QuickFee Limited (QFE) Earnings Call Transcript & Summary

Good morning, everyone, and good evening to those joining us from the U.S. Welcome to the QuickFee First Half FY '25 Financial Results Webinar. On our call today, we have Jennifer Warawa, President, North America; and Simon Yeandle, CFO, to run through the presentation. My name is Katie Mackenzie, Investor Relations at QuickFee. At the end of the presentation, probably for about 20 minutes, we'll open up for Q&A. So if you've got any questions, please type them into the Q&A tab. And now I'd like to hand over to Jennifer.

Great. Thank you, Katie, and good morning, everyone, welcome. And good evening to everyone joining from the U.S. We're really glad that you could join us today as we share an overview of the financial results and key highlights for the first half of our FY '25 fiscal year. As a reminder, for any of you who may be new to our story, we have a really simple business focus. We help professional services firms automate and accelerate accounts receivable, while at the same time supporting them as they grow their firms. If you like to stay up to date with our latest news and updates, we encourage you to sign up to the QuickFee Investor Hub, and details are shown on the screen here. Now let's take a look at our H1 FY '25 performance. This half marks a major operating milestone for QuickFee, our first-ever EBITDA-positive half year. This is in line with our consistent message to the market that we've been working towards sustainable profitability and this achievement reflects years of hard work to generate strong revenue growth, disciplined cost management and ongoing improvements in profitability, which are sustainable over time. We delivered strong growth with total group revenue reaching AUD 11.7 million, an increase of 26% on the prior corresponding period or pcp. Breaking this down, Australia revenue grew by 49% to AUD 6.1 million, a testament to our expanding market presence, and the U.S. revenue increased by 8%, reaching AUD 5.6 million, demonstrating steady growth in a competitive landscape. Gross profit increased by 33% to AUD 7.6 million and operating expenses reduced by 13%, reflecting our focus on growth in higher-yielding products and focused cost management. This has driven a significant AUD 3 million turnaround in EBITDA, which is now positive at AUD 0.3 million. Net profit after tax, or NPAT, was negative AUD 1.2 million after accelerated amortization of capitalized borrowing costs, and this is a significant improvement of AUD 2.2 million over H1 FY '24. Earnings per share improved by 0.8 cents, reflecting our progress towards profitability. Overall, these results demonstrate strong underlying business momentum with revenue growth, cost efficiencies and an EBITDA positive first half, positioning us well for the future. We remain on track to achieve our FY '25 EBITDA guidance of AUD 1.5 million to AUD 2.5 million, reinforcing our confidence in continued profitable growth in the second half. Now building on the previous slide, let's dig deeper into our key highlights for H1 FY '25. Breaking down our revenue by region. Australian revenue grew by 48% to AUD 6.1 million, a significant increase driven by strong demand and sales execution in our Australian Finance segment. Finance, or Pay Over Time, total transaction value, TTV, increased 25% to AUD 31.7 million. And our Australian finance revenue yield improved to 16.9%, up 270 basis points, reflecting our ability to generate higher margin revenue, in particular, from our higher-margin Australian disbursement funding product, which now makes up about 35% of the total Australian book. In the U.S. business, revenue increased 8% to AUD 5.6 million, demonstrating continued growth in our largest market. Finance, or Pay Over Time, TTV grew by 23%, reaching USD 16.7 million. U.S. Pay Now TTV also increased by 13%, hitting USD 705 million. However, U.S. Finance revenue declined slightly to 8.4%, down 50 basis points, primarily due to late Q2 originations with several large new clients onboarding in December. We're also seeing strong traction in our Connect subscription product with momentum continuing to build. As of the 31 December 2024, we had 5 Connect integrations and 95 firms signed up, with a strong pipeline of firms expected to onboard in the second half. Invoices delivered via Connect grew by 38% in H1 FY '25, reaching 29,000. And as previously mentioned, we maintain our FY '25 earnings guidance. Turning now to our transition to sustainable profitability. We're seeing clear progress in both revenue growth and cost efficiency, resulting in our first ever EBITDA positive half year. You can see the consistent revenue growth across recent years has delivered improving EBITDA with our first ever EBITDA positive half year, which, of course, is a significant milestone for QuickFee. This has been achieved by not only solid execution of our strategies, but also a reduced cost base. A key driver of this EBITDA turnaround has been our continued focus on efficiency. Operating expenses decreased by 13% on pcp, down to AUD 7.3 million. This was primarily driven by the cost saving initiatives implemented in calendar year 2024, which are now delivering sustained benefits. In summary, QuickFee is now EBITDA positive, operating expenses are being closely managed and revenue growth continues, setting a strong foundation for the future. Now when we look across our customer base as to why they work with QuickFee or when we win a new customer, it typically boils down to 1 of 4 reasons and sometimes a combination of these. First, they want to reduce their accounts receivable. Accounts receivable is typically one of the highest line items on a firm's balance sheet, and we help turn AR into cash. Second, they want to grow their business. There are many priorities competing for cash, and we can help find more of it for firms and their clients. Third, they want to automate their processes. We increase efficiency while improving the client and