Pro Medicus Limited (PME.AX) Earnings Call Transcript & Summary

Well, good morning, everybody. On behalf of my fellow directors, I'd like to welcome you to the Annual General Meeting of Pro Medicus Limited, and thank you again for taking the time to be with us today. As most of you probably know, my name is Peter Kempen, and I'm Chairman of the Board, and I will act as Chairman of this meeting. We are meeting in Horton, a suburb of Melbourne, and I would like to acknowledge the Traditional Owners of the land, the Wurundjeri people of the Kulin Nation. As indicated in the notice of meeting, this AGM will be a hybrid meeting with physical attendance here at Leandra and online through the MUFG Corporate Markets facility. Link was much easier, but unfortunately, they have been taken over. So I'm instructed to use MUFG Corporate Markets. I'm delighted that many shareholders have decided to join us today, either in person and I'd like to welcome all shareholders to the meeting. There will be opportunities to ask questions and to vote during the course of the meeting, either in person or online. And I will go through the process later in the meeting. I'd now like to acknowledge my fellow directors, and they might stand when their name is mentioned. Ms. Deena Shiff, Nonexecutive Director and Chair of the People and Culture Committee; Ms. Alice Williams, Nonexecutive Director and Chair of the Audit and Risk Committee. Sorry. She's just -- she's standing because she just walked in. Dr. Sam Hupert, Joint Founder, CEO and Executive Director; Mr. Anthony Hall, Joint Founder and Executive Director; Mr. Tony Glenning, Nonexecutive Director; Dr. Leigh Farrell, Nonexecutive Director. And we're also accompanied by Clayton Hatch, the Chief Financial Officer; and Mr. Danny English, Company Secretary. Also joining us is Matt Bennett of Ernst & Young, the company's auditor, and he's sitting right in the front row. So if you have any questions, they will be directed to him. He is available to answer any questions in relation to the financial statements and the report and they report to the shareholders. It's also very important for me to mention the following key personnel who in addition to the executive directors have provided excellent leadership during the year. Malte Westerhoff is our General Manager Europe and Global Chief Technology Officer; Sean Lambright, who is the Global Head of Sales; Teri Gschwind, who is the Global Head of Customer Service; Danny Tauber, General Manager of Australia, who is, I think, here. Brad Levine, who's General Manager of North America and Global Head of Marketing. Clayton I've mentioned; and Sharni Redenbach, Director, People and Culture, and she's here, too. Each of those individuals is depicted on Page 10 of the annual report. Before we deal with the formal business of the meeting, I will provide my report to you, which will be followed by a report from Dr. Sam Hupert, our CEO. As I mentioned earlier, there will be an opportunity to ask questions during the course of the meeting and following the formal business. And now to my Chairman's report. The overview. The company has enjoyed another extremely successful year, both from an operational and a financial point of view. The success of the company and the markets that we serve continues to be due to the quality of our leading technology and quality of the management team. The passion, enthusiasm and the dedication of all our staff and the robustness of our business model. The company continued to deliver the highest level of service to clients and their patients. Your company is fortunate to have a group of highly skilled professionals led by Dr. Sam Hupert, and the management team. The majority of our staff has been with us with the company for many years and the core management team for over a decade. As a consequence, the company has continued to deliver long-term profitable and substantial -- sustainable financial results by delivering on the milestones in accordance with the company's strategic plan. The group continues to invest in our best-of-breed suite of innovative products to maintain market leadership which we believe is fundamental to our company's success. In addition, we look to further add to our product suite by acquisition or licensing arrangement. We also continue to invest in our management staff, which is growing in line with our strategic objectives. Dr. Hupert will no doubt provide further commentary in relation to the company's personnel in his presentation. New contract wins and renewals. During the fiscal '25 year, the company announced 7 new contract wins in North America, including our largest contract to date, Trinity Health, which you'll be pleased to know, finished implementation in late October '25, along with many others implemented during the year. Since 1 July 2025, the company has announced 6 new contracts, 5 in North America, including those that we announced this morning, which are slightly smaller in each individually, but collectively quite significant. And the one in Germany as well. In addition, we have one client renewal and increased transaction fees and with additional products. An increasing number of new opportunities continue to present and as a result, our pipeline remains strong. Financial results. Fiscal 2025 was another record year for the company, with revenue increasing by 31.9% to $213 million and net profit after tax increasing by 39.2% to $115.2 million. The company continued to be cash flow positive. We retained cash and liquid investments increasing from $155.4 million to $210.7 million after a $7.9 million buyback of shares in March and April and paying increased dividends. The Board anticipates fiscal '26 will be another strong year. The budget for the current financial year has been determined anticipating continuing strong profitable growth from both existing and new clients. I'm pleased to advise that the results today are ahead of budget on both a constant currency basis and an Australian dollar basis despite some volatility in currency markets during this period. We are entering the second half of the year with strong momentum, driven by successful completion of Trinity Phase 1 and University of Iowa implementations in late October, both of which will contribute a full 6 months of revenue in the second half. In addition, we have several major contracts scheduled to go live early in the second half. We, therefore, appreciate that the second half bias will be greater this financial year than in prior years. Surplus cash and M&A. As I indicated earlier, our cash and other financial instruments have continued to grow during the year. These funds are maintained to allow the company to continue to invest in the development of its product suite, including AI, to meet our dividend obligations and to take advantage of opportunities that might arise. In July '25, the company invested $10 million in ASX-listed company 4D Medical Limited. This is in the form of a line with very attractive terms and conditions. The Board is also continuing investigating potential M&A opportunities, which meet our criteria, and this process is ongoing. Dividend policy. The Board is pleased to increase dividend payments for the '25 financial year to $0.55 per share fully franked. This represents an increase of 37% over the previous year and a payout ratio of approximately 50%. The dividends were funded from the company's internally generated cash flow. The Board anticipates that future dividends will continue to be fully franked. The Board will continue to determine an appropriate level of dividends coming in regard to the profitability of the business, its need for ongoing investment and the necessity to retain sufficient funds to pursue other growth opportunities. Strategic planning. The 2026 financial year, which is the one we're currently in, is the final year of our current 3-year strategic plan. And the Board and senior management are confident that the company will achieve all of the strategic goals which we set 3 years ago. However, we do not intend to rest on our laurels. Last month, the Board and senior management met to discuss the next 3 years of the company's development. The meeting noted our current position and the opportunities for further growth. The meeting determined another set of ambitious targets for fiscal '27 through to fiscal '29 and agreed on strategies to reach the ultimate goals of that plan. In closing, on your behalf, I'd like to thank all of our dedicated staff in Australia, North America and Europe for their contribution to the company during what has been another very successful year. And I'd also like to thank my fellow directors who have also worked tirelessly and diligently to ensure that the company continues to grow and prosper. That ends my report, and I'd now like to hand over to Dr. Sam Hupert to give you an overview of the performance of the company over the last year and provide you with an update on the company's current activities. Thank you, Sam.

