PCI-PAL PLC (PCIP) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the PCI Pal results presentation. To start with, if we could cover a couple of housekeeping items. Before we begin, we would like to submit the following poll, which you will see on your screens. Throughout this presentation, investors will be in listen-only mode. However, questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen or, if anyone has dialed in, via pcipal@walbrookpr.com. We will endeavor to answer all questions today. However, failing that, the company will review all questions submitted today and publish responses where appropriate. These will be available via your Investor Meet Company dashboard. Finally, I would like to remind you that this presentation is being recorded. Without further ado, I would like to hand you over to Chief Executive, James Barham; and Chief Financial Officer, William Good.

Thanks, Tom. Good afternoon, everyone. Welcome to this interims update for PCI Pal for FY '23. It's a big year for us this one with some key financial milestones in them. So for those of you that have followed our story for a while, you'll be aware of the growth trajectory that we've been on, but this year, we're expected to hit month-to-month cash flow breakeven. So that's one of the milestones, and it's also a year where we're really gearing up to our first full year of profitability in FY '24. And both of those things have been very much part of the plan since the fundraise that we did and the strategy associated to that in May '21. And I'm certainly very pleased to report excellent progress along that path and looking forward to talking to you about it today. We continue to execute very well on our strategic plans. And that's led to a strong first half financial performance. Financials aside. In the background, we're very busy driving product development. That was a big part of the further investment that we've made since that fundraise in May. And later this calendar 2023, we're certainly looking forward to updating investors more on that, and I've got a bit more in this presentation as well. So -- in a moment, we will get into that detail. If you do have any questions, you can submit those through the chat, as Tom has said, and William and I will try and rattle through this like we have done in the last few times so that we leave plenty of time to answer as many questions as we can in the live environment. So I think now we'll get into the detail with a little bit of background for those of you that are new to the PCI Pal story. So we're a fast-growing SaaS business at PCI Pal. We facilitate secure payments for organizations across business communications environments. And what we mean by business communications environments, our voice or phone, chat, social, e-mail, basically all these channels that go into the omnichannel mix that makes up modern day call centers or contact centers today. So the contact center is typically where we have the majority of our customers, and it's where majority of our customers use our services. And by securing their payments, we help customers to also comply with various data standards. The main one is our kind of brand name attests is PCI Compliance or PCI DSS, which is the commercial set of guidelines that dictates how companies should be handling consumer credit and debit card data. But also, we find that that's often used as a good foundation towards other regulatory standards like GDPR and other localized data protection standards, which we're seeing crop up more and more, whether that be state level in the U.S. or whether that be in other regional territories like Australia, for instance. Now one of the changes in our story is that, as well as securing data for payments, we're also starting to bring new digital payment methods to contact center environments. So not only are we dealing with securing and facilitating payments for credit and debit cards and the data associated to that, but also more recently in the first half, we announced our first open banking facility and feature, which we launched in -- around September time. We've got some other methods coming through on that payment route as well. So Buy Now Pay Later, e-wallet, these sorts of solutions. So I'm going to talk a bit more about that product road map as we get further into the presentation. So certainly, our value proposition here at PCI Pal is evolving, incorporating both security and compliance with payment value layered on top. So a bit more on that road map later. All of this we do from our cloud-only product sets as well. As I said, we're a SaaS business. We've got 3 core products, as you can see in the bottom left there. They are Agent Assist, which handles live agent interactions within call centers with customers. So this is where you typically or traditionally would have picked up a phone to speak to an agent in a call center. Digital, which again is a live agent interaction with a consumer, but that's being handled over, say, web chat, for instance, or that's an agent engaging with you through a social media interaction that you might be having. And then IVR as well, which is the industry term for automated telephony, so when you're asked to press 1 or press 2 for different options or met perhaps with a speech recognition system that doesn't involve an agent. We have speech recognition and keypad entry for most versions of our services. And many of the deployments that we have across these 3 products leverage tight integrations with many of the world's leading business communications vendors. So many of those companies are -- we're proud to say are our partners. And still