IPH Limited (1IP.F) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the IPH Limited FY '25 Results Presentation. [Operator Instructions] I would now like to hand the conference over to Dr. Andrew Blattman, MD & CEO. Please go ahead.

Many thanks. Good morning, and welcome to the IPH results presentation for the full year ended 30 June 2025. My name is Andrew Blattman, I'm the CEO and Managing Director of IPH. With me today is Brendan York, who recently joined IPH as our new CFO. Many of you will have the opportunity to meet Brendan over the coming days and weeks. Thank you for joining us for today's presentation and for your continuing interest in IPH. Let me also thank the broader IPH team across all our regions for their efforts and contribution to our results for FY '25. In terms of contents, I'll provide an overview of the operational and strategic highlights for the year. Brendan will discuss the financial results in more detail before handing back to me. I'll then provide an update on the performance of our 3 segments, ANZ, Asia and Canada, which will include information on financial performance and following commentary for each segment. I'll conclude with a summary of our priorities for the current financial year '26. And as always, happy to answer your questions at the end. Now moving to Slide 4, and as a reminder of the continued growth in the diversity and scale of IPH, in FY '25, we completed our fourth transaction in Canada with the acquisition of Bereskin & Parr. This enhances our market-leading presence in Canada and further strengthens our global network. We have 7 brands, over 1,800 employees with offices in 9 countries servicing some 26 IP jurisdictions. In terms of some highlights, our financial results for FY '25 reflect the acquisitions made in Canada over the past couple of years. That has delivered a 6% lift in underlying EBITDA and a corresponding 7% lift in underlying net profit before amortization. That increase in earnings, combined with our strong cash flow delivered enhanced returns for shareholders with a 4% increase in FY '25 dividends. We continue to deliver organic growth, revenue in our ANZ business despite lower market filings. In Asia, filings continue to recover, and our filings are up 16.5% on the prior year. Initial filings, of course, represent just 1 component of revenue. So, whilst we're yet to see that filing growth fully reflected in this year's Asian financial result, the associated future revenue events attached to these filings provides a very strong platform for revenue and earnings into FY '26 and beyond. While the Canadian market was challenged this year due to the disruption from the Canadian Intellectual Property Office, which I'll now refer to as CIPO going forward, systems upgrade, we successfully completed the integration of Bereskin & Parr into Smart & Biggar with cost synergies above our initial estimates. IPH remains a highly cash-generative business, and that continued in FY '25 with a cash conversion above 100% Moving to Slide 7. Despite some challenges experienced in FY '25, we remain optimistic and continue to expect growth in FY '26. From a markets and filing perspective, in ANZ, we've been disproportionately impacted by a larger exposure to U.S. patent filings, which were down significantly more than the overall market. However, our market share amongst higher-margin international filers remained stable. Given the current weakness in U.S. PCTs, we're deliberately focused on other regions such as West Europe and have also targeted Chinese corporates as part of our ongoing business development program. IPH's Chinese patent filings inbound to Australia are up 18% in FY '25. In Canada, we are now seeing encouraging recovery in patent workflow following the CIPO systems issues. Examiner's Reports and Notices of Allowance volumes are now exceeding pre-CIPO upgrade monthly averages. We expect that to continue into FY '26. Meanwhile, in Asia, we are seeing continued positive signs of recovery with promising filing growth across our jurisdictions and market share gains in our Singapore hub. As the market leader in this region, we remain well placed to return to sustainable growth as markets continue to recover and we capture further revenue associated with filings as they move through the examination and acceptance grant process. From an internal perspective, we are optimizing our platform to generate further efficiencies. This includes the change to our corporate structure we announced in May. It also includes the recent alignment of our -- realignment of our cost base and focus on operational efficiencies, which we expect to deliver group annualized cost savings of between $8 million and $10 million from FY '26. FY '26 will also include a full year contribution from Bereskin & Parr, together, of course, with a full year of synergies. As I just mentioned, our Canadian firms are absolutely focused on leveraging the anticipated revenue recovery as the CIPO workflow backlog starts to clear. Finally, we're also embedding AI into our core operations from patent drafting to administrative functions to streamline workflows and reduce costs. So, we're anticipating an improved result in FY '26. Moving to Slide 8, our 5-year financial performance. While we have seen some challenges across our regions, particularly in terms of lower U.S. market filings and the CIPO-related issues in Canada, IPH has continued to deliver a solid track record of growth. This growth comes from a mix of organic and acquisition. FY '25 marks another consecutive year of growth, reflecting our acquisitions in Canada. Given the group's high cash generation, this also means we've delivered consistent and increasing dividends to shareholders over that time. I'll now hand over to Brendan to discuss the FY '25 financial results in more detail. Over to you, Brendan.

