Beeks Financial Cloud Group (LSE:BKS) — Results for the six months ended 31 December 2025

0:00 Good afternoon, and welcome to the BEEKS FINANCIAL CLOUD GROUP PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could 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 can review all questions submitted today and publish responses where 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 MacArthur, CEO. Good afternoon, sir.

0:31 Thanks, Ali. Welcome, folks. Apologies. I mean, Fraser looks so close again. We're but we're stuck in the same hotel room that happened. Well, maybe, like, not last year, the year before. So I'm gonna run through the first few slides, and then Fraser, we're will hand over on the financials and probably try and spend a bit more q and a this time because we tend to run out of time. So I'm I'm not gonna give the kind of usual company overview. I think we've we've done a lot of these presentations, and and we're kinda gonna skip forward a couple of slides. I want to, you know, kinda sort of start with some of the product stuff. I'm assuming most people are aware of the company or, you know, if if there's people that that are not let's just say there's there's a bunch of IMC previous meetings out there if you wanna go and get the background.

1:21 So we'll kinda jump to slide four and and overview of our product set. This changes a little bit each year as as we bring online new products, and it kinda goes through the the four main areas that we've got now. So the those of you that have followed us for a long time and read the results, still, the majority of our revenue is is private cloud deals. Right? It's the bread and butter of the organization, and that is when we build a cloud environment and a financial services data center that can be bespoke for a client or can be, you know, some of our vanilla packages that are offered and advertised on the website. And these deals can be small, but they can be also very large. Right? We've we've we've done deals, you know, $56,000,000 in TCV, and and we do deals every week. It's maybe, you know, one, two, three, four k.

2:18 And we've literally got hundreds of clients that use us for various private cloud deployments around the world. Some clients grow very large. Some come in, take an infrastructure from us, and it stays static for eight, nine, ten years. So there's a lot of variation in how our different clients behave. But it's still mainly the domain of the kind of mid market. Right? We you know, the the bigger banks and investment managers do not like shared environments. They tend to go for a proximity cloud environment. So proximity cloud, again, they're about four years old, I think, It is dedicated cabinets, dedicated environments for a single client, complete network install, whatever com compute requirements they need.

3:15 We we can have various different server vendors in that proximity cloud. And we usually come as bundled with our analytics, and we sell it on a per cabinet basis over a fixed term period, you know, kind of long term contract, typically, four to five years. And we when we look at that, we look at the TCV of of each deal. Right? So if it's a, you know, 50 k a month, transaction for five years, know, it's a £3,000,000 TCV for us. We recognize some of that in advance and then the rest of it over the life cycle of the contract. So proximity cloud single use, single client can run multiple workloads, but the the key thing here is it is for one organization to use, for their own usage, whatever that may be.

4:05 And then we've talked a lot about Exchange Cloud over the years. Exchange Cloud is is derived from Proximity Cloud. So same underlying technology stack, but has a multi honed component to it as well. So we can fit we can deliver this to an Exchange data center. We become the cloud for the Exchange. That's a marketing strapline or or one of the marketing straplines. And they can either sell that cabinet or multiple cabinets to one client, or they can have multiple clients on the same infrastructure or the same cabinet in a very secure manner. So that has been very successful for us. We'll cover different commercial models as as we go through. I think we're now on exchange someone.

4:53 So over the last couple of years, we've we've rolled out. We're currently on implementation phase with both Toronto and the New Arm exchange that we signed in October or probably first half October ish of of last year, and we've got more exchanges in the pipeline. The we started talking last year. We we released last year a market edge intelligence product, which sits on top of our analytics offering, not not completely not solely integrated with our analytics offering. It doesn't have to have our analytics. We can there's other analytics packages out there, and we can do that. But it's an AI and ML framework that will give intelligence and oversight into the market data that we consume into our analytics or any third party software stack.

5:50 So, you know, these are software deals. We are close to signing our first one with a a major bank that has gone through a very extensive POC here, and think we were honest last time we were presented. You know, we we hadn't consumed customer same market data, so it was a bit of a journey of discovery with the the first client on the PLC to see what edge intelligence would spy in the new world. And and, thankfully, it's been very, very positive on the client choosing a couple of sites in production at the moment. And we're in discussions a lot with, you know, a lot other banks. The this these deals will be large. I mean, 5,000,000 TCV is probably the low side, but, you know, don't expect us to be doing a 100 deals a year. You know, there's maybe two or three that we'd aiming for, but they'd be on the larger side. Right? And that's that's a software sale.

