Infomedia Ltd (BGLOBAL.BO) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Infomedia Limited ASX IFM Fiscal Year 2021 Full Year Results Investor Presentation. [Operator Instructions] I would now like to hand the conference over to Mr. Jonathan Rubinsztein, CEO. Please go ahead.

Thank you, operator. Good morning, everyone. Thank you for joining us this morning to run through Infomedia's financial results for the 2021 financial year. Joining me on the call this morning is Richard Leon, Infomedia's CFO. This will be Richard's final results presentation with Infomedia, and I'd really like to thank him for his partnership and his counsel over the last 5 years. We announced a week or so ago that Gareth Turner has joined Infomedia. Gareth will officially step into the role with effect today, and some of you will have the opportunity to meet Gareth when we catch up post results. Gareth will also join us for Q&A at the end of this call. On Slide 2 -- the agenda for this morning is set out in Slide 2, and I'll cover the highlights of the year before handing over to Richard to run through the financial results in detail. I'll then provide some further commentary on the market generally and our strategic priorities for the rest of the year before opening the line for questions. Turning to Slide 4. We are a SaaS provider to the global automotive industry and one of very few global providers with a full service offering across parts, service, data and analytics, and e-commerce. We provide digital solutions for an industry embracing significant change. Over 95% of our revenue, is recurring and we support more than 220,000 users in 186 countries. On Slide 5, I'd like to share with you why we are feeling good about these results given the context of the year. Firstly, our top line reported growth was up 3% despite being impacted by delayed rollouts and contract signings as a result of COVID. Foreign exchange did have a big impact, and on a constant currency basis, this revenue growth would have been more like 7%. We've seen some good half-on-half growth, which shows the uptick in momentum across the business. Our global account management strategy is delivering some great wins including our announced Ford Europe win, which has been successfully rolled out across Europe. We've also won a pan-European rollout with Mazda with our data and service solutions and have won a super service rollout across Australia with Audi, and we have also won several new BMW markets internationally with Nidasu. We have also won a number of partner-led deals in the U.S., which should start to revenue in H1 this year. Our total contract wins for our top 20 contracts resulted in sales of $35 million in TCV. We've seen a significant increase in sales traction of Infodrive, our data and analytics business, which includes Nidasu, of which $13 million of the $35 million of TCV sales was in this area, and we see this as being a significant contributor to our revenue mix in future periods. We completed the transition from siloed legacy single point solutions to an integrated application platform, which you would have heard me refer to as Next Gen, and the acquisition of our e-commerce platform, SimplePart an important and strategic extension of our business at a time when automakers and dealers are looking for an online presence. On Slide 6, we look at the $35 million of TCV sold in 2021 and the composition of these sales. We are extremely happy with the sale of Ford parts in Europe and the successful rollout of our parts catalog to every Ford dealer in Europe, all within the same year, a huge effort. This is in the franchised dealer segment. The sales within this TCV are typically 3-year deals with the exception of Ford, which is 5 years, and most of these ramp up over the next 12 months to their full MRR value, the full [ build ] costs for Ford during the 2021 financial year. This provides some good future revenue growth visibility. This $35 million excludes all SimplePart deals and also any smaller contract or field sales wins. What has been very pleasing is that $13 million of the $35 million TCV is sold within the Infodrive business line, which is the OEM business intelligence and data provision area. We continue to see a lot of activity and opportunity in this area. On the whole, Infodrive rollout and sale to revenue cadence is faster than the franchised dealer segment. This means that typically installation and training can be done remotely, therefore, less impacted by any lockdown or rollout complexity. At this point, I'd like to hand over to Richard to give more color and details around the financials. I'll then return to talk about how we are building momentum into FY '22 before opening the line to questions. Thanks, Richard.

