Beeks Financial Cloud Group (LSE:BKS) — Interim Results

0:00 Good afternoon, and welcome to the BEEKS FINANCIAL CLOUD GROUP PLC interim results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Gordon McArthur, CEO. Good afternoon, sir. Thanks, Ali. Good afternoon, folks. So I'm I'm gonna do the first part of the the presentation, then Fraser will go through some of the numbers, and then we've got some some q and a sort of already submitted. So we'll we'll tackle that at the end. So we go to slide three.

0:57 So what I wanted to do today, just kinda start with a very high level on the on the period and then and then, you know, recap, primarily, our product set because it has evolved over the the the last few years. So I'm gonna spend some time there. So I think just to high level cover the the the financials of the period. So net revenue revenue was up 35% year on year, at 10,400,000, also 35% up on our annual committed run rate, which is one of the key metrics we use to measure where we are in the business. So as of the January 1, we had, you know, 21,300,000 committed. That that could always every month, right, on a you know, on a on an ongoing basis. So we've we've progressed up over the over the last couple of months as well. And then our EBITDA was was up substantially 48% at 3,500,000 for the period. So so I you know, I we've been talking to a lot of our institutional investors over the last few days, and and we we put it down as a solid set of numbers. I think if you look at historically how we've grown since we IPO ed, we're fairly consistent in that we're around 30 to 35% every six month period, and and we've managed to maintain that.

2:18 So pleased with with that. And as I say, we we put up there a solid set of results. So what I want to do is just spend a lot better time now on the on on some of the product the the product line, and really talk about how that has evolved over the period. So can we go to slide five for you, please? So I'm going back to when we IPO ed, the business primarily was a public cloud provider. Right? And and and what do we mean by that? We public cloud is the ability to go out and over the Internet buy and consume computing connectivity services. So we when we IPO ed, had about eight or nine data centers, I think, from memory, you know, the the the financial services data centers around the world, and people would consume our services over the Internet managed by a portal and and they would buy computing connectivity.

3:20 And we still do that. It is now a very small percentage part of the business, like, about a million pounds. So, you know, that is what we call the legacy business, and we still do it. The the the second part is and that was smaller clients. So, know, you know, thousand pound a month type of transaction, month to month commitment, you know, consume, you know, as you use type of service. But shortly after IPO, we started to get more into private cloud provision. Right? So private cloud is a little bit more bespoke. Right? So we would work with a client who would who would have a set of requirements. We would go build that infrastructure.

4:05 It tended to be dedicated hardware, so servers or dedicated virtual machine clusters, and a level of shared networking. Sometimes they're all networking, but more often than not, they would share our all of our cross connects and connectivity footprint. So, a bit of a a hybrid type solution, some hardware dedicated to them and and some shared environments. And, really, that's been the growth engine of the business over the last three to four years. Even in the last period, you know, the the the 35% growth came from that mid market, you know, deal size is anywhere between, you know, 3 or £4,000 a month up to some really big ones. Right? Our biggest ever private cloud deal, I think, announced last year. It was about four and a bit million pounds of commitment. Right? So so these these these private cloud deals can be very small or very large, and and that's quite a lot of them. So that that really has been a growth engine behind the business for the last in the last few p last few years.

5:11 For anyone that's been following us, you you know that we made some major product announcements that started around two years ago where we had we built out what we call the proximity cloud. So the challenge with public and private is if you're a tier one organization, a a big bank, an exchange, a broker, public and private cloud deployments happened in the BKS spaces. Right? So we would go and buy space from data centers, exchange data centers, Equinix, DigitalBeam, whoever it was, and we would roll out that platform, be serviced by our on-site engineers. You know, we would support it with our NOC. We would build it. We would support it. We would manage it. That is an uncomfortable situation for security compliance teams and and a lot of these tier one accounts.

6:04 And we kept coming up against the same same objections, you know, the ability to plug in and data and all that and all that nice stuff. Then there's controls you can put around it, but, ultimately, the the security challenges stopped us winning some business in in the tier one space. So we went we went and started building Proximity Cloud, which, we launched, '24 eighteen to twenty four months ago where Proximity Cloud is a prebuilt environment and a physical data center rack. It can be one rack. It can be multiple racks. And the key differential is it is can be delivered to a customer site. So the customer takes title of the of the environment.

