Ondo InsurTech Plc (ONDO) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Ondo InsurTech Plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mark Wood, Executive Chairman. Good afternoon, sir.

Good afternoon, everyone. Thank you for that introduction. And just to reiterate, do please submit questions as we go this afternoon. And in particular, as we answer a pre-submitted question, that prompts other questions, we'd be very happy to pick up those questions immediately. The way we're going to approach this is we've got a short presentation which amplifies the results announcement, which many of you will have seen. Greg is going to run through that at a clip. But again, if there are points that we're not highlighting from the presentation that need clarification, do submit a question, and then we've got a number of pre-submitted questions, which will then turn to aiming to use the bulk of the hour on answering the questions that have been raised. So Craig, over to you.

Thank you, Mark. So we're going to do this quick today, so we can get into the Q&A, like Mark suggested. So very briefly for any recent shareholders or any prospective shareholders who are not that familiar with the company, just a very quick introduction as to what we do. So we're focused on the problem of water damage in homes. And the problem that causes specifically for the home insurance industry. It's about 30% of all the claims that are paid out on household policies. To give you an idea of the scale of that in the United States, that adds up to $25 billion a year that are paid out just to rectify houses from the damage caused by small leaks. LeakBot is the leading predict and prevent technology for this particular problem for the insurance industry. We can reduce that cost by 70% with a proven return on investment for our carrier partners. And this comes at a time when the whole of the insurance industry is shifting towards underwriting risk into using technologies like this to actually manage and reduce that risk. So we have a patent-protected solution. We facilitate our own plumbing network to go in and find and fix the problem. And that's a solution that's fully funded by insurance carriers. As it works with our own proprietary technology, we measure the temperature through the pipe, so the pipe does not need cutting, and we can detect leaks down to about 5 milliliters per minute. So very small leaks. It's the only known way in the world of detecting small leaks like that without physically cutting the pipe, and that's a proprietary technology that we own. Now it's relevant to insurers because it means it's a low-cost device that they can afford to give away for free, the homeowner can install themselves without a professional plumber. And we own that -- the proprietary patents on that technology. Our model is fairly consistent around the world. And we work with 26 insurers. In every case, the insurer is our paying customer. They pay for the solution and offer it to their policyholders for free. We send the device in the post, the homeowner clips it to the pipe and installs it themselves. That device has an average lifetime of about 6.5 years. It will sit there, detect leaks anywhere in the mains water system. And if we detect a leak, and we think that, that requires a plumbing visit, we will facilitate a plumber to go in the home, find and fix the root cause of the problem. And it's that end point of the solution ultimately delivers the return on investment for the carrier partner by finding and fixing the root cause of the problem. So let's get straight into the results. Group revenue grew 20% year-on-year to GBP 4.6 million, recurring revenue grew 51% to GBP 3.8 million. It's now 83% of our revenue is recurring revenue. The annualized recurring revenue at period end was GBP 4.6 million, that's 41% up on the same point last year. And our contracted annualized recurring revenue, so that includes the anticipated recurring revenue from devices that have been contracted, ordered and committed to by our partners but are not yet activated at period end is up to GBP 6.8 million. U.S. is the standout country from a growth perspective. Our U.S. business revenue grew 117% to GBP 2.3 million and it now accounts for half of our group revenue. Operating loss was GBP 6.4 million. The active number of LeakBots generating a recurring revenue grew 33% to just under 145,000. In the U.S. that number grew to 57,000. It's 114% year-on-year growth. So everything in the U.S. has more than doubled in 12 months. We fixed over 3,000 in-home repairs in the United States this year. That's 123% year-on-year growth and our U.S. Net Promoter Score went up to 88 from 79 last year. So a world-class score. We're particularly proud of that because we've obviously doubled the volume of repairs and still customer satisfaction went up despite us adding lots of new engineers to our network. We had a range of new contracts in the U.S. I'll go through these in a second. But also new signings, both in the U.K. and in Denmark as well. And then post period, we obviously refinanced the balance sheet and we'll go through that in more detail shortly. So that's the results in a snapshot. You can see in this chart here more of the historic growth in revenue. It's actually our 4-year anniversary since we became a public company in March 2022. Since that point, our revenue has grown on a compound annual growth rate of 60% through that 4-year period. Recurring revenue has grown at even a faster clip as we deliberately had a strategy of shifting our revenue towards recurring revenue. You can see here the active footprint of devices that are generating that recurring revenue, 114% growth in the United States, flat in the U.K. and a slight decline in Denmark, although the Denmark customer base has grown very sharply as we've come into this fiscal year, and the Swedish business now growing quickly 36% year-on-year growth in active units. A range of contract wins through the year, just to recap. Loads in the United States, most notably nationwide, that expanded from 16 to 26 states. And post period end, announced a further commitment to order another 35,000 units in the second half of this calendar year. New partnerships with Cooperative Insurance and Selective, announced a national rollout across their 15 states, a new launch with Bear River