Thank you, Jonathan. Good morning, everyone, and thank you for joining us. We'll begin on Slide 8. As we find ourselves here in Australia under a more intense lockdown, we are pleased to report delivering to the higher end of our guidance that we provided at the time we announced the conclusion of the SimplePart acquisition of revenue between $95 million to $96 million and cash EBITDA of between $19 million to $20 million. This was achieved during an extended period of global business disruption with travel restrictions and lockdowns as well as currency headwinds, particularly for businesses such as ours with over 80% of our revenue denominated in foreign currency. Despite these challenges, our focused employees continue to demonstrate resolve to secure several multi-year contracts, some of which have committed to revenue and contributed to our second half momentum recovery. The acquisition of SimplePart was completed in the U.S. on the 31st of May, and both teams are collaborating well, building a pipe, including opportunities outside SimplePart headquarters in the U.S. Given the timing of completing this transaction, Infomedia recorded 1 month of SimplePart trading, representing a top line contribution of $1.3 million as disclosed in our financials. Balance sheet remains strong with cash balance of $66.8 million at June, and we declared a full year dividend of $0.0445. You will note we have included a line denoted NPAT before earnouts from acquisitions. The purpose of this was in effect to normalize for earnouts treated as remunerations from acquisitions due to a condition that the seller remains employed over the earnout period in accordance with accounting standard AASB 3. We have normalized for this given the quantum and timing of these contingent payments, in this case, approximately $4.1 million in order to share a like-for-like view of our results. For the type of businesses we are looking to acquire, an earnout model will likely remain to align and motivate key personnel to drive growth. For completeness, this item has been included in the general and admin line on the face of the statement of profit net loss in the statutory accounts, which distorts the growth for this line item. Also for the statutory accounts, elements of this have reduced goodwill accounted for at the time of the Nidasu acquisition. For clarity, the derecognition of this goodwill is not a reflection of an impairment of Nidasu but, rather, an adjustment for contingent earnout payments. In fact, Nidasu is performing well, which I will speak to later. On Page 9, we look at the top line results by product and geography. During this peculiar period, our teams continue to win new multiyear contracts around the world and across our solutions offering. The top 20 contracts closed represent a total contract value of $35 million, a great result that continued from the contract wins we spoke to at our first half results, and many of these wins have an original contract period of between 3 to 5 years. A proportion of these contracts added incremental revenue during the second half of FY '21. And Jonathan will elaborate on this positive sales traction and how we think about our expanded addressable market and the further opportunities to explore and advance. At a product level, our past revenue decreased 6% when compared to the previous period. And as we mentioned in the first half, a combination of factors contributed to this outcome, including delays in onetime development revenue, in particular as it relates to parts and the unfavorable impact of currency. Contextually, on a constant currency basis, part subscriptions recurring revenue would have grown a modest 1%, demonstrating the impact currency had this fiscal year. Services continue to grow strongly supported by Nidasu that delivered an outstanding year, growing 57% during FY '21. The team at Nidasu played a crucial role in winning a multiyear contract with a new franchise. Notable for 2 reasons: Firstly, this contract is in Europe, demonstrating global reach; and secondly, the solution offering was paired with our Superservice product, illustrating the value of our integrated platform. As previously mentioned, our e-commerce offering, SimplePart, contributed 1 month of trading for FY '21. As for the regions, despite the external challenges already described and this impact on our short-term financial results, EMEA showed encouraging second half recovery. While the Americas remained flat for the year, this region is poised for growth with partnership contracts coming online plus SimplePart. Asia Pacific was our standout region with revenue increasing 13% pcp, driven by strong growth across the parts, services and data. A graphical summary of our 3 region is on Slide 10. This depicts top line revenue by halves, and each line is expressed in their respective local currencies to remove much of the currency fluctuation. This does demonstrate an improved second half performance at the regional level, and the bullets below the graph are extracts from the CEO message in our annual report to give an indication of our confidence into next year. Moving to the next Slide on 11. It is a group level look at the all-important subscription recurring revenue also shown by halves. This graph visually encapsulates the unusual period we feel is now behind us. And for all the reasons already mentioned, the slowdown to subscription recurring revenue growth can be clearly seen as well as improvement in the second half. What is encouraging is to see growth momentum returning in the second half of FY '21. What is reassuring is fueled by the previously mentioned contract wins as we expect to see the resumption of the pre-COVID growth tangent. The bar graph on Page 12 shows our organic revenue mix by halves, organic excluding SimplePart. Clearly, we experienced a second half drop in onetime revenue when compared to the previous half. When we spoke at the first half results, we mentioned onetime revenue often includes [ the likes of ] development revenue that are usually associated with large contract wins; and crucially, installation and training revenue that subsequently leads to monthly subscription. Despite this drop in onetime revenue, the graph does depict subscription recurring revenue growing. From a half-on-half perspective, the second half subscription grew 3%, excluding SimplePart compared to 1% for the previous half. On a constant currency basis, organic subscription recurring revenue grew 9% for the year. On to Slide 13. A major milestone for the company was achieved in FY '21, which was the transition of our global customers from legacy software to our Next Gen integrated platform. While there are some post Next Gen rollout matters to complete, our focus now turns to delivering the new revenue contracts won during the year, including work associated with the data-related contract wins. As for the noncash items, amortization of capitalized development costs grew 16% as the buildup of accumulated capitalized costs associated with Next Gen project has commenced to amortize from January 21. We have taken a conservative approach to amortization by adopting the useful life of 4 years. And this is why we consider cash EBITDA to be a key performance measure, which has been repeated in this table. And for those on this call who may be new to the Infomedia journey, cash EBITDA is our key performance metric, as we believe this offers a more transparent view of our underlying activity by accounting for those cash costs that are capitalized and subsequently amortized. Given our reported modest revenue growth for the year, the decline in cash EBITDA for FY '21 is defined by the sustained investment intensity that crowned the successful transition of our global customers onto our Next Gen integrated platform plus work necessary to deliver contract wins. The new multiyear contract we won will very likely keep our product teams quite busy, prioritizing work to the delivery of incremental recurring revenue. A quick call out on the footnote to this slide about a reclassification of prior year costs that moved between research and development and general and admin expenses. These related to some hosting costs and some at-risk remuneration items, and the reclassification had no impact on cash EBITDA for FY '20. On to the next Slide, 14. This shows our continuing cash generative nature of our business and demonstrates that even under a global crisis, our cash from operations remain strong and dependable given more than 95% of our revenue is recurring. Our DSO, days sales outstanding, continue to improve and for us is a leading indicator that our customers value and rely on our mission-critical SaaS platform. In closing, we delivered what we said we would in a challenging global environment. We celebrate a major milestone being the transition of our global customers from legacy software to our Next Gen integrated platform. We continue to win new multiyear contracts worldwide across our solution offerings with the top 20 contracts amounting to approximately $35 million TCV. And equally important, we're building traction in our growth strategy represented by several of these new contract wins are within the new customer segments of our expanded addressable market. And all hands are on deck focusing on converting these sales to revenue. Before I sign off, as some of you are aware, I announced my departure from Infomedia in May and will be finishing up. Having spent some time with Gareth, our newly appointed CFO, I am both excited and confident Gareth will add tremendous value to Jonathan, the Board and the team to help steer the business as it pursues its growth strategy. I would like to sincerely thank you all for your engagement, interest and continued support for Infomedia. And as I now pass the reins over to Gareth's very safe and experienced hands, I would like to return to Jonathan for his summary and outlook.