6:53 They can put it in their own data center space anywhere in the world. Doesn't have to be a BKS data center. We can host it if clients wanted us to do it, but probably I mean, mostly, people wanted to put it in their own space and various exchange data centers or financial services data centers. And that that then allowed them to manage it physically with their own staff. It sat under their own network security models and could go through all the process and procedure that their own internal department's mandated. So Proximity Cloud is aimed at a single organization. Right? A bank, a broker, an investment manager. I mean, when we launched the product, we had been kinda talking to a number of exchanges about the the idea of it. And from the discussions, we found a a rich vein of opportunity where we built Exchange Cloud. So Exchange Cloud is an iteration of of of Proximity Cloud, and I'm gonna spend a lot a bit of time on Exchange Cloud today.

8:01 So Exchange Cloud is is the same principle and model as Proximity Cloud, I e, we physically hand over racks of an of of a cloud environment to an end client. The Exchange Cloud is built to be multiholed. So rather than it being used for a single individual entity, Exchange Cloud has the ability to have multiple organizations on the same physical cab infrastructure in a very secure manner that allows people to have small parts of that rack, or they they they can have their own racks, multiple racks, but the flexibility and the security is there so that an exchange can break up that environment and give it to multiple clients.

8:54 So we now have basically three product lines, public cloud, small, you know, not gonna grow that much. Private cloud, part of the revenue base, and then proximity exchange cloud, which is the the new product generations, that we've put considerable investment in over the last couple of years and and we really see as a future of the company going forward. So just to going back to, slide four, because I'll just quickly cover the map. So apologies for jumping around here, but, you know, for those of us that that followed us for a while, you'll be you'll be well aware of this map. This is our current data center footprint for our public and private cloud deployments. Right? So I think we're up to around 26 data centers globally now.

9:46 London is by far the biggest footprint we have followed by New York. So as you can see from the map the map, we are we are we've got a good geographical coverage now. We are looking at further expansion in Canada. We are gonna do something in South America and Africa as a region that we're we're tackling this year as well. So once you put these these in in place, that public and private cloud deployment capability is fairly well globally distributed. I would not expect us to have a huge amount of new physical foot data center footprints, new data center locations going forward. These will now grow rather than be concentrating on deploying it to new regions because we've got we've got a fair amount of of geographical coverage.

10:39 So I'm gonna go to slide six, please, please, sir. So exchange page. So can I wanted to give you just a know, an update on on that product road map, but I I think, by far, the most exciting opportunity the business has at the moment and and really has ever had is is the exchange cloud opportunity? So all of the large equity stock exchanges and and BEEKS really have never had an equity play. Right? We've always been in FX, certain level of derivatives, but we never did equities purely because the cost of doing it was very prohibitive. You have to to be a service provider in an equity space, you had to take space in equity data centers. You kinda had to do them all at one go.

11:32 You the exchanges charged you 20 to 30 k a month to resell that market data. You start multiplying that by ten and twenty times as well as the cost of the environments. It was a 5 to £10,000,000 commitment for us to make that equity cloud offering a reality, which we just never did because we would have to build it, and then they would come, and it was gonna be a real drag on the business. So so Exchange Cloud opens up an equity opportune the equity space opportunity for us in a fairly unique way. So all of the large stock exchanges or equity exchanges around the world tend to have their own data centers. Right? So you look at and Nasdaq in The US. They've been Carter and Malwa.

12:20 LSEG have just moved the data center out of Arrow Street into I a third party data center, but it's still theirs. You know, it's they they are they offer that as a service. So all of these big equity exchanges have their own infrastructure in the data center, but the bigger part of that is the end customers will also put their own infrastructure in that data center. So you look at a nice year and Nasdaq, they have 800 to a thousand cabinets of customer equipment connecting into the matching engines for various reasons. Right? HFTs, banks, brokers, technology providers, market data providers, news providers, all have to have physical footprints at these stock exchange data centers.

