Janison Education Group Limited (JAN) Earnings Call Transcript & Summary

The time is now 10:03, and we'll get started. Welcome to the full year FY '22 results and trading update for Janison Education Group. On the call today from Janison, we have Mike Hill, the Chair; David Caspari, the CEO and Managing Director; and Stuart Halls, the CFO. In a moment, we'll begin with a short commentary from Mark Hill, the Chair, followed by a 40-minute presentation from David Caspari and Stuart Halls on the full year results and a business update, including significant wins and accomplishments during the year. [Operator Instructions] When we reach the Q&A section of this meeting, we will read each question aloud and the team from Janison will respond. Please be advised that we'll be recording this session and a copy will be uploaded to the ASX shortly after this call. I would now like to hand over to Mike Hill, the Chair of Janison. Over to you, Mike.

Thanks, Maggie, and thank you, everybody, for joining us today for the annual results investor update. And obviously, the annual report has been released to the market as well. So I'm not going to take too much of the time away from David and Stuart, who will be doing the majority of the presentation today other than to say a few quick highlights. Clearly, the business has delivered some strong financial metrics, $36 million of revenue, 20% growth for the year, impressive extension in the gross margin up to 64%, that I'm sure Stuart will take us through in a bit more detail. And importantly, from an operational point of view to deliver 8.6 million assessments across 117 countries really shows that Janison is the real education force and is one that I think investors will appreciate as an opportunity to invest in the sector on the ASX. A couple of highlights, I'm sure David will take you through in more detail regarding that plan going fully online for the year, the launch of new products like RiSE+ and continued growth in key revenue streams such as ICAS, that David will take you through and further extension of the PISA assessment platform. Importantly, I think a couple of key financial milestones that the team has managed to achieve, especially in the light of market expectations and requirements. That is a significant reset of the cost base back in June of last financial year, which sets the business up looking into FY '23 with a more modest cost base to start with and the ability to ensure that we have plenty of runway ahead of us to deliver those growth expectations that we will seek here as our shareholders looking forward. Lots of cash on hand, so no problems there. And I think importantly, from an outlook point of view, there's both a short-term statement and also a long-term statement in there. We do have grand ambitions for Janison, we always have. I think we all need to appreciate that over the last couple of years, there has been school closures, higher education closures, not only Australia, but around the world, we hope all that they're behind us. But the business is operating in a very large market and has achieved some really significant milestones through the course over the last few years. So further ICAS and PISA extension and growth. There's some new platform deals, the guys that will talk you through and the pipeline for more of the same is certainly in hand and has kept the entire executive leadership team busy and the sales guys busy, and we look forward to being able to share more of those wins with you as the new year unfolds. So from that, let me hand over to David and Stuart. And again, thank you for joining us today. Dave?

Thanks, Mike, and welcome to everyone that's joining us today. I'm pleased with Stuart to be able to present Janison's annual results for FY '22 and what a year we've had in so many different ways. If we go to the next slide, please, Stu. Today, what we will do over the next 30 to 40 minutes between Stuart and I, we'll address FY '22 operational results, FY '22 financial results and then both an immediate term and longer-term view of our outlook and Horizon. And in addition, we will be showcasing and introducing our new product, our SaaS product targeted at parents called RiSE+ that Mike briefly mentioned. You will hear about RiSE+ peppered through the financial and operational update, and probably will showcase it later in this session. At the outset, however, I really want to share the highlights of FY '22, what's been a successful year, and then what was a significantly COVID impacted here. We posted a myriad of very strong metrics. Firstly, group revenue at $36 million, that's 20% up versus year-on-year. That was driven by new customer acquisition, both on our platform, but also with our schools and our parents. We've seen a significantly increased number of digital assessments, a 26% growth to now 8.6 