employee experience. And finally, they want to save on fees. Firms can save thousands and sometimes hundreds of thousands of dollars, on credit card merchant fees simply by passing on the surcharges to their customers. And now let's take a look at our solutions. QuickFee's payment platform allows the firm's clients to pay their invoices by ACH or card, which we refer to as Pay Now. And I think of this as traditional digital payments. We also offer a lending option that's proprietary to QuickFee, QuickFee Finance. This Pay Over Time option allows clients to pay monthly payments over 3, 6, 9 or 12 months, while the firm gets paid in full at no cost to the firm. Finally, our Connect product is a significant growth enabler in the U.S. market. Connect provides integration into leading practice management solutions, helping turn a manual, primarily paper-based invoicing process into an automated digital process by sending out the invoices generated within the practice management solution by e-mail. Those invoices have a payment link on them, which sends the customers directly to the QuickFee payment page. We now have 5 Connect integrations with leading accounting practice management systems that are driving volumes on our Connect platform. Of course, we have some competitors in the market that we run up against, as you'd expect, but there are some very specific ways that we differ from our competition. QuickFee is designed specifically for professional service firms. We have no invoice maximum for QuickFee Finance. We have no hard credit checks for clients of firms, which is important because someone doesn't want a black mark on their credit score simply because they paid an invoice over time. We integrate with the leading practice management solutions, and we have pricing that works for all sizes of firms. We are the best solution that meets the needs of the largest segment of the accounting market, and we have a very competitive subscription pricing model. Now let's take a look at our U.S. financial performance, where we continue to see profitable growth and strong operational improvements. The U.S. segment delivered strong revenue growth of 8% year-over-year, reaching AUD 5.6 million. This was driven by an 11% increase in finance revenue, which grew to AUD 2.1 million and a 6% increase in Pay Now revenue reaching AUD 3.5 million. Gross profit grew by 18%, reaching AUD 4 million, benefiting from margin expansion due to lower cost of sales. A key driver of this improvement was our decision to bring ACH processing in-house, which has significantly reduced processing costs. The U.S. segment is now profitable, with EBITDA improving to positive AUD 0.8 million in H1 FY '25. Operating expenses declined by 14%, further contributing to improved margins and profitability. Our active firm base expanded by 3%, reaching 765 firms, reflecting strong customer adoption. U.S. transactions in the quarter increased by 13% to 273,000, highlighting the growing engagement with our platform, and we awaited the team's commissions and STIs to driving Finance TTV and Connect sign-ups. And as you can see in the bottom charts, we delivered annualized run rate Finance volumes of USD 29.8 million and Pay Now volumes of USD 1.4 billion. The U.S. segment is now a profitable growing business, driven by revenue expansion, cost efficiencies and increased customer adoption, and we're well positioned to further scale operations while maintaining sustainable profitability. Note that the country segment results do not include product development expenses or corporate overheads, these costs are included in the overall consolidated EBITDA number. In H1 FY '25, we made significant progress in executing our strategy, particularly in expanding our Connect product and strengthening our market position. We successfully launched new Connect integrations with Thomson Reuters Practice CS and PracticeERP, bringing our total to 5 Connect integrations. As of the 31 December 2024, a total of 95 firms have signed up for Connect, and we have a strong pipeline of additional customers set to onboard in the second half of FY '25. This growing adoption is reflected in the increase in usage of our platform with invoices delivered via Connect up 38%, reaching 29,000 in H1 FY '25. Beyond our core markets, we're seeing traction in secondary verticals such as legal, government contracting, executive search and other professional services businesses, broadening our reach and diversification. Our strategic partnerships with BDO Alliance Global, IRIS Software Group, Knuula and Mango are progressing well, further enhancing our distribution and market penetration. Additionally, we launched a new payment portal designed to offer expanded functionality beyond the traditional payment landing page, providing a more seamless and feature-rich experience for our firms as well as their clients. These initiatives demonstrate our commitment to innovation, expansion and delivering long-term value as we continue to scale our business. Our increased traction in acquiring larger, higher value firms is driving stronger financial performance and increased transaction volumes across our platform. While total firm sign-ups have decreased, the quality of the firms that we're acquiring is significantly greater, resulting in greater traction within the larger firm segment. In H1 FY '25, new firm sign-ups decreased by 32%, reflecting our shift towards fewer, but more substantial customers. However, the average annual revenue of these firms increased by 60% to USD 16 million, demonstrating that we're attracting firms with greater financial capacity and transaction volume potential. In the Finance segment, while new firm sign-ups declined slightly by 6%, the average Finance TTV per new firm grew by an impressive 180% to USD 126 million. This underscores the impact of our traction with larger firms that generate significantly higher transaction volumes. Meanwhile, as mentioned, QuickFee Connect adoption continues to accelerate, with firms