13:14 So there has never been a a cloud service that has been available. Right? You know, you can't put up on an AWS or a GCP if you're, you know, if you if it's a latency sensitive environment. And the only reason you would be in these data centers is if latency is important to you. So so previously, customers had to build out the environments themselves. Some will continue to do that. But what Exchange Cloud gives the exchanges now is the ability to offer a cloud service in their home data center. Right? So the model is we sell to the exchange. We have one customer, one contract, and then the exchange offers the cloud servicing to their user base under their existing contract terms.

14:06 So it's a value add service from the exchanges to the customer base. Why is it important? It allows it reduces the barrier to entry. Right? It allows a lot of some smaller firms who maybe couldn't afford to do full racks and all of these data centers around the world like us, the ability to buy a cloud service that's can start from a few thousand, few thousand dollars a month for a full network compute and analytics stack already prebuilt. It's quicker time to market. So rather than especially with all the supply chain issues at the moment, we prebuild their acts. They're sitting there ready to go. The exchange could turn clients up, you know, in the matter of hours rather than waiting weeks and months for them to build their own environment.

14:53 So the exchange BKS exchange cloud offering has been licensed by ICE Global Networks. So we announced that, last year. They were our kinda launch partner. They kinda did a better product development with us. So so they're they're the largest exchange group in the world. So ICE Global Network's a part of the ICE Group, and they're a service provider for lots of financial markets participants around the around the world. And they are licensed they have licensed exchange claim for their end users. So that was a big a big announcement for us. As we said on Monday, we have we are very close to to the next two exchanges signing their contracts. We we we, you know, we've gone through very long sales cycles Mhmm.

15:48 With both of them. One's a regional exchange. One's a a a major exchange. We'd hoped. One one would have been safe before Monday, but, you know, that that didn't happen. So so we've got a we've got a pipeline of other exchanges coming online, and and the other the the two that are fairly far down the line are are not, by any stretch of imagination, the the last ones to sign up. So the reason it's exciting is the size of the opportunity. Right? We license it on a per cabinet basis. So each cabinet is roughly worth a million dollars of TCV to us as BEEKS. The client then resells that one to the the the end the end users.

16:35 So million dollars TCV per cabinet. If you look at some of these big exchanges, as I said, they have up to a thousand cabinets of customer equipment in the data center. Now, you know, we as we've gone through all the institutional investors, we're not saying, you know, that we are gonna get a thousand cabinets. That's that that will never happen. There there will be people that continue to do this themselves prefer that that's the way they want to go. But can we get, you know, five to 10% of that total addressable market pair exchange, that's really our hope. Right? So as we get more and more exchanges on board, our land and expand strategy that we've always had with these tier one clients comes into play where, you know, they're not gonna start with, you know, 50 to a 100 cabs, you know, maybe two, maybe five, maybe 10, but we fully expect as they as they fill up, then the follow on orders to be substantial.

17:32 So it's a really nice space that we've carved for ourselves. It's not particularly competitive because there's not that many there's no other provider out there that has a product like we do. So Exchange Cloud really is where we go from, you know you know, I think the the forecast of market for next year is is 30,000,000, but it's where we kick on that growth. I mean, we've gone from three to 30 since we've IPO ed. I forget to 30 next year. You know, to get to the next stages of growth, Exchange Cloud really is our flag flagship product that we hope will will will get us in over the next few years. So it's an exciting time spent on Faiza is gonna cover some of the commercials.

18:18 Spent a lot of money building it out, both from our software development point of view, infrastructure, buying and holding stock that we may need to do because of supply chain issues. So it's been a big investment for us, and and we're now hoping that the returns flow over the next couple of years. Okay. Yep. Thanks, Gordon. Numbers update, relatively short, short and simple. I can see there's quite a few questions at the end, that we'll we'll cover in terms of some specifics. But, you know, as as Gordon says, you know, we've had another consistent period. And and as he said, you know, five years since we've IPO, we've kinda tended to deliver a 35%, top line growth. So, you know, again, another another pleasing period.