on top right there, we're very much a partner-first business. So the vast majority of our business comes through resellers. We're typically averaging about 80% plus. It's more than that in this first half, which we're very happy with. We live and breathe channel at this business. We're completely committed to a partner-based business, and we have been since very early on. It's a key part of our strategy, and we've got the market's leading partner ecosystem in what we do as well. So just some examples, as you can see there, and I'll talk a bit more about our partners and how we segment them a little bit later on. Don't want to spend too much time on this, but just some awards where we're sort of regularly recognized within the industries that we work within, whether that be communications or whether that be in the payment space. We also were listed as 1 of the 100 fastest-growing companies in the U.K. last year, and I found out just last week, we've also been listed again this year for the 2022 award. So that's great to see, just good evidence of our progress at PCI Pal. Onto the update in a little more detail. So just high-level metrics overview. So as I said, strong first half from us. Because of the nature of our revenue model, we've got good visibility for our full year numbers. I think personally, we're getting the right balance between further investment into this business and our drive towards cash flow breakeven and profitability. So certainly, the Board expects that the first months of that cash flow breakeven are going to be coming our way in H2, and H1 has set us up nicely for that. So on H1, revenue up 33% to just under GBP 7.3 million. That's where we wanted it to be. That's actually the same pretty much as the full year we did in FY '21. So just again, highlighting the progress that we've made. Also a 33% increase in exit ARR run rate as well, nearly at GBP 12 million at the end of December. So not only do we sign business, but we're getting it live and getting it fed into the sticky recurring revenues that we've got. Now the revenue is very much underpinned by the core quality of the business. We've got strong customer retention at 95%. That's across just the churn that we experienced, the 5% churn across just 8 customers, and actually 1 of those made up about 30% to 40% of that, and that was a customer that we couldn't really do much about that had been acquired and was -- didn't require our services anymore. So I'm very happy that we're keeping in line really with the trends that we set in the last financial year for high customer retention. That feeds into NRR, which is very much in line or slightly ahead of our own internal targets at 106%. The comparison against last year at 120% was a very strong period for us. We noted that in our interims last year and also our full year that we made a number of large up-sells last year. This year, we haven't had the opportunity to do that, nor did we expect we would be able to. So we're where we want to be at 106% at this point in time. Now driving revenue. We have our TACV metric in the middle there across the top. So that's the total value of all the contracts that we have today, the total annual recurring value of those contracts. And it's a good indicator of future recurring revenues, and that's up 30% year-on-year to GBP 14.7 million. That does actually incorporate about GBP 300,000 of revenue that decreased as a result of a migration we went through for some of the customers that remained on our legacy first-generation platform that have all been moved over to our AWS public cloud now. We did actually retain the margin for those customers. So actually, it's a much healthier business that we've got. That first-generation platform had only sort of average 50% margins, whereas obviously much higher on our public cloud platform. So yes, we lost the revenue, but we retain the margin. So actually -- but if you want to compare like-for-like, it's -- that TACV number is just north of GBP 15 million. Probably the only metric that was slightly behind where we want it to be was the ACV sales in the period, which were marginally behind where we expected to be at GBP 1.5 million. Last year, we did GBP 1.76 million, I believe. But as I said, those -- that period did include a number of large up-sells. And actually, we've signed more new logo business in the first half of the year than we did last year. In fact, I believe we've had the strongest new logo period for us in this first half of the year. So that's very encouraging. We are making a step up in ACV this year, and we do anticipate to do that year-on-year by the end of the full year. We have strong outlook into H2 pipelines as well. So while slightly behind, confident of making that back in the second half given where the maturity of the pipeline is. Our gross margins. Gross margins increased further to 87%. This is partly to do with the transition off of our Generation 1 platform that we've not sold on since about 2018. Everything's been on cloud, but it's just taken us time to move things across and focus that project against some of the more priority things that we've had to focus our time on. So 87% gross margin. I suspect we're probably only a couple of percentages away from the ceiling on gross margin, but certainly, it may still track further towards 90% in periods to come. That along with the revenue growth is driving profitability or our route to profitability at bottom line so the EBITDA loss at just GBP 0.6 million. I say that, that really reflects the maturity of where we've come from. In FY '22, we added 50% to our headcount. So we went from -- went up