Infotrust Ltd (ITS) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to this first half results webinar for Spirit Technology Solutions. My name is Gabby, and I'm joined today by Spirit's Managing Director, Julian Challingsworth; CFO, Paul Miller; and Infotrust CEO, Simon McKay. Before I hand over for the formal presentation, just a reminder that today's webinar is being recorded. And there will also be the opportunity for Q&A at the end of the session. If you'd like to ask Julian, Paul or Simon a question, please do so via the Q&A function at the bottom of your screen. I will now hand over to Julian. I'll just get the presentation up.

Good morning. Thank you, Gabriella. Okay. Let's kick off. It's been a really busy half and a positive start to the year. So look, I think the key message coming out of our results today is that we have had a pretty reasonable and on track performance in the first half and we are maintaining our guidance for the full year, which is -- the midpoint of that is $11.5 million, so $11 million to $12 million, which is a significant year-on-year improvement over FY '24, which, as you can see, sat at $1.7 million. Improvement against the prior period in our revenue line, up $7 million from $43.7 million to $50.3 million, significant uplift in our underlying EBITDA. Key contributors to that performance is our cyber. You'll be aware we have over the last 18 months, really had a cyber-first strategy with significant investments going into our cyber capabilities, a number -- 2 acquisitions that have completed and are contributing to our growth. The cyber revenue up close to 100% to $14 million. Importantly, a 20% underlying EBITDA margin, driven in part and quite significantly from a change in accounting standards that Paul will talk to the agent principal, which we will get into a little bit more detail as we go through the slides. I think you'll see there a positive contribution from Managed Services. We're looking to turn that business around from a very difficult position. It had really been a train smash 2, 3 years ago to its contributing both to the organizational financially, but also importantly, to the strategic future of the business with some of the cyber services and the opportunities in the customer base that that's presenting, but a robust turnaround there from a loss of $2.5 million in the previous period to a slightly positive result in the half and we can see that continuing to contribute to the strategy and becoming a valuable part of the organization. And we completed in this half the acquisition of Forensic IT, which is small in absolute revenue and earnings contribution, but very significant for us strategically in the way it helps the business generate work and pipeline for both -- for 2 of the 3 divisions. So as we get into the discussion of agent versus principal, a fair portion of the business has -- involves the resell of third-party software. The Board took a conservative view that they would like to account for that now under the agent model. Historically, the percentage that had contributed of the overall group was a bit lower. But with the acquisition of Infotrust and with a review of current trends in the industry, we thought it prudent to review that. And as a result, we have adopted the agent model where as revenue, we will record the net income from software, where there is just a software sale with very little services wrapped around it. Now our business model is really based on providing services around it, providing Managed Services and multiyear contracts for those products. But you'll see the impact. And as we work through these slides, you'll see revenue from both a historical guidance perspective, which is on track and also how that is playing out now in our numbers going forward. Happy to take any questions on that towards the end. I think the key message for us here is a lot is going on. We've really had a lot of work to restructure the managed service team and to integrate the high-quality assets that Infotrust bought. And those -- that team led by Simon and the refresh of the sales capability and what we're seeing in the market around very strong demand for cybersecurity services is giving us confidence that we will maintain our guidance through FY '25. Next slide, please. You can see here some of the impact of the restatement, the pre-restatement turnover. I think things that jump out there, underlying EBITDA up significantly from a breakeven position in FY '24 to a positive contribution. Paul, do you want to add some color to any of the changes here with the restatement and any of the numbers on this page?

Yes. Thanks, Julian. Just at a high level, just to go back to the standard in relation to this. So when you report as a principal, you're reporting your revenue on a gross basis or your sales on a gross basis. When you report on an agent basis, you're reporting those sales streams on a net basis, which is obviously your gross margin basis. So as Julian said, we've revisited our model as the model has changed, also taking into account changes in the industry in terms of how the broader industry is reporting certain revenue streams. And as Julian indicated, this is mainly around software licensing and some other product revenue streams. So we've made a decision to move those streams to an agent basis, which is why you see the pre-statement number of $72 million for the half. But on a reported revenue basis, that comes down to $50 million once you apply that agent basis to those revenue streams. So as Julian indicated, a strong uplift in our underlying EBITDA. We had the full benefit in this 6 months of the Infotrust acquisition coming in on board to -- and also Forensic IT and which we'll go through the segment results in the further slides.