Mutual in Utah, Indiana Farm Bureau announced an extension into 15% of their customer base. Westfield became our tenth carrier partner in the U.S. We launched our pilot with Liberty Mutual, which we continue to run at the moment. Liberty are 1 of the largest personalized insurers in the United States with 7 million customers. And also, we're halfway through a pilot with The Hanover Insurance Group as well. But also new signings in Europe as well. We signed a new deal with Admiral and Ageas, 2 of the largest home insurers in the U.K. And also, If has merged with our partner, TopDanmark, which has created a broader opportunity running into this year. And we also signed another large personalized carrier Alm. Brand in Denmark. We launched that right at the end of this reporting period, so excited to have a material effect on the first quarter of this fiscal year. So we continue to deliver world-class levels of customer satisfaction. I don't need to say much more about this. You've come to expect us to maintain this. But most importantly, we've maintained the same level in the United States despite that very fast period of growth. Here's a summary of the P&L and the balance sheet from the accounts. Just a couple of things I will specifically draw your attention to. One is the gross margin. So the gross margin on the business stands at 4.7% in the statutory account. It's important to understand 2 different drivers of cost of goods sold. There's the device activation costs. So when we activate a new LeakBot, and that LeakBot will sit there for 6.5 years on average and generate a gross margin lifetime value of almost $200. There's a cost involved in manufacturing that device and shipping that device. We spent GBP 2.4 million. Think of that as a marketing investment on activating new devices and 71% of that cost was in the United States. Below that, then we have the cost of servicing that installed base once it's live through the facilitation of plumbers into people's homes, and that was GBP 2 million of the cost. So if you look at what is the ongoing gross margin once the device is activated? The underlying gross margin is actually 58%. Now the interesting split is, if you look at that by country, 61% in the U.K., 71% in Denmark, and 45% in the U.S. The reason it's lower in the U.S. is because we're doing less number of jobs per day. So the plumbing costs cost us more on a per visit basis. But that number of jobs today is improving all the time as we expand and drive density into those U.S. states where we have plumbers. Already into the first quarter of this fiscal year, the 1.6 has increased to 1.8. So we continue to make progress. And that underlying gross margin in the U.S. will continue to improve to the level that we see in the U.K. and Denmark. So one piece of feedback from shareholders has been -- it's been too complicated sometimes to understand our business. We've made a couple of changes, which is going to make our high-level KPIs much easier to follow on a consistent basis. So we've moved to reporting active LeakBots. It's a sharp measure of specifically at a point in time, the active devices that are generating a recurring revenue. We'll also consistently tell you what is the annualized recurring revenue at period end. So those 2 numbers can be calculated together, for example, to work out the average revenue per active device. And we'll also consistently report the underlying gross margin and tell you what that looks like by country. Those metrics together all enable you to do your own sums on the business performance and project things forward and will bring a much greater level of clarity to the accounts going forward. So the refinancing was complete post period end. A very significant part of this was the restructuring of the HomeServe loan notes. The interest rate was cut from 12% to 5% per annum. The redemption date was extended all the way to the May 31, 2030. That's delivered an immediate GBP 1.1 million benefit from the write-down. But importantly, it's taken a requirement of GBP 7.2 million out of our future debt servicing requirements all the way through to December 2029. We completed an equity fund raise. We raised GBP 2.9 million in July from a placing, but we've also secured a GBP 2 million convertible loan note and a further GBP 2 million committed credit facility. So together, that package of measures has materially strengthened the balance sheet with a broader high net worth investor base to support the company for the long term. So current trading and outlook. We've had a very good start to the new fiscal year. The active LeakBot base is now at 167,000. So that's 15% quarter-on-quarter growth since the end of March. And that growth is coming from across the board. Denmark has grown now 25% up year-on-year, really because of the Alm. Brand launch since the end of March. Sweden growing 38%, the U.S. growing 64% year-on-year. The outlook, I won't go through each of these bullets, but lots of opportunities across our customer base. We expect lots of expansions with our existing partners. And to remind you, our existing partners ensure 15.5 million homes around the world. So #1 priority is to continue the expansion and the penetration of those customer bases. That said, we have a good pipeline, not just in the U.S. but in the U.K. and Denmark, too, and expect to announce new deals. We've also switched to new lithium batteries, which deliver 3x the battery life. And also, we've entered a pilot outsourcing agreement with Beagle Services in the U.S. This will enable us to have a lower cost option to expand our plumbing services in some of the subscale states. So final thing for me, another -- to address another part of your feedback. Sometimes when we announce a new partnership, our partners don't -- often don't want to disclose any commercial details, and it makes it hard for you to sometimes understand the scale of each announcement. So one thing we're going to introduce is we're going to give you a clue by announcing a banding and [ that ] will explain how many active devices are contractually committed in that partnership. So it immediately gives you some kind of a sense for how big each of these deals are. So that was a quick run through the results. We're going to spend most of the time here today on Q&A. And Mark, are you ready to start the...