Good morning, everybody, and thanks for joining us. As you all know, we work in 3 jurisdictions, Melbourne, our corporate office and where we do the development for our RIS product; Berlin, the development and support center for the Visage imaging product; and the U.S., which is our biggest market and where we now have our biggest base of staff. I don't know what the number was last year. But as of now, we were about 142. So we have continued to grow, but in a very measured manner, and we'll talk about that a little later. The product set remains pretty much the same in Australia, it's Visage and Pro Medicus.net, which is our electronic delivery, secure delivery of results mechanism and in the U.S. and the rest of the world, it's the Visage 7 product which is the product that the radiologist use as a day-to-day desktop. As Peter said, last year was our best year ever. I won't dwell on all the numbers. They have been out for a while, but I think all of our key metrics headed off up in the right direction. It's not just about growth. It's about profitable growth, and we've been able to maintain that momentum over the years and into last year. The company is debt free, and as Peter said, we do use some of our retained earnings in terms of payment of dividends, which is -- makes us a little bit of a hybrid because we're a growth company at the front and very traditional at the back in terms of no debt dividend payments, et cetera. But that's our DNA, and I don't think that's going to change. In terms of the revenue split, again, I won't go column for column, but I think the main thing is the pink columns and blue, our recurring revenue. So you'll see the vast majority of our revenue is recurring year-on-year. So whatever we implement in this year forms a bigger base as we go forward into next year. We had a busy year. I was reading a question this time last year, which was, where are all the new sales? Because as I stood here last year, the only sale we had in the pocket was the first one up the top, which was one of our smallest ever, which was Lori Children's in Chicago. Now the reason we did a sale like that was twofold. One, they're sort of on-campus with Northwestern, who many of you may remember, are a large and important client of ours; and b, we do special sort of -- we lowered the bar of entry for 2 sorts of hospitals, which I'll talk about later, pediatric and cancer -- specialist cancer hospitals. And we announced 2 of those sales today in the bundle that we talked about. Having said that, as soon as we adjourn the AGM and Clayton and I were in the lounge on our way to Chicago, which we do this Thursday, we announced the Trinity deal, which was our biggest deal and still is. And then a cascade of deals in all forms of the market, which I'm sure you've seen in the slides before. So it was -- turned out slow start, came home with a big finish. So the result was a record year. As Peter mentioned, we had our biggest year in terms of new sales. We also had 2 very large contract renewals. We sold additional clients -- additional product to clients in NYU and [ Zug. ] We completed a lot of implementations. RSNA last year, I can talk about that because it's gone, was our busiest, and I'll show you some photos. We made significant progress with our other ologies in AI, and we formed a strong base for FY '26. So where are we year-to-date? Well, we've come out of the gate pretty strongly this half. Early in July, we announced our second largest deal ever. U Colorado Health, you see Health Colorado, as they call themselves. We announced a renewal and upgrade for Franciscan, or FMOL. We won a key contract in Germany, Heidelberg University, which is one of the top medical schools in Europe. We won another deal in the private radiology, which we announced about a week ago in Advanced Radiology Management. And this morning, we announced 3 deals in their own right, we most probably wouldn't announce independently, but just to show that we are doing work up and down the scale. So at the beginning of the half, we had a huge one in U Colorado. As we sit here today, we had an amalgamation of 3 small- to medium-sized ones and everything in between. In terms of finance, as Peter said, we are ahead of our budget today, which is very pleasing. We are also on track to deliver on or above the 3-year growth target we set ourselves back in 2024. That completes at the end of this financial year. And as Peter said, not giving us management arrest, we've already cranked up and planned out for the years to '27 to '29 going forward. We have successfully sold at a minimum a total contract value of $273 million so far in the half. We've implemented Trinity Phase 1 in October. I'm sure it's the biggest single big bang implementation in the history of our industry. It's the equivalent of roughly a few million exams, over 100 radiologists. I hate to think how many technologists and support staff all went live that Monday morning. But it is the first of 5 phasings to Trinity, and it went very successfully. We also completed U Iowa, which we announced last year. And our bookings for RSNA, which we tend to get bookings in advanced, are, by far, the strongest than the most we've ever had in terms of pre-bookings. So we are building momentum from the first into the second half. Full 6 months of Trinity Phase 1 and U Iowa. We have another one of our academics, which we announced last financial year, and U Kentucky going live next month. We then have 3 quite large implementations in the first few months of calendar year '26. Our existing client base is growing well above industry average. Industry average is around 2% to 3%. Our clients are growing 8% to 10% on a compound basis. The pipeline, we believe, will continue to grow materially following this RSNA. And as Peter said, based on all our budgets and the timing of the implementations, we believe the second half bias, which we have from year-to-year, may be a bit more exaggerated towards the second half because of timing of these implementations going forward. Our products, Visage RIS, we still manage to be the leading risk supplier in Australia. We are getting incremental sales, some of the corporate smaller players are splintering off and we tend to pick up a fair bit of those going forward. So we are actually growing that base in Australia, albeit in smaller percentages than what you would see for growth in the U.S. but it is good and profitable growth nonetheless. So to Visage 7, the cornerstone product we sell in the U.S. I mentioned 3 things, and they still are very, very pertinent where we're #1 without any doubt, speed of the product, speed at which the images come in and