I think to add to that, with the breakdown between EBITDA and underlying EBITDA, transformation and restructuring costs have been a significant element of that. We've been required to rebuild a lot of the platforms that were old and didn't support our strategy going forward. You can see they're sitting at $867,000. Going into FY '26, we don't believe those costs will be nearly as significant. The restructuring projects are coming to an end over March and April, the final systems are rolling out across the business, and that will mean we're in a single CRM, a single ERP and a ServiceNow proposition, which will give us much more information and stronger ability to guide the business for the core cyber and managed service segments. Thanks, Gab. Next slide. So we start to unpack the various business segments. You'll see there cybersecurity, a really key contributor to the organization step-up in revenue, 100% step-up on the PCP basis. Managed Services, a decrease there is a couple of million off. That's a process of offboarding unprofitable customers. There is 1 or 2 unintended losses in there. It has been a challenging period going through Managed Services, but I think we have a very stable business in there now with significantly less undesirable churn. We still have some desirable churn where customers probably aren't the right customers or too small for who we want to be in the future. And communication and collaboration continuing to be a strong performer in the team from a revenue perspective. Their revenue up from $20 million to close to $22 million. We see that as a result of a bit more business stability, the potential for interest rate decreases, a market that is very interest rate sensitive, but we're seeing it start to pick up now that interest rates have potentially peaked and may slowly come down.

And Julian, I might jump in. It's also worth sort of highlighting, we're also expanding that market footprint. So that communication collaboration business expanded into the Western Australian and South Australian markets. So during this half, there's a revenue contribution, but also there's an investment associated with that.

Absolutely. And you'll see that in the underlying EBITDA, which isn't growing at the same rate as the revenue growth while we make that investment in those new geographies. Western Australia, we think, has a lot of potential for us over the period, a strong economy and something that has hit the ground running very well and we're seeing good traction in customers there. You'll note within our cybersecurity team, there is some seasonality to this business. Half 2 is normally around 60% of our total contribution for the year. Really, that breaks down to Q4. Q4 is a very strong period in that. Simon, do you want to talk a bit about seasonality and why second half and specifically Q4?

Yes. So not unusual. And I think 10 years of history running the Infotrust business, it's always been the same. My experience in selling technology in Australia for 20 years has largely been the same. Q4 is typically the largest quarter. Variety of reasons for that. Customers are looking to lockdown budget for future years. So they spend a little bit earlier, and they're happy to buy any surplus budget. So the forecast is in line with our historic revenues, and we expect to have our largest quarter in Q4.

