Nanosonics Limited (NAN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Nanosonics Limited 2025 half year results. [Operator Instructions] I would now like to hand the conference over to Mr. Michael Kavanagh, Managing Director, CEO. Please go ahead.

Well, thank you very much, and a very good morning, everybody, and thank you all for joining the call. I do know it's a busy day on the market today. I am joined today by Jason Burriss, our CFO, who will shortly take you through the details of the financial results. But a few comments before that. You will have seen the half year results released this morning confirm the numbers in the trading update that we released about 4 weeks ago towards the end of January. The first half revenue results of $93.6 million, it represents a good start to the year, up 18% compared to our prior corresponding period. And importantly, also up 4% compared to the very strong second half that we did have in FY '24. And overall, I was very pleased with the overall operational performance across the business in the first half. And as a result of this positive start and the review of our internal forecast for the second half, you will have noticed that we have increased our range for revenue growth for the full year from 8% to 12% up to 11% to 14%. And that assumes the same FX rate of 0.67 that was the original guidance was set at. Of course, the FX is currently not at these levels. And if we were to translate this guidance at a lower FX rate of approximately $0.64 for the second half, well, then that 11% to 14% revenue growth would translate into approximately 13% to 16% growth. So there are some tailwinds that we are getting from FX in the second half over the actual guidance, as you would be aware. A couple of key points for me to take from the first half outcome before I hand over to Jason. The first is that our North American business continues to perform very well with trophon continuing to consolidate its position as standard of care. But importantly, our growth strategy for North America remains on track and is very clear. For capital unit growth, it's very much about continuing to grow the installed base. And in the first half, this grew by 940 units, where there are now over 31,000 units in operation across thousands of facilities in North America. And this new installed base growth, what we had in the first half as well as anticipate in the second half is coming from both the hospital and the private physician market, where we do have specific strategies in place for both segments. And we expect similar new IB numbers in the second half to the first half. So good cumulative growth on the overall installed base that's there in North America. And staying on capital growth, upgrades do continue to represent a significant opportunity for us with over 10,000 now aged first-generation trophon EPR units still in operation, and that's in North America. In the first half, there were 610 upgrades, so growth over pcp. And based on a strong pipeline, we expect pretty good growth on this number in the second half. Moving from capital to annuity revenue growth or recurring revenue. While a core component of our North American growth strategy is customer value expansion and establishing trophon as standard of care in North America means we now have a significant installed base already in operation. As I mentioned earlier, 31,000 units across thousands of facilities. And this significant installed base certainly affords the opportunity to deliver expanded customer value, and consequently, an opportunity for strong annuity revenue growth for us. Now where this expanded customer value comes from, there's a number of elements. The first is continued education. We've got a great clinical applications team in North America and continued education from this team for our customers to ensure that there's an understanding of all the different types of ultrasound procedures that require high-level disinfection. And of course, this can lead to more consumables growth as more patients are protected. Of course, ultrasound as a clinical modality in it itself is growing, which in turn increases the volume of procedures that may require high-level disinfection. And we did see growth in overall ultrasound procedures in North America. And I noticed from one of the large OEMs that reported overnight, they also comment on the growth in overall ultrasound procedures happening in North America. On top of the core disinfectant consumables, then there's the ecosystem of consumables used in the reprocessing flow. And that includes cleaning and drying wipes, clean probe covers, that are used after the probe has been decontaminated. And that's important so it doesn't get re-contaminated before its use. So products like that, and we're seeing good growth in these offerings as well. We certainly expect and are putting a bit of further emphasis on our digital traceability solutions, and that did okay in the first half, and we expect it to continue growth in the second half and beyond. But also a fast-growing area of our business is our technical service through service contracts or pay-as-you-go service. And that is a fast-growing component of the annuity revenue, together with the provision of service parts to GE Healthcare, who continue to provide service in North America for a lot of the original first-generation units that they originally sold. And it is worth noting on that point that growth in upgrades, which we are anticipating is also an important driver of new service contract growth for Nanosonics Direct because the majority of the upgrades come from those older machines that were originally sold by GE Healthcare, but only Nanosonics sells the upgrades. And when we do, well, then we also sell the service contracts as well for the upgrades. So we think there's great opportunity for continued growth and strong growth in the customer value expansion. And indeed, in the first half, we did see some strong growth in our annuity revenue across all dimensions there that I mentioned and with consumable service revenue growing in North America by 19% in the half. And just briefly staying in North America, we are also expanding our infrastructure over there to commence consumables manufacturing at our Indianapolis site, and that will be consumables for both trophon as well as CORIS, and that should be up and running by the end of this financial year. And this does