million, approaching 9 million assessments in 1 year. And pleasingly, we've seen growth in all 3 of our revenue drivers of assessment platform, Janison's assessment products for schools and our partnership with the OECD for PISA for Schools. And that really evidences strong execution of the strategy that we outlined now a couple of years ago. A significant highlight is the continued gross margin and gross profit performance. Our gross profit is up 39%. And as we look at 20% group revenue growth and gross profit performing almost at twice the pace of revenue, that's a significantly positive trend. Gross profit margins are up 9 points on FY '21. And what's very encouraging is, we're seeing this cumulative increase from 35% gross margins in FY '19 all the way now to 64% of gross margins in FY '22. It's driven by revenue mix. It's driven by very good strategic pricing. It's driven by the emergence of those scale benefits we've historically been talking about. And it's driven by efficiency, and we'll talk a little bit more as we talk about our horizon about our ability to sustain a level of growth. Mike spoke a little bit about the program that we ran in June of this year. We call it our future proofing program. It was implemented and across a range of different initiatives, which we'll take you through. We saw $6 million of cost out, and that's in addition to the $1.4 million of positive operating cash flow we delivered in FY '22. Finally, RiSE+ will be a topic we talk about later in the session. So we finished the year with $12 million of cash, no debt, strong operational momentum, a more nimble and customer-centric organization with positive operating cash flow, and we're targeting net cash flow positive this year. Now taking a step back, while many of you have been following Janison and now the Janison story, equally, we've seen a significant lift in the register, and for the benefit of our new investors, I'd like to provide a brief company overview. Firstly, Janison is a market leader in digital assessments. We're focused on this very large addressable opportunity of K-12, but also secondarily the accreditation market. To address that market opportunity, we sell to government education departments, government jurisdictions, and we also sell to schools, and we sell directly now to parents. We've proudly put the lid and our purpose is to unlock the potential in every learner, our technology is built to be accessible on almost any device, any browser with any network capability and provides equity and inclusion to learners of all backgrounds and ability globally. Our assessment platform now called Janison Insights have been built in partnership with governments and enterprises globally over the course over the last 10 years. And we would trust it to deliver a very large amount of digital assessments across more than 100 company -- countries around the world with a suite of a strong standardized platform and the suite of services that enable that platform, specifically for hyperscale exam events. Our assessment products are developed by educators for educators. We understand the needs of educators and how to develop flagship products, loved by schools and now loved by parents. What we deliver to them are insights that power intervention that improve learning outcomes. Finally, a core differentiator for Janison, which in many ways creates one of the significant barriers to competitive entry is our exam entry, integrity security and privacy. Our technology has been perfected through working with some of the largest jurisdictions in the world. And when you're delivering the likes of a national assessment program or a national or global accreditation program, exam integrity and exam availability and exam experiences are top most of organizations and indeed candidates minds. We do this, we believe, better than any other company and product in the world. We've transitioned to a 2 business unit model now. Our Janison Solutions is our assessment platform ARR business, and it addresses enterprise and government B2B needs. The core of our IP is our Insights platform, it's a assessment platform that addresses the needs of anything from authoring an event to running an event to marking it to analyzing it and to reporting on it. It's a mission-critical infrastructural component and combined with our assessment services, which we wrap around that platform to make sure we enable a world-class exam delivery event, we believe the combination of our platform, plus our services gives us a unique ability to understand what it takes to deliver a high-quality candidate experience and indeed government and enterprise experience, and we believe it sets ourselves apart from any other solution in the world. On the right, Janison Assessments is our digital-first product business, addresses the needs of schools and parents. It is anchored