6:49 So from a margin and profitability point of view that Fraser will cover later, much more margin heavy than the historical infrastructure business. So the other four main product areas, obviously, you know, private cloud is still the mainstay of of of the revenue. Proximity and exchange cloud is as the revenue shares come on and start to fill up, we'll become a more meaningful part of our overall group revenue going forwards. So covering first half, I mean, listen. We if you the headline numbers don't tell a great half. Right? But, you know, it's the first time you've actually shown year on year decline.

7:37 But the reality of it is and and anyone that follows us and anyone that's that, you know, understands our world would look at when we announced the contract wins, and and we announced more you know, we announced and signed more contracts this half than we did in the the first half of last year. So they were eleven nine 11.9 TCV signed in our half this year compared to 10.5. Just under 10. Yeah. Just under sorry. Just under 10 last year. Right? So we actually signed way more contracts, but they were late in the in the term. And we are not for all the infrastructure stuff, we only recognize revenue wins. You like, when when we sign a contract, it's you know, it's great, but we actually then have to go and deploy the platform, and that can take eight to ten weeks.

8:25 Right? Sometimes quicker, sometimes a little bit longer. So when we are signing deals in December, you know, the first week of December, it's fairly obvious to anyone that understands our business that revenue is not booking in the first half. It's second half second half business. So so, you know, as I say, I I get that the headline numbers don't read great, but, actually, it wasn't a bad half. It was just we signed the deals too late to recognize them. So that means that they've rolled into this half, and we will be recognizing in the in the current half. A lot of them already have. And the last bits and pieces of, I think, the last contract are are getting done right. So so, yeah, as as I say, I I get the headline numbers. Did it read read great? But if you actually if the deals have been signed earlier and we recognize the 4,500,000 that was sitting there, we would actually had a normal level of 20% ish growth year on year. So more a timing issue than anything underlying any underlying weakness in the business.

9:27 But, again, yeah, we're disappointed that for the first time ever, we showed a a, you know, a period on period decline from the previous year. But as I say, timing than anything else. And, you know, we had another couple of big wins in the the period. So TMX. So TMX is the sixth biggest exchange in the world as our biggest revenue share exchange client, you know, by the size. That will be going live, we hope, at around April time. I they were they were just getting the the final ticks of the box from the the regulator, and then we're looking to kick them off around April.

10:07 Newam, who we announced in the period as well. So Newam is a consolidation of three South American exchanges. Not actually live as an exchange yet, but that is going live very soon. And we have high hopes for it. It might be a bit of a slow burner as as, you know, people get used to it and and and onboard, but, you know, very little international participation in the markets at the moment. So we hope that we've never you know, all the exchanges we've got into are very mature, with clients already there. This is completely opposite. Right? This is effectively a new exchange getting launched, and people will have to deploy infrastructure. So we've got high hopes. We got a high percentage of not only that domestic market but international market. So two good ones for us.

10:59 Right? And both on the revenue share basis. I think we flagged on Monday the two revenue shares that are already out there, are proceeding to profitability a little bit quicker than I'd we we'd originally budgeted for. So cracking the the crypto exchange went fully live in October. That is now profitable on a month to month basis for us. So the way we work that out is, you know, say, for these are maths, you know, the the project cost us a million pounds over the five years term of the of the life cycle of the infrastructure. We need to make 20 k a month for that contract to be effectively profitable over the five year period. Right?

11:47 So Kraken has moved into profitability. I'd originally budgeted twelve months from going live because that makes him a long time. Right? But a lot of exchanges will not advertise or, you know, talk to clients until the platform is live. So, you know, once it gets turned on, we then need to start a sales exercise. Right? And sometimes it can take months. Some of the bigger banks can take years to to move infrastructure over on our our platform. So, originally, we'd we'd budgeted twelve months to get to that our operational monthly breakeven. Cracking within five months. ASX, we've had clients on board. So ASX was the first equities exchange that have gone down the revenue share model.