bring a number of benefits. There will be some margin improvement on these consumables over time. Importantly, there are sustainability benefits with lower transport requirements being closer to the customer. But also, I think, reduced exposure to the potential introduction of any tariffs. And overall, our exposure is quite limited, but this then does improve our posture there as well in reducing that exposure. So overall, North America certainly continues to perform well, with great opportunity for ongoing growth, and we expect to see some of that growth coming through in the second half. Moving over to our European region. We remain confident in the overall growth opportunity in this region. Revenue in the half grew 37% compared to pcp. So that was $5.9 million. Our new installed base was slower than anticipated in H1 with 70 units installed. However, we believe some of this was phasing. And based on the active pipeline, we do have expectations of stronger performance in H2. And as you know, this region is complex with different markets at different stages in terms of fundamentals of adoption. And our immediate focus is to prioritize the markets with the strongest fundamentals, namely the U.K., Ireland and a number of the distributor markets. And similar to North America, our goal is also to expand customer value amongst the 2,300 or so installed base already in place. So that will continue to drive annuity revenue growth, and we saw that good annuity revenue growth in the first half versus pcp, up from $0.7 million to $1.2 million this year. Another aspect that we've added to our European strategy, and I mentioned this at the end of the last year's financial year is we want to -- with the infrastructure that we do have and the sales infrastructure that we do have is to leverage our direct infrastructure also with third-party products that make sense for us. And we now have an exclusive distribution agreement for Ecolab's TEE disinfection system for cardiac ultrasound. And that's highly complementary to trophon. And these cardiac ultrasounds, in one sense, they're a little bit like endoscopes, but without lumens in that they're long, flexible and inserted into the body, in this case, down the esophagus for cardiac imaging, but they do require a different approach to high-level disinfection, a bit more like washer disinfector, which the Ecolab product provides. So similar to trophon, it does have capital and consumable service components, so very similar from that perspective. And in APAC, which, as you know, today is primarily ANZ, as you know, this market is quite penetrated with trophon as the standard of care. Revenue for the half was in line with pcp. However, capital revenue was down, but that was offset by a 14% increase in our recurring annuity revenue. There certainly was some phasing associated with the capital growth in the first half, and we do expect and have forecasted half-on-half growth in new installed base and total units in general as well as further growth in annuity revenue from the existing IB in H2. In Japan, which is our focus outside of ANZ for APAC, we continue our market development. And we are seeing early adopter sales increasing in H1 as awareness continues to grow. The guidelines are still not in place, still working towards those. And importantly, we just completed a further study in Japan, which not only confirms and demonstrates the high degree of contamination on probes in this particular case in emergency care, but also demonstrated that current practice of wiping with ethanol wipes or alcohol wipes is ineffective, while trophon was 100% effective. So again, we continue to build on all the clinical evidence and then have that clinical evidence leveraged with the various societies and opinion leaders in Japan. But pleasingly, we are seeing -- beginning to see some traction in sales up in Japan now as awareness grows. So with these strategies in place across the regions, our expectation for the second half is growth across all 3 region, supporting the upgrade of our revenue guidance. So a few other quick points, and I'll hand to Jason. Similarly to the last number of reports, you will find a P&L of the trophon-only business in the release this morning. And this gives a good insight into the business performance and profitability of the trophon-only business by excluding all investments that are not generating revenue today outside of trophon, such as CORIS and non-trophon R&D. We have, however, it's worth noting, assigned a number of one-off investments to this trophon P&L, such as our investments in our new ERP system. And you will see that the trophon-only business delivered strong profitability in the first half, profit before tax of $25.6 million. But importantly, we saw positive growth in operating leverage, where PBT as a percentage of revenue grew from 23% to 27%. And indeed, if I exclude the one-off expenses associated with ERP, which is in the order of $1.8 million, maybe $2 million, then this operating leverage would have been closer to 30%. So we earn good profitability in the trophon business and good leverage happening in the trophon business. Then finally, we do remain confident in our opportunity with CORIS to transform endoscope reprocessing. It does -- it continues to proceed through the FDA's de novo review process. The last time we spoke, I mentioned that we had a lot of questions in from the FDA. The answers to the FDA questions received to-date have been submitted. And as stated in the release this morning, we continue our preparations with supply chain and manufacturing readiness, and we continue to target the commencement for the first stage of commercialization in Q1 of FY '26, subject, of course, to the requisite regulatory approvals. Now assuming a successful FDA de novo clearance of the CORIS system, but then marketing of the device will commence in the U.S. And in parallel, it's expected that the first 510(k) for expanded scope indications will be submitted shortly thereafter. As I mentioned, over time, we'll be submitting on the back of a de novo approval expanded indications so we can cover the broad range of endoscopes being used in the market. But outside of the U.S., the first commercial launch will likely take place in Europe, again, Q1 FY '26, and that is not contingent on the FDA de novo clearance. So with that, I'll hand over to Jason to go through some of the details of the financials.