which a radiologist can work. Functionality. We do all of the basic things, the middle things and super complex things in one desktop. We are still the only ones globally that can do that. And scalability because now our clients are dealing in petabytes. And I can't even remember how much Trinity's archive is, but it's many, many, many petabytes to which they keep entering near petabytes every year. So you're talking about at-scale data that needs to be accessed on demand. Things that are driving the industry, those of you who have heard me before, the explosion of data, the cameras are just creating bigger images, it's happening exponentially. So what makes us different? Legacy technologies, pretty much everybody else in the market must compress that image, send it down the network, unpack it locally and then do the manipulation and rendering on that workstation. The problem with that is it worked well in the old days when a chest X-ray was 35 megabytes or a CT was 300 megabytes. But now with photon-counting CTs, 4 gigabytes is not unheard of in terms of one file size. So you've got 10x data size explosion, and this does not work. Sorry, we went back. So our streaming solution, which is proprietary, no one has been able to copy it that we know of, has changed the whole paradigm. So we can, on demand, look at diagnostic images usually sub-1 second, which when you're looking at multiple gigabytes, almost defies physics, but that's how it works in the real world, and that's so incredibly important for our customers and for the industry going forward. Which markets do we work in? You have seen before the academic medical centers, you know the names. We've picked up a few more academics in U Iowa, U Kentucky, and you'll see in some of the new sales, there are always medical schools built in. So we've picked up Baylor Medical School. And even though they're known as large IDNs, there is a teaching university and teaching medical school in a lot of our clients. IDNs, they're the large hospital networks. They can be any size actually, but these are the larger ones. They are the bulk of the market. We estimate there are roughly 40% of the market, maybe a touch more. As I mentioned, it's not a black and white delineation between them because some of the IDNs do have universities. But it is a market where we've seen incredibly strong growth over the -- even from the beginning, but even more so in the last few years. And you'll see, in some of the sales we made last year and this year, there's a good representation of this market space. Because Trinity was an announcement I stood up here last year, I'm going to mention a few things about it. It is one of the top 10 IDNs in the U.S. hospitals. I have hospitals -- I don't know how many, Clayton might know, but too many to count, but in 26 states, so half the U.S. They took full stack. So they took everything worklist, archive. It is fully cloud deployed or is going to be. The Phase I, as I mentioned, has already in its own right, bigger than a lot of other institutions in the U.S., just 1/5 that we've done. Next 4 key regions will be completed by the end of this fiscal year in June '26. And we believe that is still, to this day, one of the largest purely IT contracts in the U.S. market. The other market, which we talked about last year and is growing very strongly for us at the moment is the private market, private practice imaging centers which, for a while, was dominant because there was a lot of M&A activity up until about 2023. And then that sort of stopped. We did announce Julie Health last year. Elucid that gave us about $70 million worth. And just the other week, we announced another big private market. This group reads for hospitals and other groups. It does not have any bricks and mortar, a deal worth a minimum of $44 million in 5 years. So we are picking up pace in this market as it starts to evolve. University of Colorado, as I mentioned, we started off this fiscal year with a bang early in July. It's $170 million, 7-year deal. I think the thing is it's now full stack plus 1. So it's the full stack, the worklist viewer archive plus cardiology out of the gate. Highly respected health system. It is -- does have an academic medical center in terms of University of Colorado Hospital. So it is a bit like Baylor. It's one of the hybrids, a mixture of academic and large regional IDN. Heidelberg, a little bit different. Big teaching hospital, known as one of the best universities in Europe. It's affiliated with and shares colocated campus with the top cancer research institute in Europe. So it's a dual deal for the institute and the hospital. And we think it will have a material impact on increasing our footprint, not only within Germany, but longer term within the European market. It's one thing to sell them. It's another thing to put them in. We talk about our fast track implementation, and we now know that we can put in systems 1/4 to 1/5 of the time of our competitors, sometimes even quicker than that. And when we look back at Trinity, one of the key things they wanted us to make sure of or they wanted to make sure of with us is that we could put it in quickly. They had a failed implementation with another vendor. They were already 3 years behind their project, and they didn't have a moment to waste. So we will complete Trinity in record time for a group of that size within the industry. And I think that is an enormous strength because it's now coming out in the market, some of our key competitors are failing in the implementations or taking 2 to 3 years which clearly a client doesn't want. So it is becoming a very big differentiator for us. We talk about ROI. It's both financial and clinical. We are the most expensive product, which is where I think we should be positioned, but we believe we give the most back. So we keep measuring that. We keep using that in terms of our sales. The usual why should we pay more for you, et cetera. We think we have a very credible and proven answer for that question. So now, I showed this slide last year. If anything, it's getting even worse in the industry globally. There is a scramble to hire radiologists. And if you -- any of you are going to be at RSNA next week, you'll actually see a lot of the groups having their own [indiscernible] trying to recruit, right. The chair, sitting there, trying to recruit radiologists. It is getting that bad. So fewer of them, more images. They even talk about silent quitting where radiologists are so exhausted, they just do the minimum that they have to do just to stay there, which clearly is demoralizing for them. So the industry really needs an answer to an acute manpower shortage. And