Thanks, Andrew, and good morning, everyone. Looking first at an overview of the financial results and key metrics. Just to reiterate the point that Andrew made earlier, the results for FY '25 include additional contributions from Canadian acquisitions, including the part year impact of Bereskin & Parr as well as the follow-on full year impacts of the prior year acquisitions, ROBIC as well as Ridout & Maybee. As a result, revenue of $710.3 million was up 16.5%, primarily reflecting these acquisitions. Acquisitions also boosted underlying EBITDA, which increased by 6% to $207.2 million. As always, there is a foreign exchange element to our underlying results. For FY '25, the group recognized a net foreign exchange gain of $0.2 million compared to a $1.3 million gain in the prior year. The smaller gain this year was driven by the depreciation of the AUD against the USD being offset by a counter impact of the appreciation of the Singapore dollar against the U.S. dollar across the same period. A slide detailing our FX impacts is included in the appendix. Underlying NPATA, which is underlying NPAT adjusted to exclude the impact -- income tax affected impact of non-cash amortization, increased by 7.3% to $120.6 million. We believe underlying NPATA more accurately presents the underlying performance of the business given our growth by acquisition, resulting in significant non-cash amortization costs relating to acquired customer relationships. Underlying basic EPSA declined 2.3% from the prior year. That decline reflects the 9.8% increase in the weighted-average number of shares on issue in FY '25 following the capital raise completed in August last year. Statutory net profit after tax was up 13.2% year-on-year. The company continues to generate strong cash flows with a gross operating cash flow to EBITDA conversion of 103%. That has helped to support total dividends declared for FY '25 of $0.36 per share -- $0.365 per share, which is up 4% on the prior year. The final dividend of $0.195 per share will be paid on the 23rd of September. On to financial performance. Looking at the financials in a little bit more detail. As I mentioned, the FY '25 result included additional contributions from the Canadian acquisitions. There is an incremental 5 months contribution from ROBIC, an incremental 3 months contribution from Ridout & Maybee, and also the 9-month contribution from Bereskin & Parr, which was completed in September 2024. While agent fee expenses increased, these are offset by increases in recoverable disbursements, which are included in revenue. Employee expense increases reflect inflationary cost pressures, but also a net headcount increase of nearly 200 employees from acquisitions. Underlying EBITDA was up 6% to $207.2 million. The decline in the underlying EBITDA margin reflects 3 main impacts in the Canadian business: the impact from the CIPO issues that Andrew referred to earlier, where member firms held their cost base in anticipation of the recovery; the inclusion of the lower-margin Bereskin & Parr business in the FY '25 results with full year synergies not expected to be realized until FY '26; and lower legal and litigation revenue with some cases settling early in FY '25. The increase in depreciation and amortization relates to increased amortization on acquired intangible assets, while net finance costs were down 14.2% due mainly to the lower drawn debt. The effective income tax rate, excluding the income tax impact of non-underlying expenses, increased from 23.4% to 25.7% due to the increased proportion of taxable profits coming from Canada. FY '25 non-underlying expenses, net of income tax impacts, were $13.2 million. These primarily relate to business acquisition transaction costs, acquisition integration costs and general restructuring costs, which are detailed in the appendix. On to Slide 13, our balance sheet. IPH maintains a strong balance sheet, while trade and other receivables increased $16.7 million against the prior year. This included $18.9 million in trade receivables relating to Bereskin & Parr. Excluding this impact, trade and other receivables were actually $2.2 million lower than the prior year, reflecting improved receivable collections. The increase in intangible assets reflects the Bereskin & Parr acquisition, including $34.6 million in acquired customer relationships. The key movements in equity included the $122.9 million capital raise net of costs, a vendor equity consideration of $27.7 million relating to Bereskin & Parr, partially offset by the on-market share buyback of $74.2 million conducted broadly across the second half of the year. On to Slide 14, our cash flow and working capital. The group continues to generate strong cash flow with cash conversion of 103% and free cash flow up 4% for the year. The increase in working capital balances, excluding cash, was primarily due to the impact of the Bereskin & Parr acquisition, which increased working capital by approximately $18 million. Trade receivables collections improved marginally during the year and working capital management will be a key focus for the group in FY '26 to unlock further cash. We continue to be a capital-light business and CapEx of $7.9 million in the year includes various leasehold improvements relating to the Bereskin & Parr integration and property consolidation in Canada. On to capital management. Net debt at 30 June 2025 was marginally down on the prior year. The leverage ratio at 30 June 2025 was 1.9x, which remains within the company's maximum target ratio of up to 2.0x. The leverage ratio increased from 1.6x at 31 December 2024 following the on-market share buyback. In December 2024, the group refinanced CAD 180 million loan under the syndicated facility agreement, now split between a multicurrency revolving loan and a fixed term loan, which provides more flexibility going forward. The group has drawn debt facilities of $415.3 million with maturity dates ranging from September '26 to December 2028. The dividend payout ratio of 86% of cash adjusted NPAT was in line with previous guidance. Our balance sheet maintains flexibility for further investment in technology enhancements and operational improvements across the business. On to our like-for-like earnings. The like-for-like basis eliminates the impact of acquisitions and foreign exchange movements, which do create variability in the reported results. I don't propose to spend too much time here given Andrew will provide further analysis of each of the 3 segments in the next section. But looking at ANZ first. Pleasingly, we had continued organic growth revenue in this segment despite the overall decline in patent filings. Like-for-like underlying EBITDA margins were down, mainly due to inflationary cost pressure and increased IT costs, including cybersecurity upgrades. Like-for-like revenue in Asia declined very slightly, while like-for-like underlying EBITDA decreased 1.7%. However, this represents a significant trend improvement from the prior year, where revenue declined 2% and underlying EBITDA was down 6%. Now to Canada. As Andrew will detail shortly, the like-for-like performance in Canada reflects the significant disruption from CIPO issues causing delayed revenue, together with the lower legal and litigation revenue and inclusion of the lower-margin Bereskin & Parr business ahead of the full year impact of synergies. I will now hand over to Andrew to discuss these segments in more detail.