Thank you, Richard. So now if we move Slide 16, I'm going to talk to the environment we are operating in and how we are responding. The fundamentals of selling cars, parts and services are undergoing disruption at every level, at the manufacturing plant, in the processes and in customer expectations. We have been discussing for some time the impact of digital transformation in the automotive industry. This is an industry that has traditionally been slow to embrace digital solutions, analytics and connected technology, particularly in the customer retail or aftersales space. However, car owners now expect a digital experience in their car and see the servicing of their cars as an extension of their digital lives. This shift has become even more apparent during the pandemic. This morning, I'll briefly revisit the key trends impacting the automotive industry. Automation within a vehicle and the surge in EVs, electric vehicles, will have an enormous impact on the industry. The pandemic has resulted in many automakers bringing plans forward for the transition from internal combustion to EV. We anticipate this transition will be lengthy and complex, ultimately resulting in fewer but more complex parts and service processes. Connectivity or the digital interaction between the car, the consumer, the service provider and the manufacturer will also have a significant impact on consumer expectations. Automakers are looking for digital solutions that will aggregate disparate data sources to predict customer needs and create individual, relevant and personal service experiences. COVID has slowed down the changes in the dealership evolution and ownership structures, but we believe this will accelerate in the medium term. Our customers are looking for ways to drive efficiencies by using digital solutions to replace manual processes. We at Infomedia bring 3 key things to the table: Number one, we are global; number two, we are one of few providers of end-to-end aftersales solutions; and number three, we manufacture and leverage VIN-specific data across all out solutions. You will see through the rest of my presentation how our strategy for growth capitalizes off these environmental trends. This includes our connected car offering, our integrated application platform that drives huge efficiencies across the ecosystem, and our OEM business intelligence delivered through Nidasu product that helps our customers get visibility and actionable insights across the entire aftersales network. We are evolving, but our strategy remains unchanged. We are committed to empowering automotive aftersales. If we move on to Slide 17, this diagram represents our software platform. If I start on the left, our Microcat and Superservice software fits within the franchised dealer segment, which I will describe further in the TAM slide. The next offering is our newly acquired e-commerce solution being SimplePart. And finally, Infodrive is the data and analytics offering that is the OEM business intelligence and data solutions segment in the TAM slide that I will discuss further on Slide '18. Let me explain the whole platform and how it relates to a real-life customers. Nissan has been a customer of our dealership parts solution since we won the global EPC a number of years ago. We have also added our Superservice menu solutions and Triage service solutions to many regions across the world. They then use Nidasu in Australia as the OEM BI software. This forms part of our Infodrive offering. Nissan would use Nidasu to work out which dealerships are profitable and why, trying to optimize dealership profitability across their entire network. Next, Data solutions. We have started to support Nissan Japan by providing VIN data to their collision body shops to help them make accurate part and cost assessment served up through their estimating systems. Finally, our acquisition of SimplePart rounds out our end-to-end offering. They provide e-commerce solutions to Nissan in the U.S. That means a Nissan customer in the U.S. can order any original part online delivered through their dealer network. That e-commerce solution would be powered using our VIN-specific data, ensuring the customer gets the right part for their car. The common thread here is VIN-specific data. Using VIN EPC data in the dealership through the parts catalog, we also then use VIN-specific data to serve up through our menus application. We can then use that data in this Nidasu solution, power the collision systems with the same VIN data and then sell VIN-specific parts through our e-commerce solutions with that same data. This VIN specificity is a huge competitive advantage because knowing a model and the year of a vehicle doesn't guarantee you get the right part. Having VIN-specific data maximizes efficiency, knowing exactly which part belongs to that specific car, identified by the unique 17-character VIN. This hopefully shows the power of our end-to-end aftersales platform powered by a VIN-specific data and also how we can work with a global customer like Nissan to add value across their aftersales processes. You can see how much opportunity there is to roll out these solutions in all countries even for one customer like Nissan. If we move to Slide 18, I'm now going to drill down into SimplePart, our e-commerce platform that we recently acquired. For some time, our customers have been asking for an aftersales e-commerce solution, and this demand has only increased during COVID. During the last 2 years, global retail e-commerce sales have grown by nearly 30%, and automakers and dealers need a presence to capture some of that market. As a specialist automotive e-commerce provider, SimplePart increases sales of genuine automaker parts and allows automakers and dealers to compete more effectively against non-genuine online sellers. The acquisition of SimplePart is a natural extension to Infomedia's integrated SaaS platform. With SimplePart, we can leverage our platforms and data assets across a broader range of segments to offer our combined customer base a more integrated B2B and B2C solution globally. The acquisition of SimplePart is highly strategic and complementary to our business. With the integration of SimplePart, we believe we are the only automotive aftersales SaaS platform provider globally who can provide end-to-end parts and service software solutions, data and analytics and now e-commerce solutions. Now on Slide 19, I'm going to touch on the TAM in the various parts of the market. This chart shows the TAM and the SAM, the serviceable addressable market. Our core business has traditionally been in the franchised dealer market, and this year, we have strengthened our position through the successful rollout of the Next Gen platform. We have also grown our OEM business intelligence offering through excellent growth in the Nidasu business. The Nidasu business has been a resounding success, and their MRR growth has been over 100% since they joined Infomedia 2.5 years ago. Our data provision business, although early stage, has grown significantly, and we are seeing huge growth opportunities and are expecting to invest in this area to deliver some excellent wins. In the e-commerce space, we've acquired SimplePart, and we are seeing some exciting global opportunities. In fact, as of yesterday, we closed our first SimplePart opportunity in Asia Pacific, and we have a number of related opportunities in Asia Pacific and in Europe. We have also managed to access the collision market through our data provision offering and have had good initial success in Japan, Europe and in America. The mechanical segment has some significant opportunities, and we are still assessing our product strategy within this space. If we move to Slide '20. Up until beginning of last year, we had good growth momentum. However, COVID did impede our growth. I am confident in our growth prospects underpinned by: one, how well positioned we are in the market; two, the good wins we had last year reflected in sales of $35 million of total contract value, of which $13 million of that TCV was in our Infodrive business made up of data and analytics; three, the backlog of work we have; and four, the SimplePart acquisition. What is exciting is to see revenue building across all regions and all products. Our forecast for this year's revenue is in the $117 million to $123 million range, which will be more than a 20% growth year-on-year. This assumes no adverse FX movements. I'm optimistic we are back on track given our recent wins and how well positioned we are in the market. Now I'd like to open up the line for questions. Thank you.