we believe we're part of that answer. We can prove an efficiency gains between 25% plus, which is huge. So often, we will come into a site, they're days or weeks behind in the reading. And within a few days, they'll be up to date and never fall back again. That's how dramatic it can be. As much as it's about efficiency and money, it's also about moving the needle clinically. We do believe that we allow the radiologists to do a better interpretation either by allowing them to do something they couldn't do before or something that they could, but it would take so long that they wouldn't. So when we do things like Fusion, which is overlaying things, it will take another system 6 to 7 minutes, we do it in 3 seconds. That can be the delta. The growth strategy. Again, we're delivering on that. It was obviously keenly discussed in much more detail in the slide at our strategy meeting a month ago. Expand our footprint, which we're doing both in the U.S. and in Europe. We are getting above-average industry average growth of transactions from our existing user base. So the bigger the base becomes, the bigger the multiplier that is. We have brought out new product offerings, which I'll talk about in a minute. We are looking at new markets, in particular, Europe as it starts to get cloud and starts to become a bit more, I call it, North America like in the way it budgets technologies. Now that's just starting, but we can see that progressing. And we are looking to leverage our R&D capabilities. North America, biggest market by far, $0.60 in every dollar spent on health care is spent in the U.S., which is amazing. We believe we can address from a product perspective 100% of the market. We can work in small private practice. We can work in Mayo Clinic and everything in between with the one product set. Our current market penetration is now a few bps above 10% with the new sites that we won and growing. So we -- whilst our footprint is material, there's still plenty of runway ahead of us. Quickly go through the products. The first product is our viewer. That's our cornerstone product. That's the test that the radiologist uses. This was our second product, the archive. It's software that manages the images. As I mentioned before, it can be petabytes of images that we have to manage, make sure that all the past exams for the patient are there and available for the radiologist as they're looking at the current test because radiology is largely about comparison. It is a very key component of our cloud strategy, the way we store, how we use tiered storage to minimize cost of storage. There's a whole lot behind this that's not apparent from the slide but it is very critical for our go-forward strategy, and that's why some of the largest IDNs are coming with us because the way we deal with them, not only in scale, but also in storage is very important for them. And it is transaction based. So the more work they do, the more we get. The workflow is the last product. Again, a similar concept. It's the worklist tells the radiologist what examinations to do. There's a lot of smarts in it, a lot of AI behind it in terms of prioritization. The radiologist doesn't see or feel any of that. They just see what's coming next, which is how it should be. And again, the beauty of this product, not only is it a third product and a third transaction, but it means that we don't need to deal with third parties if the client takes full stack. So we can't be held up if the work is vendor, if the third-party guy is running at, if it's all us, it's only us to deal with. And so not only is it good for us financially, it's far more efficient. Cloud. We've been in the cloud now fully for nearly 5 years. We believe we're the only -- believe it or not, the only company that has a full cloud offering. Cloud is actually even faster than on-premise, which is counterintuitive, but it is. It's very secure, and that's why people want it. And I think most health systems realize they're in the business of providing patient care, not managing data centers. So they want to offset as much of their technology stack into cloud. Now a few things. Not only is it big in terms of data, it's mission-critical. That thing cannot go off for 1 minute, right? Because if it does, certain parts of the hospitals stop. So cloud is part of that solution of -- an uptime redundancy and speed. We see pretty much all of our opportunities now. One Cloud that pretty much mandated. We are agnostic. We have big implementations in all 3 major clouds in Azure, AWS and Google GCP. We see that as a competitive strength. And we note that as we become more successful to try and plug the hole, our competitors talk about hybrid solutions, which no such thing exists. It's an on-premise solution with a cloud back up. To me, that's not cloud, that's been around for 15 years. We think it gives us a significant strategic advantage, and we think that will just widen as there are other can-dos and the ones that can't. The One Viewer is becoming really important for one technology stack, which now will do radiology, cardiology and soon digital pathology. It's the one source code, one product. We're the only one so far that has been able to do that. And we think we'll see more growth opportunities, and we've started to see it in the cardiology offering, which is next. Again, cloud-based, part of the same source code. Our first really big major client was -- it will be U Colorado. We have other RFPs out that want imaging and cardiology. So we're hopeful that we'll see more of this full stack plus 1 as we progress. And we're seeing a lot of interest for cardiology from our existing client base. So we believe we'll be able to, without much impedance, sell that back to them. Digital pathology, that is pieces of tissue you look at under a microscope. It is emerging. Unlike radiology, only about 5% to 7% of the market in pathology has gone digital. So it will be new rather than replacement. It is something that we have available. We will be showing it at RSNA. We're waiting to start going through the regulatory FDA cycle that it requires. But it will be another string to our bow as we look to do more and more departments in the hospital. AI, I won't dwell too much about it because most of you have been AI-ed out by the -- by all the news lately, but we think that it will have a major role in medical imaging as a second set of eyes, an aid to diagnosis for the radiologists. And so there are a number of things that we're doing. We're just in FDA. We have entered our breast cancer detection algorithm into the FDA. Unfortunately, with the government shutdown, everything stopped for a while. So we were