Thanks, Michael, and good morning, everybody. As Michael said earlier, total revenue for the half was $93.6 million, up 18% over the prior corresponding period, with revenue growth in capital, consumables and service. Firstly, to capital revenue, which grew 11% to $22.7 million in the first half. There was a total of 1,730 units sold in the half, which was similar to the prior corresponding period, and the revenue growth was primarily driven by unit volume mix between regions with more units sold through our direct operation in North America and more units sold as a capital sale versus MES in Europe. You will remember, we don't receive revenue upfront for MES product in Europe. We received higher consumables revenue over time. Pricing on capital units remained relatively steady for the half. So switching to consumables and service revenue. Growth in consumable and service revenue was 20% for the first half to $62 million. This was driven by a few things. Firstly, a higher installed base year-on-year, and secondly, increasing ultrasound procedures, which were up about 7% over the first half of '24. This helped consumables volume and also the customer value expansion activities that Michael mentioned earlier, including technical service and the sale of our ecosystem products also grew, contributed to that 20% growth in consumables and service revenue for the half. Technical service continues to be a fast growth area of our business with growth in technical service contract adoption as installed base and upgrade volumes grow. You'll see in the balance sheet that contract liabilities increased about 11% to approximately $30 million, with a great majority of this relating to prepaid multiyear service contracts, which also obviously contributes positively to our cash position. Moving across to margin. Gross profit for the margin for the half was 78.5% within the range that we expect. Pleasingly, the margin improved from the 76.3% in the second half of '24, which you remember was primarily due to a slowing in manufacturing as we embarked on an inventory reduction program. The program was successful, reducing inventory levels by around 5 million or 20%. We're now back to normal production volumes and aim to deliver a similar margin for the full year as in the half of around 78.5%. On to the cost side. We have disciplined cost control measures in place across the business, and we see this as operating expenses are growing slower than revenue. OpEx was up 10% versus revenue growth of 18%. The operating expenses for the half were $66.7 million, which was, as I said, around 10% higher than the prior corresponding period and around 3% higher than the second half of last year. The largest single contributor to that growth was approximately $1.8 million spent on the new ERP implementation and related costs in the half. The ERP is expected to be implemented in late fiscal year '25, and the majority of these costs are one-off and will not repeat in fiscal year '26. The next biggest contributor to operating expenses was inflationary-related staffing costs and higher sales commissions associated with improved business performance in North America. It's worth calling out R&D, which you know we fully expense. We're committed to ongoing R&D. And as previously communicated, we expect moving forward that while R&D investments will likely increase as a percentage of revenue, they will decrease over time. We see this in the first half. R&D expense reduced from 20% of revenue in the prior corresponding period, down to 17% in the first half results. This disciplined approach to operating expenses will continue with particular emphasis on ensuring the trophon business further improves the positive operating leverage we have established. That brings us to operating profit. Pleasingly, operating profit before income tax was $10.9 million, up 124% compared with the prior period of $4.9 million. While the primary driver was the 18% growth in revenue, the diligent approach to margins and cost management ensured that the benefits flow to the bottom line, a positive operating result. As we flagged earlier in our trading update, the half 1 result does include an unrealized foreign exchange gain of approximately $1.3 million. This is due to the exchange rate moving from around $0.66 on the 30th of June to $0.62 on the 31st of December '24. We saw that sharp fall in December. This compared to a loss of around $0.4 million in the first half of '24. Putting that FX component aside, PBT was still 81% higher than the first half of 2024. A brief comment on tax, income tax, with the business doubling its profit before tax, tax expense moved from a benefit position to an expense. The tax expense was $1.1 million in the first half versus a benefit of $1.3 million in the first half of '24. The effective income tax rate was 10.5% in the first half of '25. This meant net profit for the half was $9.8 million, 58% higher than the first half of '24 of $6.2 million. And just lastly, before I hand back to Michael, a word on cash flow. The business generated $13.8 million in cash flow for the half, leading to a cash balance of $144.5 million. And as a reminder, the company has no debt. With that, I'll hand back to you, Michael.