I think too there what we've seen in Managed Services is significant investment in Managed Services that relate to the security desires of our customers. So we're starting to see a lot more discussions within our existing customer base within cybersecurity, the 650 customers within Managed Services. There's over -- there's 1,400 customers, but there's 400 key that we would describe as key service customers that have bigger, bigger offerings from us. And the coming together of cybersecurity and secure Managed Services to provide joined-up services has been a big focus for us over the last 6 months. I think going into the next 18 months, you'll see a significant performance uplift there. Next slide, please. How it's washing out in revenue and contribution. We touched on a little earlier that cybersecurity revenue is up significantly. As a consequence, so is our earnings contribution. Historically, Managed Services had been quite a drag on the results. It's a sort of negative 24% FY '23 to FY '24. So that 2-year restructuring journey has taken it from a multimillion, $3 million, $4 million loss position into one that is now contributing to the group. The communication collaboration has been consistently strong over the period, has generated a lot of the cash that we have recycled into the restructure program and also the ability to buy cybersecurity alongside capital raise to support that. But you can see the clear trend there between '23 and '25, where our cyber-first strategy is coming through into the results. Cybersecurity going from 5% contribution to our earnings to 46% and we see that continuing at a pace going into the next couple of years. Next slide, please. When we talk about our cyber capabilities and how they join up, you can see that there's 4 key teams across the business: Infotrust, Forensic IT, Secure Managed Services and NextGen. If I think of these businesses and help people understand their contribution to a cyber capability, Infotrust is clearly 100% of its business is focused in cyber market. It has a great reputation in the industry for the quality of work that it delivers and a broad customer base. And broadly speaking, not getting too technical, it breaks under 3 key buckets of professional services, helping clients procure, install and run products effectively and our 24/7 SOC based up in Brisbane. We recently acquired Forensic IT, which added incident response capability. Last year, they did 160 incidents and we see this as a real driver of business across the business, reason being is when you've had a breach and we've helped you resolve it and contain it, limit the impact of it and recover from that breach, one of the first things organizations talk about is what do we do to prevent that happening again. Now, that is a real opportunity for both our Infotrust and our Secured Managed Services to go in. In the half, we've had a couple of instances where they've had an incident. They've done the post-incident review and said, okay, why did we have this breach? What went wrong for us to be in this position now where we are dealing with a breach? And what we found is their existing Managed Service provider just wasn't at scale, didn't have the necessary skills to support them. And we were able to take a client that was effectively offline because of a breach, an organization with 1,000-plus people with critical infrastructure clients and turn something that was a breach where they may have been offline for 3 to 4 weeks into them being offline for 2 to 3 days and back running at full pace because of the capabilities that existed within our Secure Managed Service team. As a consequence of that, we've signed up to $1 million of TCV on that. On top of that, specific opportunities that have come out of Forensic IT directly into the PS or Product Space for the Infotrust team, there's been 6 opportunities in the short period that we have had Forensic IT in the family. So for us, being able to take these teams and really put them together is a great opportunity. You'll see currently Managed Services sort of 60% of what it does is really around security. Over time, that will increase. Our strategic focus is security in that space. And you'll see NextGen sitting there. Very few, less than 10% of their customers specifically choose the product because it does secure meetings and secure communication. But it is a fabulous business and it's very predictable and it throws off good amount of revenue and cash. But you can clearly see -- well, I hope you can from this slide, how the key pieces are coming together into a consistent security message. Simon, do you want to talk about how we'll take that to market and what that looks like from a growth perspective over the next couple of years?

Yes. And I think the context being that since we joined the group 10 months ago, the first piece has been getting the teams together, merging, building the organizational structure for the cyber entity. We've largely done that now. It's been very successful. Our customers and partners have all been very happy with what we brought to market and how we engage. So we've now had time over the past few months to look at the Spirit managed offerings and they do fit strategically within a go-to-market for the cyber space. Frankly, their products and services that I haven't had access to previously, but with a much larger sales team and 650 customers of all shapes and sizes and a large amount of those in the mid-market, these are really ripe solutions that we can accelerate into our customer base. So secure network, secure infrastructure, even backup and recovery is part of a good cyber strategy. So all of these lend themselves to a faster go-to-market, more MRR and more profitable Spirit first sales for the group.