Yes. No, that's perfect, Craig. Thank you very much indeed. So let me start off with a four-part question, which was 1 of the pre-submitted questions from a long-standing shareholder. Firstly, why did we raise capital in the manner that we did rather than repeating what was done in the late autumn when we raised it 25p. And why was the fundraising so dramatically dilutive? Well, when we raised money in the autumn, we had a short-term exercise to raise a small amount of money to address specific funding need, which had arisen from 1 of our contractors delaying an order by a very short period of time. We needed a small amount of money. And there's no need to preannounce that in any way. The circumstances for the capital raise we've just done were rather different and required a great deal of deliberation by the Board and our advisers, both our broker and our legal adviser. And the issue there was, as many of you, I know, are already aware, was that we have essentially been funding the working capital requirement of the business to a large part by the upfront payments, which are -- particularly our American insurers pay when they submit an order. So they essentially pay for the 12 months in advance that they're committing to upfront, which enables us to fund the manufacturing of a unit, the initial find and fixed visits and also the operating costs we're building out the plumbing network as we expand the number of active LeakBots. We had 3 completely separate reasons. We had 3 interruptions to the flow of cash that we had anticipated coming into the business. And therefore, at the end of March and the beginning of April, the Board was confronted with a decision. Do we raise again a relatively small amount of money to find our way through this period and wait for those orders? Or do we raise a much more significant amount of money, which creates a firm balance sheet on into the future? When we announced the trading announcement, I think there was a widespread view which was that we were actually in a much more serious financial position that actually turned out to be the case. And of course, the share price collapsed. That created a problem because under the London Stock Exchange rules, the maximum amount that can be raised is 75% of the market cap of the company. And so effectively, that put us in a position where we could only raise -- well, actually, it turned out to be GBP 2.9 million gross of fees. And that, in the Board's view, is not a satisfactory position as we were going through a period of accelerated expansion. And the dependency we had on timing of orders from our very large customers had to be removed. And so we created this structure, which included a convertible loan note, which sits outside the 75% rule. The other question you might ask that's related is, well, why didn't you do a full prospectus fundraise? Prospectus takes about 4 months to do and it's about GBP 0.5 million to GBP 0.75 million expense, and we just didn't have the pipeline, the confidence in the pipeline of cash flows to allow that to be the case. Hence, after a great deal of deliberation, the Board took the decision to take the route that we chose. I completely understand the concern around that. That decision, but also as Chairman of the Board, I'm convinced we took the prudent course given the circumstances that we were in. As a related question, the second question is, do we need to look at the Board? I've launched a Board governance review in conjunction with our company secretarial -- we outsourced our company secretarial arrangements to specialists and have asked them to conduct a board governance review really to look at the effectiveness with which the Board operated over the 4-month period between recognizing the issue and resolving the issue, the way in which we dealt with the decisions around the announcement. And then subsequently, how we navigated our way through those issues. And so we'll have the outcome of that at the beginning of September. And any resultant changes, amendments, adoptions of new practices, construction of the Board, all of that will be examined as part of the output