Thanks, Jason. Well, overall, as I said at the beginning, a positive half all around. And -- but importantly, expectations we will see further growth across all 3 regions in the second half. And so as already indicated, this has led to an uplift in our revenue guidance for the full year from 8% to 12% to 11% to 14%. We also narrow our gross margin guidance range from 77% to 79% and narrowing that to 78% to 79%, as Jason said, we expect to see that in the middle there around 78.5% or so. And the OpEx range is also refined moving from 6% to 10% to about 8% to 10%. And the increase in the bottom level of that range is really due to the increased sales that we anticipate and consequently higher sales commissions, et cetera. So with that, thank you for listening, and I'll hand over for any questions.

[Operator Instructions] We have the first question from the line of Josh Kan from Barrenjoey.

First one, I've got a couple. First one, just on the consumables and service revenue. Obviously, that was pretty high. And I get -- we've talked about installed base volumes up 7%, which is probably high. But I guess that service component is probably a big delta versus people's prior expectations. Can you just maybe give us a bit more color as to how we should break those out and how we should think about both the opportunity within that service opportunity, but also just the runway of growth there in terms of the next couple of years?

Yes. See -- as I was saying with this whole area of customer value expansion, there are a number of dimensions to that. And it is across just the core consumables for disinfectant. So we did see growth there. there is the ecosystem, our wipes and clean probe covers, and we're seeing strong growth there on the basis and actually a good opportunity there because less than probably it's in the order of 30%, I would say, of existing installed base or customers currently using that ecosystem. And as they become more aware of its availability, strong opportunity for growth there. But as you say, the service side of things also is a big opportunity. And overall service for the business, if I was to break it out, I think it was up over 20% as well. Overall, the sonic, CI, the core would have been up maybe 12% to 14% and ecosystem off a lower base of maybe about 25% to 30%. The service -- the drivers for service, obviously, are twofold. One is the for all new installed base coming. Now we're quite -- the new installed base there last in North America, in particular, was about 940 and expecting similar sort of numbers in the second half. And all in all, in general, in the industry, maybe between 55%, 60% of customers take up service contracts versus -- and the rest are on pay-as-you-go. But the bigger driver for service is the tremendous opportunity that are in upgrades. And so there's over 10,000 upgrade opportunity in terms of aged units over there. And the absolute majority of those units that are viable for an upgrade currently get their service from GE Healthcare. And as we upgrade, GE don't sell the upgrades, we actually sell them direct. And our experience so far with all our upgrades is even if people have been prior -- serviced prior with GE, they switch over to Nanosonics. So there's a great runway for ongoing service growth for a number of years to come.

And so is the way to look at that, Michael, I think from memory, service used to add about $1,000 generally per annum was sort of, I think, from a while ago, that was. Is that sort of the way we look at it? And when you sign those multi-service contract agreements is the understanding from what Jason said before, you get a cash component upfront and then that the revenue amortizes over the life of the contract? Or maybe just give us a bit of detail on those couple of things?

No, spot on. And round numbers, maybe around $1,000 per annum. And that covers all PMs, if any break fix, et cetera, parts for the customer. There are customers -- I will say there are customers then on pay-as-you-go. So if they do have a problem, well, then they pay and they may pay -- pay higher. But in terms of the -- what Jason mentioned on contract liabilities because we offer service contracts up to 6 years. And some customers will actually pay upfront for the 6-year term of the service contract. So that's why you see in our contract liabilities of about $30 million, up about 11%. So that's money to come in over time, we amortize it over the term of the actual contract.

And second question, just quickly for Jason, around the cost base into the second half. Obviously, a bit of a step-up from the first half based on the guidance as you ramp up for CORIS and other things. But you also mentioned the ERP will obviously unwind. Can you give us a bit of a feel, Jason, if we look at that second half, I think it implied around about 70 or 71 depending on which guidance you look at the midpoint for the second half. Is that a reasonable base to look at into FY '26 as we're sort of sitting here today? Or are there -- maybe just to give an idea of that plus the ERP, how we should think about the step up or movement into '26 on the cost base?

