Getech Group plc (GTC) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Getech Group plc Investor Presentation. [Operator Instructions] Before we begin, I'd like to submit the poll. And I'll now like to hand you over to Chris Jepps, CEO. Good afternoon, sir.

Hi there. Thanks for the introduction, and thanks, everyone, for joining. So today, I'm going to be walking you through Getech's 2026 H1 Results Presentation, and I'm joined by my colleague, Simon Brown. A along with Simon, Max Brow, our Chief Business Development Officer. We're a new -- a relatively new management team. We've been in place since January 2025. And we've been executing on a plan to really turn around Getech Fortunes. And we feel the company is in a much, much better place now than it was previously. And we're really proud of the work we've done and sort of quietly confident going ahead as well. So I'm going to walk you through where we've got to and look at what's lying ahead of us as well. So those of you that don't know Getech, really with the subsurface experts. We're a long-standing, well-trusted brand, been going -- been listed 21 years, been going 3 decades or more. We work globally, and we've got a fantastic client base of both household names, sort of names you've all heard of as well as a long tail of sort of less well-known energy and natural resource companies. And what we do for those guys is we help them reduce their exploration risks with our products and our insights. And many of those companies have been with Getech a long time, many of them using our sort of key platforms of Globe, which is our geoscience knowledge platform and our gravity magnetic data, which is where the company started. And we're very much a product company. We're underpinned by a fair chunk of ARR. And last year, 2025, about nearly 80% of our revenues came from products. So where we got to so far in 2026, halfway through the year. So last year, for those of you who don't know the story, was a bit of a sort of resetting of the fundamentals of the business, and this year has all been about building on trading momentum. So given the lower operational cost base that we developed last year, we're now really delivering on revenue growth and returning to profitability. And kind of key metrics of revenues, EBITDA, cash generation, they're all up, moving in the right direction and we've got a bit more detail on that on a later slide. And this is driven by great sort of background trading, business as usual trading and also some major contract wins. Earlier this year, we announced a renewal of one of our globe major companies, and that had about a 28% value uplift to the contract. It's one of the key ways that we try and grow ARR. We also, post period, added a new globe client, which we were very happy about, first on for a few years, really showing the strength of our revitalized sales team. That was a European super major. And then a few days after that, we were able to announce one of the largest contracts we've ever won this time in the natural hydrogen space, which is an area we've been focusing on in order to diversify our revenue somewhat as well. And that was with the European Commission, a bit more detail on that later, but a significant contract of over EUR 1 million. So looking forward, we're starting to see positive market signs for the first time in quite a few years in the sort of upstream energy world. And that's really being driven by kind of low reserve replacement rates among oil and gas majors and also sort of geopolitical uncertainty and sort of security of supply concerns. And that's really had a good effect on our trading. It's also had a good effect on our new business pipeline. We're very much on track to meet our guidance for this year for 2026. And along the way, we picked up a new major shareholder in Excalibur, again, more on that shortly. So for those of you that don't know too much about Getech, the main markets we serve are the energy and natural resources markets and in particular, oil and gas, minerals, natural hydrogen and to some extent, geothermal. Oil and gas, as I've said, exploration is very much back in focus. There was an announcement by the CEO of TGS earlier this week that they fully expect exploration budgets to be larger next year. We're still kind of working on budgets that were set in 2025 before the sort of recent shocks to the energy system. And that's all great industry and sector tailwinds for us. Likewise, there's increasing recognition of the need for more exploration for key metals, such as copper, lithium and gold remains important as well. Natural hydrogen, hydrogen that's found underground rather than created by electrolyzers. That's kind of a nascent and emerging sector. helium, there are a lot of shortages for and hydrogen, natural hydrogen and helium are often found co-located together. So that's the market we've been winning work in. And again, referring back to the previous slide, we won this very large contract and more on that later. We are in energy transition. There's been slower progress in some parts of that, especially with sort of oil and gas exploration coming back into play. But we're seeing a bit of a shift in demand. Things like data centers are really driving demand across all options for energy provision, including geothermal. So we continue to keep our eye on that area, too. But a lot of what we do is oil and gas, that's very much swing back into fashion with an eye on all these other sectors as well. So I'll hand over to Simon to talk through the numbers from our H1 2026.

