Intercede Group plc (IGP) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Intercede Group plc investor presentation. [Operator Instructions] And I would now like to hand you over to CEO, Klaas van der Leest. Good afternoon, sir.

Good afternoon, Jake. Good afternoon, everyone. My name is Klaas van der Leest. I'm the CEO for Intercede. I'd like to welcome both existing investors as well as potentially new product investors to this session, which will cover the full year until the end of March. During this session, I'm joined on my right-hand side by Nitil Patel. On my left hand side, by Allen Storey Allen is our Chief Product Officer. Nitil our CFO, and we look forward to providing you with an update in the next 45 minutes. Whilst the presentation is us presenting to you, we very much look forward to your questions. And please also leave your feedback after the session. We do take your feedback serious, and we use that to approve any sessions going forward. So without further ado, let's start with the main presentation. So agenda, quick progress in forward results highlights Nitil will than take over to go through the financial review, followed by Allen talking about strategy product and Mark review. Allen and I will share the approach to M&A and will then close off with a summary outlook. There are a few appendices which will be available to you after the session. And of course, we'll do Q&A once we finish the session. So progress, results and highlights, just to provide a bit of context. I started this journey with the company 5 years ago when the main aim was to get the business back to profitability, cash generation, try and create a good, strong balance sheet. Heavily invest in the product, make sure that the company was actually ready for growth. We reached that phase at the beginning of last year. So Phase II basically is underway now. We've completed our first year, and the whole objective for Phase II is continued business expansion through both organic and inorganic growth. So what did we say last year at this time, we basically said our objectives and strategies are clear. We have a clear plan. We felt we had a good pipeline that we could actively dive into we can actually see rest of world gathering a bit more momentum during COVID or rest of world, we've been very transparent about this have been very, very quiet. Continental Europe basically was not transacting at all. That was in sharp contrast to our North American market, which actually contracted like normal. We saw good business flow from that. So this time last year, we felt confident in our ability to drive double-digit growth from a revenue perspective. So where did we end up the year? We start on the left-hand side, our revenues grew by 22%. Its record revenues for the year at GBP 12.1 million. Pipeline conversion was good. It was actually quite strong. Not just in the U.S., but indeed, Rest of World, Continental Europe started picking up quite nicely. We also saw interest from the U.K. market, those who have followed us for a little while may further talk about that we typically do less than 1% of revenues in the U.K. because U.K., particularly U.K. government, showing relatively interest in PKI, which is our traditional market we've played in and will continue to play in without the innovation in Ukraine, we've actually seen the Fire Eyes collaborating significantly more and within the Five Eyes, the U.S. is dominating the security posture. Good news is we're very much recognized in U.S. federal market, the security posture. They used to share information is PKI, ultimately credential management is what we do. So we actually closed a few deals with U.K. MOD here. I can't provide any further detail on that. A lot of these interactions are either at secret or top-secret level. Good news is we have some colleagues who are played so they can actively participate in these programs work. So organically, we grew very, very nicely. Inorganically, we announced over acquisition of Authlogics in October last year. We'll provide a bit more update but at a very high level, business integration, very much on track, but also product integration is on track. Investment in the product, particularly MyID who's been very, very heavy. There's no surprises here for the last couple of years. We've continued to invest around GBP 3 million in R&D and that's actually being recognized now by an independent consultant called [indiscernible] it's a leading German consultants. They're not as big as Gartner, but they're very focused on the identity and access management space. They approached us over a year ago made some inquiries about what we were doing for either for the enterprise Allen and I the original conversations with them.. That led to quite an extensive interaction both in terms of questionnaires as well as spending time with our market analysts and they published very recently their secrets management leadership confers and Intercede was recognized there as overall leader. Secrets management is an impact, what we would call production management but it's actually a really good recognition by an independent third party. Allen was also invited to speak recently in Berlin at the main event around identity and access management, and he was specifically over placed to speak about quite about the enterprise. So we've been preaching firewall for quite a while. It's really good to see that the market is now starting to pick this up and will help us to drive revenue growth going forward. If we then move to the right-hand side of the slide, we talked