Thanks, Brendan. Over the next 3 slides, I'll provide an update on our 3 operating segments, as Brendan has indicated. The first slide is the Slide 17, the ANZ slide, where we continue to achieve organic revenue growth in our domestic business despite the overall decline in patent market, particularly the decline in New Zealand patent market filings for the period. Underlying revenue and earnings were 2% and 1% ahead of the prior year. This included the currency gain, partially offset by increased costs and further investment in the business. On a like-for-like basis, ex currency, revenue increased by 1% with a decrease in like-for-like EBITDA of 2%. The lift in revenue despite lower patent market filings reflects the long-term annuity style nature of our business where current period filings represent just one of a number of factors contributing to our ongoing financial performance. The decline in like-for-like EBITDA primarily reflects inflationary cost pressures, together with increased investment in IT, including a cybersecurity upgrade. In terms of filings, the total Australian patent market declined by 1.7% for FY '25 compared to the prior year with IPH Group filings declining by 9% for the same period. As we have detailed previously, IPH member firms have a significantly higher exposure to U.S. clients relative to the market, and we continue to be impacted by a decrease in market filings from U.S. applicants, which were down almost 8% for the year. This has disproportionately impacted our total market share. However, our share among higher-value international filers remains relatively stable. Slide 18 is Asia, and we continue to see positive signs of recovery in our Asian business. Underlying revenue was slightly below the prior year, while the decline in underlying EBITDA reflects a negative currency impact during the year, primarily the strengthening of the Sing dollar against the U.S. dollar by almost [ $0.05 ]. On a like-for-like basis, revenue was marginally below the prior year, while EBITDA decreased by 2%. As Brendan has indicated, this represents a significant ongoing trend improvement from FY '24, where revenue declined 2% and EBITDA was down 6%. The decline in FY '25 reflects the impact of lower non-lodgement revenue associated with the reduction in patent market filings across the region over the last 2 to 3 years. We have a slide in the appendix pack which you've seen before, reflecting the last 3 years of filing for each of the countries in Asia, and it's well worth having a look at that to see the increase this year and the position in the last couple of years. So, we are cycling that filing story. This was partially offset by increased initial filing revenue associated with the improvement in IPH Asian filings. As I said, the patent filings started recovering strongly towards the end of the first half and continued into the second half of FY '25 IPH filings up 16.5%. We had double-digit filing growth across 7 countries in Asia; China are up 14%, Indonesia are up 31%; India up 22%, Malaysia up 17%; Philippines up 82%; Thailand up 21% and Vietnam up 17%. Notably and very pleasingly, in Singapore, we outperformed the overall Singapore market. Singapore patent filings were up by 2.4% year-over-year through April, while the market declined by 1.9%. As I've indicated previously and earlier this morning, we are yet to see that full filing growth reflected in this year's Asian result. The associated revenue events attached to these filings as they move through the examination process provides a very strong platform for revenue and earnings into FY '26 and beyond. Now turning to Canada. The underlying results include the incremental contributions from ROBIC and Ridout & Maybee compared to the prior year and the 9 months, of course, contribution from Bereskin & Parr. On a like-for-like basis, we experienced a 1% decline in revenue and 5% decline in underlying EBITDA. As we have detailed previously, the FY '25 result reflects a significant disruption from the CIPO systems following the launch of its new system in July of 2024. The backlog of workflow linked to these systems issued -- cause significant delays in revenue. We have seen -- I'm pleased that we have seen a partial recovery in workflow in some areas. However, the CIPO systems were not cleared as quickly as they have indicated, causing a continued delay in revenue recovery in the second half. I'll give some more detail on this in the next slide. The revenue decline in Canada was partially offset by a solid increase in trademark revenue as CIPO service levels improved throughout FY '25 in trademarks. As we previously called out, litigation revenue, which is a variable revenue flow depending on cases, was lower in FY '25 due to a number of cases being settled earlier in the year. The decline in like-for-like EBITDA margin reflects those issues, but also reflects the inclusion of the much lower margin