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

Hello, everyone, and thank you for joining the Infomedia Full Year Results Briefing. We will begin with a presentation by the Infomedia management team followed by Q&A. [Operator Instructions] We have 60 minutes for today's call, so please keep questions to the point. Now over to the Infomedia CEO, Jens Monsees.

Thank you, [ Kiara ]. Good morning, everyone, and welcome to our full year 2025 results presentation. I'm Jens Monsees, CEO and Managing Director of Infomedia. Firstly, I would like to acknowledge the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation. We pay our respect to the elders, past, present and emerging and extend this acknowledgment and respect to the First Peoples in all countries in which we operate. Joining me today on the call is Chantell Revie, our CFO. You can follow along with the presentation slides, which were released earlier on the ASX. I will refer to the slide numbers as we move through the presentation. Please note the legal disclaimer on Slide #3. Well, let's kick it off on Slide #4, I will first share the highlights and strategy update before Chantell takes you through our financials. I will then come back and close off by presenting our outlook. For those who are familiar with our company -- who are not familiar with our company, the glossary provides definitions of the terms used in the presentation and the appendix contains a good overview and further details on Infomedia. We welcome your questions after the presentation. You can see on the highlights, the full year 2025 on Slide #6. We achieved 4% growth in total revenue compared to FY '24 despite the churn of a major customer in SimplePart. Exit ARR and ARC both grew by 2%, and our margins increased further, both in line with our strategy for the strengthening phase. Cash EBITDA increased by 7%, showing continued improvement of operating leverage. A particular highlight was the strong free cash flow generation boosted by effective working capital management. Finally, we have decided to pay a $0.02 per share fully franked final dividend for FY '25, taking the total dividends in FY '25 to $0.042 per share. On Slide 7, you see our key business achievements during FY '25. Firstly, as previously communicated, we have appointed new sales leaders in both EMEA and the Americas. Dirk-Marko Adams have been leading EMEA since December last year, and Brent Green started in March this year running our Americas business. I am encouraged with how both of them are getting up to speed on Infomedia products and organizing their go-to-market team, and I'm seeing higher customer engagement than before. Secondly, we decided to rebuild the tech stack for our Infodrive CX product to prepare for global expansion. This rebuild is progressing as planned, and we anticipate completing the core product by February 2026. Thirdly, for SimplePart, we have realized synergies through the integration of data landing with Microcat, meaning we now only need to process the data once for both products. We renewed large contracts with major customers and achieved attractive price increases despite the challenging macroeconomic environment. In February, we announced the acquisition of 50% of Intellegam, a European AI company that we believe brings significant capabilities for Infomedia. The integration is going well, and the first contracts have been signed with 4 more AI solutions set to roll out in the second quarter of FY '26. Finally, in May, we received a takeover proposal from TPG Capital, which is not a telecom company. On August 6, we signed and announced a scheme implementation agreement, which will be voted on by shareholders likely in November this year. Slide #9 shows that our strategy is consistently delivering better results, reached -- results being reached since Chantell and I have started accelerating the business in FY '22. Over the last 3 years, we have grown revenues by a CAGR of 6.8% due to disciplined cost control and good operational leverage, cash EBITDA grew by a CAGR of 12.5% or in other words, our cash EBITDA is now 42% higher than when we started. If you look at the core business divisions by excluding SimplePart and Intellegam, revenue grew by a CAGR of 7.7% and cash EBITDA by a CAGR of 16% or 56% higher than FY '22. We are successfully executing on the strategic vision that we have created in 2022. Over the last 3 years, we continue to grow our underlying cash EBITDA every year, but that's not to tell the entire story of our journey. Beginning of May 2022, the share price was at $1.16, and Infomedia was a sales-led organization with increasingly one-off customization work, which put pressure on our margins. Our solutions were stand-alone point-to-point solutions. Since then, you can see what we have changed on Slide #10. On process, we have transitioned to a flexible Biz-Dev-Ops model to stabilize our cost balance while allowing us to invest into our products. In the people category, we renewed the entire ELT. We have a very diverse and competent team in place. On products, we have established an integrated ecosystem with innovative and scalable solutions. We have diversified our revenues base by -- revenue base by growing Superservice and Infodrive. On performance, we have gone through contract renewals and achieved meaningful price increases. We expanded our customer base and product portfolio, resulting in a stable foundation. The team has made a lot of good progress, both operationally and financially, but the job is not finished, and our journey will continue. I will provide more details on that and our outlook after our CFO, Chantell, has taken you through our financials. Over to you, Chantell.