caught in that sort of go-slow traffic, but it started again. We're hoping to release that commercially next year so that it becomes almost like a second radiologist, looking over the shoulder of the radiologist and will pick up something if the radiologist thinks it's normal, the algorithm, thinks, hang on, I see something, it will actually warm the radiologist. So a lot happening in that space, and I think we're well positioned for it. Our leadership team, they're all PhDs in this area, Malte Westerhoff, Peter mentioned, our CTO and a co-founder and Detlef Sterling. So their PhDs are in imaging and in health care. So very much aligned in terms of what we need to supervise the technical part of our AI developments. Something different. Many of you may not know, self-congratulations. But this year is 25 years since the company IPO-ed. So going back into the past, we IPO-ed in 10th of October 2000. So pre-IPO, this was -- these were our newsletters. Anthony and I thought we were great marketers at the time. We called the newsletter Profile. The first one actually had a photo of -- my daughter who's in the front when she was 1. So it shows how far back we go. But in that, you may not be able to read it, but we say Profile is back this year bursting with news. Since our last edition, there are many exciting changes here, new products, new offices, new everything. That was back in 1997. And you'll actually see down the bottom right, it's a bit dark, a photo of the office just as we moved in a little while earlier. We had gone through the late '90s, and we've seen something we had never seen before, which was technology coming front and center in terms of investment. The Internet was starting to become real. There were a lot of companies, and there was this huge tech boom that went on around us. The next Profile was in late '99, and we were talking about the year 2K bug, which most people would have forgotten by now. So we're showing our age. So there we were in '99 looking to IPO. Here's a graph, and the reason I mentioned the graph is you see the big peak. That was the time we were about to announce to the market. So weekend that we were going to IPO on the Monday. And guess what happened afterwards? Tech rec. Tech rec occurred the exact weekend before we were about to announce to the market. And if you have a look at what happened -- and some of the things in the slide, it was just a complete wipeout. Anthony and I thought there's no way now we will ever IPO. We've done all this work, put in all this money, and this is going to take years. But we were wrong. Our brokers in J.B. Weir and the person leading our fleet, which happened to be Peter Kempen at the time, rang us and said, we think there's appetite for your stock in the market. And I said, well, what happened, they go, you make money. That was literally the answer. You make money because before then, everything was just pure hyperbole. And so we were pictured looking very sort of [ dire ] in front of our new office float just what the doctor ordered by line in the age. This was just the day before our listening and our then Chairman, Founding Chairman, Mill Ward, who was with us for 10 years until he, unfortunately, passed in 2010. So there we were just 2 boys coming to an IPO, we didn't know how it was going to go. And here's the press after we IPO-ed because 2 IPOs before us didn't trade for 3 hours and then went underwater completely. Thankfully, we started up with a large amount of shares trading, and we traded up the whole day. So the share price was $1.15. We traded as high as $1.60, finished the day at about $1.41. And then all the papers were like a first way to get away in months. And so we had this at healthy premium, big demand, et cetera, et cetera, et cetera. So just last thing about the float that seemed so long ago, we issued 100 million shares at $1.15. Our current shares on issue, 104,495,170. Thanks, Denny. So we have increased our shares on issue less than 5% in 25 years. All of those shares have been issued to staff as part of an LTI. So I think we're a little unusual on the ASX because we have been entirely self-funding throughout, and we've never had any debt. Thank you. From the past to the future, I'm nearly finished. Don't worry. The Apple Vision Pro, these are the 3D virtual reality goggles. We were a launch partner with our special software for them. It is quite amazing. We are starting to see a number of real-world uses for it clinically, which is great because people thought, is this just a toy? It looks great, but can it be used. We are starting to see a number of real-world applications to the point where, today, week in Chicago, Apple are putting on a huge event in their Apple store in Michigan in the Magic Mile. It's only still big enough to hold an event like this. They expect 100 to 200 people to turn up, and it will be all around the Vision Pro, and it will be 2 users who use it in real-world clinical environments. And Malte Westerhoff, our CTO. So it will be highlighting our capability with VisionPro, hopefully, for a whole lot of radiologists and other clinicians there at the Apples store Monday week. So any of you're in Chicago, feel free to come. RSNA, that's why we're going. It's our biggest show. Last year, we had 50 staff. This year, we're going to have 62. So 62 out of 142, nearly half our staff will be in Chicago. It is huge. We build a literal city that you see there. It's a bit hard to tell. But at the back there, 3 conference rooms, one is a theater that will hold 35 people. The whole thing is built, used Sunday to Wednesday and just gets dismantled and taken away. So it is amazing. It's like a little village. That's what the team looked like last year. I did wake up in time for the group photo. So I stood in front, but it will be even bigger this year. Some of you may notice they're all wearing these green or black stripe shoes. One of our staff, them I went, they're great. He goes, "Can we make those official kit, yes. So you'll now come to RSNA and most people will be wearing those. Summary. FY '25, I won't go through it all, but we do think it was most probably our -- it was our biggest year. In terms of year-to-date FY '26, we are off to a strong start, as Peter mentioned. We do have $273 million of sales contracted so far year-to-date. And the half hasn't finished. We have completed 2 big implementations. We are ahead of our budget year-to-date. U Kentucky to go live next month. So as Peter mentioned, we think that there will be a stronger second half, which always is a bit stronger, but it will be more skewed to the second half than has been the case for recent years. Thanks very much.