about the revenue, a 22% increase. Clearly, we've got some exposure to the U.S. but even when we take currency fluctuations into account, our growth was still 13% based on constant currency. The momentum we did have in half one very much continued into the second half and that also helped us to continue to drive the recurring support and maintenance revenue, which increased by 11% to 7.3%. Our support and maintenance is very, very sticky. Our tax rates are very high as a result of attrition in terms of the sport maintenance is very, very low. Good news is that support maintenance revenue at these kind of levels is starting to cover quite a lot of our operational costs. So as and when we sell licenses, a lot that will flow through to the bottom line. Talking about licenses. We had good license recognition and sales in the U.S., again, usual kind of suspects in U.S. federal space but we also saw new deployments has talked about U.K. government, more specifically MOD, but also through acquisition, through Authlogics, we've got a very strong presence in the Middle East through distribution and resellers. We've seen new customers in UAE, Saudi, Oman and a number of other countries. Cash remains very important to us. 5 years ago, we were close to running out of cash. We've managed cash very, very tightly or lost for 4 to 5 years. We ended the year at 8.3%. That's net of Authlogics acquisition, which is roughly GBP 2.5 million. So without the acquisition, we would have been very sensibly above GBP 10 million. As Nitil will explain to you in his update on community follows our cash is actually higher at the moment. So I'll pass on to Nitil.

Thank you, Klaas. A financial review for the year, so income statement. As Klaas has said, it's a record year for the group, which is great top of GBP 1 million. I'll come to explain how that revenue is broken down in the next few slides. The cost of sales was a slight uptick compared to last year. This is mainly to reflect the license sale class mentioned earlier, had a third-party product embedded into our offering. And obviously, that's the cost that we have to incur for this type of product. Gross profit is 96-- 96.8%. Going forward, we see that going back up again to a 97%, 98% Our operating expenses, as you can imagine, as the biggest expense we have is payroll. We look to control that as best we can, but we'll come -- I'll show you later what the movement has been incurred in the company regarding retention and making sure the churn rate is low and obviously making sure that we invest in the future regarding succession and graduate training screen plans. However, that has resulted in a good profit, operating profit is GBP 571 million. And although we -- we're one of the few companies that expenses most of our R&D into the income statement we do 100%, and that's gone straight as an operating expense. Some people will capitalize we don't. Now the consequence of the other part of this is that we've been able to utilize HMRC tax rules. For R&D expenditure in the United Kingdom and then we'll see a tax credit coming in of GBP 685,000. That's a big number for us for this year because of the regime that was in place. However, going forward, in FY '24 and '25, the changes that are made by the government, we'll see that number reduce not completely disappeared but will Compound, we are forecasting circa GBP 350,000 to 400,000 going forward. It has meant the profit for the year at GBP 1.3 million compared to GBP 700,000 last year, and that's a good result. If you look at it from a revenue perspective going down. The key thing here is that with asset support and maintenance and professional services covering the bulk of our operating expenses, any accretive sales that we do IN license, it moves really down into the profit line for us. So the focus for FY '24, '25 is to continue to grow US F&L as inflation rates and normal growth procedures of 5% to 10%. We're focused on the license income to give the double-digit growth in the top line and to see that at the bottom line. Due to the acquisition of Authlogics, we just decided to show you an adjusted EBITDA profit is. This is just to reflect, obviously, going forward, we'll have a larger amortization of intangibles due to the acquisition and of course, any acquisition costs related to M&A activity going forward. As mentioned, we just want to focus, to give you some idea of where the revenue breakdown is coming through. There's a regional revenue analysis and the revenue breakdown of the streams that we have. As you can imagine, the United States is the biggest market in the world. Again, Allen will show you why this is having an impact on the rest of the world. And obviously, they're well funded, and we're concentrating on bids and clients in that area. But ROW and EMEA has grown. And with the addition of our Authlogics, the Middle East footprint has increased for us, which is good news. As mentioned previously, support and maintenance as a recurring revenue stream for us, and we now see PS becoming a recurring revenue stream for us. The reason for this is, obviously, as we mentioned previously, we're now bringing our quarter releases every year for our products. So we have pleasure GBP 12.6 million latest GBP 12.7 million coming out in June and this month. And that enables us to go to our clients and say, look, past 5 years, where support it's in your interest to upgrade the clients that we have government, defense and aerospace, big corporates. They tend not to like to be outside our support and there's a churn of increase