there. The third question that we have pre-submitted is to do with LeakBot Edge. You'll know that LeakBot Edge is an important development of the LeakBot functionality, particularly in the U.S. because, of course, LeakBot works very well on temperature differential, and it relies on the water coming out of the ground and into the property inside the property. And it's for that reason that LeakBot in its current configuration doesn't work in condominiums, blocks of flats, hotels, hospitals, or in states where the mean temperature is so high that there's no need to plumb under the building and into the building and come in outside the building and into the building. And you may remember 3 years ago, when snow fell in Texas. The consequence of that was a lot of the water supply, which rose out of the ground and into the house froze because it was so unusual to have subzero temperatures in Texas. Now our major U.S. insurers are nationwide insurers, 1 is actually called nationwide. They cover multiple states. And ensure millions of households, our largest insurer alone insuring 4.5 million households. And many of those households, particularly the larger households where LeakBot is particularly valuable are in the southern states, Southern California, particularly Florida, but also the Gulf of America band of states. And so we're -- we have a development program, which goes from the prototype, which was funded primarily by the largest household insurer in Australia. And we're taking that prototype and industrializing it. And so there's a relatively small but continuing investment in perfecting that technology, which PURE and Nationwide and Liberty Mutual are all looking forward to implementing in those southern states. So although we didn't headline Edge as part of the capital raise and in a sense that as many need because at the moment, this pre-industrialization of the technology is a relatively small spend. Edge continues to be on its development program. And then the fourth question is a very topical one. As I look out at my brown lawn, which has -- given the level of water shortages that are being experienced in the U.K. at the moment. Why is it that LeakBot is not an attractive proposition for the water companies? Well, in fact, probably what would it be, Craig, 18 months, 2 years ago, we developed a relationship with 3 or 4 of the water companies and in particular, Portsmouth installed a number of LeakBots. And of course, discovered that a lot of the waste of water is to do with washers and the systems in toilets and faulty garden hose, all of those things. The difficulty is finding a commercial proposition, which allows the water companies to justify the capital investment in installing sufficient LeakBots in order to get a material change in the amount of water usage. We suspect the way in which that's resolved is by a water company and household insurer entering into a partnership because, in a sense, the insurer wants to avoid the leak in the property and the water company wants to save water from the leak being resolved. So there's a mutuality of interest there. And may be -- and actually, it's worth just picking up on an element of Craig, if I can just jump around a little bit, an element of Craig's presentation. Craig, I think when you were talking, you mentioned the U.K. growth rate in contrast to all the other territories being pretty much flat. The reason for that primarily is that Hiscox, our oldest customer is already at a 40% penetration of their insured base, and Admiral is just coming to the end of a pilot phase and in fact, have just initiated an order. NFU is also just coming to the end of a pilot phase. And Direct Line has, of course, been acquired by Aviva. So we expect to see growth in the U.K., but for this unusual confluence of pilots and a major acquisition, the takeout has been relatively low. But it may be in the U.K., that the water companies and 1 of these major insurers can collaborate and to perfect a financially justified model, which enables water shortage to be addressed in part by the application of LeakBot. Craig, what's our next question?