signed up increasing by 38% from June 2024 to December 2024. Similarly, invoices sent via Connect have grown, further validating the platform's value in driving automation, improving efficiency and generating recurring revenue streams. By prioritizing larger firms, high-value transactions and increased Connect adoption, our strategy is positioning QuickFee for sustainable long-term growth, improved profitability and deeper client engagement. Now I want to take a step back here and look at the bigger picture environment in the U.S. market. The U.S. accounting profession is undergoing significant structural shifts driven by industry consolidation and changing business models. In 2024, 12% of industry growth was attributed to M&A activity with the highest performing firms leading this trend. Several key factors are driving this consolidation. Technology investment has increased, now accounting for 5% to 6% of firm revenue, nearly doubling over the last 8 years with around 50% of firms investing in AI to improve efficiency. At the same time, firms are grappling with the succession planning as retiring partners exit the industry, while competition for top talent remains challenging. Additionally, the evolution of new service offerings, such as advisory and cybersecurity, have reshaped firm revenue streams. Notably, revenue from noncompliant services has grown to 36% in 2024, up 20% from 2012, demonstrating the shift towards higher value services. Another major trend is the move away from hourly billing towards value-based pricing, creating a fundamental shift in how firms generate revenue. QuickFee is actively responding to these industry changes to maintain a competitive edge. We're working closely with large private equity-backed accounting firm consolidators, which allow us to remain integrated with high-growth firms. However, of course, we've also lost some smaller firms to other industry consolidators, highlighting the competitive nature of the market, although I would say that we've been net beneficiaries of this trend so far. To strengthen retention and engagement, we're expanding our subscription offerings, ensuring that firms continue to see value in our platform. Additionally, we're promoting our unique finance solution as a key market differentiator positioning QuickFee as an essential partner in the evolving landscape of the accounting profession. These industry dynamics present both challenges and opportunities, and our strategic initiatives are ensuring that we remain a trusted partner for firms in navigating this changing environment. Now on the next slide, we've shared this previously, but given it's the foundation of our strategy and key focus areas for FY '25, I just wanted to revisit it for a few moments. We think of this flywheel as showcasing the 5 areas that we believe will unlock transformational growth in the U.S. market. And in fact, we're already starting to see these growth areas deliver. Our #1 lever on our flywheel is QuickFee Finance, not surprisingly. QuickFee Finance has revenue yields that are approximately 25x those of our P&L offerings, all while delivering the solution to the market that's unmatched by any other company in the U.S. It's the reason we came to the U.S., and it's instrumental in delivering transformational growth. Secondly, QuickFee Connect is a key part of our growth strategy. Many firms that have adopted Connect have seen their transaction volumes grow substantially, essentially by removing paper-based checks from the process. In addition to that, by integrating QuickFee Connect with the most widely used practice management solutions in the U.S., firms are able to unlock automation capabilities that simply don't exist in the practice management solution itself. To maximize the transaction volume we capture from our customers, Connect is key. In addition to QuickFee Finance and Connect, we need to continue to deliver differentiated technology, build strong partnerships with other leaders in the industry so we can rapidly grow our reach, drive increased awareness and acquire customers at scale on a one-to-many basis, and of course, leverage automation across all areas of our business. And we've made significant progress in all of these areas over the last half year, giving us confidence that our strategies are working. As part of our strategic growth initiatives, we continue to focus on professional services businesses that operate within a B2B or business-to-business environment. These firms have complex financial needs, making them ideal candidates for our solutions. Our primary verticals remain within the accounting sector, including both accounting firms and solution providers that cater to accountants. Now at the same time, we're actively expanding into secondary verticals to diversify our market reach and create additional growth opportunities. These include industries such as legal services, government contracting, executive search and other professional services businesses that share similar financial complexities and require flexible payment financing solutions. To ensure we're engaging with the right businesses, we have set key qualification criteria. Firms must have the necessary professional qualifications or licensing, and we focus on businesses with annual revenue greater than $1 million for our primary verticals and greater than $2 million for our secondary verticals. These thresholds ensure that we're targeting firms that can fully benefit from and sustain engagement with our platform. Expanding in secondary verticals allows us to leverage our existing infrastructure, enhance retention through broader industry adoption and capitalize on new opportunities in professional services sectors that are seeking innovative financial solutions. As we continue executing this strategy, we expect to see increased penetration across these industries, further driving our long-term growth. QuickFee Connect, as I mentioned earlier, continues to be a key enabler of increased transaction volume, growth and