by the flagship ICAS competition and aspirational competition from years 2 to 12 across 6 different subjects, and we will talk about the performance of that competition both last year, but also indicators for this year later in the session. Over the last 12 months, we bolstered our ICAS flagship competition with the acquisition of QATs and the acquisition of Academic Assessment Services. So right now, as we start FY '23, we have a broad product portfolio of K-12 assessments, progression tests, benchmarking tests, competitions, ATAR predictors, scholarships that address the end-to-end needs of schools. And as we now launch RiSE+, we start to address the needs directly of parents and students [Audio Gap] 2 years ago, at the beginning of FY '21, in fact, at the end of FY '20, we outlined the 4 revenue growth drivers. Our assessment platform, our assessment product business, our partnership with the OECD for PISA for Schools and our targeted M&A strategy. Now we've evolved as a company significantly over the last couple of years with inorganic growth, with organic growth, with our partnership, with our new wins, and we've been executing this strategy well. What's important to note is that while we've evolved a lot, these drivers are fundamentally unchanged since we communicated them 24 months ago. And if I step through those revenue drivers, on our platform, our growth will be driven by adding new B2B enterprise clients. We'll talk about the 2 we added in the fourth quarter of last year, later in this session. It's also driven by expanding existing clients on our Insights assessment platform, a land and expand strategy. And we're very focused on key international markets, particularly Europe, targeting education departments, accreditation bodies and global publishers. In our product business, we'll grow firstly by our recovery to 1 million ICAS tests per annum, and we'll talk through the drivers of that transition to 1 million later, increased product expansion through the recent acquisitions of AAS and QATs, which allow us to cross-sell across all different parts of our portfolio across all of the different schools that we now are present in. And finally, unpacking the assets that we've acquired, and particularly the test items to address and unlock new addressable market, the parent addressable market as an example. Our PISA for Schools partnership by way of reminding you is an exclusive 5+5 year partnership with the OECD. We're in year 3 of that 5+5. And what we are doing is, we are rolling out this extraordinary PISA for Schools product to an addressable market of up to 90 countries. This product is -- drives school improvement. It's truly a force for good and it is linked to the gold standard PISA right and its unique assessment product that stands globally apart from everything else. We operate in 2 different growth modes in PISA for Schools. The first is as an international platform partner generating in the order of $200,000 plus of platform ARR per country. And in 6 countries of the U.S., the Australia and the 4 countries of the U.K., we have the additional opportunity as the national service provider to sell directly -- that product directly to schools at $7,000 a school. And we have a stated medium-term target of 1,000 schools in each of Australia, the 4 countries of the U.K., 1,000 in combination for those 4 countries and in the U.S. and so $7,000 on average per school with those kind of medium-term targets, you can very clearly assess the market opportunity and the opportunity for growth there. Finally, we'll continue to scan the market for targeted acquisition opportunities that bolster either our assessment product or our assessment platform go-to-market or technology staff. Equally, as with revenue drivers, our profit drivers remain fundamentally unchanged from what we communicated a number of years ago as we transition to that 70% to 75% horizon targets. Our revenue for our key 3 organic growth drivers -- sorry, our margin is all above a gross margin of 70%. But so by sheer growth in those revenue drivers, we see the revenue mix shift and it drives gross margin expansion. We're seeing scale benefits, continued growth in test volumes, deliver scale benefits on the likes of a fixed cost base of ICAS. We're also seeing the scale benefits of unlocking our test assets and other IP. We're seeing efficiency that comes from the transition that we've made over the past 2 years from the suite of bespoke platforms and branches to our single standardized, but configurable Insights core platform. And through that, we're realizing those material efficiency benefits that come with supporting fewer platforms. And finally, we need to further that and we are future-proofing the business through the cost reduction program we spoke about. Now I'll pass to Stu to talk about our business performance.