Thank you, Sam. I feel like I'm Sam straight man in this environment. But I hope you got a lot from that. I just want to make 2 comments before we go to questions. Yes, we did party. Unfortunately, we couldn't invite all of you to join us, but we did have a party to celebrate our 25 years. And needless to say, it was a great event. And I just wanted to reflect on $1.15 per share. I don't know whether there's anybody in the room who, 25 years ago, decided to invest in the small emerging company, but I'm sure you're well satisfied with the return to date if you managed to be here at the beginning or even shortly thereafter, even at $1.60. It was good value. So I'd now like to invite shareholders to submit any questions they may have. We will initially deal with questions in relation to comments made by Sam and myself, and later, we'll seek to answer questions in relation to the items of formal business when we deal with each item. We'll deal with the questions in the following order. Normally, I would say written question first, but I don't believe we have any of those. So secondly, questions from those attending in person. And thirdly, question from those utilizing the online portal. And finally, if there are any questions, those attending by phone. Shareholders attending online can submit their questions during the meeting by clicking on the Ask a Question button. To ensure questions reach us in time, I ask that you submit them now if you haven't already. Before I go to the questions, I just did want to reflect on the question that was asked last year at the AGM by a shareholder. They raised the question of whether it would be appropriate to undertake a share split, recognizing the level of the company's share price. The Board did some investigation on this issue and considered it in some detail. And we did receive some external input, including from some shareholders, most of whom were -- didn't see the advantages of doing so. And the Board, in conjunction with other advice that we received, decided there was no particular advantage for the majority of shareholders in undertaking a share split. So we don't intend to do that in the foreseeable future. So may I take questions from the floor, please.