a PS that we see coming through. It's not the focus for us. It just helps us to cover that OpEx as alluded to in the income statement. To give you an idea, again, how sticky as auto maintenance in this pie chart, if you look at U.S. federal and aerospace and faster represents 68%. It's nice to have they pay us on time. You may be 55 days late but they do pay. And one of the things I obviously mentioned is that 80% of our revenues are coming to U.S. dollar denomination, how are we going to look at that going forward on exchange movement. We now have a facility with Barclays Bank on a Board exchange capability and facility. We were going to use it till last month, but our clients again paid us on time and that we didn't need to use it going forward, when we do a license sale, that's large in dollar denominated, we will now look at turning in pay rises or insurances not to derisk and make money on exchange movements, it;s made to de-risk and give us certainty on the conversion rate for the company. Again I just wanted to show you the movement between last year's our operating expenses to this year. Obviously, you can see the largest chunk in there is pay rises bonuses National insurance contribution. Critical to our staff and retaining our staff is essential experience, losing a staff member. It's difficult and for the lots of knowledge is not great. So we help -- what we've done is we processed in 3 ways. We've looked at it from a ARS point of view, which ranges between 5% to 7% and then a discretionary bonus depending on appraisals. And we also did acknowledging that our cost of inflation was increasing last year, we did a one-off cost of laarge payments across the board for us start in United Kingdom and United States. Going forward, so I try to move forward towards the sales commission and new recruits run rate. Sales commission that was a bigger delta than last year purely because of increased activity and then new recruits, again, coming back to investing in the future, get classical mention this later in the slides out of Ireland. We're looking at how to enhance our products, how we can increase the bandwidth so we can focus on making sure that our product is best in class, as Allen will show you the slides. How we see this going forward, if any of you got access to the Fincap, you'll note that we've got another investment strategy plan. We continue to invest in our graduates. It's working well. We want to make sure that, that enables the company to have succession planning going forward. But also one aspect that we're looking at now that we've got time to do this and got the cash flow to do so is invest in our right internal IT infrastructure. We're moving a bulk of our IT into the cloud Microsoft Azure. This is a heavy lift from us. It's not just the back end of the service but also our product and how we operate in coding. So that's going to take a 2-year plan and what we're doing is we're expanding the same we'll see the reasons why Fincap made the note that we're investing in our IT infrastructure. It does gives us scale, resilience and it gives us the capability of expanding our own strengths in the future. And then on the financial position, again, the main movements this year in light of the acquisition of Authlogics and IFRS 3 is you'll see now a goodwill horizon on to acquisitions and other intangible assets. This is a consequence of the Authlogics's acquisition. Goodwill is a grouping of moving to one CGU, which is good news, and as that there's no differentiation between the Authlogics's product in the Intercede product MyID product. And again, Allen will come to you and show you what we're planning to do in the future around this. The other intangible assets of the multicontract that we acquired in the acquisition. The other metrics that we focus on heavily is trade and other receivables, cash and deferred revenue traded other receivables are higher than last year, again reflecting the activity increased activity in the group, and we've converted GBP 3.5 million to GBP 3.6 million of that into cash. So as of 31st of May, the group was sitting at GBP 11.3 million in cash and no debt. The other focus on this is deferred revenue. We like to have a large deferred revenue as per because it gives you our foresight into the next year or next 12 months. And as of the first of April, we had GBP 7 million into FY'24 FY '25. We'll continue to focus on that metric because as I said to you, gives us good stability and forecast into the financial years going forward. The only other aspect to note is the contingent consideration. Again, that's part of the FDA on Authlogics, and we had a deferred element to them, and we've recognized what we believe we're going to be paying out according to the SBA over the next 2 to 3 years. And final slide for me is just again showing you the net cash position of the group, which shows you the debt position you do see the cash increasing. That's a good position reducing the cash increasing and that's a good position and use this as a facility of the launch at for doing an M&A strategy. We're fully aware at the moment of cash is really keen, but is important to us as best we can deploy on an M&A strategy. Debt is becoming more expensive in light of the interest increases on the back of England. We have a facility that we've not enacted with a bank. The term sheet is there to use it when you require and we've got the right target. And then obviously, the last option is to go to the shareholders for a larger deal, but that will be only on the share price increase on the deal is its highly EPS accreting for us to go to the shareholders to ask for that. So it's cash first, making sure that we pass working capital to make sure we don't have to go back to shareholders for more money. It's the debt depending on the interest rates and the cost of aid then obviously shareholders dependent comp size of the acquisition. I'll pass you over to Allen