12:35 And, again, some clients onboarded. They were a bit October, November time as well, and we've got a large client that will be onboarded in next month or two. That takes us to that monthly breakeven point again. So we're seeing six months to breakeven rather than twelve months, right, which is encouraging early signs. And then we've got TMX and Newarm coming on board over the next couple of months, and we've got more exchanges in the pipeline. So yeah. You know, I I think there was a lot of nervousness on the revenue share model, especially for the investment community, but the early signs are good, and it's doing as we expected.

13:25 The other good part of the period, we had our best ever ACMRR period. Right? So, you know, we we look at 60 k net increase on the ACMRR figure every month, and it was pretty much there or thereabouts. Right? So a good period. So that, again, underlying business is strong. Right? So I what swung the numbers was a couple of the bigger deals falling outside the period. Right? But the actual underlying everyday deal type has been very strong in the first six months almost. We can see that continuing for the second half. So as these revenue share deals come on next year, they will contribute to the ACMRR. The good thing is we're trying to get away from this.

14:11 Not reliance, that's the wrong word, but, like, the numbers being swung by these big deals either coming in or or not coming in. Right? So, you know, we work 60 k per month will not be the target for next year. That will be up on the back of the the the revenue share deals coming in. Not gonna give a figure at the moment, but, hopefully, most of our forecasted gap next year will be covered by ACMRR, not the not these big proximity cloud deals and classic exchange cloud deals that, you know, make or break the number.

14:48 So, yeah, I think it just shows progression and, you know, revenue booked for the period. Right? So, you know, this goes back to 2022, which feels like a long time ago. Right? You know? We are increasing how much we sign every year, pretty much year on year. Right? 2023 was a bit of a bit of an anomaly, but, you know, it's a good slide just trying to show how that is going year on year. And, you know, there are some of the exchanges that we've signed in the period. Right? And some of the the the contributions too. And, you know, I go back to IPO days or pre IPO days. The reason we IPO ed was, you know, okay, we had a funding requirement, but we weren't really in the tier one market. Right? You know? And that was always that that that wasn't our client base. Our client base was a mid market.

15:45 And that was the reason for IPO was to, you know, put some strength in the balance sheet, you know, have very visible numbers out in the out in out in the out in the world. All of our competitors are mostly private equity owned, you know, running huge debt piles that in the current climate, I would be very uncomfortable with. We didn't wanna go down that route. We wanted to be have a balance sheet and a profitability in the public domain so people could see, give us a level of credibility. And that was to really start attacking that tier one customer base. We have built products for them, but we've been very successful. Right? And these guys do not move quickly. Some of these engagements are four to five years from initial conversation to first contract. That's the reality of signing a big bank. Some of them are quicker, but some of them are five year pursuits.

16:43 Right? And and we've been doing that since we IPO ed, and we have been relatively successful. So we were now more than 30 tier one clients both directly with us and via our partners, and and sometimes we, you know, partners bring bring a big bank as part of their deployments, especially in the ISV software vendor space. So, again, you know what? You know, going back to seven years since I came with I can't Eight. Eight. You know, the the the business has gone from 3,000,000 to you know, the forecast is around about 40,000,000, midpoint between the two. Forecast is about 40,000,000 this year. So, you know, while we've not always been perfect and some things are I, you know, I I take the the acquisition that we can be a little bit aggressive on our forecast.

17:31 You know, we have set we have achieved some of the things we set out to, on the back of the IPO. And this just shows our exchange client footprint, which is increasing. You know, North America, has been you know, North And South America has been very successful. Jesse, we're the the the original exchange, and we still have a very strong relationship with them on pursuing other strategic initiatives with them outside of Exchange Cloud. You know, Kraken Kraken is matching engineers within Europe, but I think one of their sources of frustration is the lack of uptake by the European exchanges, and and we hope we are gonna sign our first European exchange

18:25 before our financial year ends. But we've been frustrated, and and I don't I have no answers why because I'm sure someone's gonna ask me why have the European exchanges been so slow to adopt what we're doing, and and I don't have an answer. You know, I would, you know you know, we've tried our home exchange multiple times, but I'm giving up. I'm giving up. I'm not I'm not frequent to that because I end up being grumpy. I get in trouble for it.