They cluster into a few themes. So some are backward-looking and many are forward-looking. So I suggest we go for a few of the backward-looking ones and do them together? So let's start with some of the punchy ones. Someone got the cash flow forecast so badly wrong that the company had to undergo an extremely expensive emergency recapitalization, a huge long-term -- a huge long-term cost to shareholders. As the CEO and CFO have not been dismissed, who was responsible for this critical mistake? Shareholders are owed an honest explanation for what went wrong.

Yes. Are you going to cluster a few? Or are you going to give me 1 at a time?

Yes. There's another related one said, of the 3 contract deferrals, how many are still paused or uncertain? What was the problem that caused the price crash and how has this been resolved? So I think it's a similar question. How did the company arrive at a crisis position without a solution already in hand?

Yes. That's very helpful. Just -- I'll pick them up in a different order for a reason it will become apparent. The price crash issue, I think, was primarily because when we announced we were looking for funds, particularly on the social media and the chat rooms, I think there was a lot of speculation that we were going out of business effectively and the price discounted down to that level. And of course, the market -- the way the market functions -- but there are those who trade in anticipation of circumstances. So I think that was the reason for the price crash. The 2 sentences that referred to a fundraising requirement, a crisis and no solution. I mean I think all of these concerns are entirely legitimate, frankly. There was nobody being sacked, which is probably at the heart of all of this frustration that people are feeling is investing in a high-growth fintech company is not a risk-free activity. And we've been very deliberately running this business on a skimpy capital base. And part of the reason for that is that all of our customers are AA or AAA credit-rated major insurers. The difficulty is that the phase that we're in, in terms of the growth of the business is that we're getting very large orders for the first implementation of LeakBots with an insurer. So the insurer pays us for 12 months in advance. We get to work, manufacturing the units, installing the units, sending the plumbers. And we've paid 12 months in advance to do that, and providing those orders continue to flow as expected. The need to raise further capital is removed. And so we've had -- the cost of capital there for the company therefore drops. In 12 months' time, and we're going to be in a position where the monthly payments, which insurers pay at the end of the 12-month period that the LeakBot has been activated will accumulate in the order of GBP 450,000, which is the current burn rate for operating the business. So these 3 order -- interruptions to the expected orders came at an absolutely critical moment because we were coming to the end of the phase where we're reliant on these big lump sum payments and quickly moving into a phase where the monthly payments will be the equivalent to our monthly -- our current monthly operating costs. So it couldn't have come at a worst time. Now what's the situation with those 3 circumstances? Well, number one, Nationwide, where we were anticipating between 30,000 -- well, their largest order to date have been 25,000. So we were expecting, given the success of the rollout a step-up from that. They've confirmed the 30,000 unit order to be implemented in the second half of the year. So in the period up to the 31st of December for the avoidance of doubt this year, calendar year. The other 2, 1 of them has -- was coming to the end of its contract, they haven't done their actuarial modeling to their satisfaction, and they have agreed a 6-month extension to their contract and their return on investment calculations are looking extremely positive. So we -- our expectation is that during the period between now and the 31st of December, we put the contract extension in place. We get their order and off they go. There's no negative here -- there at all. And the third was really a change in personnel, which led to a change in marketing priority. And frankly, their relationship was so early with LeakBot at that point. We're absolutely confident there was no reflection on the assessment of the efficacy of LeakBot, it was just simply a shift of personnel and a shift of priorities. Craig, is there anything you want to add to that -- that set of explanations or responses to these 4 very important questions?