Thanks, David. Good morning, everyone. So what you've got here is a couple of slides that represents revenue of the 2 business units that David has just taken us through. So solutions on the left and assessments on the right. Starting with solutions, we had a very good year in terms of revenue growth. Just as a reminder, this business unit on the left is our B2B enterprise division. It's a combination of our assessment platform, our learning platform and our professional services, including the JEM exam management service. It's important to note this context because we really saw very strong growth in the core elements of this division and that being the assessment of license sales, assessment services component. And that's in a market which we've seen some lingering disruption amongst a number of large enterprises as they battle with the various waves of COVID during FY '22. Where we saw contraction on the left-hand side was in our learning business. Learning was actually cycling a record year the prior year in FY '21, where we saw a very huge -- a very large increase in demand for digitization of learning content as a result of COVID, although that's not a worry for us too much, given our focus in that division is on assessments and not on learning. So if you exclude the learning business results from that division, we actually saw a 12% growth in that business unit on revenue. And we ended the year with a number of large client signings at the end in June right at the very end, which we believe will deliver approximately 7 million -- sorry, 7 figures of revenue over FY '23 and '24. We also ended the year with a very good pipeline on that side of the business with a number of assessment deals, large assessment deals, which were in various late stages in the sales funnel. On the right-hand side, you've got the Janison Assessments division. This is our second business unit, and this is where we saw good growth here, too. In large part, that came from acquisitions, where we purchased 2 businesses that David just went through, which was QATs and AAS or Academic Assessment Services. They were purchased in October and November of 2021, but been saying that there were other positive outcomes as well with the remaining sort of organic revenue underneath. On the assessments, I'll just step back for a second. On the assessments business unit, just as a reminder, this specializes in the production and sale of direct-to-school assessment products. So that's exams, exam questions, tests, exam reporting and insights, and the customers on the right-hand side of this chart include schools, teachers and now parents as well through RiSE, which we'll talk about in a moment. It's a combination of some very well-known brands, such as the ICAS brand. And now with the recent acquisitions we made in FY '22, we also have the brands such as Allwell tests, scholarships, progression tests, QATs and now also the RiSE brand as well. Underlying sales performed pretty well, considering we had almost complete school closures in Q1 across New South Wales and Victoria in FY '22, which happens to be in the peak selling window and also the period in which we set the ICAS assessment to several hundred thousand school students each year. On this next slide, what we've got here is largely the same data, but broker net interest component products and brands. On the left, with the solutions business unit, you can see underlying performance of that core business segment I was talking about, which is that assessments, PISA for Schools where we are the international platform provider and our professional services for our assessment clients, all of that grouped into the bottom chart is where we see that 12% growth year-on-year. Within that, our PISA for Schools platform is in a business unit for solutions, is a school products sold at a country level to a federal education ministry around the world. Here, we experienced a similar issue that we had to deal with ICAS in FY '22, where school closures and disruptions caused sales be held back. With ICAS, it was a domestic issue, but here with PISA on the platform side, it's more of a global issue. We're still very confident though in terms of the opportunity. We only have 17 of the 90 existing countries [indiscernible] the main PISA study. And as we go into this year, FY '23, we can certainly see a much more improved environment, particularly inside federal education bodies around the world that are getting back to normal and have that capacity now and the budget for valuable assessments like PISA for Schools. And that's reflected in our pipeline. It's also worth noting in calendar '22, this calendar year. This is the main PISA study here, where 90 countries around the world take part in the global benchmarking program. It happens every 3 or 4 years. It's separate from what Janison does. It's the main PISA study, it's much more of a services program. And that will complete at the end of this calendar year. And I think as a result of that main PISA study that's happening this year, it will reinforce the importance of these products all around the world, and in particular, the rankings, which come from it from the OECD that give those international education rankings. And we expect this will deliver or generate a lot more enthusiasm for PISA for Schools and a lot stronger demand as well as we go into particularly in the second half of FY '23 when those rankings come out. On the right-hand side of this