19:05 And, you know, a lot of that has been our core business or, you know, our private cloud business has delivered that. So we've kinda small deal run rate type deals that have, you know, that have that have kept it going during the period. I've always talked about proximity and exchange clouds so that, you know, the in terms of the second half, there's an expectation in terms of where those contracts are that, you know, they will they will deliver into the second half. But, you know, it's good to have that that first period just for the run rate business. And that's why the the committed revenue, so ACMRR, so annualized committed, so that's effectively on the books revenue, is also up 35%, which is good. So if you look at our full year number, which is consensus just under 25%, we've got about 85% of that already committed.

19:50 And in terms of how that's translated to the profit numbers, so profit before tax and EBITDA both up over 40%. So we are delivering on that top line growth. We're always going to be second half weighted on that recurring revenue model. So in terms of some of the margins, if you look at period on period, there's a slight increase in gross profit margin, which, again, is pleasing. Key driver for that, Exchange Cloud, Prox Cloud sales in previous periods. So that is a slightly lower cost of sale to us. So the kind of lag in the previous period on Prox Cloud sales has helped up that percentage margin, which is good. In terms of cash, so we've talked quite a bit to institutional investors in terms of our operating cash flow, where it's at now and where we expect to see that. So from an operating cash point of view, again, we've grown it in the period.

20:47 We are still at net cash outflow over the period, so just over $3,000,000 And we strengthened our balance sheet back in April, took a raise of $15,000,000 So we're in a much better place. As we move into the second half, again, you know, we expect stronger operating cash flows with a similar level of investment. So we, know, as we move sort of forward over the next kind of twelve to eighteen months, you know, we expect to see that get into a a cash generating phase. Right? So, you know, we we we've talked again, as I say, quite a bit about this. You know, when, you know, as investors, you expect to see a a return on that investment. Right? As Gordon says, with last couple of years, we've added a lot to our headcount. Know, with the basic capacity. You've got, you know, we have got stocks sitting, just over 2,000,000 sitting in our in our head office. So, you know, as we move into the next the next phase, we will control our headcount again, you know, Maybe something to over elaborate that point, but that's the kind of key lever for us to manage our overall profitability and our cash generation. And we've kind of been through that product recruitment in the team. So we're kind of largely there with that. So headcount will be incremental as we move forward, and we've got a better scope to eke out an extra percentage or two in terms of overall profit margins and, let's say, control the headcount will allow us to do that. So that's certainly the focus, on the business over the next twelve to eighteen months.

22:14 Okay. Next slide. So, you know, twenty twenty three objectives. So we kinda have internal the year of. Right? So a few years ago was the year of people, right, trying to put start to get up, building the team to build out, you know, where we wanted to go. So we've kinda done the year of people, the year of product where we started, you know, and and, you know, did a lot of proximity shape, they're building. This year, going forward, 2023 is really we're looking at the year of profit by you know, we've as as Fraser says, we are now at a stage where we want to start to become cash generative and and, you know, that they start to, you know, us to be above the line. So so, you know, this year, we're looking at you know, to do that, we need to convert the the op the pipeline that we've got. Right? We've got some very slow moving but very significant opportunities on the books, getting them closed, deployed, and doing them sensibly with sensible cash flow implications to the business are are really important to us going forward.

23:24 So that's that's primarily the the number one focus, and that will drive a lot of the the top line growth, but also allow it to fall to bottom line. So we will continue to build out the products. A lot of the heavy lifting has been done, but, you know, as we work with more and more exchanges and and more and more banks and brokers on the proximity cloud, you know, requirements come in as we have these discussions. So there is still product road map there, and, you know, we've got feature function that we wanna build out for the next twelve, eighteen, twenty four months. You know, we have a we have a very strategic relation relationship with with IPC. We jointly go to market with them. We jointly bid in a lot of stuff. We are they're a customer of ours. We're a customer of theirs, so we want to continue that momentum. It's been a real, benefit to both organizations when you combine their networking product, with their infrastructure products.