18:56 So revenue share model, we just wanted to touch on this because, again, there was a lot of nervousness about it as we announced this last last last year. I think it it caused some anxiety because, you know, the the the classic contract that we call it was, you know, a set amount of money per cabinet per month for a long term period, and that's very predictable revenue. But it was slow to convert, and we thought by offering revenue share, a, we could take a bigger part of the wallet share, and, b, we could shorten the sales cycles. And that's that's happened. Right? We would we wouldn't have signed the four exchanges on revenue share if we didn't have that whole. Like, we wouldn't sign these exchanges unless revenue share was there.

19:48 So, you know, as I I've I've kinda covered where we are with the first two. And, you know, there is no long term commitment from the exchange, but also from us. Right? If it doesn't work and we are not making money, we left and shift that environment to someone else. So, really, it's a year's worth of depreciation or two years worth of depreciation of an asset. So, commercially, downside to us is fairly limited, and the upside is significant. Right? And and we've we've tweaked how we position knowing the revenue share and what we get as opposed to what the the exchanges get, and, that's an evolving thing.

20:37 So, yeah, it's it's been it's been successful, and we'll go into next year with four revenue share clients fully live. And we hope that you know, because exchange claims are small part of our number at the moment delivered because we've not done any of the classic contracts. We hope that it will start to tick up. And and as I've said before in previous presentations, I look at ex Exchange Cloud as a ten to fifteen year annuity revenue stream with five year renewal periods. Once once this is in an exchange and it provides and it and it's popular, it's very, very, very, very sticky. So, you know, I get the six, twelve month views of markets and PLC land, but I I look at this as a ten to fifteen year roadmap with each exchange.

21:26 And it and it brings us by selling Exchange Cloud, some of these exchanges are very big. Right? They're very big IT deployments. So it it gives us other opportunities with the exchanges. And I and I think we we we first did this late last year, and our first deal on the direct customer contact contracts was announced in November or December. So we signed a large South African bank who were a decent consumer of CO two point o, which is what Jesse called Exchange Cloud. So they've been using that for a couple of years now, very happy with it, and came to to contract directly for the FX deployment in London.

22:16 That contract is now signed and will be delivered being delivered as we speak. They're also looking at New York deployment, But that came as a they hadn't heard of us before. Like, that that came as a direct result of us working with a bank via an exchange and then them contracting directly. Already starting to see it with the SX. There's some conversations with some of the banks that we talked to already about further APAC deployments. So Exchange Cloud is a bridgehead into an exchange, but it also brings other opportunities. Right? We are working on some networking opportunities with both the GSE and another exchange that's fairly well down the the sales path. So, you know, again, it it opens these type of opportunities up. So, you know, we we get such a close relationship with these exchanges once they they they onboard clients.

23:12 Their clients and our clients, our success is their success. You know, we have so many touch points between our team and the exchanges team. These relationships become very close, and that helps us position ourselves for other opportunities within the exchange. Alright. I'll hand over to Fraser. Thanks, Gordon. Good afternoon, everyone. So I'll cover the the financial content of of the deck. So just before we go into the financials, I thought it's probably helpful for a bit of context in terms of the the current periods and just to talk through some of the the margin swings. So, again, I think for those that that follow us, our profit margins, particularly the the gross margin level, are are are pretty consistent.

24:01 And if you look back over the last three or four years, they've kind of been there or did about this this 40% gross margin level. And, actually, you know, in terms of how we price, so we take the cost of the infrastructure, we take the cost of the data center cost, we apply a margin, you know, we we price that to the to the customer. So it's been broadly consistent over the period. About context in the first half, Gordon touched on it already. So when we deploy a proximity or an exchange cloud contract, on the classic fixed price model, we have to take about half of the revenue upfront. So what is what is booked in that period is around about half of the revenue of the contract value and the cost of the hardware. So it has quite a big sort of drop through into to gross profit.

24:52 So, as Gordon explained, the timing of when we deploy those deals has quite a big impact on not only the revenue, but the profitability on that period. So if you look, at the margin movement, between the two periods, it's gone down 8%. But the kinda key thing to take away in that is it's not so much how we price the economics of the deals. It's more the timing of that. So most of that is is is timing in terms of when we deploy those deals. But there's also a bit of upfront capacity investment where we take space in the data center contracts and then the, you know, the the revenue flows after that. And, also, you know, some of these rev share models where we've got some upfront costs, you know, it it's starting off at a a zero revenue as opposed to a fixed price 20 k per month. So so so I thought it'd be helpful just to give that context before we went to the rest of the the income statement.