chart, you've got the Janison Assessments division that is broken down into the individual school assessment brand, so ICAS, AAS, QATs and so on. As you can see there, ICAS makes up the lion's share of this division. And then in addition to that, we now have AAS and QATs, those are sort of blue and the gray bars, which [ contributed approximately ] $4.8 million of revenue this year. That's a prior year revenue, both in the acquired around sort of Q2 FY '22. So they'll still have some underlying full year revenue growth just on a pro forma basis next year as we go into FY '23, and that's around about $1 million to $1.5 million of additional annualized revenue. PISA for Schools also sits inside this business unit as well as on the left-hand side. The difference here is that it's the sales from those 3 large regions that David mentioned, the U.S., the U.K. and Australia, where we go beyond just being the international platform provider, and we actually provide the full service for PISA for Schools, delivering and supporting the events in the school. That sales approach is more of a direct to school or direct to a school group one, which is much more aligned with the way we go about -- or go to market in the Assessments division, it's why it sits on the side of the screen as well. What we want to do here is basically present you a sort of 3 major categories of cost in the business, that being cost of sales, OpEx and CapEx and run through a couple of things that have happened this year, in particular, in FY '22 and also what's happening next year. It's very important to understand. In FY '22, there was a material step-up in all of these categories. This was something we stated from the outset back in FY '20 when we raised funds back then and also in FY '21 when we raised further capital. We, as a business needed to professionalize. We needed to increase our capacity. We needed to increase resources in key areas such as sales and marketing, in global event support and senior management levels and in leadership. And that's what we did, and that's what we used the funds to in terms of deploying, and that's what we're referring to as our investment phase. And that's what we did during FY '21 and '22 is an investment phase for us to get set for growth. As we went through this year, FY '22 towards the back end of this year, a number of large projects came to completion, particularly around the sort of merging and the consolidation of the many legacy branches of the Assessment platform that we have. We came from a place a few years ago where we produced or developed bespoke platforms for clients. We since transitioned a couple of years ago to offering only a single standardized assessment platform called Janison Insights. And we've since been on a journey to consolidate all those legacy platforms back into the core for that incredible efficiency benefit that we're now sort of starting to see in our gross margin. In consolidating all of those branches into the core, that obviously consumes a lot of development time and testing resource, but that's now coming to completion, and we've been able to wind down those teams. A lot of it sort of flex overseas development teams, which allowed us to sort of scale back down and reduce a significant number of roles and a significant number of cost -- amount of cost. And in doing all of that, we've actually managed to reduce our cost base, as Mike mentioned at the beginning, by approximately $6 million. That happened at the end of FY '22. Some of that $6 million came back through accelerating some of our planned acquisition cost synergies that we identified through the purchase of those 2 businesses. And some of the $6 million also came back through a couple of roles here and there across the various departments, but the bulk of it came in sort of winding down of our technology teams, where we finished the major CapEx work on that consolidation program. So the net outcome of all these cost reductions was a huge reduction in our cash outflow. And as I mentioned, most of that took effect in June. So right at the very end of the year, but it started to deliver results now in this financial year from July onwards. And that whole cost reduction program is what we're referring to as a future-proofing phase. And so on these charts below, you've got the 3 bars at the beginning, which sort of represent a step increase over the last few years. And we've [ proforma ] what the full year FY '22 would look like with a full year of acquisition costs. So that's the AAS and QATs OpEx. And then in the final column of each chart, we performed what that would look like with the full acquisition cost in there, plus all of the cost reductions that we've made. So you can see in each of those and particularly in the CapEx, we've made significant reductions in our cost base. Looking ahead, so looking ahead into FY '23 and beyond, we don't see any need for material increases in any of these particular cost categories. We do have capacity in our teams now to absorb a lot more revenue -- and the only increase is really from -- or any of these 3 is around sort of incremental inflationary increases and in targeted marketing campaigns where we're supporting the launch of RiSE, a big launch this year and also the growth of ICAS. Obviously, now it's much more of a parent product, and that requires that marketing spend for the customer acquisition piece. And now, I hand back to David for the operational thoughts.