Yes. Josh yes, so certainly, for the first half, as we've said, around $1.8 million, $2 million we spent on the ERP implementation. We expect to finish that at the end of the second half of this year. So we'll incur some more OpEx on that in the second half. And what we expect going into '26 is that will not repeat because it will be implemented. Sure. We'll still incur some costs, I guess, as we learn about the new ERP and system. But the majority of that $1.8 million that we talked about that we've spent in this half, we do not expect to spend in the first half of '26.

And then just sorry, for the implied sort of second half, though, that sort of run rate into the second half ex maybe the ERP stuff. Is that -- is there -- is it too early to sort of give some context around that? I mean, I assume we're still obviously -- it's dependent on some of the timing around the CORIS release and commercialization. But just trying to understand a little bit of what we're baking in and just any sort of directional color on that would be super helpful.

Yes. Look, we certainly -- from a trophon-only business, our goal is to continue to build operating leverage there. And Jason is doing a good job in all the cost controls on that part of the business. But we will, of course, be moving into a launch period with CORIS. So there will be incremental costs associated with that. So it's a good base, but I would be -- certainly, I think there will be not a massive increase or jump in OpEx, but there will be incremental growth on that in the new year that will be allocated. It will be primarily CORIS related.

CORIS related.

We have the next question from the line of Shane Storey from Wilsons Advisory.

Just a couple of starters on capital sales and pricing. Jason, you called out the higher direct rather than MES capital sales in the EMEA. Are you able to describe that in a bit more detail? I'm just wondering whether that's a one-off that we can sort of book and move on or whether there's something structural there that happened in any of those markets that we need to think about?

Yes. Shane, look, it depends on the preference of the customer. And depending on capital budgets or if there is a restraint, will depend on the way they go. But yes, we wouldn't expect it to continue at high levels. It will bump around a little bit. But the main driver of the revenue increase was North America and the fact that we sold more through that direct channel. The North American units increasing 100 units over the prior corresponding period. So the great majority of it was that offset by the lower units in APAC, where we use a distributor. So as APAC goes down and North America goes up, you get that differentiation. So it's not price. Price is relatively stable for the period.

Okay. So yes, because I thought I detected a small pricing change -- positive change in the U.S. in constant currency and it was surprising because upgrades are stronger in the mix. I mean, I'm fully aware that there was a bit more pressure on price in the pcp. Is that what also has happened there?

Well, pricing on upgrades, I mean, we do -- there are trade-ins that happen with upgrades as well. So there's normally and a volume discounts that happen with upgrades. But overall, in general, the overall pricing was very, very similar.

Final question for me. Just a clarification on the breadth of this first de novo clearance for CORIS. Would I be correct in thinking that, that first clearance will concentrate on one category of scope and it doesn't really matter which category of scope, let's say, duodenoscope. Would then I be right in thinking that, that would cover that class of scope generally and then for Nanosonics to work with all the different OEMs for that class of scope? And then the 510(k)s that you referenced, I'm assuming that that's relating to other categories of scope, say, for bronchoscopy or urology. Again, just sort of trying to get those -- just how to think about those approvals.

It is category related, but it can also be brand related. Now the thing with the brand is that Olympus make up 80% of the market, but it is category related. And -- but even within category, there are quite a number of different scopes. So the FDA guidance to us was to narrow, but very quickly, like within a sort of 12-month period, we imagine we'd be covering close to 70% of the volume -- the endoscope procedural volumes across the different categories.

We have the next question from the line of Elyse Shapiro from Canaccord.

Just on the U.S. manufacturing piece, can you talk to the extent of the margin improvement there and any CapEx that's needed to build out that facility or the inventory build?

Yes. Over time, as you know, Elyse, the margins on consumables are already pretty high. I imagine over time, we would expand that even if another percentage or so based on the volume that can be actually quite meaningful. CapEx for -- that we're putting in, obviously, we depreciate this over time. It's probably in the order of about $3-plus million.

That's pretty well under control. And then you kind of talked to some of the progress that you've seen in Japan. But at one point, you were talking to a potential distribution model in China as well. Any updates there? Have you kind of had a big offer selected any distributors for that region?

No. And see, we continue with the regulatory approval in China. But we're going a bit slow on China at the moment and focusing the majority of our efforts into Japan.

We have the next question from the line of John Hester from Bell Potter.

Just beyond 2025, when you complete your approval of the CORIS device, what should we expect for your ongoing R&D expense? And on what projects will that focus?