reoccurring revenue, enabling firms to automate their engagement to cash process with seamless integrations into leading practice management solutions. We now have almost 100 Connect customers with half having completed the onboarding process and the other half currently in progress. Additionally, there are around 200 firms that use a compatible practice management solution, but have yet to subscribe to Connect, which represents a significant opportunity for cross-sell right in our own customer base. Connect is proving to be a powerful tool in driving new subscription revenue, while also increasing overall transaction volume across ACH, Card and Finance products. As more firms on board, we expect to see continued acceleration in transaction processing and revenue generation. We're also focused on building an ecosystem that integrates with firm's existing tech stacks, providing a scalable and seamless experience. Today, QuickFee Connect integrates with 5 major practice management solutions, including Thomson Reuters Practice CS, IRIS Practice Engine, Wolters Kluwer CCH Axcess and CCH ProSystem fx and Practice ERP. Additionally, we've expanded our integrations with Knuula, which provides integration with their market-leading engagement letter solution. With these integrations and a strong pipeline of firms still to onboard, Connect remains a major growth engine for QuickFee, reinforcing our position as a leading provider of automated payment and financing solutions for professional service firms. We expect that the reoccurring revenue streams from the subscription model will comprise a more meaningful component of U.S. revenue over time. Our strategic partnerships play an important role at QuickFee's growth, allowing us to expand our reach, strengthen industry relationships and enhance our product offerings. We're proud to be the only vendor with representation on the BDO Alliance Partner Advisory Council, which positions us as a trusted resource for its members. Through this partnership, we provide valuable insights into financial technology trends and solutions that help firms optimize their operations. In addition, we've secured 2 speaking spots at the upcoming BDO Evolve conference in May, further reinforcing our leadership in the accounting profession. Our engagement with the California Society of Certified Public Accountants, or CalCPA, continues to grow, and I'm representing QuickFee on a leadership panel at the upcoming Women's Leadership Conference. This involvement underscores our commitment to supporting industry professionals and driving innovation in the financial services sector. Additionally, our partnership with Mango Practice Management is expanding, as we continue to collaborate on promoting and selling QuickFee Finance to Mango's customer base. This integrated go-to-market partnership enables us to engage more firms with our financial solutions, creating new growth opportunities for both companies. Watch this space for updates in the months ahead. By deepening these relationships, we're not only driving brand awareness and adoption, but also strengthening QuickFee's position as a key partner for professional service firms looking to enhance their financial workflows. Now our Australian business continues to perform exceptionally well, delivering strong revenue growth and increased profitability. In H1 FY '25, Australian revenue grew by 49%, reaching AUD 6.1 million, primarily driven by a 50% increase in finance revenue to AUD 5.4 million. The Pay Now segment also grew by 25%, and this growth reflects the increasing adoption of our payment solutions in the Australian market and consistent strong sales execution from the team. Profitability has substantially improved with gross profit increasing by 57%, driven by higher revenue yields for the disbursement funding product as well as operational efficiency. Importantly, our Australian business continues to be profitable with EBITDA growing to AUD 2.1 million. Notably, operating expenses remained stable, demonstrating our ability to grow revenue while maintaining disciplined cost control. Looking at our key operational metrics, we continue to see strong momentum. Finance TTV increased by 25%, reaching AUD 31.7 million; Pay Now TTV grew to AUD 44 million, reflecting rising transaction volumes. The number of active firms grew from 470 to 487, demonstrating continued adoption of our solutions, and quarterly transactions increased by 31%, signaling greater client engagement with our platform. Overall, these results reinforce that our Australian business is on a strong, profitable trajectory with sustainable revenue growth, expanding margins and continued operational efficiency. We remain confident in the long-term potential of our Australian business, as we continue to scale and enhance our offerings. Our Australian business generates its profits from lending, which is to say that we don't generate revenue from credit card or EFT transactions like we do in the U.S. These graphs here show the steady increase in rolling transaction volumes from the finance product and the quarterly increases in revenue. This growth reflects increasing demand for our financing solutions as more firms adopt our platform. A key driver of the success is the continued expansion of both traditional fee funding and disbursement funding or DF loan books. The DF loan book now accounts for approximately 35% of the Australian loan portfolio, offering higher yields than traditional fee funding. This shift is enhancing margins and improving the overall profitability of our financing operations. Importantly, our credit performance remains strong with low credit losses, reinforcing the quality of our portfolio. With the support of major industry partners such as KPMG, RSM, Piper Alderman, Kelly Partners and Carbone Lawyers, we're well positioned to continue scaling our Australian business while maintaining strong financial discipline and credit quality. I'll now hand it over to Simon to share our financial highlights.