to just around 100 people from standing start of sort of mid-60s. So we brought on a lot of cost in doing that. So it just goes to show the maturity of the business and how the revenue has grown and margins have grown that, that we've actually achieved the same level of loss in the period. So that's very encouraging for us and is reflective of where we're getting to from a profitability standpoint. Just looking ahead. Strong lead generation going on through the business right now. I feel very happy with the way the pipelines look. We've got good momentum in customer deals going through, and we've got a strong pipeline in H2, and a bit more on that later in terms of where that pipeline is coming from. We pushed very hard in the last 18 months. And those of you that know us well will know we've done that. We've always pretty much stretched our targets year-on-year. We do that. We challenge ourselves, and that requires a lot of effort from our people. So despite a number of headwinds that these businesses have to face, we've retained employee retention at 93%. And that's something I'm very proud of. We've got an excellent culture here at PCI Pal. And as William reminds me, people are our largest costs. So we've got to look after them and make sure that's benefiting us. A bit more on strategy. So just those new to the story. So 3 key strategic pillars, broadly speaking. There's quite a lot more detail to our strategy. But from a high level, they are cloud, global and channel. So to lead the market in cloud solutions in our space, we were the first to market with a true public cloud offering on a global basis. And by far, we've got the most mature cloud platform today. To leverage that cloud platform, to be able to access the global contact center market, it is a fairly specialist space that we operate in, but it is a large one on a global basis. And most of the dynamics in contact centers are the same no matter where you go in the world so to be able to access that global market through the technology that we've got but also leveraging a partner ecosystem and a channel model to support us in that ambition to sell globally and access that market. And that's very much those 3 sort of pillars of what we've really focused our strategy on so real focus on technology and global presence. And so just updating on that position, the global cloud and our global presence is key to us now. So we are 110, 115 people within this organization, but we very much have a global feel to us. We think very hard about how we do that, and it's important to us to take more of a holistic global view in this business given that we've got so many large truly global partners that we work with. We launched Australia and Canada. So we've got feet on the ground effectively in those 2 countries just over 12 months ago now. More updates to come on that. But as a business, we're very well set up to manage the global engagements that we've got with partners. The vast majority of our people work remotely, and they had done pre-COVID as well. But remote first is the way that we do things today. We leverage WeWork pretty much extensively apart from Ipswich, where we start our own today. WeWork haven't quite made it here yet. But we have WeWork everywhere else. And that allows us to be pretty cost-effective but also have that global feel and that global access. So I'm an avid WeWork user myself whenever I'm traveling. In terms of the cloud platform itself, as I said, we've been the first to launch in cloud. We were pioneers in cloud-to-cloud third-party integrations. I've always said it was the focus of our early sort of product efforts. And as a result of that, we patented the ways by which we found to work with third-party clouds. And in FY '22, we talked about an important patent that was granted for us in the United States. And in the first half of this year, we've seen a raft of new patent grants coming through for that same method. And the reason for that is these things take 4 or 5 years to come through. But we've seen grants in H1 in the U.K., EU, Australia and just last week in New Zealand as well. We do have a couple of customers. Cloud innovation and our focus on that has been important for our partner model as well. So we're working with the majority of the Gartner Magic Quadrant for CCaaS, as abbreviation-wise, that's contact-center-as-a-service. So it's the cloud communications platforms that they use. So that's helped us with that partner aspiration, but also it helps us access the breadth of the contact center market, and in particular, it allows us to deal with any size contact center in a cost-effective way. So the vast majority of the contact center market globally is small to midsize. So in the United States, 90%-plus of contact centers are less than 250 seats. That's the majority part of the contact center market. And that's where traditionally we were very strong, but we're now starting to move up into the enterprise space as well. We've got a very strong enterprise customer base. And all of this is hosted within Amazon Web Services, which is the strongest hosting platform in the world, though we're agnostic to any third parties that we plug in to. So in short, we've got the most mature cloud offering in our space. We've got patents that protect the way we do things in this, and we're well set up to support our globally hungry partners across that as well. And on those partners, good segue, we -- another strategic initiative was this focus on channel, and we do live and breathe it. We have a very strong partner ecosystem that some of our partners listed there with most -- many of them are very