24:24 Some of the exchange to create conversation we have are jointly with IPC, you know, going to the exchange with an end to end solution that has an infrastructure in the data center, but, you know, IPC also have network connectivity all around the world that that that trading organizations need to send market data around the world. So, you know, we continue to grow that relationship, and it's it's been a real benefit for both organizations. And then, you know, our return on investment, right, the yield of profit. So so, you know, focusing on that bottom line is is is is important here. Next slide, please. So look. So, yeah, I mean, really positive. I think we have an array a range of products now that I'm really happy with. So the team has done a fantastic job.

25:16 You know, product product strategy, people, development people, you know, everyone in the organization has contributed to where to building out market leading products that, you know, don't have a huge amount of competitive push on them. So, you know, it's now it's put us in a very good position. So the the pipeline is very strong, frustratingly slow moving. Exchanges are very highly regulated entities as are the big banks. So they do not do anything quickly purely because they're very large. They're very regulated. These are big decisions. You know, if you look at Exchange Cloud, an Exchange is basically offering it as a service. It's their name on it. It's powered by BEEKS, but it's ultimately their service offering. So we have to go through a huge technical due diligence, operational due due diligence exercise.

26:08 It just takes time. So the move to the cloud and and and capital markets is increasing. There has been quite a lot of big announcements of the hyperscalers and exchanges. Not really in the trading infrastructure side, more desktop, back office, the execution component. I I, you know, I fully believe that the future of exchanges is going to be a hybrid cloud footprint where they have matching engines, physical, you know, physical matching engines that people connect to, and then some workloads live in the the hyperscaler generic clouds. Back office fits in a very nicely market data is very well distributed by the hyperscalers, but there's still no answer to how do they do that execution engine. And and that's really how we surround that physical execution footprint with our cloud offerings. So we are cloud enabling the end users of of that of that area. So so, you know, our our world is becoming more and more cloud ex you know, accepting of cloud platforms in various parts of their of their organization.

27:17 Yeah. We you know, we've as we mentioned on Monday, we've got two deals, Exchange Cloud. I I think that we are looking to to close out in relative short order. I think the the good thing about some of these big engagements is that it's high quality pipeline. Right? We we go on a journey with an exchange that can last up to a year or two years, but it's a significant investment in time and effort from them because this touches a lot most departments within the exchange, so we have to deal you you know, we're not just selling to IT. We're we're talking to security. We're talking to compliance. We're talking to business dev, accounting, support teams. So we can tell when they like, you know, it's high it's not like they're having a bake off between us and someone else.

28:06 We go through a journey and an education with them, and it kinda take if they're going to do that and put the resources in it, it's more when it happens rather than if. So we, you know, we were we were always historically used to very short lead times on on deals closing. We're in the opposite side. Now we still have that that small deal engine that will, you know, continue to find and close deals in a couple of weeks, but we also may lay on top of these bigger transactions that we are monitoring as a pipeline from very far away. So and and the pipeline is bigger than ever with them, with a lot of these tier one customers. And once we win them, the land and expand opportunity is is hugely significant.

28:52 The second deals after the first deal is much easier, and so is the third and the fourth. So we've shown from some of our tier one wins where, you know, we are 600% of our original contract value a couple of years into the the relationship that we're really good at doing that. So we will continue to do it. So so the outlook is is very positive. We look to close out the year, get these two exchanges onboarded with contracts, and continue to, you know, increase and convert that proximity exchange claim pipeline and and continue the the the small deal run rate in private cloud. So that's an exciting time, and an interesting time for the business and everyone involved.

29:39 So I think there's there's quite a few questions. Would you wanna scroll to the top? So we'll kinda start to go through some of the q and a. Oh, yes. How is the productivity? So Mark's asked, how is the productivity of the software development team? So we you know, three or four years ago, we were 95% of the infrastructure company. Right? That has changed dramatically over the last few years as we've grown a software dev team to build out the product. So the the product is half infrastructure, half software. Right? We're we're basically selling big appliances, right, software bundled onto hardware platforms. So we've had to build in that software development function from historically not being a software development shop. Right? We had a couple of developers, but to scale that is hard, right, is difficult.