Thanks,. Nitil we're going to take a look at product strategy and market fit and then move on to how that plays into acquisition strategy. So as a reminder, the Intercede customers today buy our product to help protect ourselves against data breach, hackers don't tend to break in hackers tend to log in. So they steal some of these credential and then log in with that credential. We help customers protect themselves against that by replacing weak credentials with stronger credentials. We do that at scale, so tens of thousands and hundreds of thousand employees. And importantly, we do that securely compliant with all the U.S. government legislation. We use this, what we call the authentication pyramid to describe the strength of security, so weaker authentication of the bottom moving up to stronger authentication at the top with PKI, but it also describes the addressable market. So Intercede have historically played at the time of this pyramid only in the PKI space. So that's federal government, it's aerospace and defense, it's military, intelligence agencies, et cetera. Which is a good place to be because it's very sticky. Once you're in there, you tend to stay in there and they also tend to be high-value customers who pay well. However, there was a portion of the market that we weren't able to address so that's customers who want to become more secure to move away from passwords what's a stronger authentication, but would never move to a solution as complex as states PKI. So that acquisition of Authlogics back in October allowed us to do 2 things. Firstly, it allowed us to start addressing those customers that we wouldn't previously have got to because our solution was too complex for them. And we're seeing good traction with that in the Middle East, which is the reason which does want stronger authentication before it moved up to PKI. Second thing it allowed us to do is to start looking and selling more into our existing customer base. So the legislation that drives a lot of our business in the U.S. is to change. It used to say that PKI is the only authentication, we trust the strongest form of authentication. It then changed last year to become more risk-based. So it now stays depending on the risk of the material you're protecting, you can use different forms of authentication. So things like push notifications to phones, one time passwords, send them over SMS, for example, depending on data you're protecting are allowed but importantly, they now fall under the agreement of the legislation, whereas they didn't before. So we have some of our existing customers that will come to us with the high assurance solutions they go to another vendor for the midterm solutions and another vendor for password security management. So with the Authlogics acquisition, we can now address all of that we can go to a customer and say, come to us for all of the authentication needs all the way from passwords through to PKI. We are changing the branding and the positioning of this. So the Authlogics brand name will disappear. That will be consumed within the MyID brand name. We're doing that in consultation with Gartner as to how we best position this in the product. and in the market and the feedback is MyID's strong brand credibility we gain from a customer base. We have a number of Blue Chip customers will help position the multifactor authentication, password security management solutions. So MyID has moved on from being a single product. So we've moved on from being a single product company to a multiproduct company and we now have multiple products within the MyID family. So you'll start to see this addressed on the website and the presentations we make going forward. So we have MyID password security management as a product. If you're still using passwords, try and make them as secure as they can be. And part of that is by making sure that if the password has been compromised if it has been breached and leaked online. We now have the world's largest database of the no compromise credentials. So our customers can validate their password against that and make sure they're not known to be compromised. For customers who want to step up to stronger authentication but don't need to go the way to the very high assurance authentication, the multifactor authentication solution supports that. MyID credential management system is at the very highest level. So that's in that government aerospace, military space. And the fourth one in there, registration ID verification. Again, this is aimed at that very high assurance U.S. market where some of the real state that it's not enough just to have a strong credential. We must have enrolled the person securely capture biometrics, verify their identity before we can issue them the credential. So all of those 4 are now products that can be sold stand-alone, but we are integrating into a single solution. This will be on the market in September, marketed in advance of that. So our customers can benefit from a single pane of glass to manage all their authentication credentials, no matter how secure they want to be. You'll notice on the right-hand side there, we have a box with 3 dots in it. So that's to depict