have addressed all those questions from investors today. So thank you very much indeed for that. But Chris, before I redirect investors to provide you with a feedback, which is particularly important to yourself and the company. Could I just please ask you for a few closing comments?

Sure. I'd just like to thank everybody for joining us today and your valuable time. And we look forward to updating you on our progress as we move forward through the year.

Fantastic. Chris, Simon, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback, which will help the company better understand your views and expectations. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.