Great. Thanks, Chris. Yes, just building on a few of the points you've raised there regarding metrics -- we announced revenue growth of 15% compared to H1 '25, and that's driven by a combination of those new business wins, but also strong customer retention in that period. The revenue growth is now translating to profitability, and the group delivered positive first half adjusted EBITDA of GBP 0.2 million compared to a GBP 0.1 million loss in the previous period. Importantly, with the cost base being stabilized, we're also seeing that progress converting into cash. So we see that continuing now as we move into H2. ARR was broadly stable, flat on the year-end position. But in the post period, we've seen that increase to just over GBP 3 million with those key new contract wins and the strong customer retention that we've seen as well. And then finally, on to order book, it stood at GBP 4 million at the end of the period. In the 2 months post period, we've increased that to GBP 4.7 million. So that gives us great visibility and confidence as we move into H2. GBP 1.6 million of that is expected to be recognized in H2 and a further circa GBP 2 million will be recognized in '27. So in summary, I think the financial indicators are all moving in the right direction, giving us confidence as we move into the remainder of 2026. Back to you, Chris.

Thanks, Simon. I think worth noting as well at this point that Getech has historically been an H2 weighted company in terms of revenue. We're often about 60% revenues in H2. So we really feel that we're well placed as we go through the year. So just think now looking further ahead, if you like, and looking at strategy, the new management team has really focused the company back on our key strengths, looking at the subsurface and things related to extracting things from the subsurface. We prioritize the sectors I've already gone through. And what we do for those sectors is we leverage our geoscience, geophysics understanding and our products like Globe and our GIS software products as well as new technologies such as AI and machine learning to provide unique solutions and insight for our clients. we have a lot of intellectual property in the company, particularly Globe, which has been built over 15 years, gravity and magnetic data, as we call it G&M data. That's been being built by the company since it started as a spinout from Leed University and the software products have been developed over 20 years as well. And our ambition really is to be the world's most trusted source of subsurface and geospatial insight for our clients in the sectors in which we work. And we feel that, that will get us to being sustainably cash generative. We have a real target to grow our ARR up towards the level of the cost base and potentially beyond. And we do both of those things by keeping our products relevant, enhancing them, evolving them and by keeping an eye on diversification as well. So at a high level, that's our strategy. Last year was about a turnaround. This year is about momentum. And as we execute on the plan, we'll be getting more into a growth phase. Globe is our key product really, and it's one thing that GT has been built around over the last 15 years. And this product is trusted by 5 of the 6 world's oil and gas super majors. It was actually built on our own data sets, on our own gravity magnetic database, which is a global data set and itself one of the world's most extensive commercially available data set. It's fantastic to be able to tell the rest of our market, which, by the way, is very large as well. 5 of the 6 super majors are only a part of the oil and gas market. There's a very long tail of large independent as well as national oil and gas companies and governments that are customers for our offerings. And it's great to be able to show them this kind of the peak of the industry, if you like, these super majors rely on GTX Globe technology. I'd say it was built over 15 years of investment by highly skilled geoscientists, geophysist. -- again, using our database as its foundation, so not easily retreatable process from that point of view. And Globe can be applied across multiple kind of exploration scenarios. Some of the technical things are shown on the screen there, but also used across multiple sectors. So it was built for oil and gas, but the model can also be used for mining use cases, Geothermal, natural hydrogen and so on. And we think that the scale of the data set and the amount of historical investment and the proprietary nature of a lot of the inputs and the work we've done during that time make the data set exceptionally difficult to recreate. One of the inputs into our response for European Commission natural hydrogen tender was to use our own Globe data and our own gravity magnetic data. So this is a great example of how we can use our IP to win new business. And as part of a consortium, we were selected by the European Commission to conduct a Europe-wide geological assessment of the natural hydrogen potential across the continent. And we beat off competition from a number of blue-chip organizations, many of them household names. So we're super proud of that. This is a chunky contract worth over EUR 1 million. It's a 12-month project. So we'll recognize it this year and next. Obviously, that strengthens our order book, as Simon has already demonstrated and gives us good visibility on services revenues into next year. I think of it as like a really strategically significant win. We have done a lot of work, smaller projects in natural hydrogen. And this big project really validates our approach, the investment we've made in the sector and it also positions us right at the forefront of the natural hydrogen world and it could potentially give us a platform for similar wins as other areas look to do similar projects. Not everyone has mapped the potential for their natural hydrogen, in fact, very few places have. So really, the rest of the world to go after in this kind of play outside of, say, the U.S., which have done one in Europe, which are doing one. And obviously, natural hydrogen is important for energy transition. It's clean. There's a lot of it. Estimates put it up at a similar magnitude to oil and gas and potentially beyond. Obviously, it's important for transition, could potentially support energy sovereignty and obviously works towards decarbonization. With the turnaround of the company, we've been able to attract a new shareholder, Excalibur Multiphysics Group acquired a 25.5% shareholding through the summer