the acquisition strategy, where, as we'll talk about over the next few slides, the strategy is very much to have additional products in the product family that can be sold stand-alone but they're part of that MyID digital identity strength, and they will be integrated with the rest of the product family to provide a combined solution. Looking at where we invest, so how do we invest in product, where do we partner, where do we acquire new organizations the best place for us to start is what's driving our market. So what's going on in our customer base, what's driving them to make purchases. I won't go through all of this in detail. I'll just pick out 3 key points. First key point is that on the left-hand side of the slide, the first 3 items there. They're all driven by the U.S. And that's no surprise to us. The U.S. is the best funded administration to set Cyber security standards. What tends to happen is that missed set standards and then the rest of the world follow a reply back to those standards. And that's what we see. So the major changes in cyber security, most of the legislation still continues to come out of the U.S. If you look on the fourth column in there, we've got NIS 2. This is a cyber security legislation that has been enacted in Europe. Now what's now happening is that that's turning to regulation and i.e., law within each EU member state. And that's by 2024. So Belgium will typically start Germany will follow that talks about systems and data protection, talks about the need for strong authentication, encryption, signing, et cetera. That refers back to this legislation that's come out of the U.S. So it calls out to that as a best practice, which puts us in a strong position because our product already meets and exceeds those standards. On our own personal home turf in the U.K. we're starting to see changes to the legislation as well. So our security authority and the NCSC updated their guidance in April of this year to promote use of stronger authentication, phishing resistant multi-factor authentication. Again, that calls back to NIS2 as to say what that technology is. A Pattern we're seeing there is that organizations are now not receive big cyber security insurance unless they've reached that base level of security. So 3 real things to point out here. One is that the legislation tends to start in the U.S. and they're spread out from the U.S. The second is the stronger authentication, multifactor authentication is being pushed everywhere, both within the organization and down supply chain and the third is the biggest change in our industry is zerol trust, and I'll explain what that in a couple of slides time. So how do we make benefit from that? How do we look at what's happening in the industry and apply that to our product set and our acquisition journey. So the first is that, that high assurance authentication is still critical. We're seeing a growing need for that in the U.S. from some good project wins there, starting after COVID to come back to life in Europe, and we've some interesting opportunities coming forward there. So continuing to invest in our corporate MyID credential management system at the high levels of Assurance is key. That market leadership we got from the [indiscernible] analysis, it's generating revenue, generating business, and we want to maintain that. So we will continue to invest in that product set. Moving over to more of the mid-market size. That's where the ID and password security management and multifactor authentication solutions that came in from the acquisition. So when we did the acquisition, we were confident from due diligence that there was a strong technology, strong competitive product there. What was really lacking is the scale of the organization to invest in sales and marketing around that. So that's the initial activity looking at taking that product set to market, investing in the sales and marketing around it, both into new customer base and their existing customer base by the channel. But we also see an opportunity to take the code we've written in our credential management product and the skills we've earned -- learned from that and take that into that mid-market product. So I'll find out for the enterprise, we see it's a very interesting growth space, and we believe by adding that into that multifactor authentication product. We can make that product differentiated against sort of the competition. So investing in the existing product, investing in the acquired products. As we move on to acquisition, that's where we believe zero trust is the space where we need to move. It's starting to drive our industry. So I'll describe what that is and where we think we could play in that space. So if I can describe the world before Zero Trust, it was very much Sam needs to access the network. Let's make sure some is who we claim to be by onboarding and doing some background checks, et cetera. And then we give them a very strong credential of finding what PKI, phishing resistant, they can log onto the network with. And that was the world before Zero trust. Zero Trust really raises the security value quite significantly. It stays never trust, always verify. So just because it was Sam who logged on to the network 10 minutes ago, is it still Sam but behaving in a different way. Is the machine safe, does it have malware wrong on now where they're going to plan ransomware and value them. It's some suddenly a different location that was impossible to travel to within that particular time window. So it starts to look at multiple, what I called our pillars