Thank you, Stu. We saw momentum and delivered growth across all our revenue drivers. On our platform, with a year of share of wallet growth and we saw expansion of all major existing accounts, whether it be the continued rollout of check-in and other new products in the New South Wales Department of Education, whether it be the continued expansion of NAPLAN, whether it be the delivery of maritime license on top of driver's license tests in the New South Wales Roads and Maritime Services, a very significant program was the delivery of chartered accountants for the first time in FY '22, very large program. We deliver a remote proctored using our remote proctor, Janison Remote product offer. It's extremely high stakes assessment, and we've surpassed even the high expectations of charted accountant, ANZ and indeed the candidates who are very comfortable now setting that test in our environment. Very encouragingly, we also saw the expansion of JEM digital exam services. We -- through lockdowns, we delivered ICAS to home and ICAS to remote centers. We delivered remote proctored exams for New South Wales selective schools and of course, chartered accountants and others. So in total, we delivered 8.6 million exams. It's 26% year-on-year revenue -- sorry, exam volume growth. On our assessment products, like as Stuart said, we did experience lockdowns in our key sales and delivery period for ICAS. We delivered 20% growth for the FY '21 ICAS campaign and ICAS competition. We reached 86,000 registered parent customers. and that's up 40,000 year-on-year. Now that's important for many ways. The contact database is valuable because it allows us to now market our suite of parent products and other products, particularly immediately RiSE+ to a community with a very high propensity to purchase assessment products. If they're going to purchase a competition, well, then they're very likely to want to be able to practice that competition on the same browser in RiSE+. Our partnership with the OECD for PISA for Schools to the global rollout of the PISA-based test for school continues to flourish. It's a showcase of our aspiration, it's a showcase of our purpose, unlike anything else we do. Look, in the face of a pandemic, in the face of some geopolitical instability, we were still able to progress our partnership. We now have contracts as the exclusive platform provider in 17 countries and in 6 of those, we have been appointed the national service provider where we take greater responsibility for in-country rollout. We also saw 160 new schools added in those national service provider market. I do want to take the opportunity very briefly to showcase NAPLAN. NAPLAN for those of you who have kids or those of you who have been following the Janison story for a while is the Australian National Assessment Program for Literacy and Numeracy. As far as we're aware, it's the largest assessment of its type globally. And in FY '22, for the very first time, we saw the entire cohort of students seeking NAPLAN -- seeking NAPLAN online and digitally. So extremely significant milestone for the NAPLAN program and indeed for the Commonwealth of Australia. Over the course of 2 weeks, we delivered 4.3 million online tests. We saw a 48% year-on-year increase in students, a 45% year-on-year increase in test volumes. And in terms of technology milestones, on a single day, we delivered over 1 million tests in essentially every single school in Australia. And in terms of platform performance at one point on that day, we had 315,000 peak concurrency, 315,000 kids, experiencing Janison Assessments platform doing NAPLAN online in every single school. I think it's fair to say, and if you spoke to our customer, the performance of our platform and the performance of the program exceeded even the most exacting expectations of the Commonwealth. And as we start FY '23, we started with momentum. I think firstly, it's important to say that while schools are not entirely back to normal and while a level of geopolitical instability continues to exist, we do see an improved trading environment and that underpins our growth outlook for this financial year. On our platform, we signed 2 major new logos in Q4, which will drive $1 million to $2 million of new recurring platform revenue once fully implemented. ACECQA is the child care accreditation for Australia, and it's obviously a market where our new government is stated, it's going to continue to invest more, creating good growth prospects there. And Cambridge BoxHill is a significant new logo. It delivers English language testing for healthcare across over a dozen countries. So it's a global new logo. And obviously, we have the need for more nurses, more medical practitioners and so on and so forth. We're already -- BoxHill Cambridge has already seen significant growth on paper and that transition online will naturally see us grow. On the Janison product side, we've had a strong FY '23 competition. We're close to the end of the sales campaign. We're already in competition campaign, and we're expecting to deliver another circa 15% growth. Our parent contracts -- contacts through the ICAS competition are up again 70%. So we're now at 150,000 registered contacts, and we're starting to already see good initial sales momentum in rise. Finally, on the OECD PISA for Schools, we're confident of the opportunity has been impacted by COVID, but we've definitely seen, I think to see a better trading environment. We are seeing a pipeline of countries. And while timing is proven difficult over the last 6 to 12 months, we do expect signing of new IPP countries in the first half. We have now completed a refreshed new sales force build in the key national service providers of the U.S. and the U.K., and we're now gearing up for that next sales cycle, which begins in September in the Northern Hemisphere. I want to briefly talk about RiSE+, which you've seen the herd mentioned a number of times. In Q4 of FY '22, we launched our first new product developed solely the students marketed to parents with the introduction of RiSE+, a SaaS product containing the highest quality test content and indeed 12,000 test items in the initial launch, which unlocks a very significant asset that we acquired through ICAS, QATs and AAS. It's a practice assessment tool, which delivers a range of tests and subjects that will ever expand. What's important is it's actually built using the same Janison test player as used for NAPLAN and ICAS and other assessments, for example, the New South Wales Department of Education. So kids get the opportunity to experience the same browser in our SaaS environment. There's no other product that provides that value proposition. We've unlocked the vast test item library, and we can prepare students for a variety of well-known school run assessments. At this stage, we're doing years 3 to 7, and we will be going very soon to years 2 to 8, experiencing the same digital interface that we would in the actual school run tests on exam day. For parents, they receive valuable insights in real time. They provide information on child's strength and development opportunities. We're in early days. However, we're seeing -- we're on -- we're above management expectations, and we're gaining our traction quickly. To Stu as we go to our financial results and highlights.