I think the effort that Simon and the team have put into refreshing the sales capability nationally and being able to take those products consistently to our customers out of our Brisbane, Sydney, Melbourne offices, it's the first time we've really had that full East Coast coverage with a set of offers and a way to get them into market with a high-caliber sales team. So I think, again, when we go back to talking about FY '25 guidance and why we have some comfort in it, a), the results are showing us that, but also be the capabilities and the integration across the teams and that shared desire to take a greater wallet share for our customers gives us confidence that FY '26 and '27 is also looking like significant opportunities for the organization. Gabby, next slide. I think this is covering probably some of the things that we've briefly touched on. But I think key customer growth. Historically, we've had small share of wallet because we've done one of those capabilities within clients. The uplifting of the sales team, we're seeing sales team able to take multiple offers. As Simon says, he's now got a whole portfolio of things that are relevant to his customer base. It's a great opportunity for the team to deepen our relationship with customers, convert some of the professional services work we do into recurring revenue and have a much stronger relationship with the customers. Communications team, as Paul touched on, really good growth opportunities we're seeing in WA, South Australia, potentially opening formally in North Queensland towards the end of the financial year. Leveraging partnerships has been really important for us. We have strong relationships with the industry leaders. We're getting a lot of support from our vendors, key vendors, Microsoft, Cisco, CrowdStrike. There's a dozen of them in there, but working with those organizations. And the fact that now we are a much bigger firm, we're a national firm, lends us the ability to have a stronger relationship with key partners, better pricing, better support, more marketing support is the outcome of those stronger partnerships. Offerings we've talked on. Really all of the conversations within the teams outside of communication lead with a discussion on security. Organizations are still seeing breaches every day. ASD reported in Australia this year, we have one breach a second in Australia, I think, 47,000 breaches across the year. So everybody knows somebody who's had a breach or just dodged a bullet and has been lucky not to have a breach. So cyber is the conversation that leads into that. And where we see it competitively positioned, there's a number of cybersecurity firms in market that we compete against. They don't have the depth in Managed Services. So they're not able to take the full suite. They may do one of those services, PS or they may have a SOC, but they don't extend across into the Managed Services. On the other side of the coin, we see some Managed Services organizations who are struggling with security or they're reselling one product and badging themselves as security experts, but they can't lean into the 150-plus experts that we have in the security team that makes it a very different story for our customers when they -- especially when they scratch under the surface and do a bit of diligence and say, okay, what does your SOC look like? Is it 2 people in a room with a pager and you wake them up at night and get them out of bed if there's a breach? Or is it 24/7 with the team up actually at their machine ready to help us within minutes of a potential breach? So a very strong offering that is very relevant to the market and everything we see around the future of breaches. And of course, inorganic growth, we will continue to fill some gaps that we have in the team, both from a geography, potentially from a capability perspective that we would like to deepen or from an industry vertical. Internally, we have a very strong focus on supporting critical infrastructure and building out deeper capabilities. We have dozens of customers in there today, but really building out a strong critical infrastructure practice may require some inorganic growth and where we see well-priced acquisitions that are culturally aligned, we can integrate them quickly given our investment in new systems and platforms and leadership who are getting a couple of acquisitions under their belts and doing that better and better each time. Next slide. Outlook. Look, I think as sort of my opening comments, guidance reaffirmed. You'll see there a pre-restatement of $154 million to $164 million under new accounting principles that sits at $100 million, $110 million, in line with our previous guidance, significant opportunities to cross-sell between Infotrust, Forensic IT and the Managed Service team, improved profitability. Cybersecurity, as you can tell from the investment and the tempo in the market is set to be the largest earnings contributor and continue its growth in FY '26, '27. With scale comes margin accretion opportunities and we continue to see Managed Services contributing and over the next couple of years, really getting back to a normal run rate for what we would expect with its industry peers. So I think ultimately, that leads us to a position where we have a cyber-first strategy, probably the only listed company that I'm aware of that is cyber-first and it's its main job. We'll continue to grow inorganically, strong organic growth with the goal of supporting our customers secure their digital environments. Next slide. I think that's a summary really there of some of the things I've said for, I think takeaway for me is always strong tailwinds. We can talk about breaches. I think we now have the largest, if not the second largest incident response capability in Australia. Breaches will continue to be topical. Cybersecurity will continue to be topical with our customers, something that we will capitalize on over the next couple of years. Gab?

Okay. Thank you, Julian. [Operator Instructions] A number of questions have come in. Julian, first one is from James Tracey of Blue Ocean. Could you please expand on the reasons for the 40-60 first half, second half seasonality that you expect in cyber?

Sure. I think there's a couple of reasons. And I think the initial one Simon touched on around budgets and organizations spending of budgets. I think the other one that drives it is that activity that they do compounds each year. So typically, in the Infotrust business, Simon would sell a 3-year deal. And often, in some ways, we've trained customers to buy in the last quarter because they get sharper pricing from the vendors. So they sign up in that Q4. Now then next year, the renewal happens in that period as well. So you get that continued buildup of a book of recurring revenue where the re-signs happen in Q4. And what -- on day 1, you start out with limited seasonality and then you go through Q4 and then next year, Q4 is bigger. And it gets bigger again because of the continued re-sign of multiyear deals in that period. So it's challenged because we know it's a hugely busy month. We have lots of renewals and lots of activity. But I think -- it's the way customers have been trained effectively as they know they'll get a little bit extra off or they'll get some extra support because the bigger organizations might be closing out their year-end and the pencils are a bit sharper. And look, if I look back to my Tesserent days, our split was 72% half 2, 28% half 1. And again, it was because it was a much -- it was a large product book. It was -- had a bit more volatility and churn in it as a consequence, but it was heavily seasonalized as a consequence of that. Now we have a more diversified revenue book in that business. So it's sitting at 60-40, but it's really that compounding effect of deals and re-signing of those deals across each of the years.