of Zero Trust. So these are items you need to consider before you can implement Zero Trust. This is taken from the NIS's specifications, which are core to us because that drives our existing customer base. The first pillar on the left design is users. That's really identity, digital identity. That's very good for us because our pyramid all the way from passwords through to PKI, you really cover that first call. So it all starts with the identity, but it expands from that looks at the device. Is it one of my devices is it in a good state as it got anti-malware installed as it got antivirus installed, is it up to date from a patch perspective. How do I protect my network I don't want my network visible to the outside world. I want those trust decisions to be made before we can even access it, protecting the applications of the data just because Sam's logged on the network, does it have access to this particular application, does he have access to this file store area, this area of share plan for et cetera. Visibility and Analytics who's getting onto my network, what are they doing lots of artificial intelligence machine learning starting to come into this space to make decisions on security. Orchestration, key point about this diagram is really that one vendor is not going to be able to provide all of this. So -- and Microsoft for on a sale point, the giants in the industry are not going to be able to provide all of these solutions. This is all about vendors working together following standards what Gartner called an identity fabricates called cyber security mesh. How do they share security and identity as between them to make a much broader, deeper decision on security. And importantly, down the bottom, this has happen on an ongoing basis. We can't have Sam logging on and then nothing is checked for hours, whatever it moves to a different area. The network access is different application, something changes. We need to make sure it's still Sam. So this is a fundamental change. I haven't seen a change in the cyber security industry as large as this since 2006 when the fixed legislation that significantly drove our business came out. This is regulation. So the executive or the President pushed out a mandate, saying federal agencies and that spreads out to supplies to federal agencies, intelligence communities, aerospace and defense, so our core customer base have to adopt this by 2027. so if you go to a conference in the U.S. at the moment around cyber security, the 0 trust room is where everybody sat happy implement this. And that's right in our core customer base. So we believe we are very well positioned here in that we have a number of these core customers using our products for identity and they're now starting to look how do i spread out to Zero trust. We also expect that might be the legislation to start in the U.S. and then spread out through the rest of our markets.

So before we talk about M&A, what Allen has just described is very much us to assess what's happening in the market, where are our customers going? Where is the legislation going and how do we respond to that? And then basically, what do we need to do from a product perspective. And at any point in time, we have 3 choices to make. We either decide to build it we're buying it or with partnering it. But from an M&A perspective, we appointed a Head of Corporate Development, very experienced in U.K. and in the international markets. And this basically guiding us as a management team through this. And we're looking at 3 things here. We're looking at is the product fit is the market where it's operating in suitable for us is a company that we're looking at actually having the right kind of attribute. So what does this mean at a very high level. At any point in time, we probably have a long list of 250 to 280 companies that we do basic desk-based research on. So we're trying to assess on the outside, what does this company do? What does it add to us, can we afford it they've got revenue are they profitable or not how many staff have they got have good products position. We then grind that down to a short list, typically 20, 25 companies on a short list, and then we start approaching the targets on the short list. At any point in time, we're in dialogue with anywhere between 0 and 4 to 5 different target companies. What are we assessing those on from a product perspective, following up on Allen's background in Zero Trust, can any of these form a core building block for Zero Trust. Do they have IP that will actually stand up is defensible. Ideally, we want to look for a SaaS offering, but also the ability to deliver on-prem functionality. A lot of our clients and existing client base, they do have air gap networks. They need to be capable of having on-premise flexibility. So when you look at an Optum and Duo they're very much cloud-driven and cloud-driven. And typically, we don't see necessarily in the environments where we're trying to put position. At the same time, we're looking for functionality and product that can add value to the large players. So when you look at the forward stock when you look at the sale point we're keen to add value. A lot of that value is actually demanded by our client base. We have Sale point across a large part of our client base. We have four strong across the large part of our client base and it's a client who actually demand that there is sensible integration between the players. So rather than competing with them, we want to play with them and basically be a niche provider around their offering. And it's