tight integrations. We split our partners into 3 groups, so integrated partners, solution providers and referral partners. We're very pleased in the period that we saw 87% of our contracts coming through our reseller partners. And actually another trend that we're seeing, and it was an expected trend, is that the value -- so the ACV value coming through our partners is increasing. So that's gone up to 65%. And what I can tell you is that 3/4 of the contracts and 3/4 of the value that comes through partners is coming through our integrated partners now. So those of you that have listened to me in the past will know that, that was a position we wanted to get to because the integrated partners are much better operationally for us, and they're better in terms of releasing products as well because you have a centralized integration and can work through them much, much, much freer. Highlights from the partner business for the half year. Record number of contracts being run through the channel, record levels of pipeline that we're seeing today. We've got a very strong pipeline coverage to what we need to do in the second half of the year. We continue to be strong in the CCaaS space, both working with existing partners, but also we're still adding partners. We -- this year is much more along the tone of the back half of last year. We're not going crazy trying to sign new partners at the moment. We're very focused on those relationships that we've already got in enablement and strengthening those. But we did bring on one new global CCaaS vendor who's growing at quite a pace and has good coverage across North America, Europe and APAC as well. Signed our first customer with that partner as well. So the integration is there and working. And then just finally, some of you will know that we are strong in the U.K. government space. So we've got 50-plus local authorities that use our services and a number of central government agencies as well. And I'm pleased to say that in the first half, we kind of built momentum -- got the momentum going again in that space with a number of local authorities being added in the period. So all in all, very happy with the execution against these sort of 2 or 3 key strategic initiatives that we've got. Now I'm going to hand over to William now to do some -- jump into some of the numbers. William, so I will hand over to you now for control of the slides.

Thank you, James. Good afternoon, everyone. So -- it's again a continued story of growth, delivering on our -- financially delivering on our plans, which we've laid out since 2018. Again, 30% growth in revenue layering some of that to feed into the growth in the business but also allowing some of it to drop through to the bottom line in a controlled way to bring our EBITDA down, heading towards that profitability and cash breakeven in FY '24 that we've been talking about for a number of years. So on the financial highlights side, I'd like to lay out a sort of consistent picture. So these are -- I kind of used them every time we talk to you. So you can see the trends. So you see in the top left-hand corner, the revenue. We did GBP 7.26 million this time, which is 33% up on half-on-half last year. And as you can see, it was almost the same as we did in the whole of FY '21. So you can see the growth performance of the business. And the Board is fully expecting to hit its full year targets as laid out in our presentations. Gross margin continues to increase. So 2018, we were on our Gen 1 revenue-share model as we've sold more and delivered more on our AWS platform. That's increased to 87%. And as James said, that's going to probably head towards 90% and then plateau. The numbers I look at more carefully is the bottom box, the adjusted EBITDA. The adjustments I take out are exceptionals and share option costs, for instance. So you can see the performance on that. So as we've grown the business, we've gone from 25 people roughly at 2018 to the current 110, at the same time, growing revenue but decrease in the EBITDA. So we're now down a GBP 57,000 loss for the period, which is very similar to what we did last year in spite of increasing, adding 25% more on the headcount and having a 46% increase in the cost of those people. But more on that later. Looking at other metrics we measure. James has talked about the new ACV. We're slightly behind where we wanted to be but not critically so. So we did GBP 1.47 million in the first half against GBP 1.76 million in the comparative period in FY '22. In FY '22, however, we did sell GBP 650,000 worth of up-sell contracts. And most of that was to 3 large clients that we renewed in the period. So as James said, on a like-for-like basis, we are -- sorry, on a like-for-like basis, we're ahead on new logo. We're aiming to obviously deliver a strong H2, as James said, and we believe we'll be reporting a like-for-like increase against FY '22. The only other graph I'll talk about is the one at the bottom, cash balance. We finished the period at GBP 1.89 million. We had no facilities in place, so that's a pure cash balance. And as you can see, it's grown to GBP 3.4 million at February '23. And if you've been following us recently, we did have a bit of an SVB problem, which I'll talk about in a little while because I can see there's questions coming up. Mid-March, we were already at GBP 3.6 million. So we're turning the corner on cash. However, our cash flow is lumpy as we renew contracts. So why has it jumped so much? While we -- in December, we had a renewal with our largest U.S. customer, and that was done on a 3-year multi-prepaid contract. We did a similar one when they first