Bereskin & Parr business. Given that the integration was only completed towards the end of the year, it was after March, we only received a partial benefit from the cost synergies in FY '25. We expect, of course, a full year benefit in FY '26. We continue to generate client referrals from our Canadian businesses into IPH Asia Pacific firms and vice versa. And at the end of FY '25, we have delivered a cumulative total of 796 referrals. Now, Slide 20, that the CIPO delay, and I refer you to the chart attached to Slide 20 and give some further context on the CIPO issues we've experienced. As you can see on the chart, the issues from CIPO upgrade did impact revenue recovery, mainly in examiner's reports, notice of allowances and a variety of other official actions that came out of the patent office not being received and processed. And of course, [indiscernible] client responses to these official actions. And these are all key revenue events for us with our client base. So -- but CIPO service levels are continuing to improve, and you can see that in the chart and the positive trends in processing times and responsiveness are starting to come through and particularly in June, July. The clearance of the backlog has begun, which is part of CIPO's road map towards normalization and was expected across the rest of 2026, the full calendar year. As a result, we expect this delayed revenue to flow through contributing to further growth in FY '26. Now Slide 22, our strategic focus in recent years has been on acquisitions and of course, subsequent integrations, and we have now created the market-leading presence in Canada. Having now successfully completed these Canadian acquisitions, our focus is now on enhanced organic performance and operational excellence. Through our transformation team, we are taking steps to refine our strategic direction to focus on building long-term value by strengthening the member firms within our group. The core of our revised strategic plan is to empower our member firms with the group providing strategic guidance and shared capabilities. This will allow each member firm to retain its own identity, culture and client relationships and the model we pursue balances the strength of the local brands with the benefits of group scale. We are embedding AI into our core operations, whether it'd be patent drafting to administrative functions, streamlining workflows and reducing costs. We also restructured group corporate services to better support member firm level growth towards the end of FY '25. Slide 23 refers to our sustainability commitment. We remain very committed to operating a sustainable business, and we continue to make solid progress in each of our core strategic priorities here. I wouldn't propose to go through each of these in today's presentation, but they are detailed in our sustainability report, which has been released with the annual report today. So, looking at priorities for FY '26, we continue to build towards our vision of being the leading IP services group in secondary IP markets. Our key priorities in FY '26 is to support that vision. It includes optimizing our network of member firms, targeting organic growth and operational efficiency. Our focus in Canada is to leverage our platform and the anticipated recovery in patent workflow following the CIPO system issue. Our ANZ focus remains on organic growth with business development initiatives targeting U.S., Western Europe, Japan, South Korea and increasingly Chinese incoming filings. And in Asia, we aim to build on the current momentum in filings to deliver revenue and earnings growth. We have realigned our cost base to drive operational efficiencies to deliver estimated annualized cost savings between $8 million to $10 million from FY '26. Additionally, we will be implementing our transformation plan to empower our member firms to drive efficiency, deliver strong commercial results while continuing to invest in technology and operational improvement. Meanwhile, we have refreshed our group-wide incentive program to focus on driving member firm performance, business development and working capital management. Of course, underpinning these initiatives is our strong balance sheet with continued high cash generation and our focus remains on delivering improved returns to shareholders. Despite short-term disruption, the medium-term fundamentals for IP remains supportive for growth. Company's intellectual property remains one of the most valuable assets, and that requires protection across global markets. As a market leader across secondary IP markets with an unmatched global network, we are well placed to service our growth. In closing, I'd like to, again acknowledge the hard work and contribution of all our people across the IPH Group. Many thanks to all of you for your continued interest and support. And over again to our moderator, where Brendan and I are happy to take some questions.