Thanks, Julian. Next question is probably for you and Simon. It is, can you please talk to the cross-sell opportunities that Forensic IT is offering to other parts of the business?

You want me to take this one or...

Yes. Go for it.

So I've worked with -- partnered with Forensic IT for years on the legacy Infotrust business prior to coming into the group. So have a good background with them. The opportunity working with them is, I think Julian mentioned 150, 200 breaches that they worked on last year. So that for me is a new entry point to market because that is essentially a customer that is -- has had a breach. Forensic IT will come in, do the incident response, remediate and contain. What Infotrust does and what Spirit do, Infotrust can then go in and build on an uplift of security controls strategy, work with the board and then guide them to lift their cyber posture so that they have better protection and process and control in place moving forward. That's all investment in the Infotrust side. If infrastructure is down because of that breach, then the Spirit side can come in and help them to come back online, backup recovery, Microsoft, all of the applications, if you think about a breach that can be taken down, sit within Spirit's wheelhouse. So revenue opportunities on both sides and we have this sort of circular motion of a breach occurring and then a bigger portion to the right group. On the flip side of that, a lot of what we -- our customers ask us for on the cyber side are incident response retainers. So if you look at insurance policies and bringing premiums down or even just to improve cyber strategy against a standard or a framework, in order to improve that, having incident response retainers in place in the event of a breach are hugely valuable. So different market opportunities, but essentially accelerates for us our new logo acquisition because forensic bring us more opportunities that we potentially wouldn't have had access to before. And we go and build longer strategic relationships and revenue opportunities off the back of that.

Okay. Thanks, Simon. This next question is related to that. So just want to know the revenue synergy opportunities for both Forensic IT and Infotrust and also the cost synergies from both acquisitions?

So specifically, the revenue for each of the teams?

Yes. Yes.

We've only had Forensic IT briefly in the portfolio. So Paul, do you want to talk to -- at the revenue line? For us, Forensic IT typically do relatively small engagements. But it's the access to customers who have got security at the top of their mind as a consequence of the breach where we see the value is probably $1.5 million of work generated for the business outside of the numbers that Paul can talk to on a revenue perspective for -- specifically for that organization.

Yes. I think, Julian, just the best example is just taking one of the examples in the first half where, as you said, there was a customer that Forensic IT responded to. That customer then engaged the Managed Services division and also the cyber division to provide further services, which is that Managed Service contract that you referenced at the start.

Yes. And I think if you break that down a little bit, I think the Forensic IT work would have been between $50,000 and $70,000 for that job. Their individual revenue numbers because they're experts containing over a period of a week, 10 days, they are not huge numbers in the context of the Forensic IT unit. The bigger numbers come from the opportunity for Infotrust and Managed Services where there's probably $675,000, $700,000 signed as a consequence of that, which broke down into about $240,000 in professional services to help them stand up and rebuild their infrastructure at the time and then about $0.5 million Managed Service contract to support that infrastructure and that new architecture and that new solution going forward. And then you can layer on top of that some of the controls work and the testing work and the validation through pen tests and other things like that, that Infotrust will do on an ongoing basis with that client to make sure the controls are effective and working. And the security posture the clients ended up in doesn't lead them towards another breach.

The other thing -- sorry, the other thing with Forensic IT that it brings is an increase to our average order value because now we've got expertise across the legacy Interlock, Infotrust and Forensic businesses, we're able to improve our quality of product and then increase pricing around that. So our cost base doesn't change, but the value of the offering to our customers does. So just natively, having better people with broader skill sets enables us to do more and higher-value sales.

Okay. Thank you, Simon. Next question is also from James Tracey at Blue Ocean. He asks, how scalable is the cyber business now? Do you have the systems and processes in place to seamlessly integrate acquisitions?