Look, I think the comments we're making at the moment is we expect R&D as an expense to continue to grow in absolute terms, but as a percentage of revenue to decrease. Now we saw a decrease from 20% of revenue in pcp down to 17%, then we would expect that to continue to come down a bit. On the -- where it will be allocated to, I mean, obviously, we're not stopping our innovations in the ultrasound reprocessing space. So a little bit like your iPhone, they're up to iPhone I don't know, I probably still have the first one, but they're up to about iPhone 16. You'll start seeing trophon 3s, 4s, 5s over time as well in that franchise. In CORIS, we'll have our first generation. There'll be more coming out there. There's work to be done on expanded indications, et cetera. And we're putting a bit into our digital traceability components as well, both for CORIS as well as ultrasound but that market is actually beginning to evolve in importance. So most of it will be across those 3 streams. And at the moment, we're also just looking at from an organic perspective outside of ultrasound and endoscopy, even though there's great opportunities remain within both those categories, where else and what makes sense where we can apply our expertise in terms of automating current manual processes for the reprocessing of reusable medical devices. So once we identify something there that we believe could have a good return on investment, I imagine some of that R&D will go into that bucket as well.

Let me ask the question this way then as a follow-up. How much of that R&D expense is internal or fixed cost? And B, why do you continue to disclose the profitability of the trophon business separately if clearly the R&D expense is an ongoing piece of the organization?

Well, first, I'm not sure I understand the second part of your question. But in the trophon-only business, that only business also includes all the research and development we're doing in the ultrasound reprocessing. And in the last half, that was about $6 million versus total R&D in the first half in the order of about $16 million. So of that $16 million, imagine $10 million of it was associated -- primarily associated with CORIS-related or some digital-related, mainly CORIS-related. So I think it's important to -- for people to understand when we look at the trophon-only business from a profitability perspective is it gives an indication of what is possible in terms of profitability when it can become standard of care. And as we demonstrated, you can see that the trophon-only business is a quite profitable business. And from an operating margin getting up to 27%, closer to 30%, I think that's industry for medical device industry, that's a pretty good operating margin. So that's why we provide that delta. But I may have misunderstood your question, John.

We have the next question from the line of Richard Hemming from The Radar Report.

I've been very impressed over the years with the resilience and increased resilience of Nanosonics, especially how you've changed the business model slightly. And now that you've got positive cash flow and you have a pretty hefty cash balance, I've always wondered why you don't pay dividends? What is your dividend policy? It's a mystery to me.

No, a good question. And I can assure you our Board's regularly look at our capital management strategy. I think as a dividend, there's one thing -- I mean, from a franking perspective, there's no real benefit for dividends at the moment. And I think building that cash balance over the last number of years has certainly made the organization more resilient, gives us optionality with respect to the investments that we can make on ongoing growth initiatives without having to go back to the market. Product expansion, we're certainly interested in that product expansion as a strategy, but that doesn't always have to come organically. So we do -- and I know we're talking about this for quite some time, but we've just not been successful in identifying yet, I would say yes, an acquisition target to add to our portfolio. And of course, there will be some of that cash that will be required for overall CapEx requirements for our working capital requirements, I should say, when we're launching our CORIS. So it gives us that sort of resilience. But we would like to get in future years to a position of being able to pay dividends. I just think at the moment, it's probably a little bit too early. I think we've got just looking at the time, we've got time for one more question.

We have the next question from the line of Reece Frith from APSEC Funds Management.

Look, just a quick one on the M&A stuff. So you've just touching on the cash flow, the cash balance. I mean, you've hired a dedicated resource in Europe, as you said, disclosed last half. So I want to understand around the timing. I mean, you've got CORIS, you're going to launch hopefully in the second half of '26. And that's going to take a lot of the focus in the business in the next few years. So I guess the question, the timing of why you're looking to sort of buy something now. Just trying to help reconcile that against your sort of CORIS efforts and what that's going to take in the next few years?

No, no, great question. And certainly, we don't consider -- and that plays into the type of M&A that we would do. We -- especially initially, and we're not -- we can't take our eye off the ball, as you're saying, with respect to the core growth drivers that we have we're faced with today, and that's ongoing with trophon and bringing CORIS. But if we can identify something that you're not just purchasing a product and putting it into the existing fold, you're bringing in new capabilities also to the organization and the people along with that, that's something that we would certainly consider. Well, look, thank you all for joining on what I know is a very busy day out on results announcements today, and I look forward to catching up with many of you with Jason over the coming weeks. Thank you very much.

Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.