signed up to us, and they wanted to do it again. That was $1.75 million, which was billed in December and collected in January. And since the period end, we've also billed a year renewal for 1 of our largest U.K. customers, which is GBP 1 million, and that was billed and collected in 30 days. So the cash is strong, and I'll talk a little bit more about that later when I talk about SVB. So TACV. TACV, I won't talk much because James has covered it. What I will bring to your attention is the little box on the top -- little orange box with the a GBP 2.8 million in it. We are still expecting our TACV to finish the year at about GBP 17.5 million. How does TACV grow? Well, it's -- it grows by us selling new ACV contracts. So it gives you a gauge of how much we're expecting to sell. And that's a net figure because, as contracts churn, and we do expect some contracts to churn in the second half, that will come immediately out of the TACV. But we're well on target for delivering that -- those targets to get to the GBP 17.5 million. And that GBP 17.5 million should underpin the management expectations for FY '24. A bit more on TACV. We are clearly strong in 2 regions. EMEA was our original market that's grown. And you can see the orange bars on there is North America, which has grown from our launch in FY '18 through to the current and is growing strongly, as you can see. On the right-hand side, I break down the TACV also in between what's live, so our ARR against what's in deployment, so contracts that are signed and going through, and then we'll recognize revenue, and what's on hold. So I'm pleased to say our ARR has hit that magic number of 12. So I'm getting a monthly revenue release of GBP 1 million. That should be compared to what we did in FY '18. We did GBP 2 million in the whole of FY '18. So there's strong growth coming through this business. On the on hold, we've improved the on-hold position from the end of June. We're in GBP 1.2 million. It's now GBP 0.88 million. And -- the metric we follow, the on-hold run between 4% and 6% of TACV. So what we do, we work hard with our customers to make sure that they have the resourcing or our partners to do that. We manage the on-holds over time, put them into deployment and then make them live, and that drives our ARR forward. Revenue growth. We talked quite a lot about revenue. So the only thing I would bring to your attention here is on the orange boxes on top of the charcoal boxes, they relate to our nonrecurring revenue. Historically, primarily that's professional services. It's that we bill upfront on contract and release typically over 4 years under IFRS 15. But included in this half is a one-off contract that we took on for a major U.K. client where they asked us to actually use our telephony connections to connect one of their contact centers to the -- to their main systems. That contract has generated about GBP 350,000 worth of revenue in the first half. It's going to generate slightly less in the second half and then is likely to expire at the end of this financial year. So we treat that as nonrecurring, but I thought I'd just flag it up to you because it obviously changes the metrics a bit. Looking at the income statement. We've talked about the revenues and the gross margins and the cost of sales. The thing I'd like to bring to your attention here is the staff costs. So you can see they've gone from GBP 4 million to GBP 5.8 million, a 46% increase. Why is that? Well, we took on 50% more staff in the whole of FY '22, and that's the impact coming through in the full year. In the actual period from December '22 -- 2021 to December '22, we took on 22 new employees. Now these employees we've taken on are at the more expensive end of our spectrum in the sales and marketing and senior engineering side. So that's why the staff costs have gone up slightly more than the headcount numbers. As James said, those are starting to plateau out. We are taking and filling in more, but it's -- that's slowing down, which is allowing our growth to drop through to the bottom line, and that's why we're pleased with our EBITDA position. Talking of EBITDA. You can see that we achieved a loss of GBP 600,000 in last year, and we've done a very similar number this year in spite of taking on all those additional costs. The adjustments, by the way, we've taken out -- we take out exchange movements. Those exchange gains and losses purely driven by the revaluation of intercompany loans. The exceptional costs there, though, are relating to our patent case, which James will give more on later. In that patent case, we spent GBP 433,000 in the period on legal fees. To-date, we've spent GBP 1.23 million defending the claims since September '21. Money up -- for not to be spending on legal fees, but we are robust in our defense. Taking those out where our adjusted EBITDA is flat. Moving on just on the cash flow. On a like-for-like basis, we spent GBP 2.99 million worth of cash out of our reserves in the first half. If you strip out the patent case cost, that's GBP 2.6 million. That's very much in line with our expectations and the renewal cycle of the business. If you remember, we bill quite a lot of our contracts annually in advance. And so the cash does go up and down very -- is quite lumpy. But on a trend, it's moving definitely towards cash breakeven, as we've already said. Just turning to the balance sheet. Trade debtors, I'll just point you to that. We run with GBP 2.5 million to GBP 3 million worth of trade debtors at any one time based on renewals and new contracts coming through. It spiked up in the end of H1 due to the renewal in America of that $1.75 