Thank you, Jennifer. Hello, everyone. Jennifer shared the financial headlines, but we'll run through in a bit more detail. It's been a very pleasing half year, and we are on track to hit our full-year projections. . Interest revenue was up 39% to AUD 7.1 million from AUD 5.1 million in H1 FY '24, and revenue from Pay Now and other fees was up 10% to AUD 4.6 million. Our loan book growth in the half year led to increased borrowings, which in turn resulted in interest expense increasing to AUD 2.8 million. Our cost of sales decreased by AUD 0.2 million to AUD 1.3 million. And this saving was a result of moving our ACH processing in the U.S. in-house and thus reducing our third-party processing fees. OpEx was down 13% to AUD 7.3 million, primarily driven by cost savings that we implemented in the first half of calendar year 2024, and we get the full 6 months' worth of those benefits in the half just finished. Our net bad debt write-offs in the period was worth AUD 16,000, which is 0.02% of total lending. Our total bad debt write-offs on average over the last 7.5 years has been 0.14%, so very low. The provision for expected credit losses at 31 December was AUD 162,000, which is 0.3% of the total loan book at 31 December. So we've got a pretty conservative provision there and continued very low bad debts. Because our professional firms guarantee their clients' borrowings for their fee funding product, that means the product is extremely low risk and does ensure we continue to incur those very low levels of bad debts across the business. The group's depreciation and amortization charge increased to AUD 1.3 million, as Jennifer mentioned, due to the accelerated amortization of capitalized borrowing costs when we established the borrowing facilities for Northleaf some years ago, and we expect to refinance those in the second half of FY '25, which is why those amortization charges are accelerated to when that happens. And as Jennifer mentioned, the group reported a positive EBITDA of AUD 0.3 million, which is an AUD 3 million improvement over H1 FY '24, and the group loss after tax was AUD 1.2 million versus AUD 3.4 million last year. Our permanent head count has reduced in the past 12 months by 10, as we move a large part of our tech team from permanent staff to contractors and eliminated certain other non-essential roles. We now have 38 permanent staff, 20 in the U.S., 16 in Australia, and 2 nonexecutive directors. A little bit more on OpEx. We've continued to manage costs very carefully without impacting our growth potential. We're running a stable cost base. OpEx was AUD 7.3 million in the half, down AUD 0.1 million on the second half of FY '24. Here, we show total OpEx in the chart top right and the 4 main functional characters along the bottom for the last 5 half years. So along the bottom moving from left to right, general and administrative expenses were level with H2 of FY '24 at AUD 3 million and down AUD 0.4 million on H1 '24, which is the prior corresponding first half. Selling and marketing and customer acquisition expenses were down in total AUD 0.2 million and product development costs were down AUD 0.5 million on pcp as a result of their technology and product team restructure implemented by our Chief Technology Officer, Dave Moore, last financial year. That's slightly offset by a temporary increase in activity in the last few months, as we accelerated some Connect development, but we do expect to see PD costs reduce slightly in H2 from the level in H1. Now a couple of comments on the balance sheet. Our net assets at 31 December was AUD 7.7 million. Our reported cash of AUD 15.4 million is made up of available unrestricted cash of AUD 3.5 million and AUD 11.9 million of cash in transit, and that cash in transit is from our direct to bank ACH processing model, where we process all ACH receipts through our own bank accounts. And the other side of that AUD 11 million is shown in increase in firm settlements outstanding and current liabilities. So you can see the increase offsets the cash increase there. Our strong growth in the Finance product in both the U.S. and Australia has meant our total loan book has grown 16% to AUD 64.4 million, that's current and noncurrent, at 31 December from AUD 55.2 million at 30 June. And there's also AUD 254,000 of capitalized Connect software development costs on the balance sheet at December. The accounting standards require us to recognize a specific component of development work as an asset, and we expect there will be a similar amount capitalized in H2. So the first year we've capitalized any software development, but we do now have an intangible asset with -- in the Connect software product. So we're required to capitalize a portion of that. On the cash flow slide, on the left-hand side is the summary cash flow statement in the usual format. And on the right, it's the reconciliation from loss for the period to operating cash flow. The first main element of operating cash flow of negative AUD 0.5 million represents our operating loss from running the business. That will become positive once we're more profitable. The second line, net cash outflow from loan book and firm funding of AUD 0.4 million is comprised of 2 elements, and they're set out on the right-hand side at the bottom 2 lines on the bottom half of that right-hand side table. Change in loan book, AUD 7.8 million cash outflow from funding our loan book growth. And that is because our loan book is funded, about 90%, from debt and 10% of our own funds. If our loan book continues to grow, then this negative AUD 7.8 million change in loan book line will continue to be negative, as we lend more money. On the second line, the change in payment processing working capital was AUD 8.2 million cash inflow with the increase in cash in transit from our in-house ACH processing model. So those 2 lines add up to the AUD 0.4 million change on the left-hand side. As a liquidity and funding update, on the next slide, we have summarized our credit facilities, cash and facility growth capacity here on the left through Northleaf and Wingate. On the right-hand side, a quick snapshot. We had AUD 3.5 million on restricted cash on hand. As I mentioned, borrowing growth capacity of those facilities of a further AUD 21.5 million. We keep our cash on hand at a minimum level required to run the business in order to minimize interest and borrowing costs. And we are still in the process of refinancing our borrowings facilities. We're in advanced discussions with lenders. We don't expect any material financial operational impact from those changes. Interest rates that we pay will stay reasonably similar to where they are now. So there won't be any material change, and we will update the market as soon as there is anything to announce there. So we remain well capitalized and continue to be well placed from a liquidity perspective, in addition to being well positioned to grow. This chart we've shown in the past, but we've included this to underline the confidence we have in achieving our full-year earnings guidance. We're often asked what gives us confidence that we're going to continue to grow. And the 2 main reasons. Our business is seasonally much stronger in the second half of any fiscal year. The chart shows the revenue growth we have seen over the past 10 quarters. The arrows in the chart show revenue increases from Q2 to Q4 every year, as an indication of that seasonality. So it's clear there's a strong basis for us to have a lot of confidence that H2 will again be stronger than H1 this financial year. In addition, our loan books have a long tail of unearned interest revenue attached to them, as the interest revenue is recognized over the term of each payment plan taken out. So while our loan books have increased AUD 16.5 million over the past 12 months, the future contracted, but unearned interest income of that loan book at 31 December is AUD 4.9 million, which is AUD 1.5 million higher than 12 months previously. And again, that's just a proof point that shows that why we expect H2 to be stronger than H1 again is that we've got more contracted future income. With that, I'll hand back to Jennifer to wrap up.