30:35 So it's been a bit of a challenge over the last few years. We've now got a team that we're really comfortable with who are managing that process. I would always say software developers can work a little bit, you know, harder, deliver a bit faster, but, you know, they they they are a certain breed of individual. And, you know, overall, I think we've got a lot better. You know, I think we could squeeze a little bit more out of them. Yes. I do, but I'm not sure. I'm not sure if the head of software development would agree or not. Do we need more people in the software development team? No. No. We as Fraser says, we have invested significantly. I think we're about 40. Yeah. Forty forty people in that software development function, that will not you know, we may take a couple of incremental people for specific roles, but that we don't expect that that growth in the in the headcount yet to continue or tail off.

31:32 I'll I'll move to the next one. So next one, cost update oops. Just a minute. I don't know. Cost of data centers are rising significantly. How did you experience it? Can you pass all those costs to your existing customers? So, yeah, they are. So, you know, we got fairly chunky price increases effective January 1. You know, the quantum was about a million pound to our to our cost base. And we have always done an annual price increase. So we effectively, you know, hedge that cost increase. So we, you know, we we we gave a we gave customers a a bigger inflationary price increase. You know, we weren't profiting from that. We were simply passing on the, you know, the cost to do business. So that that's effective from March 1, you know, so just a couple of days ago. So, you know, we we kinda took a bit of pain in the first half, but that that price increase is is effective from from March, so kick in in the second half.

32:27 Next one, I think, similar, talks about managing the wider inflation impact. Yes. So, you know, things like, you know, as well as power increased wage inflation, you know, we, you know, we were subject to that. We we we gave reasonably, fair, decent, pay increases across the board. But, again, that that that price increased our customer factor, both the the power increase and the and, you know, the cost of wage inflation in there as well. I think that the other question on that is around so somebody's, said that the sales are now, you know, 2% lower in comparison with the 06/30/2022. So I think, you know, what's been asked there, so if you look at our our, you know, our first half, we've done 10.4% revenue. If you take our full year number for last year, it was 18.3%. If you take off our H1, it was 7.7%.

33:13 So actually, H2 last year was slightly higher. It was 10.6 compared to the 10.4. The the main reason for that so, you know, we've always had this underlying, you know, recurring revenue nice profile. We of Proximity and Exchange Cloud are a a different revenue recognition model. So when we deliver those appliances to customers' data center, we have to recognize about half of that upfront. Right? So so what you're seeing there is that half upfront as part of last year's number, right, the upfront revenue recognition. As you're comparing it year on year, we'd expect to do pretty similar this year. And as we've said, so we've grown the run rate 35% as well. So you can almost need to look at it at a full year comparison, I think, rather than half years. But that's really what's driven that.

34:02 Again, I think similar to revenue, so talking about our Progressive has a $24,500,000 revenue forecast. Is this revenue still achievable? Yeah. We absolutely believe that. Looking at where we are in terms of run rate, so the exit revenue in December was 21.3%. That excluded the price increase, so that kick in. And in terms of that visible pipeline that's short term, we do expect to deliver a proportion of that before the year end, and that will allow us to get to the consensus forecast. That's all for me. As soon as I didn't do much talking at the start, so okay. When do you think the cost base is stable? And how much then you'd need when the profits are kicking in? I think, again, we've depending on the profitability metric, right, so we're aware of the statutory numbers loss making.

34:54 If you take the share based payment as a noncash add back, we are profitable. I think in terms of cost base stable, so the way we price deals is cost plus margin, right? So we've got that visibility. And I think, as I said earlier on, it's really, for us, writing good business and controlling headcount is really how we deliver better profitability going forward. And a lot of that is in our control. As a Board, as a management team, we believe we can deliver that. And in terms of time frame, we're willing to do it now, right? So there's, I think, as I said earlier, one so twelve to eighteen months to really kind of focus better margin and better cash generations probably the 10 scales that we're working to.

35:41 Again, similar, I was talking about cash outflow. So in the period, as I mentioned earlier on, the cash outflow was $3,500,000 The cash reserve just now in our balance sheet is just under $7,000,000 And the question is really what's the view in terms of further raises. Short term, no. In terms of what we need to deliver the consensus forecast, have enough firepower in terms of additional debt that we can take. We took some asset, financed the period of $1,500,000 We have access to more. We have revolving credit facilities available for our banks. So we probably believe we've got enough cash in the bank and access to date, sorry, debt in the short term future, you know, would we rule out a a return to market? No. You know, on a on a a mega deal coming back to the market, you know, with a with a deal, that we may have to to to front load some some cash then then, you know, possibly, but, you know, be on the back of a, you know, major major contract win.