got to be capable of even be sold stand-alone but also integrated the out now. As Allen has explained, we're now integrating Authlogics into our next release, which will be released in September this year. Looking at the markets. Our core market is very much U.S. federal government-related. Any target we look at needs to be capable of compliant with those markets. But at the same time, those markets are typically test that it moves from government into core enterprise in the same way, as Allen described, that Zero Trust is probably the hottest button in the U.S. Cyber security market less so in Continental Europe. But interestingly enough, we are seeing and hearing noise that Zero Trust is also start to make U.K. government. So we want to follow that trial. And when it comes to the company, we're not looking for some academic kind of exercise. We're looking for a company with a proven track record. They've got recurring revenue out there, they're either profitable or close to being profitable. And the last 2 points are absolutely paramount. So culture and credible management is very, very key when we knew do our assessments. If I actually transpose Authlogics across this. We get lots of green ticks and boxes but culture fit from Authlogics perspective has worked really, really well. They're technically competent and the credible. So our sales teams, our presales teams will not hesitate in getting Authlogics new members of staff in front of our clients. And our clients are typically one step up from most oddly Authlogics. So they're absolutely credible. So these dining principles very much drive what we do. We have a very structured approach. We're not afraid to walk away, and we do lots of upfront work in order to assess whether we think some technology or company is right for us. So what does it mean in real terms, you fully appreciate that we can't disclose to you who we're talking to, but Allen will give you a sense of the kind of technologies we're currently assessing.

Yes. So we're very much focusing on that Zero Trust area, we can add value to our products set in that space. There are 2 types of organizations we're looking for there. On the left-hand side, we have people we believe can form a key building block key cornerstone and Zero Trust that we can then add components around. So for example, that could be network proxy providers, so people do sit in front of the network, make the network invisible until anybody has actually cash those security checks before they can come in orchestration. So that's why I was talking about multiple systems talking together, sharing security signals before a decision can be made, and that's where we tend to get a loss of sort of artificial intelligence, much learning capabilities to that space. And policy definition enforcement are very important as well. So what is the policy before somebody can actually access the system not just about the identity and authentication, but about the device, the location, the level of risk, et cetera. So a number of organizations in that space we're talking to -- we are also finding some interesting component providers who whilst not providing an overall Zero Trust solution in our right, can provide an interesting component part for that can either be bolted on to the systems on the left all can add value to some of the large identity and access management vendors we've spoken about. A couple of big auto that. One of them is use of behavioral biometrics. So this, for example, is how am I holding the phone, how are my typing. Is this still the typical way that I interact with my device. Therefore, is it still likely to be our news in that device. Some of this technology has been used in the finance world for a while. Where we're looking at the risk transaction. And that tends to be a very financial decision. If the risk of the transaction reaches a certain point, but the value of the transaction is quite low, then we're quite happy for that to go ahead. In our world, we tend to be protecting people accessing unitary helicopter plans, air traffic control systems, tracking nuclear material. So we need a much more absolute identity that those people don't want to know it's probably Sam they want to know it definitely is Sam. But that technology starts to claim the world of zero trust because we can't ask Sam to strongly authenticate with their opinions marker every 10 minutes. It's just going to be useful. But the idea here is if we can have systems checking. Well, we know someone with strong authentication 10 minutes ago. And in that time, he's still using the device in the same way he typically uses the device. I'm comfortable it's still sounds although it's kind of not good as very authentic. If however something changes, somebody else might have taken out of that device, they may have walked away from it, somebody else may be using it, then I can force them to authenticate. So we're starting to see some interesting technologies that have been needed outside of our strong authentication space coming into that space. Device help the identity are but briefly about organizations to be very concerned about ransomware and malware. So systems that can check that and divide certainly have a lot of value. And again, risk analysis is very important here. So that's whether AI machine learning comes in what's the risk of this being happening on the behavior or to think that doesn't typically happen and then stepping up the level of security or analysis around this. So we're in dialogue with organizations on both sides of this slide.