Great. Thank you, Simon. In the second half of FY '25, our focus remains on growing profitability while unlocking transformational growth opportunities, particularly in the U.S. market. Our strategy continues to evolve around maximizing profit growth through QuickFee Finance and QuickFee Connect. We'll continue to carefully manage our cost base while investing in automation within Connect to enhance efficiency and capture additional revenue opportunities. In Australia, we anticipate continued organic growth, building on the strong momentum we've seen in the first half. In the U.S. market, we're focused on unlocking transformational growth by leveraging our scalable technology foundation, ensuring that our platform remains robust and resilient as we expand. A key part of our strategy involves deepening strategic partnerships, which will allow us to accelerate growth and expand our market reach. Additionally, we're growing the new Connect subscription model alongside further integrations that will enhance adoption and engagement with our solutions. With a clear focus on profitability, operational efficiency and scalable growth, we're confident that H2 FY '25 will position QuickFee for long-term success and value creation. Importantly, we remain on track to achieve our FY '25 EBITDA guidance of AUD 1.5 million to AUD 2.5 million, reflecting our disciplined execution and financial performance. With that, I'm going to hand it back over to Katie to facilitate the Q&A.

Thank you, Jennifer and Simon, for that really informative presentation. [Operator Instructions] So we do have a few questions just to kick off with. So Jennifer, first question for you. The overall revenue in the first half was up 26% on pcp, and that reflected 48% revenue growth in Australia, 8% revenue growth in the U.S. Can you give us a little bit more insight into the factors impacting revenue growth in the U.S. in the first half? And how you think about that revenue growth moving forward?