million contract with America, which was collected in January. So it's now down to normal levels. As at the end of December, some 14% of our debtors were over 60 days, and most of those were in the 60- to 90-day category. The reason is we tend to give 60 days credit to our American and U.K. customers, but they tend to pay on 70 days. So it's just -- we have a little fall over into that. Otherwise, we don't really have a bad debt problem, or in fact, we don't have a bad debt problem. Deferred revenue is the other area. I'll just point to you can see it's grown from GBP 8.7 million to GBP 11.5 million. That just reflects the underlying strength of the business as we continue to win new business continue to bill in advance on that -- on the contracts we win. And then once they go live, we start releasing it out of the business. So I'm quite pleased with that growth because it funds the underlying side of the business. I will now hand over to James for some more...

Thank you, William. So some operating highlights, so we get to wrap up so we've got time for questions at the end. So just working through the bullet points there. So we referenced in the interims a number of enterprise-size U.S. customer wins. The reason this is important is we've long stated the size of the U.S. market and that we want to be able to get into it in some depth and getting access to some of these large enterprise organizations within the U.S. The U.S. has more enterprise contact centers than any other country in the world. So really pleased to see a couple of good wins there of an enterprise size for us. So one of those with a very well-known U.S. clothing retailer, probably one of the brands you'd associate the most with the U.S., and we sold that at the back end of Q1, and that's live already across more than 2,500 agents, leveraging an integration with one of our CCaaS partners, which is fantastic. That was a competitive process, that one. And then the other one is a more regional energy provider in -- across the U.S. and Canada. And whilst being a fairly large deal for us, it was also interesting because it leverages our speech recognition capabilities across Agent Assist and IVR. Because we're deploying it into Canada, it does also have a French requirement too. So we're delivering that right now, and that will be going live in the coming month. So that's good progress to see over in the U.S. And linked to that, on to the second bullet point on their pipelines, as I've said earlier, are looking good for us, particularly in the United States, particularly through partners as well. So we're really seeing that start to pick up in the U.S. We've always said that we felt the U.S. market for us has probably got a 2- to 2.5-year lag on where we're at in the U.K. So we got them growing quite right. Maybe it is 3 years, but it definitely feels like it's starting to pick up nicely for us, and we've got a good outlook into the second half. We've talked a bit about renewals as we've gone through this. William mentioned our largest customer in the U.S. and that we -- we renewed that at the back end of Q2. We don't talk about renewals a great deal because most of our customers also renew given the nature of our SaaS sort of subscription-type services. But certainly, some of the very largest do require conversations at renewal. Most of the work we do to ensure that customers do renew is in between during the contract term. It's those customer satisfaction scores, making sure our delivery is strong, our relationship management is good and that we work well with our partners. So to that point on that fourth bullet point there, we've talked about NRR but CSat, we get accused of using too many abbreviations sometimes, so I'll try and define them, customer satisfaction scores. So we've kind of moved -- not moved away from NPS, net promoter scores, but as the highlight stat, we're generally using CSat now. So we're tracking 87%, and that's improving. We made a few operational changes in terms of the structure of the business at the beginning of the year, and that seems to be having a positive impact. So I wouldn't be surprised to see that get to 90%-plus. So yes, operationally, the business is very healthy at the core. And then in terms of the 2 new regions that we set up, Australia and Canada, we've now been live there for more than 12 months in both of those sort of 12 to 14 months in each. Pipeline is building nicely. I would say -- I've been asked to comment by some institutional investors over the last few days. I'd say that Australia is moving quickest for us, but that was as expected. So we didn't bake in the same sort of target level in Canada as we did in Australia. So that was not that we didn't anticipate that, but we've got a very good feel about what's happening in Australia right now. We've got good coverage with our partners down there. We have patents there as well. So yes, very excited about that region. But also we do anticipate Canada being able to get to the numbers that we've set for them in the second half of the year. So we're in also some really exciting highlights given some of the headwinds that we've had to manage in this business. So just on that final bullet point there, I did want to give an update on the patent case, the details in the interims. We've been involved in this patent case for 18 months now. If you're new to the story, and you'd like some background information on this, please do go back and read our full year update on this, though, the interims update is fairly extensive. And if you want to hear from us, we have talked about it on other updates as well. The update on