I think that sums it up. I mean I empathize from a distance, it's hard to understand. But -- I think when you're in the middle of that, I think you explained it very well, Mark, the timing could not have been worse. So we had a long period of the upfront payments, as you very eloquently explained. And none of those deals is obviously a gap before while we run the prepayment down and then those active devices start to generate monthly cash flow. So we were at a moment in time where the U.S. business was not generating any monthly cash in on a regular basis. But the very first deals were about to go over the line where those chunks of devices then start creating an annuity. And like you explained, Mark, over the next year, that annuity goes up to something like GBP 0.5 million over the next year, 18 months, something like that. And those 3 deals, well, the delays are all totally unrelated to each other. So it was a huge amount of bad luck and bad timing that led to that, fortunately.

Next question.

There was another 1 on a similar vein. There was 2 that relate to the kind of the business model and to profitability mark. So one said, from March to June 2026, you increased the U.S. LeakBot from 57,000 to 66,000, that's a total of 8,500 over 3 months. Surely you need 12,000 a month to start the road to profitability. So I think we've added -- we're adding about 7,500 a month over the last 3 months. So I guess the question is around what's the run rate that you need to?

Yes. Okay. So the -- yes, yes, very helpful. There are 2 really important elements to this question. And everybody is going to be thinking when do we get to break even. And there's also an important line of thought, which is we're building an estate of LeakBots that are activated that will generate revenue on into the future. And so there is an argument to say we should push breakeven out further into the future in order to accelerate the rate at which we're installing units because every 1 of those units generates value in terms of the capital value of the company. We have a manufacturing capacity today of 40,000 units and we have the option because of the arrangement that we have with our outsourced manufacturer based in the U.K. and Bedford. We've got the -- and it's an entirely robotic production line. So it's not in any way not movable. We've got the option of replicating that in the U.S., which at some point, will become worthwhile, and that will increase our volume. But the 8,500 calculation is flawed for 1 specific reason. And that is if we didn't install another LeakBot, if another -- if no more LeakBots were activated, in 15 months' time, we'd be at breakeven because we have the current cost base of GBP 450,000 a month and we have a monthly income of GBP 500,000. Now that's an illusion because that's clearly not going to happen. We are going to add more plumbers. We are going to have more infrastructure. There will be a bit more management supervision. There will be some more account management for insurer relationships, possibly the manufacturing cost moves around a little bit. And as we do all of that, the breakeven point moves out a little bit, but the value of the company goes up because the installed base grows. So I think that's the way to look at it. There are 2 key components. Craig, does that make sense?

Yes I think so.

One of the problems with a format like this is you answer a complicated, sophisticated question like that and have no feedback from anybody as to whether you're talking nonsense or not. So maybe we'll get that in questions as people -- supplement questions as we go through this. Where next?