You bet. Thank you. So the revenue growth rate in the U.S. in the first half was not what we hoped, and it's certainly not representative of the market potential and opportunity that we have in front of us. There were a number of factors that contribute to that. It was one thing. One of the factors certainly was the impact the election had on the economy overall and the stalling of decisions in the U.S. market. And so we expect to continue with strong growth and ideally accelerate that in the second half of the year. I can share that in the 7 weeks, I guess, we are into calendar year FY '25 and our second half of our fiscal year, we have seen really strong demand. We actually -- we signed up a $90 million firm on Connect yesterday, and they want to go live before tax season, and I thought it was tax season. So I guess we're in a time where we don't expect people to be pulling the trigger and getting going. They are making decisions to move forward. So while the first half was not as strong as we would have liked in the U.S. market, we expect the second half to be much better, I would say.

[Operator Instructions] We have another question here. You've spoken a lot in the presentation about Connect and how that is a key growth driver for the business moving forward. You've spoken about the pipeline and the strong onboarding pipeline for Connect in the second half. Can you give a little bit more color around that pipeline into the second half for Connect?

Sure. Yes. So we have -- and we've shared a little bit of this in the presentation. We have about 100 firms that have signed up for Connect, almost 100, and about 50% of those have finished implementation and are now ramping as they head into the busiest season of the year, tax season. So we're seeing -- we've got a firm that we're onboarding on Monday evening, while they're quiet for the evening, and they expect to be sending out 2,000 invoices a week. So that's -- and that's one firm. So we're excited about that. So we have 100 that are in that -- have signed with 50% having implemented and 50% coming up for implementation in the near future, and we're accelerating those implementations as quickly as we can. Additionally on that, in our own customer base, we have about 200 firms that have a practice management solution that we integrate with already. We don't need any additional integrations to be able to go after those 200 firms. And we've just recently brought on 2 new hires in the sales team, and they are hunting in that base as well as out in the market. So we have not only a strong pipeline, but high expectations, and we've been really pleased with the performance and the momentum that we've been able to build.

Thank you, Jennifer. So we don't have any further questions there. But if people have got questions after that they would like to ask us, please feel free to reach out to any of us here on the call. Alternatively, we've got the Investor Hub, which is really easy to type questions in and so we can get back to you there. So, Jennifer, I might hand it back over to you to wrap up the call for today.