[Operator Instructions] Your first question comes from Tim Lawson at Macquarie.

I might just start on the cost out. Can you just talk about whether that's across just the corporate head office or across the broader network of firms?

Tim, that's across the whole group. So, you've got a mix between the segments and corporate.

Yes. Okay. And it looks like there's a $9-odd million second half restructuring costs. I appreciate restructuring costs are somewhat related to Canada, but it's a heavier -- much heavier second half versus first half weighting. So just wondering whether any of that's related to just the announced cost out?

Yes, you'd put them all together. So, you've got some -- you've had some cost out on the Bereskin & Parr integration and then the corporate cost out and then obviously, some other costs out across the second half of the year across the segments. So, yes, that's a collective number.

Okay. So, can you break that down? So, I'm just trying to understand the sort of the timing of realization of the $8 million to $12 million, given there's sort of the restructuring costs within that $9-odd million in the second half, obviously, taken this year. So, is that telling us that the run rate of cost savings of that $8 million to $10 million is -- what's the sort of run rate?

So, that's activated. Effectively, that's an annual run rate from July this year, and that's all ready to go. So, they're all done. There was a little bit of that benefit towards the tail end of FY '25 as the program has been activated. So, you've got a small proportion of upside coming through end of '25, but the full annual savings, $8 million to $10 million comes into -- from July for the whole of 2026.

Yes. And then just switching to Canada, have you just sort of talk to what you think the backlog of revenue is and what that might mean for sort of margins into '26?