[Operator Instructions] Our first question from Garry Sherriff with RBC.

I've just a contract on -- sorry, contract -- a few questions, one on the phasing of contracts, another one in relation to SimplePart and the a third one in relation to margins for FY '22. Firstly, the phasing of the $35 million contract wins, can you maybe just give us a bit more sense as to how we should think about that phasing?

I'll take this question, Garry. Yes. So as I mentioned in the presentation, there is a ramp. However, we expect that ramp to be roughly at the full MRR value by the end of this financial year. Do you want to repeat your second question and third question?

Yes. Next question, SimplePart did about $1.3 million revenue in June. So should we just assume about just under $16 million annualized? Or is there some form of seasonality that I might be missing? So that's probably the next question, just around assumptions around SimplePart for FY '22.

So of the $1.3 million, roughly $1 million of that subject to FX is the recurring and $300,000 is the onetime.

Okay. No trouble. And I guess, again, annualizing that, I mean, there is no huge amount of seasonality, I imagine, is there in June per se?

No. We don't -- sorry, go ahead.

Okay. Yes, yes. No, that's right. I just wanted to confirm that we should be thinking, call that, $15 million, $16-odd million contribution of revenue line for '22 at a high level.

At a high level and again, subject to FX, yes.

Yes. And I guess the next question is how do we think about the growth in terms of -- if I add your $97.4 million revenue you did in '21 and add, call it, $15-odd million for SimplePart for '22, you're not far and away. You're, what, $4 million to $5 million off your lower end of your guidance. So just trying to get a sense around the parts and services growth that we should be thinking about for FY '22.