Yes. Thanks, David. And I'll probably keep it brief because I'll try to leave some time for questions at the end. If you do have questions, feel free to put them into the chat, and we will answer them around sort of 10 minutes to 10. We go here on the 2 slides -- or the 2 charts on this slide, a summary of the revenue and recurring revenue and our gross margin. It's important to note our recurring revenue is made up of the platform sales on the solutions side of the business, that being [ B2B side ] but also the product sales on our assessment side, where we have the highly recurring digital platform used to deliver score assessments. I think the sort of call out here probably around the gross margin. Obviously, it's increased substantially over the last few years. And I think it's worth sort of spending a couple of minutes to explain why and why we think it will continue to grow. One is the consolidation of those legacy platforms where we have many, many branches of the assessment platform that we are maintaining and supporting, which is very expensive. We've since consolidated, and that's generating great efficiency gains. The second is scale and volume benefits from just selling more tests. We've seen good expansion of share of wallet with our existing assessment platform clients this year, and we've also seen good growth on our product side, where we talk more assessment products. On the product side of the business, we -- it's a fixed cost to produce [indiscernible] it's writing questions every year for ICAS, for example, is a relatively fixed cost, and therefore, every sale or every incremental dollar above the cost of breakeven on that is almost entirely pure gross profit. And then thirdly, in terms of gross margin improvement, it's really just around better pricing, better pricing on the product side, but also better pricing around our services on the solutions side and without obviously impacting demand. Next couple of slides are just really the financial tables. Again, I'll sort of look through and just call out some key takeouts, but please feel free to ask any questions in the chat. I think -- I guess the important call out here is that we -- we separate out revenue into platform and services. And it's worth just explaining platform is our enterprise side of the business. So the B2B large enterprise clients that are paying a license fee for our assessment platform. That includes where we supply the platform for PISA. And it also includes all of the product sales where we sell a digital assessment or online test on the same assessment platform as well. Services, on the other hand, is the combination of many different things. It's professional services that support the enterprise clients, such implementation and development. It's also things like test writing and marking and exam supervision and it also includes any sort of paper-based delivery of exams where for example, AAS or academic assessment services, that acquisition still sits in that sort of services category at the moment because it's a paper-based in-person exam delivery process. But over time, that exam will -- AAS as a business will transition to online. And when it does and when it's delivered on Janison's test player, it will then form part of our platform sales. A couple of other notable sort of comments on this slide. There's been a step-up in DNA. We're now amortizing down the acquisition of that, so the amortization of AAS over 5 years, and that's adding about $3 million to $4 million of amortization each year. The other thing is around share-based payments has stepped up a little bit. What we did this year, which thanks to the Board and the Remuneration Committee, we've introduced a core company, ESOP, employee share ownership plan. And that's proven to be a very successful tool for getting their buy-in and engagement from our workforce and it's a great way of attracting and retaining talent in the business, particularly when a time when salaries are running at all-time highs. On the next slide, we've got same sort of thing, but just broken down the income statement into the 2 business units. Again, this is all in the annual report in much greater detail, but just a summary here. I think the key takeout is that both business units are profitable at the gross margin level and both have improved their gross profit year-on-year. Another take, I guess, is that the assessments business, that's that product business for schools, does have a lower GP than the solutions business, but that will continue to grow as we -- then I think it may even surpass solutions over time as we grow the number of tests being solved, has that scale benefit and a high margin for incremental revenue. Solutions, however, will see increases. We expect this to continue