So there's a few kind of commercial ones you relating to the presentation. So it's one -- I can take this one. I know this year the device has been manufactured with new batteries. Are these still replaceable? Is there any change in the unit cost, any supply constraints? Any change in expected lifetime revenue? So yes, it's a small change, but it has a big impact for us as a recurring revenue business. So the existing -- the previous batteries on average, maybe lasted about 3.5 years. Customers do replace them. So we have a very good hit rate of customers replacing them. We alert customers, let them know in [indiscernible]. It's another thing for -- something for people to do. It's better if there's no batteries to replace. So we've made a simple change to lithium AA batteries. So there's still AA batteries, they look like AA batteries, you can replace then with regular AA batteries. But in lab testing, it's -- they're relatively new. And in lab testing, we're getting 3x the battery life out of them. So it's certainly a positive change. And it's a relatively modest increase in cost per sale. So it's not added much to the manufacturing cost, but obviously, adds a lot to the lifetime value of a device. A question from Stuart. You mentioned last year that Helen Lonsdale had been out to the Nordics to discuss deployment. What strategies have caused the uptick and in particular, what rethink of the Länsförsäkringar subscription -- what rethink of the Länsförsäkringar subscription that was harming LeakBot uptake? So we've made some progress in Denmark recently. Helen has done the deal with Alm. Brand, which has started really well at the end of March. You can see that in the numbers. The customer base -- very sharp customer base growth in Denmark as we started the new year. So sometimes with these things, what we learned is insurers go at their own pace. And that's certainly the case in Sweden as well, where we, in hindsight, we're overambitious as to how quickly the Länsförsäkringar rollout would go in Sweden. They made some integration, so they now use their own app to install the device, took longer than we anticipated. And they're quite -- there's lots of different units across Sweden. It's a relatively decentralized organization. But that -- they've now grown 38%, 40% year-on-year at the active base, it just took a while. It took a while to get going. It's the same with the partner delays. The insurers go at their own pace. And we, at the end of the day, are a supplier of services to them. So they work to their own timings. And -- but Helen's been doing a good job managing that. The ROI case makes a lot of sense in all of these markets. And the longer we have devices deployed, the easier it is to measure the ROI case for every individual carrier. So I think that's...

It's very interesting -- it's an interesting dynamic in Scandinavia, there isn't, Craig, with Länsförsäkringar being the largest insurer in Sweden. The TopDanmark being acquired by If is a massive -- I mean I think it's a 4.5 million household insured base there. So as big as the biggest that we've got in the U.S. And the distinct element about If, both in the motor insurance proposition in Finland, Denmark and Sweden and in household insurance is that their mantra is moved to digital, analog to digital. And so we are absolutely central in terms of the way in which they are developing out their household proposition. And then Alm. Brand, again, a massive footprint in these specific markets.

An eye-watering GBP 6.4 million operating loss recently revealed. It appears there is no clear pathway to profitability. Is the business model broken and unsustainable without future fundraises?

Yes. So the annual -- the contracted annual recurring revenue at the 31st of March is GBP 6.4 million as with -- GBP 6.8 million as we've reported. The current cost of running the business per month is GBP 450,000. And in 12 months' time, we're receiving -- 15 months' time, we're receiving GBP 500,000 a month, not from any assumed growth, but simply based on today's -- actually not even today, it's 31st of March, installed LeakBot. So we're already ahead of that schedule, that 15 months' number. And so arithmetically, you can see, as I said a few moments ago, if nothing changes, that's the point of breakeven. But of course, things will change. But it does, hopefully, I think, put the operating loss into perspective because that just over GBP 500,000 a month, including a bunch of one-offs, which are not recurring is cleared essentially by the projected cash flows based on the current installed contracted activated LeakBots.

And similarly to this, Mark, what is the dynamic that caused losses to widen while revenues grew?

Yes. Well, Craig, why don't you talk about the pace of development in the U.S. and the number of states -- the expansion in terms of the number of states, and then the sequence by which we build up the plumbing base?

Yes. So I think we may have already touched on this to some degree. So one thing is that split of our cost of goods sold I explained as to why the -- currently, the gross margin in the stat accounts is compressed to the 4.7%. That's because the largest part of that cost GBP 2.4 million should think of that as a marketing investment. Every one of those devices we activate is going to generate $200 just under $197 of gross margin over the 6.5-year average lifetime. And so it's a very good return on that investment. So the faster we grow, the bigger that cost is above the line as a cost of goods sold. Below that, the fixed cost base, the -- although it grew year-on-year, part of that were one-off costs as well. There was a FX effect and some -- a few elements of technology that we invested in as a nonrecurring cost on a contract basis. We built an ROI dashboard for our partners in the United States. We wanted to accelerate that. That was an investment well worth doing because now all of our partners use that as a way to monitor all of the installed devices across their portfolio. So a couple of specific investments, but I think about $800,000 was a nonrecurring cost anyway.