Garry, I guess, we're feeling like we're getting back to the resumption of our kind of pre-COVID growth rates. And the assumption there is roughly half of the growth is coming from the core business and the other half at a rough level is coming from SimplePart. We are again seeing huge -- the TAM that we have, the $35 million TAM that we have, we believe, underwrites a lot of the core growth that we are seeing. And so therefore, breaking it down, I think, might be -- at a high level, I think that's probably the right way to break it down.

Are you guys -- with Infodrive, is the plan to separate Infodrive and SimplePart out going forward? I mean I know you've done it. You've done SimplePart anyway for this result. Just trying to figure out where is Infodrive sitting. Is it currently in that other segment? Just want some clarity, I guess, around your expectations for future reporting on SimplePart and Infodrive?

Richard, do you want to answer where it's currently sitting? And Gareth, maybe you can talk about our future breakdown.

Sure. So currently, Nidasu is sitting within our services revenue components. And as we are getting our feet under the table with this new strategy and how we think about our markets, here's an opportunity for us to repackage, I guess, our offerings in a way that makes more sense that includes Infodrive or the franchised dealer section that we showed in our graph. And I think with Gareth's experience in the past, he will definitely play a key role in figuring how to report this to the market.

Yes. Thanks, Richard. Gareth -- it's Gareth. If I can just sort of just quickly introduce myself and say hello, I think there's plenty of opportunity for us to introduce some additional measures into the reporting. I think some of the total contract value and the growing MRR that you've seen in these slides is very helpful. And some of the things that Jonathan and I and Richard have been talking about is on a journey of introducing more of those types of things; and obviously, the Infodrive elements of the business are very interesting and exciting. We want to find the right way to highlight those in the results going forward. I think as you change CFO, there's always an opportunity there, relook at reporting certain things that Richard couldn't have done because he's got to keep consistent with the past. I may have an opportunity of changing, obviously, with the input of the Board and Jonathan and others. But hopefully, we'll be able to say a little bit more about that at the AGM, but it's certainly on our radar to look at a sort of transition of the reporting given where Infomedia is going in terms of its selling a platform rather than individual products.

Last question just on margins for 2022 -- FY '22 EBITDA or cash -- and/or cash EBITDA margins. Should we be thinking they're increasing or falling? Just highlight the guidance around FY '22 EBITDA margins would be helpful.

Yes. So obviously, this is the first time that Infomedia's provided revenue guidance, and it's a very strong revenue guidance, so early in the process. Usually, would think about doing some of that at the AGM. So I'm going to be a little bit careful about giving too much of the guidance around costs or profit just because we haven't actually gone after that just yet, and we don't have a mandate to give the guidance at that level. But I think your intuition around keeping those margins broadly consistent is probably right. So hopefully, that gives you something to work with, and we'll look at maybe saying a little bit more about that at the AGM. But right now, obviously come up with explicit revenue guidance, but I think that's steer on broadly those margins being relatively consistent is not a bad place to start. But don't take it as an official guidance number because we don't have a mandate to do that, but hopefully, that's a bit of a steer, and we'll look at potentially saying more at the AGM.

Our next question comes from Quinn Pierson with Credit Suisse.

Maybe just firstly, I appreciate the new TCV guidance for the top 20 contracts. I guess in aggregate, how much TCV potential is there from a smaller contract in aggregate? Can you maybe help us understand if it's potentially material at a group level? Or is the bulk of the TCV win captured in that top 20?

Look, I'll answer that. The TCV, the other areas that haven't -- that we haven't added in are typically field sales, which are basically smaller contract wins. I don't think they're significantly material, but there is certainly a whole lot of -- and the SimplePart TCV that has been one we haven't included in that. I would suggest that the $35 million materially is the majority of the larger contract wins, and the smaller wins that we do get are really upside there. But again, I would suggest, relative to timing of the TCV, the smaller wins really just fill up the total revenue in the year and quite difficult to actually predict. There are a whole lot of smaller deals. So in reality, for your guidance, I'd keep the $35 million as the majority of the contracts won if you want.

Yes. That's helpful. And maybe secondly on Infodrive. It's good to see some momentum there and some contract wins. Can you maybe just talk us through maybe a little bit more qualitatively how you're seeing that division and opportunity emerge, I guess, in terms of what kind of momentum from a selling perspective you might have and if there's much kind of in the pipeline? I guess what I'm trying to get at is some great new wins, but I'm just trying to understand if maybe that's the first of many, and there's a bit of inflection or if you've kind of plucked some low-hanging fruit and the growth might taper off from here.

A good question. I think at the moment, we started off this and we described those as green shoots early on, and we've been working on this area of the business really for the last 2 or 3 years. In terms of where we're at, we definitely see this as a higher growth area, and we see the opportunities in the Infodrive space as being significant. We are really looking at our sales and go-to-market area as to how we capitalize on them; and certainly, our expectation is we see a lot of opportunity and growth momentum in the Infodrive area. And that's certainly playing out in terms of deals that we are winning and opportunities that we are seeing in the market.