25:46 So, again, just looking at some of the key metrics. So, you know, period on period, it does show a decline because, if you compare this period with the period last year, you know, the upfront revenue recognition across procto proximity and exchange cloud, deals closed and delivered in the period. You know, the the difference was last year was about three over 3,300,000 against 500,000 this year. So so that's had a a an impact on the half. As Gordon says, you know, the timing of those deals that were signed in December, they are gonna be h two weighted. Right? So so they'll be recognized and deployed in the second half of the period. The positive thing that, again, Gordon's touched on already is the actual committed revenue. So that's our kind of key health check of the business. So that ACMR annualized committed monthly recurring revenue, is up 15%, which again is, you know, is a, you know, is a really good positive, increase in the period. And then we've also moved to the revenue share model. So, as we move forward, we've become less reliant on, you know, deals being delivered in the period.

26:50 There's it goes back to the historic way that the business was recognized. The the revenue was deployed monthly, it was recognized monthly. So, again, a a nicer benefit from that as well. Touched on the gross margin already, so I won't explain that. So, again, the other kind of investment in the period, and I think we said this at this at the end of last year, we we budgeted about around about 12 people into the business. So that recruitment's happened. It's happened in h one. You know, headcount will largely be unchanged in in in h two. So, as we deploy those as we deploy those proximity exchange cloud deals, and we kind of, you know, the the the administration cost of business tend to flatline, that's when we start going back to kinda normal profit margins that we have seen historically.

27:41 And and, you know, things like edge intelligence software sales will typically have a higher margin than the infrastructure sales. So so so there's, you know, there's there's there's positivity in that point as well. So, yeah, as Gordon says, you know, looking at it, you know, period on period, it doesn't look great. However, there's a lot of lot of timing, playing into consideration, yeah, in the period. We thought this should be helpful. So, you know, the as I say, the the committed revenue is just under 33,000,000, but Exchange Cloud and Proximity Cloud is still quite a low percentage of, recurring revenue. We've shown it two ways here. So Exchange Cloud, because we take half upfront on the fixed price deals, that remaining half is is divided over the the lifetime of the of the contract. Right?

28:29 If you take accounting and timing out of it where you don't have the upfront element, exchange code, though, is still only 4% of our business. And, you know, Kraken, minimal impact on the the period in terms of revenue. But with Kraken, ESX, Toronto, and NewAM all coming on, in the second half, you know, we expect that to start being a much, bigger percentage of of the overall recurring revenue. So, thought it'd be helpful just to just to show that there's there's there's a long way to go in terms of Exchange Cloud. And then just going into the cash flow. So, you know, a a period of quite significant investment. So these proximity exchange cloud deals, we require to fund the CapEx upfront. So across the movement in payables and within PPD, there's about 6,000,000 of investment there. So that was deploying some of the proximity clouds at the end of last financial year also the upfront investment and and all the, you know, the the proximity exchange clouds that we've we've talked about over the last thirty minutes or so. So these get funded upfront, and then ultimately, that cash, that operating cash comes back over the next four to five years. So we we've made quite a, you know, quite an investment in the period.

29:45 We also, you know, stockpiled some more infrastructure, given some of the supply pressures on on some of our compute. So we, you know, we've got additional capacity. We've got enough to do another four or five exchange claims with that current capacity. So h two will not have the same level investment as as h one. We took down a bit of debt in the period. You know, we are still we're still in a cash business, which not all our peers can say that, but, you know, we we used a bit of asset finance. We took down some additional debt of about £3,000,000 just to kinda maintain the concurrent cash levels. But, you know, our our balance sheet is still tidy in in in terms of our our our borrowing compared to our EBITDA. It's it's, you know, we're we're low levels of debt. So, you know, we'll we'll we'll continue to monitor that.

30:36 You know, some customers pay in advance, which, again, will help cash flow, but, you know, we have £10,000,000 of of accrued income. So that is all going to unwind. That's the that's sort of between the upfront proximity exchange cloud revenue recognition, and then and, ultimately, that cash will start flowing through into the business as over the next three, four years of these contracts. So, you know, balance sheet remains strong and, you know, low levels of debt and still as a business. Okay. Alright. Thanks, Fraser. So I think, you know, going to the second half, I think we the reality of it was we've got about £5,000,000 bridge to get to forecast, and I can't remember if that's midpoint of forecast or whatever, but to get there.