So I'll try to wrap up with a summary and outlook. If we look at it from a revenue perspective, we delivered good, solid revenue growth also in terms of constant currency, adjusted EBITDA and profit for the year were up. We continue to have strong margin focus and our cash conversion remains very, very strong. Nitil's definitely pushing robust working capital in there. And our balance sheet is very, very clean. It's un-leveraged. And the momentum we have in 2023, we're also looking to take forward in '24. And we've actually had a good start to the year. If we look at April and May. Clearly, we've got 4 months to run in this first half, we will push really, really hard to make that happen. So our growth is very much on the agenda. So whether to believe from an outlook perspective, we had a good start to the year. We're going to continue to push that out. But at the same time, in order to continue this growth and grow even faster we need to invest. We need to invest in colleagues. We talked about we want to put more horsepower in the engine, so we can deliver more product road map. But at the same time, we've got a bit of catch-up to do on our own IT infrastructure. But on the back of that, we'll be far more resilient going forward. We continue to invest in the product development. We continue to invest in sales and marketing it was only yesterday when our last sales we could actually start it. But at the same time, we're very much aware of what's happening out there in the big wide world there is lots of volatility going on. Sometimes it's just volatility here in the U.K., but also clearly a global level, there's quite a lot going on. So we're maintaining our robust working capital model. At the same time, you want to push continue to push the scalability of the business and accelerate the organic revenue growth last year, 20-odd-percent plus was nearly all organic revenue growth. So we want to continue to push that. But at the same time, we've hopefully given you a view that our approach to M&A is focused, and we're very much looking for a strategic acquisition. So overall, the focus continues to be on sustainable, good quality growth, and we're confident we can execute on our plans to achieve that. At this point, I think, and I'm pretty sure I'm going to hand over back to Jake. So Jake, are you there?

[Operator Instructions] But Klaas, if I may, just hand back to you perhaps to chair the Q&A session with the team, and then I'll pick up from you at the end.

Okay. We'll try and answer as many questions as we can. I will read out the questions, and I will try and to take the best possible person to answer. So Roger has got a question. So you seem to be doing well. We're expanding your sales to U.S. government agencies and other government bodies with little news of commercial customers in surety organizations as banks need the technology why is this? Well, actually, we are selling to commercial customers and corporate enterprises and particularly with Authlogics, we actually see that, that core market is very much core enterprise space and we'll continue to push this going forward also in talking about fiber for the enterprise. We call it specifically final for the enterprise because we see going forward that there's going to be far more traction in the commercial side of our business. So hopefully, that's answered that question. Next question from RW is with over 80% of revenues in the Americas, we are sensitive to the dollar note.

33 operating profit shows for change gain this year versus last, last does our company journey for us exchange hedging and how do you consider reporting the accounts of dollars. I think I've explained, we are looking at foreign exchange hedging. We have the capability. We were -- we didn't have it last year. We were going to do this on one of our big -- so on maintenance contract renewals, but we actually got paid on time. So there's no point doing it. We will look at it again after next [indiscernible]. Are we going to report to dollars? No.

Next question is from Elis, the maximum deferred consideration for Authlogics was GBP 3 million you're forecasting you will pay GBP 0.5 million. This tells me that, one, the deal was well structured. You didn't pay for growth that was talked about and it has not good, but two the growth in revenues has been moderately positive, but far from great. Is this a fair reading? Nitil, you want to comment on that?

Thank you for noting that. Yes, they give us their forecast to get margin. They give us the nice little hockey stick we said fine, if you believe you're hockey stick because put your money where your mouth is, we will give you a valuation based on those deliverables. Obviously, we don't see that happening completely. We've got a moderate growth. The reason we've done that is because we are integrating the product. We've what happened. We will hope to beat those numbers that we've got out there.

Next question is again from Alastair, why don't you and your house broker report and forecast adjusted EPS effect for EPS, adding back amortization of acquired intangibles, acquisition costs and exceptional costs, focusing on EBITDA is particularly unflattering presentation for Industry, given there is no interest charge. The tax is an inflow. And the market accepts amortization of acquired intangibles to be adjusted out and to something of a red flag to a casual reader who assumes that the number overstates true earnings whereas industry to case it understates. Nitil one of you.

Point taken Alastair, we will look at this going forward into FY '24 .