It's been a really big strategic goal of the organization to put those in place. We've invested heavily in sort of leading standards in operations, CRM and financials around Microsoft Dynamics. [ Value ] there is just getting consistent information and speeding up some of the processes, where we have -- we've also invested heavily in ServiceNow within our SOC team to be able to scale up quickly. SOC doesn't scale up in a linear fashion. Those services don't scale up in a linear fashion. They do have capacity constraints and you do need to make investments as you bring on multiple customers. I think one of the key successes of the half is that Simon's really invested in his onshore leadership team to get the right people in the right roles for growth. And now some of the new hires that will deliver the capacity for us to maintain the growth rates really relate to more junior hires, so more profitable work at the time. And also, with the new platforms gives us the opportunity for the middle office like project management and some of those capabilities and then finance and marketing to shift some of the resources to Manila, where we currently have about 100 people. Now that may not be ideal for all the security functions since Simon's got a line around who should be onshore and who should be offshore. But we have a very successful model at the moment in putting the right resource in the right cost location so that we can grow more profitably over time. So I think what we have created through platforms and that resourcing model is very scalable and improved profitability. Simon?

And just to add to that, that's not a new model for Infotrust either. So that has already been in place for years. Our Manila team are very experienced and have been in the business for a while. So that scale is already working for us in H1 and we expect more of that in H2 as well.

Yes. I was just going to add from a financial lens. So that investment in the first half of about $700,000 was related to those system and process integrations. We still expect to see further costs in the second half. And the expectation is all those integrations will be done obviously by 30 June. So as we lead into FY '26, we won't have that cost base moving forward.

And on top of that, it gives us strong capabilities to integrate new organizations, because we've mapped out all the processes. We have a strong team and a strong technical platform. So now as we get inorganic opportunities through the pipeline, we'll be able to very quickly onboard them into our financial system, into our processes to get value from those acquisitions early.

And I think just to that question in particular around the systems and processes, I think the visibility now of having everyone in one system gives us the ability to market quicker, go to market quicker, report, have the visibility across products and services, what's working well. So something that we haven't had the benefit of before, but a lot of work has gone into having that one singular vision now and then the reporting capability to go and execute those plans.

Okay. Thank you. Julian, next question relates to the inorganic growth strategy. You mentioned during the presentation that you do see some gaps. Could you provide any color as to sort of what you feel the gaps are and what you're looking at in terms of future acquisitions?

Sure. I think future acquisitions will align with the cyber-first strategy. We have a couple of gaps. I think there's potentially security architecture where we could be deeper. I think we've certainly got an opportunity to scale more in Melbourne. We have a very strong team in Sydney and Brisbane. I think, again, critical infrastructure has quite a unique set of skills that we are organically building. But if there was an opportunity to more rapidly scale those areas, then we would look at that. What we're -- I suppose what we're trying to avoid is equally important, overpriced acquisitions. It's hard to recover value if you overpay. And acquisitions where there would be a lot of internal conflict, where you're just buying scale of something that you could do. I'd rather say to Simon, he's a bucket of money, scale your business quickly. Then I would say, look, we bought an acquisition that is very similar to your current business. And then he has to worry about his teams going, well, who's going to be the head of assurance? Who's going to be the head of this team? And they all of a sudden, instead of looking outwards to customers, we're looking inwards at who's going to be the head of sales, who's going to be all of these questions. And they're very disruptive to organizations. So for us, it's a value. Is it strategically aligned? And are we able to integrate it quickly with minimal conflict in the organization because we've just been through a long restructure. We've just been through a couple of acquisitions. We're positioning the -- look out, go into the market and win, don't look internally. We'll fix everything that's internally. We'll make it a high-performing business, but it's our customers. It's serve our customers well, do it profitably, grow the business. So I think it's avoiding acquisitions that are expensive or create conflict because it turns the team inwards when we want them looking outwards and winning in the market.

Okay. Thank you, Julian. [Operator Instructions] The next question comes from Shuo Yang of Microequities. He says, the C&C business, I imagine, is not as seasonal, i.e., can we roughly double the first half revenue and segment EBITDA to get a full year number?

Paul?

Yes. There is a little bit of seasonality in that business. I mean, that they generally have a strong sort of May and June period. So the expectation is that their revenue line and their EBITDA will be stronger in the second half as a consequence of that. That's going to be balanced, obviously, by the investment that they're still doing in scaling up in the WA and South Australian markets where they're putting their effort into. So to answer the question, there is a little bit more in the second half relative to the first half.