Great. Thanks, Katie. Just wanted to thank you all for taking the time to get an update on our Australian and U.S. business. We feel incredibly optimistic with the momentum and the direction that the company is headed, and we're really pleased to be able to continue to track towards the EBITDA number that we provided in the range of AUD 1.5 million to AUD 2.5 million. So we're excited to be on track for that. And we think that the best days are yet to come. So thank you for being with us on this journey. And -- we just had a question come in. Well, maybe -- we're not done yet, don't hang up yet. Yes. That's good. So, Katie, do you see the question or would you like...

Yes. It's just come in, sorry, Jennifer, as we were wrapping up. We do have a question here. If you are seeing any changes in the sales cycle, if the sales cycle is shortening or lengthening or if there's any color you wanted to add to that on the sales cycle?

Yes. I love to talk about the sales cycle. It's a really interesting place to be and much less predictable in this business than it has been in previous companies that I worked at. I would say, coming out of the election period, that certainly stalled sales cycles. There were people who were not making decisions about anything. So it was just -- it was like, well, we're going to decide after the election. It's like, well, regardless of what happens in the election, I think you're going to need to automate some of your business processes. But I carry on, we're going to wait until after the election. What's really interesting is one of the firms that we landed, which proved to be a very high-value firm, bringing in a lot of finance transaction volume in the second quarter and in the first half, that sales cycle was very short, and it was a large firm. So thinking about $300 million firm, and they were referred. They had a set of past due accounts receivable, and they were ready to hit the ground running, and it was a very short sales cycle. And so in some cases, you can see a sales cycle that's less than a week, and it's not dictated by the size of the firm, it's dictated by the urgency of the need. And so you would expect -- I mean, normally, you'd expect smaller firms could move faster, larger firms would have a longer decision-making process. I was on the road recently with someone from our sales team, and we went and called in on a prospect that we've been working towards. It's a relatively large firm, and we said, how many other people need to sign off on this. He said, "I'm the sole decision-maker. When I say go, we're going. I don't need to ask anyone else". You can get into another firm of a similar size, and there can be 10 decision-makers. So it's really a wide variety of what we see in the sales cycle. I would say for sure the hesitation or the stall that we saw during that election period, that has definitely led up, and we are seeing people overall make quicker decisions, but it really depends on the urgency of the need inside the firm.

Okay. Thank you. And a follow-up question. I think this one might be for you, Simon. Have you seen any changes in the default rate or the delinquencies of your financing products? We did talk to some of those very, very low numbers in your presentation, but if you could perhaps sort of recap what those numbers are.

That's a great question. The, yes, AUD 16,000 bad debt write-offs in the half is obviously very, very low. I think our model, because we're taking installments from clients on a daily basis, and we debit their accounts, we're very, very much on top of any client who does get behind with their payment plans, and then, we'll take that sort of guarantee payment from the firm very, very promptly, which certainly limits the exposure and any debts getting into that 30-plus days past due outstanding. But I think also you hear a lot of stories, particularly in Australia about the level of insolvencies increasing, particularly around industries such as construction and small businesses. Because our model is built on underwriting professional services firms, particularly accounting and also lawyers, they tend to be much, much better insulated against any economic kind of challenges. So you very rarely see accounting firms go out of business. It does happen, never say never, but they tend to be a lot better placed when it comes to their financial stability. And the consistent demand for their services. So in the U.S., for instance, everyone needs a tax return done. The IRIS does all the marketing for the CPA firms. The demand is particularly strong. So it's one of the reasons we focus on professional services firms is because their track record is so low.

Okay. Thank you, Simon, for recapping. That's all, we don't -- I can't see any further questions here. But again, if you do have any, you can feel free to reach out to Jennifer, we might do round 2 on the wrap-up. I think you got halfway through it.

Yes. Yes. Thank you all very much for your support and for tuning in today. Again, please visit our Investor Hub. You're welcome to post questions there. We'll answer them. You can see everyone else's answers. So it helps you get a better picture of maybe what's going on in the business and what other questions we're getting in. But we appreciate your support, and we look forward to a great half coming up. So we'll keep you posted on results.

Yes. Thanks very much.

Thank you.

Bye.

Bye-bye.