31:25 That that's the size of the gap when you look at where we are from a a recurring revenue point of view and the revenue that we didn't book in the first half. So, you know, not not insurmountable at all. So that's that's what we've got to deliver in the second half, and there's a pipeline that supports that. Right? And it well, it's like any. You know? And we if the pipeline closes, we'll be we'll be fine. If it doesn't, then we won't. Right? So that's where we're at, but, you know, we are monitoring closely. There's there's some deals that are close that are fairly significant. But, you know you know, getting a bank to adhere to a June deadline because it's our year end. It's not the end of year end. Right? So we we try what we can, but, you know, as what it is, you know, we we use commercial levers where we can, but, you know, we are still relying on clients putting signatures and contracts.

32:26 You know, we're still we scratch the surface surface for all of this stuff. You know, there's you know, we are now saying a lot of tier ones, but the way they act is they don't they don't bring you on as a new supplier, and and I've said this many times before. You know, they they give you a project to test you. Right? You know? And that project might take a half a year to implement, and then they'll they'll test it and and and monitor it for a year, and then you have a conversation about the next project that will tend to be bigger or more sites or whatever. And then, you know, you can finally start to talk big big numbers. Right? You know, banks can say the $100,000,000 infrastructure contracts easily, especially the the, you know, the big the biggest ones that we're dealing with. And, ultimately, that's where we we want to and and are striving to get to, but it doesn't happen overnight. And, you know, when you take into account, some of them are a four year pursuit to get a contract, and then you've gotta deliver. You've gotta prove yourself.

33:19 You know? That's that's the the the game we are playing in. Right? You can't trying to flex it to hit six months or half year or full year numbers, Sometimes it doesn't work. Right? But are are we doing the right things? We had a lot of MSA discussions with banks at the moment, you know, some closing off relatively short order, I think. So, you know, that's the size of the gap we've got. So we're 5,000,000. We've got a pipeline that gets us there, and we need to go over and, you know, kinda execute it. Right? And continue to, you know, not only focus on the big stuff, but the the the the run rate private cloud business is still our bread and butter, and and we still do very well with that on that on a month to month basis.

34:08 Okay. And just to close off, you know, historically, we've gone 20 to 30% every year. We still expect to do that this year despite what we the fact that the first year looks a lot first half looks a little bit weak. But as we said, timing more than anything, we generate cash. We're gonna focus on cash generation go forward and make sure that that becomes better. We've got a lot of good partnerships, and we are winning a lot of conversations to move into contract stage with banks, brokers, and exchanges. And we're at the you know, cloud's still now we're not saying it's in its early days in financial services, but there's still a lot to go. You know, most of our clients are still doing stuff themselves.

34:56 And, you know, we have built an AIML product. We are not about to pretend that we're an AIML an AI company. Right? And, you know, we have taken advantage of the or we have provided technology to help some of our customers and our real world marketeer problem. So we're in a good place. You know? Still looking for, you know, a good full year, and, again, is strong for next year. So we're not a bad place. So, thankfully, we'll move on to q and a. So let me just have a look at the first questions. Is there a chance in those that contract could be re regained?

35:45 I just said last year, I'm not ever good talking about BKS FINANCIAL. No. Just how significant is your competitive advantage? Why is no one else doing this? It's significant. Right? It's not just that we've built the technology, and it's tried and tested, and that is the most important thing in our world. Does it work? Does it fall down? Is it reliable? Is it secure? We have tried and tested it. The segment is not big enough for the hyperscalers to be that interested in it, you know, the the the local exchange presence despite what they might say. And, you know, hyperscalers have, for years, been talking about exchanges moving into the cloud. What they what they failed to mention is it's middle and back offices moving into the cloud. Front office, I e, transactions trading will never move on the cloud despite what the hyperscalers have been saying for years. We've been saying it's not still never a meaningful exchange has put any matching engine of any notes into the cloud.