36:48 Okay. So, Nick, what further investment is needed into the business over next year? And and where are you looking to use that investment? So I think, you know, the the the product investment is largely you know, we've we've made over the last couple of years now. You know, that development team is built. So that that will be kind of, you know, adding as as we go forward. That that major investment we feel is is now made. You know, we'll we'll always have, you know, we'll also have a cost of doing business. So capacity, we'll, you know, we'll always have to invest in. We you know, Supply chain issues mean that we have to hold more on our balance sheet just now. The stock we have is a couple of million pounds worth. Going forward as we as those supply chain issues shorten, we would not expect to hold that kind of level of stock. But in terms of investment, I think, Gordon, correct me here that we kind of gone through that that major cycle for the last couple of years, and now it's really a case of, you know, execution and delivery on the on on some of the on these these wins. Yeah.

37:48 I I think Fraser's right. I think, you know, we still have to have, you know, the level of software team because there's still feature function to build out. But, you know, in terms of a a percentage of, you know, our revenue and and things like that, then, you know, the the head count will will that will tail off over the next the next year to two years. So, you know, we will still invest in the the product and and and try to pivot the organization as as we need to, but a lot of that is done. So just going on to some of next ones as as NICE are looking to sell exchange, clearly, to existing customers or just new customers. So need to be clear here. So NICE is a stock market. Right? New York Stock Exchange is part of the ICE Group.

38:34 Right? ICE Global Networks have licensed our platform, and they are looking to sell to both new and existing customers. Correct. Yes. When the two next question. When the two exchange cleared contracts are completed, there's a large CapEx implication. It's the same as, you know, anything. Right? You know, we we have we have about half of the stock available in Glasgow to, you know, facilitate the initial two, deployments to the two exchanges. So we will have to, commission some more new infrastructure and backfill what we have if the supply chains are still looking stretched. So so, yeah, that those CapEx, implications to, you know, every exchange in proximity cloud.

39:22 We do because we have to deliver a substantial infrastructure every time we deliver a cap. So, you know, it's just part parcel of the of the the way we do business. So can we run through the revenue potential for an exchange for a customer win? Yeah. That's a good question. So, like, we we kinda separate them into, you know, medium and large exchanges, really. So if you take the top 10 exchanges globally, if we win one of them, my view is that our opportunity is north of 20,000,000 TCV per exchange. Now that's not gonna happen all day one. But if you think it's a million dollars per cab, should we be at least getting 20 cabs over a a, you know, over a period if the the, you know, their their sales team appreciate it successfully. And, absolutely, yeah, you know, how big does it get?

40:21 I don't know. It's hard to tell. You know, the the next two are gonna be real tests of how quickly this goes. I think the first one and and and maybe a bit smaller, they have done a very good job of going right to a lot of the customers and demoing the platform as they've as they've gone through the contract contractual process with us, and the uptake has been higher than we would have hoped. So we've got high hopes that that actually they fill up very quickly and then they go on to phase two, three, four, five, and deal. But it's it's hard to tell. Are there any exchange contract client contract wins included in the consensus estimates?

41:07 You know, we we probably have to get revenue recognized from us, one of the smaller one, but, you know, we are not counting on the bigger the bigger transaction hitting the books, the side of the energy, which is our financial unit. Who's joining? Next one. How well do your depreciation drag? Do depreciation rates match the life expectancy of your kids? So, I mean, you know, we depreciate over five years, and we get a bit more out of that. You know, we don't, you know, experience our our life cycle replacement. We've not had a major, you know, refreshment, but we're gonna start having to do that. So, you know, you know, I I think it's fair to say we we get what we depreciate or, you know, we get a wee bit of it. We don't push it too much.