the position is really unchanged from what I've given previously that we very much strongly refute the claims that have been made against us. We believe those claims are unfounded. And given that PCI Pal has been the fastest-growing company in this space for a number of years, it's always been and continues to be our belief that this action was taken by a competitor to disrupt the momentum that we have in this business. So the position today, as we said in the interims, it's very much a 2-way street. Firstly, we have the claim of infringement. And we're confident that we don't infringe, and we have legal opinions to support this. But secondly, we've made counterclaims against the validity of those patents. And our counterclaims include various elements of prior art and a number of other claims which we believe mean that these patents are invalid. So the bottom line, I suppose, is that we've got high confidence as to our advisers. We have our own patents for what we do, as I've shown you on the earlier slides, and even whilst we don't think it's needed, we have taken the prudent approach, as we noted in the interims that, in any kind of worst-case scenario, no matter how unlikely we believe it is, it's a prudent approach that we've got adjustments that we can make to our products if we need to. So whilst we've kept the door open for discussions throughout, and we will continue to do so, we're very much prepared for court in the U.K. when the time comes in June. That's the update on the patent case. I'm going to switch to product now and back to some of the good stuff, if you like, before we get to questions. So last time out on products, we talked you through our plans to evolve our product set. It was one of the main reasons behind our fundraise in May '21, and it's long been a vision of ours. It wasn't new in 2021. When we started on this journey all the way back in 2016, we had an idea of where we'd like to go to in the very long term once we really established a foothold. So what we're doing is effectively moving our value proposition from solely being about securing data and compliance to actually enabling payments with security and compliance basically becoming the table stakes and the foundations for the payment value that we add on the top. And in this, we're talking about on top so that our salespeople, so our marketing teams, our messaging out to customers is more than just security and compliance. It will start being about value. So it will include talking to customers about increasing revenue, talking to about how they can better control and reduce the cost of payment processing, how they can better control fraud. And effectively, what we're doing is making e-commerce payment capabilities because there's so many great digital payment options for consumers today on websites. We're making those available within business communications environments across that omnichannel mix within contact centers. And the way that we're doing this, and this is critical to it, is that we're doing it, leveraging the existing technology stack that we've built to-date, and we're leveraging our existing go-to-market model as well. So that core technology platform that we've invested so much time and effort in will be leveraging that for all these new products and services. We'll be using our partner network and our partner ecosystem and the existing integrations that we've got with those partners to allow us to push these new products out into that ecosystem as well. And that will also allow us to access the global market opportunity, too. So ultimately, we're looking at growing our addressable market, and historically, we've done that more by geographic expansion. But by this product evolution, we're doing this also through the evolution of the product set. And there will be more of that to come in the second half and later in 2023. But in H1, we did launch the first of these, which was an open banking product launch, which was the first, and we launched that with a very well-known sort of market leader in the open banking aggregation space called TrueLayer, a London-headquartered business but with a global footprint. Across H2 and later this calendar year as well and really for the next 2.5 years our road map spans out, you're going to get to see numerous new features, including all these additional payment capabilities, whether that be Buy Now Pay Later, e-wallets. We've got a new user interface coming out soon, and we're doing quite a lot around data analytics and AI and intelligence to better understand payment flows. So there's a huge amount of work going on in the background here at PCI Pal right now, and that's how we're using the proceeds from that fundraise that we made in May '21. But it's really exciting times here, and we're looking forward to talking to you more about these things that will add more value to this business as we continue on this growth trajectory. So just to wrap up before questions, so the outlook really is kind of more of the same, but we're expecting a strong H2. Revenue momentum certainly continued. We've got very strong revenue visibility to the end of the financial year. We've got work to do in our sales pipelines. We've always -- everyone's always got work to do in their sales pipeline. So we've got deals to get over the line, but we have very healthy pipelines and good level of deals at a mature stage. So looking forward to moving those along. And also, we've got new -- some of the new products and features that will be coming to the floor as well. So that pretty much covers our -- William and I's update. So why don't we move to some questions now.