Thank you, Jens, and good morning, everyone. On Slide 12, I present the annual recurring revenue, ARR and annual recurring costs, ARC on a line graph over time. In the past, ARC outgrew ARR. During the change phase, costs were brought under control and the ARR line started to increase higher than the ARC line, resulting in positive operating leverage and an increase in the cash EBITDA margin. In the first half of FY '25, ARR has a dip in October as a result of 1 customer churn in SimplePart, which we reported at the half year. During the second half of FY '25, ARR recovered from this churn event and still grew 2% compared to the prior year. ARC grew 2% compared to prior year in parallel with ARR, and therefore, we remain on track during the strengthened phase of our strategy. Included on this slide are the key retention metrics over the past year. Gross retention revenue measures the percentage of recurring revenue retained from existing customers, excluding any revenue from upgrades or new customer acquisitions. For FY '25, this metric was 93.5%, indicating good customer retention. Net retention revenue reflects the total recurring revenue retained and expanded from the existing customer base, including upsells and cross-sells. For FY '25, this reached 99.3%, demonstrating the company's ability to grow revenue with its -- within its existing customer portfolio. On Slide 13, I have a breakdown of revenue and cash EBITDA by region. Starting with APAC, revenue grew 10% on the prior year and cash EBITDA was up 14%, demonstrating the region's ability to generate positive operating leverage and deliver productivity gains in FY '25. APAC remains our strongest operating region. EMEA delivered 6% growth in AUD and 4% in local currency, whilst increasing cash EBITDA by 7% in AUD against prior year, showing EMEA's ability to deliver profitable growth and positive operating leverage. Revenue from the Americas declined by 4% in AUD and 5% in local currency with cash EBITDA down 5% in AUD. This is as a result of the loss of 1 SimplePart customer in October 2024. We continue to deliver positive operating leverage at the group level, as highlighted on Slide 14. Recurring revenue grew 4% despite the significant churn event. Total costs increased by 3%, reflecting strong cost discipline across the business. As a result, underlying cash EBITDA margins increased to 24% and cash EBITDA increased by 7% compared to the prior year. Further profit measures are presented on Slide 15. EPS increased 31% to $0.0444 per share and adjusted EPS grew 6% to $0.0588 per share. Our capitalized development costs have remained at 14% of revenue. We anticipate that this percentage will largely stay consistent moving forward. Share-based payment expense increased to $1.9 million during the period, reflecting strong business performance and the continued viability of long-term employee incentives. In prior years, this expense was suppressed due to the reversal of previously accrued incentives that were no longer payable. Business restructure costs in the year were from a team restructuring after the SimplePart churn event. The business continues to generate strong cash flows, as can be seen on Slide 16. Free cash flow increased by 34% in the period after the payment of the final SimplePart earnout in July. At the half year, we commenced a share buyback program and paid $318,000 for 244,721 shares at an average price of $1.30. Shortly after starting the buyback, an offer was received from TPG Capital and the buyback had to be paused. As at the 5th of August 2025, the buyback program has been suspended. In summary, Infomedia continues to generate strong cash flow. At year-end, cash holdings increased to $84.6 million, up from $70.4 million at the end of FY '24. Back to you, Jens. Thank you.