36:52 It will not happen. Why are the competitors not doing it? I mean, our competitors don't really innovate. Right? They they do m and a. They build up big debt piles and service something. Right? We we we we don't do that. We build products, and we continue to enhance products. I can't comment on why other people don't wanna go down our route. They have more managed service providers than we see ourselves as bit of client provider. Can you talk about your growth ambitions? Just how big is the opportunity? I mean, if anyone's followed us for a while, I think, you know, in terms of growth, we have big big ambitions. Right? I'm not gonna give numbers because I already crucified for it. You know, Gordon said three years ago he's gonna do this. Like, things change. And, you know, I would expect this to be a 100,000,000 turnover business.

37:50 It's you know, at some point, you know, it's not gonna happen next year. Right? But at some point, that would be the we're only scratching the surface. As I see, one or two banks sign contracts. Bank can easily sign a contract for $1,520,000,000 a year with us, but it comes in it comes in stages. Give me one sec. Is there a potential to increase your share of the economics and revenue share deal, which is yes. Not gonna go into details because our competitors log on, and this is kinda commercially sensitive, but yes. The plan is the new revenue model of ExchangeClave leads to an accelerated conversion of your sales pipeline. Yes.

38:43 I mean, I think we've proven it. Right? You know, we've we've we've seen more exchanges in the last year with revenue share than we did for the last three years in the classic contract. So I think it's been proven. It's worked. So I don't know what else this is over there. Sorry. Does the does the Middle East conflict affect you since the target primary margin come emerge emerge markets? We are if it does and no. We are we were in discussions with a number of the the Middle Eastern exchanges, and, obviously, we we have given off at the moment, hopefully, temporarily. But, you know, other than that, does it affect us? I mean, it affects me moving to Dubai, but other than that, it affects me personally. But I don't think other than a few conversations temporarily halting on on the Middle Eastern exchanges that could get any other exposure to than that.

39:43 And this is what about slowing underlying momentum here. Do you see this? No. I think we've talked about it. No. Is 40,000,000 sales still a number that you have in mind for the year? That's a forecast. We've not changed the forecast. So, yeah, that's still what we're looking to do as a minimum. So what gives you comfort that you can find four or five minute revenue that's not secured? And what what gives us comfort that we can hit the target? I mean, I see the people. I want the clients. I'm doing the contracts. If we sign them, we'll do it. If we don't, we won't. Once BEEKS has reached a steady state, what do you think will be sustainable if you got a margin, Fraser?

40:32 So the question is, you know, once BKS reach reached a steady state, what do you think the sustainable EBIT margin can be? Yeah. I mean, I think the answer to that is there's, you know, there's there's a lot of runway still. You know, we the infrastructure sales and and margins, you know, as I said earlier on, should be addressed to the kind of typical value, you know, for us scaling and keeping good cost control, you know, there's there's more scope in the margin. You layer on, as I said, some of the software deals, which is higher margin as well, you know, there's definitely runway in terms of, you know, where we've been historically, which has been about this 15 to 16% operating profit margin. You know, there's definitely more we can we we can get to there.

41:30 Exchange cloud. Right? Can you give us an indicator on how the Exchange cloud revenue builds up from a standing start? I mean, it's monthly recurring revenue. I don't each exchange is gonna be different. I get it's like forecasting. I I struggle with crystal ball gazing. Difficult. But, you know, as Gordon says, the, you know, the first two payback at six months as opposed to twelve months is Yeah. Is positive. But, you know, we will as we do mobile, get better at predicting it, but it it is hard. You know, each exchange is different, isn't it? And some are much larger than others. Right? So that's a hard question to answer. Can you expand or expand on the competitive landscape and the motor and peaks? No. We don't talk about competitors. We let them talk about us.

42:18 Last year, you referred to foreign exchange deals at late stages. Only New has been announced, although there's still negotiation related to in h two. Yeah. You're right. And New Arm is one of them. One of them has fallen out because it's being divested. It's been put on for sale as part of what I was not gonna get too confused. It's too easy to guess. So one of them has fallen out. We are in advanced discussions with another, and there's another the other one was in is in The Middle East. So but there's other ones that have come in since then, right, that are maybe a little bit further out, but still, you know, in the plans for next year.