Look, we -- we're not going to commit to a number of the exact backlog revenue, what we think it might be. Obviously, there's still a lot of moving pieces. And we've obviously -- we're expecting some further recovery back towards the tail end of FY '25, and that didn't quite get there. So -- but the key message was obviously the Canadian business has held their cost base for anticipation of the recovery. If you go back to the slide in the deck, you can see that the examiner's reports and the other notices are starting to tick up. So, we do think there is going to be some extra revenue in -- certainly in FY '26, but we think the normalization happens across the whole of calendar 2026. So, some will still flow into FY '27.

The next question comes from Amanda Kelly at Barrenjoey.

Just wanted to say congrats on the results. I guess I'm representing Ary and a few questions that he's got. So, I guess, looking at corporate costs, so in the second half, $11 million, how do we think about corporate costs into 2026? And does that reflect cost out?

So, just be mindful, there's some -- on a reported basis, there's a few large variances on foreign currency across the first half to the second half in the corporate segment. So, we are expecting -- look, there is some cost out in corporate that happened towards the end of the FY '25 period. So, we are hoping that corporate costs will be slightly less than the FY '25 number. I'm not going to -- we're not going to break out by segment specific guidance. So -- but yes, there is some saving there, and so we are expecting a downward trend from '25 to '26 in corporate.

Okay. Yes. And I guess on the CIPO issues, how do we think about the timing of when they'll be alright? Obviously, you said some improvement across FY '26, but how are you thinking about the trajectory across the near and the midterm?

It's a fair question. And as Brendan mentioned, I won't say promise, but the suggestion that we might see some more activity in '25 didn't really eventuate. But as reflected in that slide where I spoke to, the uptick from June and particularly July in all those official actions are strong. So, they're type of starting point of some of these -- they're occurring across the life cycle, but some of that is also the starting point we -- it generates another deadline. For example, the issuance of an examiner's report generates another deadline for a substantive response to the report, which is even a larger revenue event. So, I think towards the end of this calendar year and as Brendan has indicated, it will go into the second half and possibly beyond. But it's certainly in backlog territory now, which is good. And so, we've got there on that, and we'll just see how it continues to deliver.

Great. Sorry, just one final one. What -- do you have any sort of in terms of CIPO issues in second half and how they impacted EBITDA? Is there a kind of dollar qualification on that? Or...

No, we're not giving dollar qualification, but obviously, it did hurt the second half more than the first half. So, if you do -- if you sort of run the first half to second half splits in Canada, you can see that the EBITDA deteriorated from, I think, at the half year, we were about 2.3% down half-to-half, and then we ended up at 5.4% on a currency-adjusted basis. So, there definitely was a deterioration. But also, to some extent, the teams were holding their cost base on the recovery, which didn't quite get there. So, there's obviously sort of a mix of factors into that outcome.

The next question comes from Apoorv Sehgal with UBS.

Sorry, I have to apologize. I just jumped on the call actually, so I have missed the bulk of the conference call so far. The first question, if it's all right, just ANZ and Asia, second half like-for-like revenues looks like it's gone backwards a little bit year-on-year. Would it be okay if you could just step me through sort of the reasons why for both regions, why they went backwards in the second half?

So, we'll do ANZ first. Certainly, there was a deterioration in the second half on filings, particularly in New Zealand is probably -- was probably the biggest impact across the second half and a little bit in Australia. So, it wasn't a significant number, but yes, that's probably the basis, so New Zealand primarily. In Asia, -- the first half, second half split, look, it actually wasn't dramatic between the 2 halves. So, I think if you think -- if you would go back and look at the half year, we were pretty much flat like-for-like on revenue currency adjusted. And then at the end of the year, we've ended up at minus 0.6% like-for-like adjusted. So, not a huge difference.

Okay. Can we talk about the FY '26 like-for-like revenue growth outlook then for both ANZ and Australia?