Thank you very much, Chantell. Let me describe the macroeconomic factors relevant for Infomedia on Slide #18. The first is the digitalization of customer experience. There's a trend towards more data-driven marketing and customer service from dealerships. This will benefit several Infomedia products, in particular, Infodrive Analytics and Infodrive CX. There's also a boom in [ demanding ] and demand for AI solutions. Dealers are replacing humans with AI and software. The second factor is uncertainty in trade policies. OEMs are still figuring out the impact of potential tariff changes. And once they have the tariffs figured -- once they have them figured out, the tariffs will change again. This is not only affecting new car sales, but also the entire part supply chain. As a software provider, Infomedia is not directly impacted by these tariffs, but it brings uncertainty and slows down decision-making of OEMs. The third factor is the ongoing disruption of the automotive landscape, the right of the slide. Continued growth of the Chinese OEMs and production overcapacity are putting pressure on OEM margins. On the other hand, it is an opportunity for Infomedia as we recently started to work with 6 larger Chinese OEMs. The growth of connected car and software-defined vehicles, as this becomes more established, Infomedia is ready to participate in this trend. The increased variety of powertrains, ICE, hybrids and EVs are creating complexities for dealerships and Infomedia's products help them to navigate this by providing wind-specific data regardless of the engine. The progress we have made with Intellegam since acquiring 50% of the business in February is detailed out on Page 19. 6 months into our partnership with Intellegam, the team has been introduced and welcomed into the wider Infomedia ecosystem. The first joint contracts have already been signed during the recent roadshow in EMEA and APAC. Infomedia customers' reception of Intellegam's product and solution is very positive. Currently, Intellegam and Infomedia have our AI solutions in development with a comprehensive road map of more products to come. On Slide 20, you see our main focus areas for FY '26. First, increasing our sales productivity in EMEA and Americas. I'm encouraged by the rapid change that both leaders are driving in their regions. Secondly, our technology and product teams are working on rebuilding the Infodrive CX platform for the global launch. And thirdly, as mentioned, we are doubling down on our AI strategy with Intellegam. Revenue guidance for FY '26 is $152 million to $159 million of revenue. On Slide 21, we laid out the summary of the TPG Capital take-private offer. The offer of $1.72 per share, less the amount of any dividend paid is at a significant premium of the share price before we announce the agreement. All members of the Board recommending the offer. In the absence of the superior proposal and subject to an independent expert concluding that it is in the interest of shareholders, we expect their report to be published within the scheme booklet. The scheme meeting will likely take place in November. Importantly, shareholders do not need to take any actions at this point in time and more information regarding the scheme will be provided in the near future. Concluding, I would like to thank the entire Infomedia team across the different regions for all your great contribution. I also would like to thank our clients across the globe for their business. And last but not least, our shareholders for your ongoing support. That concludes today's presentation. I would now like to open up for questions. Kiara, over to you.

Thank you, Jens. [Operator Instructions] Our first question comes from Olivier, who asks, guidance appears to assume a better net win outcome over FY '26 than seen over FY '25. What's driving this?

Thanks, Oli. So it's basically we don't have a big churn event this year, but also -- or no planned churn event this year, but also, we have seen increasing momentum from our European head, which started in December last year and we've also seen some momentum from our Americas head starting as well. So our -- yes, our guidance is better, correct.

Thank you. And we do have a follow-up question that asks, SimplePart churn has been painful over the last few years. Are there any contracts coming up for renewal in the near term? Confidence that can be defined -- can defend clients?

Yes. So the next or the first half of FY '26, there's no renewal coming up. In the second half of FY '26, we see a few big contracts coming up for renewal, and we are in close discussion with our clients.

Thank you. Our next question comes from Tim, who asks, can you please talk to upcoming major contract renegotiations over the next 12 months? Can you split between core business and SimpleParts, please?

Yes. So we are more than half the way through the book in terms of renewals. Our major contracts are normally going 3 to 5 years. Actually, they're going much longer, but every 3 to 5 years, they will be renewed. We see, as I pointed out in my presentation, Tim, some good price increases and opportunities there. Also, we bring out additional innovative features. So for the core products, we continue to go through the book and increase our prices and also renew our contracts. So from that point of view, I don't see any churn risk at the moment. For SimplePart, we are stabilizing our platform. We have invested some money in getting the platform better and more stable. I'm confident that we can renew the major contracts that are coming up for renewal on the second half. But as we know, the core business of -- and core products of Infomedia are more sticky and more [ ingrained ] with our clients and the e-commerce part is easier to exchange by an incumbent.