41:56 Can the CFO get more clarity in note three to the accounts, under the heading operating segments to show proximity exchange claim revenue amounting to 50% of the total? Yes. So maybe disclose that in account. So we have what's called point in time and point over time. So if you look at the full year to thirtieth of June 'twenty two, the $2,200,000 point in time revenue that you see as as part of that number is is the 50% upfront. Right? So as we deliver that into customer data center, we can recognize half of that. Right? So that and then the remaining 50%, we we take over the the contract length, and that will be in between sort of three to five years. So again, if you look at the the the first half of the first period that we've just covered, you'll see those point over time proximity cloud revenue, and that's not being the same view, which is the remainder of the contract flowing through.

42:52 So are there opportunities to upsell additional pure software features? So I said, again, a good question. So we acquired an analytics company two and a half years ago now, Velocimetrics. What we've done is built an and and a big piece of development effort over the last twelve months has been building in that analytics function into proximity and exchange cloud. So when we sell that to customer, they have in built analytics via the UI of Exchange Cloud, major piece of work. So that's a software component, but it now just becomes a a a component of the proximity and exchange cloud sale. And exchange cloud to exchange will then go on and sell that as a bit of a software plate to their end customers and license it for server, however they want to do it. So we we've we're rather than kinda coming up with software offerings, everything will be built as component parts to proximity and exchange.

43:51 It just makes life simpler. Right? And and maybe customers can license different bits as we go forward. So we're not really looking to become a pure software play. Everything will be, you know, integrated into that pre engineered systems. Do you next question. Do you anticipate new institutional investors coming aboard? I mean, you know, we did the equity raise last year. It was heavily oversubscribed. We we had a number of new institutions. Artemis took a substantial shareholding, You know? So the the the we've had you know, when we IPO ed, I think we had maybe four or five, you know, of of the the larger institutional investors that that that bought us in day one. They have they they you know, pretty much every time we've we've needed to go for money, they've increased our holdings. So so we got a really stable base of institutional investors.

44:55 Some new ones came in. You know, it's hard to say. You know, we don't we we try and kinda limit the the the investor roadshow, or we could spend our entire life in London talking to fund managers rather than running the business. So it's a difficult question to answer. And, you know, you know, existing shareholders may add or, you know, do what they want. So it's a difficult one to answer. I do not know. I don't know. Final question is how many ExchangeLink customers on the sales pipeline to crystallize over the next two years? I'm gonna I'm gonna set myself a target to be hung on here. So, I mean, I I listen. I I would hope to sign four or five of the majors and then another, you know, you know, four or five of of some of the smaller exchanges over the next two to three years.

45:55 The sales cycles are very long. They're very long. But as we become you know, as more exchanges do it, then it becomes a self fulfilling prophecy. Right? You know, the other exchanges just look at it as then, you know, why are they not offering a service to the clients? So, yeah, yeah, that's yeah. Between five to ten, whether it's two to three years, we would hope. I think what we've missed there. So, the question is, I'm asking what kind of level of maintenance CapEx profile is envisaged. You know, I think so for the different propositions. So I think proximity and exchange, you know, will be four to five or three to five year deals. So that'll be a, you know, a a recycle after that period. And I think our historic private and public cloud, I would assume similar to what heavy depreciates over five years.

46:51 If you look at our estimate in terms of fixed asset spend in the year, it's about 6,000,000 Of that, you know, historically, you know, it was lower. So, you know, probably around 10% of that would be, you know, maintenance replacement, and the rest on on growth. Alright, folks. Well, that's Gordon Fraser, thank you. And I think you've addressed all those questions you can from investors. And, of course, the company will review all questions submitted today, and we will publish those responses on the investor me company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Gordon, could I please just ask you for a few closing comments? Yeah. So thanks again, Louise. So, yeah, I mean, I think it's been a strong period again. We now have a track record of consistent growth. You know, the the company has gone from, you know, 3,000,000 turnover to to where we are now over the the the period of time we've been on the market.

47:43 And we look forward to an even more exciting growth trajectory going forward. So it's it's a really interesting and exciting time for everyone involved in the company. And, you know, we we thank our shareholders for their loyalty and continuing to support the business. So yeah. Thank you. Gordon Fraser, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of BEEKS FINANCIAL CLOUD GROUP PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all.