Okay. Thank you. We've probably got time for a couple more questions. Next question, Julian, comes from [ Peter Diamond ]. He asks, how has the first 2 months of the second half been going?

So we're really comfortable with where they're going, Peter. And I think it's a consequence of having the sales team in and with the product set. So some key hires within the team landed on the 6th of January. Now they -- everyone takes a bit of runway to get fully going, but we're seeing very strong performance from them. And sales is what accounts for us. We've had 18 months of cutting costs and fixing internal things. We're selling our way to success, but we are definitely comfortable with what we've seen. And also, I think, positive news there yet to close. So let's not get ahead of ourselves, but we're seeing really solid SOC lift in opportunities and the quality of responses coming from a more mature sales team in how they're responding to customers. So I think for us, that's really important because it drives that MRR revenue and gives us a really good seat at the table with a critical security service for the customer to then sell additional uplift services around. Not all going our way. We have lost a couple of things over the quarter. As you'd expect, we don't win everything. But I think with the maturity of the new sales team, there's a really good process around why we lost. And there are some things that we missed for one bid that we've addressed. And in terms of -- they wanted us to bring more of a whole of business to the table and what can you do for us. And we missed it with this customer because they asked for a widget. We potentially sold them a widget, but we could have sold them more. But I think sales team really strongly maturing with some great leadership and it's reflected in the pipeline and giving us comfort for the first 2 months of the year.

I think just again, just to add to that, the factors that we look at are the increased average order value of the pipeline. So again, if we look at how we've hired, it's been more of that mid-enterprise, enterprise space. So whilst we've grown the sales teams, the audience that they're selling to is also larger. And in turn again, the pipeline that's building is bigger than we would have had historically on the old Infotrust business and broader in terms of the product lines that we have access to now as well because of the scale and capability in the group.

Okay. Thank you. Next question comes from -- again from Shuo Yang at Microequities. He asked again about the C&C business. Is it operating at optimal margins? Or are there any significant synergies that could be gained hypothetically under different ownership?

Well, I can't answer what it would be like under different ownership, because they'd have their own sort of costs and things like that, which I'm not aware of. We -- that is a very well-run business. Elie and James, who are the leaders of that business, are very focused on margins. It has been impacted. We had a slow sales as interest rates were going up 12, 18 months ago. We do have cost pressure in that business. They have call centers. They have a large number of young employees in call centers that set appointments and do installations and drive that business. Now we're seeing cost pressure in there and you'll see that revenue is growing faster than the earnings contribution. And as Paul has mentioned, that's a number of factors when significantly is the growth in other geographies. But there is also cost pressures above what we've seen in previous years within salaries of that younger team. And part of the strategy to address that is some key team members are moving to Manila and we're moving some of the resources there, which have proven for us to be a), more cost effective, but also their tenure -- average tenure in those roles is longer and their performance is similar to what we get in Australia. So there's a big review of that and a big focus to say if we've we got the right labor mix. We're struggling in Australia to get those people into fill the seats to the degree and as quickly as we would like to. But what are our alternatives? Because we're having success in different geographies overseas in filling them quickly at a cheaper price point, but maintaining the success rate that they've had in that place.

Excellent. Thank you. And Julian, just to finish off today, has there been any points that are particularly important for investors to take away from the session that hasn't been covered in the Q&A or any final remarks that you'd like to make?

No, I think we're really pleased that we're trying to be more predictable. So when we put things out, we achieve our goals. I think the cyber-first strategy and the huge investment that we've made both through acquisitions, but people and process and our go-to-market is starting to come through. And I think you'll just see that build year-on-year as a consequence of that investment. So I think we're comfortable with where it is. There's a lot more to do. And we'll continue to really push hard into that because there's a huge opportunity. The tailwinds are behind us in terms of organizations needing more mature cyber practices, needing an integrated Managed Service cyber offer. So we see strong tailwinds there. It's now executing and getting it out to market. And I feel I've got the right people in the right places to achieve that.

Excellent. Thank you. Thank you, Julian, Paul and Simon, for your presentation today. Thank you, everyone, for attending as well. I hope everyone has a good afternoon. Thank you.

Thank you.

Thanks all.