to grow. As our revenue mix continues to be sort of made up of new clients, the ones that are taking the standardized assessment platform and less on the legacy side of the business with legacy contracts and pricing, we'll see a natural sort of uplift in our margin there as well. I think the other point to note is at the bottom of the slide, OpEx. It's really just an allocation. It's not -- it's probably not the best measure of profitability for those 2 business units. We tend to allocate a lot of the overheads based on revenue. So I think for that, I would look at GP margin as more of a sort of indicator of margin. On the cash flow, probably the key call out here is just that we made positive operating cash flow again this year. With the acquisitions that we made and the cost of acquiring those and also the investment in our new product development and our consolidation of those legacy branches -- that did take us into a negative on a free cash flow basis. But certainly, on a standstill basis, we were positive again, which is great. We finished the year with $12 million on hand. Again, very comfortable amount of money to see us through the year from a working capital point of view, no debt. And we did expect to be operating cash flow positive again this year and targeting again also to be net cash flow positive in FY '23 as well. And now I'll hand you back to David to give you a bit of summary on the outlook.

Thank you very much, Stuart. So the headlines on our FY '23, our shorter-term outlook. Firstly, we've spoken about the future-proofing program. That's resulted in $6 million of reduced cost base, and it does underwrite operating leverage, we are and we'll continue to see through the rest of this year. On top of that, we see robust organic growth lines. The ICAS competition is expected to be 15% higher than FY '22. We've spoken about our major platform wins. We've spoken about RiSE+ launch. We've got a good, strong pipeline across both business units. We're well positioned to take advantage of the PISA opportunity in FY '23. And as Stuart said, we will be operating cash flow positive and target net cash flow positive for this financial year. If we go to our longer-term outlook, Stu, our longer-term output. At the end of FY '20, we stated a medium-term horizon goal of $80 million to $100 million and a 70% to 75% gross profit margin through the growth drivers of our platform in Janison solutions, our products in Janison Assessments and our PISA for Schools program. On the left, you can see a broker consensus table in the current market consensus, so just expected to achieve a revenue of $60.6 million by FY '25. It's relevant because our brokers and the research that they produce, our brokers have a good appreciation of the disruption that we've been grappling with over the last 1 to 2 years, and that's reflected in those numbers. And while not providing guidance today, we have confidence in surpassing our analyst consensus. We are confident in achieving 20% plus CAGR over the next 3 to 5 years, and we have confidence in achieving our gross profit margins of 70% to 75% working towards the stated Horizon target. As Mike said, our ambitions are grand. We're operating in a very large market. You can see our ability to execute on the opportunity and we're focused on doing that. So as we move to the next slide, I think we're in a position to open up for Q&A.

Yes. I think there's one here. I'll start to sort of work through, and maybe you and I can take tag team. A question here around PISA, generating $2 million for the year. And it's sort of a calculated on a number of IPP countries paying $200,000 a year, plus 300 schools at 7,000. It should generate, I guess the question is saying, why is the revenue not higher? Good question. What we find is the timing thing mostly, timing and initial launch. So timing wise, some of these schools and countries are signed up later in the year. Therefore, it's an ARR thing versus a reported revenue. We don't get to book much revenue less the exam has been set in that country. So we might call out that we have a certain number of countries and schools signed, but not all of them would have actually sat by the end of the year. We certainly wouldn't have been able to book all of the revenue for all those customers. And the other thing is, as well, a lot of the times, a lot of these countries start off small, and they'll start with a minimum of 100,000 and then they'll grow into the second third year. So the average of $200,000 a year per country is sort of relevant where you got a country that spend around for a year or 2. So there are some countries that spend $500,000 a year with us. Based on the number of schools they set the examine others start out and stay at that first $100,000 level.