Understood. And lastly for me, just now that SimplePart is closed, has freed up capacity to kind of more aggressively pursue other acquisitions. Is there much on that front? Or are you going to take some time to bed this down before considering and pursuing further acquisitions?

From an M&A perspective, that is still core to our strategy. Our inorganic growth, we feel there are lots of opportunities to acquire both new functionality, drive some strength in different regions and also extend out some of our offerings. And certainly, if you look at the type of deals that we have done being both the SimplePart opportunity and Nidasu, I would suggest that we should see further opportunities. And we do have a strong pipe of M&A opportunities, however, we are, again, very focused on making sure we do the right deals and we don't have the pressure on doing a deal for the sake of a deal. But Adam, who has been driving our M&A growth, is very busy at the moment.

Our next question comes from Naveen Patney with E&P.

The first question I had was just a clarification on your revenue guidance in that range. If I sort of take out SimplePart's contribution for this year, it implies sort of, by my estimates, 5%-11% organic revenue growth, but then if you compare that to the uplift in the second half '21 performance in each of the geographies, they're sort of achieving well into double-digit type revenue growth. And obviously, you've announced new contract wins as well today. I was just trying to understand how you got to guidance. It just looks fairly conservative in terms of my take but just interested in your thoughts there more generally.

Naveen, it's Gareth. We've sort of agreed between us that I'll take some of the forward-looking questions because Richard's in the process of handing over. So just to give a bit of additional insights into that, the answer to one of the earlier questions around SimplePart, so as Richard explained, there's about $1 million of the recurring revenue in SimplePart that if you annualize that, you're getting to sort of 12, 13, 14. and if you look at that as a component of the build of that guidance, at the $117 million level, that would show the organic and you're sort of controlling a little bit for the one-off. You kind of keep that one-off revenue at the same assumption that organic growth is about the 7% to 10% mark between the low and the middle point of the range. And if you get to the higher end of the range, that's coming out at around about the 13% growth level. So we're of a mind to be cautious about getting that right. There [ is scope ] for having a good result towards the higher end of the range, but there's a few things going on. Obviously, there's FX and things like that, that we want to be able to manage to and be able to hit the guidance that we've put forward. So I hope that gives a bit of a color around the bookends of that. So obviously, the total of $117 million is 20% growth with a solid contribution from SimplePart from the higher end of the range, $123 million, 26% growth. And as Jonathan said before, another way to think about it is kind of roughly half of the growth coming from SimplePart and half of it coming organically. So we need a bit of space between those 2 ends, and that's the way we're looking at it. That's triangulated through some expectations, some insights into our budget process for next year. And I don't know, Jon, would you add anything to that? Are you comfortable?

No, I think that's good. I think that we're putting a range and we obviously are very, very cognizant of making sure that we hit the range. And I think that there are enough moving parts that we want to make sure that -- and we haven't split out exactly the growth, but we are very confident in that range.

Okay. Okay. Great. Very helpful. And I guess the -- another question I had was just in terms of the $35 million of total contract value announced. Is it a case of winning more work from existing customers? Or are you winning new clients altogether in certain regions? And also, how should we think about the margin profile of these new contracts? And just the last part of that question, should we think about -- has it been much in the way of attrition of clients as well in terms of largest customers?

Okay. That appears to be 3 questions. So let me just try and answer those. Number one, the TCV, there are new customers. So Ford Europe, although not new, was a huge win and really does open up that relationship for us at Ford globally. The Mazda European, pan-European deal that we won is a new customer, again -- and opens up a new OE globally for ourselves. And then on the smaller wins, I would suggest that a lot of them actually are either new opportunity within customers and/or some of the new customers. So we are seeing certainly breaking into new customers globally, and we're seeing that -- as much as extending our existing customer relationships. In terms of the margins, I think that we should assume very much a similar margin profile as Gareth mentioned. There's nothing that should be significantly different in our margin profile. So I think that's probably key. And your last question, Naveen, was?

Just around attrition. I mean, obviously, there's a good contract win. I know that 95% of your revenue is recurring. But is there anything to offset those TCV contract wins?

There's nothing significant in the attrition. There is movement. There's a lot of buy, sells. A lot of dealerships are going -- are being bought or shifted into different dealer groups. So we're seeing a fair amount of movement in between. And so those would often reflect as kind of churn on one hand, and then we win them back on the other hand. But there's nothing significantly different in our churn this year or going forward that we can see. And certainly, what we have done since Richard and I have joined is most of our large contracts are underwritten by a minimum order quantity. So even in the scenario that there are -- there can be churn or shifts, we typically protect the downside of the contract value. And therefore, I think from a churn perspective, even when there are some of those movements, you'll find that our contracts protect the downside, if you want, of those churn opportunity -- issues that we might see.