post period. If you don't know Excalibur, they're a global leader in airborne geophysical acquisition. So they shoot the kind of data that we hold already gravity magnetics and other types of data, electromagnetic for example. And they're also moving into country mapping. They have operations across 6 continents. They have a specialist aircraft fleet for doing this kind of acquisition. So you can see there's quite a bit of potential interest there in terms of doing similar things. And as you'd expect, we're exploring opportunities for how we can collaborate going forward. Talked a little bit about ARR. How do we intend to grow our ARR. This is a key strategic priority for the business. Anything we can win that ARR means we don't have to win it again next year, obviously, especially if it's a multiyear agreement. So there's 2 main ways for us to grow ARR. First one is to land new clients and the second one is to leverage our existing very strong customer base, as you've seen from the logos that you've seen. So there is a large market for us to go after. We might have nailed the super major or most of the super majors, but there are some very large independent oil and gas companies down to very small oil and gas companies that could benefit from the solutions that we offer. Most independents and super majors look after about 1/3 of oil and gas across the world. National governments and NOCs look after the other 2/3. So there's a large market of governments to go after all around the world. And we're looking to leverage our strong customer base as well, and we saw some evidence of that by the renewal of one of our globe clients earlier in the year with a contract uplift of about 28%, driven by our other product enhancements and bundling in other offerings. So talking of product enhancements. These are some of the things that have been on our optics this year. Globe, we're always looking to enhance with new analytics, but also new content, new data layers and new delivery options as technology evolves around us. Obviously, integration of AI and machine learning capabilities to really extract the maximum value from the data within the system. Similarly, our gravity and magnetic data holdings, always looking to source new data sets, merge them in and create new commercial opportunities. We're also looking at new ways to distribute that data, moving hopefully from sort of spot sale, one-off commercial transactions to a more recurring ARR model. Our unconventional Dalis product was up revenue-wise, about 22% year-on-year. So we continue to push the boundaries with that to attract new clients, and that's all about building ARR with enhanced analytics within that product. And I've mentioned AI and machine learning a few times. We look at that, of course, as everyone is in terms of making ourselves more efficient, integrating capabilities across our offerings and also being aware of kind of the moats to the moats around us in defense of the threats of AI. So -- we put a lot of work into AI this year, and we expect that to follow through into our offerings down the line. So our core markets remain the priority going forward, but we do like to keep an eye on diversification opportunities for reasons I've already mentioned. Within oil and gas, we tend to be quite upstream, but there are other areas of oil and gas, which are revenue opportunities to us, specifically appraisal and into development. In fact, our unconventional analyst product is an example of that, which is a bit further downstream from exploration. So we have good skills there, and we're starting to win services work in that area. We have a lot of geospatial or GIS expertise within the company. The GIST market itself is very large, and we're well placed to grow our own revenues within that market. And this year, we've been working on new offerings to launch during the year and going forward. And there's clear revenue upside potential, we believe, for Getech there. And then on the low carbon side, we have a strong presence in the geothermal market. We continue to pick up projects there, and we've had that great validation of our natural hydrogen work with the European Commission study. So there are areas we continue to progress. We do have a sound energy JV with -- for natural hydrogen exploration in Morocco, and we continue to progress that slowly in a capital-light fashion. Generally, we continue to focus on our core markets and the best kind of revenue opportunities in those. So in summary, 2025 was a bit of a turnaround year for Getech. We've continued the strong trading momentum at the end of 2025 into the first half of this year, and we can see from the post period wins that that's carrying on into the H2. Those contract wins have allowed us to increase order book and ARR. We continue to focus the business on ARR growth. And we're continuing to maintain our cost base discipline. And actually, we're kind of highly leveraged to growth with any additional product and data sales really do hit straight down to the bottom line for us now with that relatively fixed cost base that we have. We are seeing exploration activity starting to increase. We're very optimistic that budgets will increase for next year, 2027 across the industry for exploration activity. And that puts Getech in a really good place with some market tailwinds behind us for the first time in a long time. And as such, as a Board, we're very confident of meeting our market expectations for this year. So we look forward to the rest of the year. And obviously, we'll update as we get through the year and into 2027. And with that, I would like to thank you for your attention and jump over to any questions.

That's great. Chris, Simon, thank you very much indeed for your presentation. [Operator Instructions] Guys, as you can see, we have received a number of questions during today's presentation. Chris, if I could just hand back to you now to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end.

Yes, we'll do. Let's just see if I can group a few of these questions together. There's one here. Is there more growth possible from the 5 super majors that you're dealing with? Absolutely, yes. We've seen from the renewal we did with the state-backed globe client where we uplifted contract value. Clearly, that's a tactic we can bring into play with all our other existing globe clients, those super majors included. So yes, that's very much -- yes, we can do that. And it's a sales strategy as we approach renewal for those contracts that we're very much working on.