43:03 So there's a lot of yeah. I'm not gonna get to anyone now. But there's there's there's more that are in the. Under the revenue share model, is the revenue capped at 30 k per month per full cabinet? If so, why is it capped at the amount rather be uncapped? It's not so much cap. I think, you know, the ultimate capacity, you know, think the example in the in the deck is 20 k per month. We would charge the exchange would charge 60, which is kind of their typical pricing, and you'd get half of that, which is the 30. So it's not as much as cap. That's that's the pricing, but, you know, obviously, more capacity can be it can be additional cabinets added. So, you know, and that's that's rough indicators, but it's it's really, you know, it's based on that exchange pricing model.

43:49 Alright. Have AI models such as CLOUD impacted the product of your software team? Do you see a positive impact from massive AI advantage contributing to exchange cloud demand? And there's two questions in there. Yeah. AI, we are looking at it. We've actually got working group across the business to look at how we can be more efficient, not just in software development, but even things like accounting, phrases, exciting world, you know, HR, sysadmin, right, or the DevOps team stuff. So we are we are we are using some AI and software dev at the moment, but we have a a working group across some type as I still look at it.

44:36 AI AI really has nothing to do with Exchange Cloud. It's it's it's it's we are not it's not an opportunity or a threat for Exchange Cloud. Right? These exchanges are with the Exchange data centers are the most expensive data centers in the world. Right? Exchange is charged a premium to be next to the matching engine. So you do not you're not gonna run large language models next to an exchange. There is no benefit and a latency advantage for LLMs. I mean, you know, we are taking market data and running proprietary data models against it, and we will maybe look at LLM integration. But you gotta remember, we had the data centers for latency, security, and speed.

45:26 They have there's no big AI workloads running in these data centers. They're done in Greenland, Iceland, wherever. They can get power and they can kill it, and that is not an exchange data centers. If this change is near to closing, how many do you expect to adopt revenue share rather than conventional financial model? Hard to answer. I don't know. You know what? You know, in some ways, we actually prefer revenue share. In some ways, we do because it takes away these big swings of, you know, upfront recognition. It's quicker. It's more profitable. You know?

46:12 So, you know, it's hard to answer what you know, each negotiation's different. Do you expect the edge intelligence POC customer to sign in h two? How is this pricing structure of the upfront versus annual monthly charges? I've always shown interest. Again, really the question I've been wondering for, we hope that signing in second half, it's you know, we'll be very honest. It's with the bank. There are others that we're talking to that are moving to POCs and are interested. Can I ensure that the bank is gonna sign a contract by the end of June? No. Because I don't see any contract with the big banks. Are we pushing them to? Yes. Do we have a commercial structure for the end of June? Yes. But, you know, it is what it is. You know? It it's not like, are they gonna do a deal? It's when.

47:05 So I think that's a positive. How long do you expect your servers to last before they need to be replaced and upgraded? The cost of RAM is going up. Is that a big cost to be? I I mean, it is. And, yeah, I was ranting about this the other day. I mean, RAM has gone from, like, 300 pounds of DIMM to $3, and the DIMM manufacturers need to look themselves. This is predatory pricing based on perceived scarcity. Like, there there is no extra cost of supply to these guys. I'm not gonna swear on this call, but it's getting ridiculous. I mean, we are kinda protected in some ways because of the way we do pricing, which I'm not gonna mention in this call. But I find it frustrating, and I find it predatory the way that they are placing their components and all.

48:05 I rely on this a bit. Point Gordon to say no new clients. You know, I've got a big sales team. If you have 10 people, it's not me that's signing up clients. I mean, I get involved, sometimes they want to see me if it's especially the exchanges, and I want to have relationships. But believe me, I'm I'm not signing our private client clients. We have got a sales team and presales team over 10 that do the majority to the heavy lifting. I'm a mere figurehead. Same question. Yeah. Same question about the four h changes. I think think I covered it. Again, another question about the edge intelligence.

48:55 I missed it earlier. Did you see 5,000,000 TCV was at the lower end? For edge? Yeah. I mean, they can be bigger. I'm not gonna say that they're all gonna be bigger, right, but they can be bigger than five. They can be bigger than five. Again, I'm not going into specifics of current deals, current portals, but there will be transactions that'll be more than 5,000,000. Okay, folks. That is the last of the questions. So thank you for your time. Hope you enjoyed, and we'll see you again in six months. That's great. Thank you for updating investors today. Now please ask investors not to close this session and should now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

49:41 This will only take a few moments to complete, and I'm sure be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.