Okay. Excellent. And last couple of questions for me were just in terms of R&D capitalization. I mean how should we think about that profile going forward in the next couple of years? And the last question was just some clarity in terms of other revenues that just sort of -- I know it's pretty small, but it sort of went back 10% this year. So just some clarity -- clarification there would be great.

Maybe I could cover essentially the forward-looking points and Richard, you could cover the backward-looking point if that's okay. I think your question around research and development is a good one. And one of the things, I think, if you look at the set of results, obviously, the revenue returning to growth and the green shoots that you can see is very, very strong and positive, and you can see some of the return the business is getting from the development spend and the OpEx that is invested in the last while to get next year and up and running, win some new customer deals and actually sort of plant some seeds for the future. So there's certainly elements of that return coming through, but if you look at -- if you look at the reported results, revenue went up 3%. Cash EBITDA went down a little bit. So there's certainly an increase in that OpEx. But it certainly does bode well for the future in terms of those additional TCVs and revenue that have been disclosed, a lot of that, for the first time this year. Some of the things we want to look at for reporting going forward is to be able to find a way to explain some of that return analytics a little bit better going forward. Some of the -- to be able to give you a guidance number around that, it's not something we can do just immediately given we're only giving revenue guidance, but that's something we're looking at. There is a lot of control around those costs and a lot of analysis, but we're looking forward to hopefully reporting a bit more of that at the time of the AGM.

Naveen, I can add some color that may give you some insights going forward. So you'll see in the slide deck when we talk about development costs, we did a, I think, an outstanding asset hitting this milestone of transitioning from legacy onto the Next Gen. We were also very conscious about our costs, and we're managing it in a period where COVID was disrupting and delaying sales. And you'll notice in that slide that the intensity of capitalization increased, and that intensity is really an indicator that our guys are really working their butts off with this. Once Next Gen is done, as I mentioned, there is a little bit more to do, but what we have now is a great problem. We have problem of delivering to the $35 million TCV. So right now, all our guys are continuing on a very high intensity in working to getting these things out. If I go back to your previous questions on Infodrive things, whilst it is early days and we have $113 million worth of TCV, the initial observation is that the time to revenue for these is a lot faster than our traditional parts and service areas. And again, whilst it's early days, I'm very cautious not to promise anything. It bodes well for a company that has been traditionally selling large deals and taking a little bit of time for it to revenue all for the right reasons. As we morph and see this growth strategy take shape, it does bode well for us. Firstly, just a clarification question. Just with that $30 million or $35 million TCV. That's all. And secondly, to give a bit more color on perhaps what the untaken opportunity to present this -- we're talking about it right now. Yes. No that earlier in the call.

[Operator Instructions] Our next question comes from Elijah Mayr with CLSA.

Just a couple of quick ones from me. Firstly, just a clarification question. Just with that $30 million -- $35 million TCV, that's all incremental here? Or is there some renewal in that as well?

That's all incremental. So there's no renewals. Those are new sales to customers.

And secondly, are you able to give a bit more color on perhaps what the monthly recurring revenue was as an exit rate in June or perhaps what it was in July?

So Elijah, Richard here. So I think this is one area that Gareth was talking to, to take present this. We're talking about it right now, whether we come out with -- on a tech day or an AGM or the first half, it's certainly something that we want to share. We're just deliberating how best to do it.

Yes. Noted. Jon's sort of [ noted ] that earlier in the call. And then maybe just one final one. I know pipeline is another thing that you guys would probably provide a little bit more clarity and a bit more information on going forward. But is there any quantification you can give, perhaps the TCV in the pipeline at the moment?

Elijah, that's -- there is some complexity because in our pipeline includes some of the TCV, if you want. So in reality, there are 2 pipelines. One is the TCV of what we've sold, and some of those are being built or being rolled out. I think what you're talking about then is our field sales rollout, if you want, and again, those have been slowed down, in particular in APAC, where we've got a very strong pipe of rollouts. And if you look at our -- in APAC, our April and May onetime and respective rollouts were I think the highest organization has ever seen. And then in APAC, the lockdowns just slowed that down dramatically. So we are careful around making sure that -- because of those externalities, we're careful as to how we disclose the pipeline because it is a pipeline, however, some of those are outside our control. But just being very clear, that pipeline is not included in the $35 million TCV. And I think that the underlying -- the major contracts and how we roll them out from an organizational perspective is we separate the $35 million and then the rollouts. And we haven't really disclosed and we don't really disclose the pipeline as a dollar value and more keen to describe these as TCV. Certainly, going forward, Gareth, we are, again, looking at what metrics make sense for the investment community and looking at looking at describing those more at the AGM.

Yes. Understood. And then finally, just one quick one. Just on -- if there was any material sort of COVID concessions, maybe particularly in the U.S. in the second half? And what, I guess, value you would expect to revert in FY '22? And what would be a tailwind, I guess, as you cycle some of these COVID concession periods?