Thank you. Our next question comes from Tim who asks, can you talk to the sales pipeline in terms of opportunities across the business, core business, AI Intellegam and SimpleParts, please?

Yes. So each region has a pipeline that favors a different product, and we see each region doing well. So in EMEA, Superservice does really well. And in America, Microcat does very well. We also actually have a really good pipeline of SimplePart. So I know it's been an unloved child, but it does have a good pipeline of upcoming contracts that it's bidding for as well as other ones that it's won, which you'll be able to see in FY '26. So -- and APAC doing really well. I mean it is the blueprint for the rest of the business. So yes.

APAC does particularly well on Infodrive CX, right?

Yes. Yes.

I think overall, all regions are having different focus on their go-to-market strategy. As we are already pointing out, we are pleased with EMEA that they get a little bit of upside. And finally, your question was also regarding Intellegam. We have already signed a few deals. And I think with the solutions that are currently in development and ready to launch in the first half of FY '26, we see further upside from the joint development Intellegam and Infomedia.

Thank you very much. [Operator Instructions] We do have another question from Tim, who asks, you mentioned tariff uncertainty, have pricing discussions become more challenging since March '25? Do you expect to get the same sort of pricing increases as before the tariffs?

Yes. For sure, tariffs are impacting the profitability of OEMs. We saw in their earnings call a steep drop of profitability. We see also the Chinese overcapacities are pressing into export, especially in Europe, but also in parts of Middle and South America and Asia. So overall, the profitability of our clients is lower. Ours not. As we just reported, we have a little bit of upside again on our margin and positive operating leverage. Yes, it is hard. Yes, it takes sometimes longer. Yes, there's more uncertainty for OEMs to make decisions on the renewal of our contracts or signing up for our innovative products as a new customer. But as I pointed out, except the churn in FY '25, we don't see a backlash on us. In fact, we are running our business very well, and I also can anticipate some further price increases in FY '26.

Thank you. Our next question comes from Tim, who asks, can you talk to [ DM's ] integrations in FY '26? Have you managed to get any new DMS operators into the pipeline?

Yes. So overall, I think we have more than 880 DMS integrations across the globe, across our products, across the different DMS landscape. Every year, we are deploying 50-plus new DMS integrations into the market. I think, Tim, as I know you well, your question is very much to the U.S. market. I cannot report any further progress there with OEC that is still to come.

Thank you. Our next question comes from Olivier, who asks, how much of the $152 million to $159 million of revenue is expected to come from Intellegam?

Yes. Intellegam is a start-up business run by 3 founders. Intellegam has, from the overall magnitude of our revenue, less than 1%. We obviously see the capabilities and the skills and the upgrade to our core business. And I think they will not stay at 1%. They will grow in their stake of the overall revenue portfolio and claim their spot there, but we don't guide on any specific product line.

Thank you. Our next question comes from Chris, who asks, any guidance on cash EBITDA margin in FY '26?

Yes, Chris, we're not giving guidance on FY '26 cash EBITDA margin at this point. So we'll leave that question there. And when we -- if we feel we need to, we will.

Thank you. And another question from Chris. You are permitted to pay dividends of up to $0.049 as part of the scheme agreement. When would you look to potentially pay a special dividend?

Yes. So the up to $0.049 is including ordinary dividend that we just announced with $0.02 per share. And we might clear out our franking credits with a special dividend when we are having a voting and a second court approval and if the transaction goes ahead.

Thank you. [Operator Instructions] As no additional questions have come through at this stage, Jens, I'll hand back to you for any additional remarks.

Well, thank you, Kiara. It was obviously a tough start in FY '25 with the churn that we experienced in SimplePart, but I'm very proud that the team could make good and outgrew the revenue and also from the cost discipline, the team is doing very well. So our strategy is delivering what it should deliver, and therefore, we are looking positive into the year FY '26. With that, I would like to thank you all and see you in our lunches and our one-on-ones later down this day. Thank you.