Tom here. Great. Okay, fine, great. Well, look, thank you, James. Thank you, William. If we could turn to the questions, we have a number of questions submitted ahead of the presentation, and please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. What we might do, I wonder if we can turn to you, then that view changes as to look to the performance [indiscernible] presentation. We have 2 questions actually related to the breakeven. So [ Roland ], thank you, and there's 1 which is anonymous. But I'm very pleased to see the company continue to deliver. But please could you comment on whether you reach breakeven at net income level in H1 financial year '24 or [indiscernible] H2 financial year '24?

Yes, good question. So the trajectory is obviously full year profit at adjusted pretax level. I'm expecting to be a small profit in the first half and a bigger profit in the second half plus or minus a couple hundred thousand. It'll be just above breakeven, I believe, from my current forecasts.

Right, okay. We've got a couple questions around the SVB situation. So if I can just group a couple together, and if you could add a little color there. First one is, any lessons learned? The second is, do you have facilities in the U.K.? And if you did, are they still available? And the third question is, how are you placed in the U.S. in terms of the circumstances around your account?

Okay. Good question. So SVB was a bit of a shock to the system. For those who have followed us, we've been with SVB in the U.S. since we opened up there in 2017. And they've worked with us very well. However, we had our relationship management out of London. And when London became a registered bank, we were looking to open up facilities with them. Some people who follow us will notice that we've already put charges in place with SVB, our company's house, so it's public information. But we do not have a facility in place at the minute. That's in discussion. Now clearly, with HSBC taking over the U.K. arm, we are being told that they want to continue with the facility. However, I will only know that next week once I've met with them. In hindsight, yes, so 3 weeks ago, our money was split between 2 banks. It just happened to be -- we just happened to time it very, very badly. So we are now going back to running 2 banks, and we'll be balancing our cash flow between -- with the majority to be kept in the U.K. split between NatWest and HSBC, and we'll be keeping a working capital facility, for instance, covering the payroll and everything in the U.S. The U.S. situation is still flux. It's still under control of the Fed and the FDIC, and there is not a buyer in place yet. I know they have made announcements that they are looking for a buyer, but we need to be prepared that, if they can't find a buyer, then we might have to move to a different source, and that we'll deal with at the time. One potential silver lining on this whole debacle is, obviously, we now have a relationship with HSBC. They have taken on our relationship director and the team at SVB, and that's important to us because SVB do talk our language. They understand SaaS businesses. They understand recurring revenue. And so if we can take that and underpin it with a global bank, I'll be very happy. I think that covers the questions.

Great, okay, super. And a couple questions in and around admin expenses, which were touched on in the course of the presentation. But if we could just add a little bit more detail. So Question 1 is in respect of North America and Canada. Does the 38% increase in adjusted admin expenses for North America solely reflect the growth of the Canadian office, or has headcounts also been added in the U.S. since H1 '21?

Good question. So if you go back to June '21, so just after we had done a fundraise for our global expansion, we had 16 heads in the United States. The vast majority of those are sales heads. We have a few professional services people managing our installations and working with the teams over there. By December 21, that had grown to 21 people, all in the United States because we had strengthened our U.S. selling as we laid out in the fundraise. And then in -- by December 24, it's grown to 24 people. So the answer is it's a mixture of both. The 24 people include Canada, and -- but we had strengthened the sales and marketing side of the United States. And that's the driver for the increase in admin expenses.