Well, we can certainly -- it's probably in the Asian piece, you're getting a 16.5% filing growth and particularly in Singapore, where there's even a market share improvement in filing growth, given that Singapore probably has the fastest examination cycle IP that I expect that next -- say it's the start of the next 70% in the case of Singapore because there's no translation, will come faster and we should be in the FY '26 year based on some of these increased filings in Singapore. And then the other jurisdictions have run at different time [ peaks ] in terms of their examinations and requesting examinations. But it's up across so many of those countries, and it's been up now since the end of the year [indiscernible] started to come through in December that I'd start to expect some revenue growth beyond the filings, the next stage of opportunity coming through as a whole, given that we are across 6 countries that are double-digit growth in Asia, which would come through certainly in FY '26 and hopefully seeing some of it in the first half of FY '26, which -- and we've seen some good momentum in Asia even in July in that context. So that's ticking along nicely. And I said that back in May, I think that the Asian piece, the filings were strong, and that feeds that pipeline. So, we're very pleased with that. The Australian story, it really is -- there's 2 parts to it. We are the biggest player in not only Australia, but also in New Zealand, as Brendan has indicated. The New Zealand market is probably under more stress generally than what the Australian market is, probably reflective of the economy. And we are pivoting more and more to not necessarily all U.S. but certainly seeing an increase in incoming filings out of China, which is up, I think, 18% for us on the previous period. So, look, we continue to act decisively there in [ BD ]. And as Brendan has indicated, we've reset our cost base across not only on the corporate and some of the business units as well.

Okay. So, it sounds like you do expect like-for-like revenue growth in FY '26 across both those regions, ANZ and Asia?

I think it's probably a little bit too soon to commit on the ANZ given the trajectory of the filing. But look, we're optimistic on Asia, just given the filing data.

Okay. And the skepticism on ANZ specifically is because kind of with where U.S. filings are tracking? Because I think U.S. has been pretty soft, which would indicate, I guess, 2026 could be challenging. Is that kind of thinking there?

I think that it certainly is down almost 8% on the year, the U.S. PCT. So that's significant. And look, for us, that is at face value a challenge. But we've also seen this coming, and we've pivoted to other markets to try and correct that. So -- and that momentum will continue.

Yes. And that -- Andrew, just that U.S. challenge, is that not the same challenge for Asia as well? Doesn't that affect both ANZ and Asia together?

To a certain extent, AP, but we're also getting -- we're seeing a large amount of incoming into Asia out of Europe and particularly also out of China, probably more impact in Asia from China incoming both at corporate and associate level, certainly at corporate level and some very strong filings, not only Europe, but certainly some technologies out of the U.S., which are also strong for us. So, we're probably getting a greater exposure in Asia, particularly countries ex Singapore in Asia, where a lot of the big corporates are now starting to designate Southeast Asia, including countries like Indonesia, Philippines, Thailand as priority 1 type countries. So, I think based on the probably the population size and increasing GDP, it's an attractive market that they want to get into, which is a momentum the like of which we haven't seen before. So, it's a nice position -- it's a stronger position for us in Asia than probably anywhere, no question.

One final question. I know I've taken up time, but just on the same sort of topic. Is part of the challenge in both your regions that price becomes less of a tailwind going forward? Because if I go back a couple of years ago, you put through kind of, let's call it, above-average price increases. My understanding is that takes kind of 2, 3 years to roll through the book of clients because some clients are on fixed-term sort of contracts. Is that now less of a tailwind to your revenues on a go-forward basis compared to perhaps what it was in the last couple of years? Is that part of the challenge as well?

Well, look, we had -- we did -- we took advantage, I mentioned everyone did of the inflationary period 2 or 3 years ago or 2 years ago, and our price increases are probably now more modest by comparison, but they're still ratcheting through. And our competitive dynamic in Southeast Asia is probably a stronger one to support stronger price increases because there's very few -- I don't know of anyone that has the competitive position we have in Asia in terms of coverage across so many countries. And we're -- that supports a price differentiation, probably more so it does in Australia. So, I think there's still pricing opportunity certainly in Asia and probably more modest ones in Australia.