Sir in the blue. Thank you.

Stuart Burn, representing the Australian Shareholders' Association. We noticed that there's $35 million in franking credits in the financial report. Can you please advise if there are any plans to return these to shareholders via increased dividends?

As you appreciate, we've tended to have a policy of returning 50% of the after-tax profits each year to shareholders, and they're all fully franked, as I mentioned earlier. At this stage, this is probably the largest level of franking credits we've actually held because over the years, they've been quite modest. So we haven't turned our mind to disbursing any additional franking credits at this stage, but we will. We do intend, assuming profits continue to rise, we do intend to increase dividends, and therefore, franking credits will be provided.

Okay. And my second question is, can you please advise the investment by PME in 4DX is strategic as they have very similar profiles? And are there any plans to invest in other similar companies?

4DX is probably a special case. Yes, it does have software that's quite interesting to us, and they are in a similar space. There may be -- apart from the financial aspects of the arrangement, there possibly will be opportunities for us to be involved with the development of the marketing of that software when it becomes more available.

I just -- sorry, Peter. I just want to add that the investment was financial to begin with. We could possibly resell their software, like we could any other third-party AI. We would not have to -- I don't believe we'd have to take an equity stake to do that. It was just -- it came to us as an opportunity because many of you may know, I used to be on their advisory board, so I knew them prior to listing. And I think the Board felt the terms were such that from a financial perspective, it stood up in its own right, that was first and foremost. And whether we decide to want to sell it or not still remains to be seen, but we have that right.

I should just add to that, that if Sam was -- had some involvement with the company earlier on, and that conflict -- the potential conflict was disclosed, and Sam didn't -- wasn't party to the actual decision taken by the Board. Another question at the back? Thank you, sir.

My name is Barry Telfer. I've seen literature recently about spec imaging. And I'm just curious, is that a sort of imaging that you can bring into your system?

Yes, we cover spec. Spec is a type of nuclear-type scan. They do a lot of spec for heart. But yes, we covered that in amongst PET, spec and other forms of that type of imaging.

Okay. And can I just -- one more.

Yes.

4D Medical, because of the lung imaging, I'm just curious, why not Cyclopharm?

I don't -- I'm not that familiar with it. I was familiar with 4D's technology. Their first technology around lung function was something that we felt was good, but we wouldn't add value to because it spits out a PDF report. This particular one, which is around pulmonary embolism, the one that just got FDA, you need to look at all the CT images with it, so we can add that value, hence one of the reasons we invested. But look, there's plenty of algorithms, plenty of good technology. We invested in a company called Elucid 2 -- 1.5 years ago that does AI for cardiac CT. There are now 2 companies in Australia that are looking to do the same. So we are looking at them. I should introduce, we've got a new staff member. That's Jim Kern, our new CFO. He didn't make the cut for the AGM. He's part of next year's. But we are looking at part of Jim's remits to look at all these things. But there are a lot -- they're a lot and you can't look at everyone. We try trying do a curated list of what we look at.

So just wait for the microphone.

Rick Howard on behalf of myself. With the data that you're uploading from these new huge clients, do you have the right to train your algorithms on them to make an even better product?

No one does believe it or not. So if you are a researcher at one of these institutions and you're on staff and it's an official research project, you still have to go through a process through a board called an internal review board. You have to say what you want the data for, how long you need it for. Only that subset of data is given to you and it's all anonymized.

It's about one thing in our mind.

So we don't. But on the flip side, we have currently 4 research agreements with Yale, Mayo, NYU and UCSF. And in those research agreements, clearly, if we're working on things, some of which I've mentioned in the past, then we and they have access to that subset of data. We do have 2 other data right agreements with 2 other clients, but that's not standard in the industry. But we have access where we need it, but you have to go through this process.

I think -- sorry. Just -- I think it's right to say that some of the AI products that Sam mentioned have been done in conjunction with 1 of those 4. And we have effectively had access to prove up that the algorithm actually works. I think in one case, it was quite a lot of data for a company. That's 10,000 or...

Yes. It's even more. So it was NYU. With them, we developed a breast cancer detection algorithm. We and their researchers had access to all their past, mammographies, breast tomosynthesis, breast MRI from everything that they have. Yes, it's a huge advantage. But data is not the only thing. It's how well curated the data is. So you can get tens of millions of exams, but if they're not expert radiologists, you may not get the right answer. So it's not just the volume, it's the quality of curation. If you look at the people like Mayo and UCSF, you're really at the top of the tree modeling.

I'm Sung Chang, and thanks for sharing on the product ideas and so on. I have a question on how much of the current contract pipeline by value are expected to convert in the next 12 to 24 months?

If I tell you, I'd have to kill you. Well, we hope as much as possible. So the pipeline is dynamic. So this time last year, I had the biggest pipeline I've ever had. I had Trinity sitting there, and I had 6 other contracts, all of which drop within a few months. And they went bang, bang, bang. Was there any reason they all came to contract in that time period? 0. They had nothing to do with each other. It wasn't like they were all on hold waiting for Donald Trump to say something, it just happened that way. I think what we can say about the pipeline is, obviously, the day Trinity comes to contract, there's -- if the pipeline gets smaller by Trinity, there's another one just waiting. Like a chair, someone gets up another person sits down. But we have been able to rebuild it with a lot of good opportunity. And we think this year's RSNA will most probably be -- I can't preempt it, but I think we will get more pipeline opportunity than we've ever seen before because these people actually book with us. So we know who's coming. So the pipeline gets rebuilt. The other thing is we -- I think if you've seen the range of markets that we sell in is also important because we want as big a market share we can get. So we can't leave any of the market alone other than the really tail bit that's too small to contract with by themselves. And if you look at all our sales over the last few years, you'll see it's across the whole range, the whole spectrum. And the one area that was sort of quiet for us that now is coming on full steam is that private market. You see 3 pretty material deals in the last -- I don't know, 12 months or less, and we see more opportunity in there. So all I can tell you about the pipeline is it is healthy, it's across a large range of market segments. And I'm only talking U.S. I'm not talking anything in Europe or possibly Australia.

And the next question would be you have gone around 7 contracts, and each of the contracts come into pipeline, into the system? And how would it impact the margin? Would you be able to share a bit?