Yes. So the COVID concession, the [ intermediate-only ] enjoyed a small amount from the U.S. early on in the first half, I believe. We don't expect to be claiming any further credits or assistance there. And sorry, was there a second question to that?

Was just thinking if there was anything that came in through the second half or if there's sort of any direct cost attributable in the second half that also might revert, I guess, into FY '22.

No. No, there would be not. No.

Our next question comes from Tim Plumbe with UBS.

Most of my questions have been asked, but I'm just going to delve down a little bit further in that $35 million of contracts won if possible, please. Just confirming, does that include the -- just confirming that, that includes the $14 million Ford Europe contract. And also, can you talk about how much of that was delivered in the second half of the year versus the first half of the year by any chance, please?

Yes. Tim, so confirmed Ford is included. So that $35 million, that's the effort of the sales team for the full year-to-date. And whilst I won't want to talk specifically about Ford, we generated about $1 million worth of revenue out of that $35 million for FY '21 in the second half.

Got it. Then just a question. I think you mentioned R&D required in order to bring that online. Should we be thinking kind of 1-year revenue is the right way to think about the cost of the R&D costs associated with those contracts?

I think the challenge for the business right now, Tim, is that from the development investment that we're doing, with the intensity and the self-imposed deadline to get Next Gen out, we actually pushed quite a bit of other work out also. A lot of this work related to things that are associated with enhancements that some of our customers were requesting, all revenue generating or revenue protection in fact. So we're actually cleaning those things up as well. But this is as a result that we put all hands focusing on Next Gen. Once that dust settles and Gareth gets his feet on the table, we'll have a better view of that return.

Got it. And just a question in terms of the pricing environment. And apologies, I came in late, so I might have missed this. But can you just confirm that there wasn't any further discounting to the OEMs in the second half of '21? And further to that, how are you guys thinking about the pricing environment around Next Gen and when you might be able to monetize some of that increased functionality?

So look, we haven't seen any shifts in pricing. And in fact, in some of the new areas, I think we've got the -- margins are very similar, if not, even better in some of the data areas. In terms of monetizing Next Gen, obviously, the big win for ourselves is actually the new OE, which was Ford. And -- but on top of that, we are seeing some of the module sales. So for example, in the Mazda pan-European sales, part of that -- half of that is actually a new module that was as a result of Next Gen. So it becomes quite difficult to split out what is a new module versus Next Gen as a whole. But certainly, we're seeing a lot of -- the return on Next Gen is certainly significant from a -- from Ford but also from our strength in the market. And then some of the new wins that we are starting to see are as a result of both either modules or the Next Gen platform. And so that's very exciting for ourselves, and I think we're early stages still, but the growth momentum is proving strong for ourselves.

Got it. So just to clarify, we should be thinking about that as strengthening or creating a more sticky customer and potentially getting upside from modules. But you might have customers that are on the new platform, not taking any modules and not paying any more than they were previously.

The other area, which relates to that, what we are seeing is on re-signing, and I think we spoke about this at the half. We are seeing on re-signing the ability to increase pricing, and our competitive nature in the market has been much stronger. So on the last 2 renewals, we've got increases on those renewals, which -- and much bigger increases than we've ever got before. So I think that really does show the strength of the platform and our relative strength. But I think it's all wrapped into a number of areas: winning new opportunities, winning modules and also being able to get lifts, whether be through new modules or just the whole platform that they -- that we have that strength in. And I would suggest that, that will flow through into next year from a growth perspective.

And just, Jon, if I could just add, I think that's exactly that's half the stuff we want to start being able to show, is the return on the investment that has been done and show that through increasing recurring revenue, the TCV that the business is able to write. And that's the journey we're on to try to show that in a bit more -- put that in a bit -- [ up and nice ] a little bit more.

Understood. Just maybe one quick last one. A bit of housekeeping and apologies if I've missed it in the document. But could you just give us the underlying FX assumptions within that guidance range, please?

What we -- Gareth, go ahead.

We're trying to work out between who's answering your question. That's all. You go, mate, sorry.

That's all right. Because these conference calls, I know kind of the conditions where nbn is unreliable and you have to rely on your hotspot. So the underlying assumption is that we use our FY '20 rates as a [ settler ]. And if you ask for that number, I don't actually have it right with me. But we just used FY '20 as our base.

Sorry, just confirming you're using average FX rates from FY '20 to set for '21? FX movements have -- FX moved pretty substantially.

Yes. Yes. So for FY '20, you would assume that there was quite a significant move, especially in the U.S. dollar.

There are no further questions at this time. I'd like to hand the call back over to Mr. Rubinsztein for any closing comments.

Thank you very much. I do appreciate everyone's time on the call. I know everyone's busy. I really look forward to catching up on the one on ones, even though it will be in a virtual environment. And thank you very much for your support. Have a great day.