Yes. That one I can tell you. They go up. The margins go up simply because the revenue goes up more than our cost base. So we often get asked, are you investing enough in the company, particularly around R&D? And the answer is, we believe we do. So myself and my executive team, our job day in, day out is to rightsize. Make sure we have the results we need. Don't get too overblown, don't get too thin that you can't service. So I'll give you an example. We can't always predict when people want systems implemented. And these implementations are really big. There's a lot of organization that goes in between. We might have bought one line and say, we did Trinity. I mean, there's months and months and months of work behind that. Having said that, we have never ever, ever missed a go live date. So we have to make sure we have the people there, train people, you can't just bring people off the street. So that's what we do. We think all of them that we mentioned will be implemented within the next 6 to 12 months. Now often, not always, it's up to the client. So we signed Trinity in November. They only went live in October. That was because of them, not because of us. And they reckon 9 months is world land speed record for them. They normally would get ready in 2 years. So basically answering your question, yes, margins go up a little new sales.

The margin in go up that much though, because the base is getting bigger. So I just wanted to pick up one point in the pipeline. At least one of our more recent announcements took 2 years from start to contract signing. So it's very difficult to predict. And then as Sam mentioned, the implementation is another period. So the tail is quite long from first discussions to contract to implementation. So that's why we can talk about a pipeline which has a long tail. There's a question at the back.

Mine is more of a comment than a question in that when I first got interested in this company, we used to meet over the river with maybe 20 people turning up to the AGM. And I would like to thank you now, just looking at this, for the measure of the success of your company has been, and like to thank you very much for what you've done to the value of my shares.

Thank you, sir. I remember with some fondness that meeting over the river. But yes, it was a bit cramped over there, wasn't it?

Well, I'm going to tell you, our first AGM was actually in the bigger hall in Leonda. And we had even more people because we were one of the first IPOs after tech was successful. But it hasn't always been an easy ride. I mean, in 2010, when I came back as CEO, our shares were down around, what, $0.20. We were off the radar. So it hasn't just been like that. It's gone up and down, but thankfully, more up than down.

There's another question in the back. Sir?

Clive Shell. Could you quantify what the benefits and advantages might be out of that access to the American veteran system?

The VA?

Yes.

Yes. Thanks for that. In America, they have Department of Defense, which is roughly broken down into 2 arms, active duty and Veterans Affairs, or VA. The Americans love going to war. They've gone to many them, and they have a huge health system for veterans. They have their own hospitals, their own clinics, their own specialists. It really is very extensive. What they do is they divide the country into a thing called the [ VISN, ] which is an integrated service network. So it's geographic. If you're a vet that lives in that area, you can go to any of the hospitals or clinics in that area. In the past, there was a special government contract called Impact that you needed to deal with military, either active or VA. And now they're pushing everything to go into the cloud. So you may have seen some of our announcements. The first one is we have a thing called FedRAMP. FedRAMP means you're certified to go into a government cloud. It doesn't talk about military. It's purely around the government because it's a hypersecure cloud. It's not the normal AWS. Recently, we got another certification which was in the military itself called an ATO, not Australian Tax Office, but authority to operate. And you need one of those to do anything in the military hypersecure cloud. Yes. So it's very, very bureaucratic. It's all around security and permissions. And so we recently got an ATO, which normally takes years to get. And that ATO will allow us to move our first VA Vision 23, which is on-prem into this hypersecure FedRAMP cloud. So we think we'll be the first, if not only one, that will have the model of where all the other VAs want to get to. So that opens up the -- I suppose, gives us a hunting license and some credibility that there is a model that they can follow. Now it sounds easy, they can't just go out and buy it. They have to go through a process, but they can't buy you if you're not on the list, and we're on the list.

Just a question. AGL, a happy shareholder. I just wanted an update, Sam, on the competitive landscape, like your new competitors coming in? Any leaving? Is it becoming easier or tougher?

Well, it's never a dull moment in our industry. So they're the traditional players. And a week ago, I would have told you the traditional players like the Ts, Philips Siemens, the only one that's doubled down is Philips. But this last week has made me a liar because GE has bought a company called Intellired that is in our space. Intelerad as a company we know well because they have a presence here in Australia. We don't see them in the upper end in the U.S. You won't see them in Mayo Clinic or an NYU, they just don't have the sophistication. They're more for the private market. That's been their strength. So landscape -- competitive landscape just changed again. I think, truth be known, don't quote me on this, because I think it's good for us because I don't think that's where a dynamic software company lives best or sits well, but that will be for GE to work out. But we've seen some new entrances at 1 or 2, some Internet-based start-ups. You see them every few years. It's not uncommon. You see companies like [indiscernible] for, for instance, we used to do we're trying to reinvent themselves. I mean what this announcement by GE show is it is a very big market, which we have always been saying it is, and there will always be people attracted to it. So competitors come and go, and we have to deal with that. But as we see it today, we don't see another competitor that can actually work in cloud, take the whole thing, put it all up in cloud and decommission all the hardware. And this particular one that GE bought is in that boat as well. So they can't do it either. But look, we keep an eye on 2 things in the future. Run faster than the competition, never stop; and make sure you know what your competitors are doing so that you can make sure that what you're trying to do keep ahead of them.