Celebrus Technologies (LSE:CLBS) — Post AGM Q&A

0:00 Good afternoon, and welcome to the CELEBRUS TECHNOLOGIES PLC post AGM Q and A session. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. And I would now like to hand you over to nonexecutive chair, Tom Skelton. Good afternoon to you.

0:27 Hi, everybody. My name is Tom Skelton. I'm the chair of CELEBRUS. I joined the board in late twenty twenty three and then assumed the chair position from Peter Simmons in March '20 With me today is the the full board here. You can see we've got our CEO, Bill Bruno, and our CFO, Ash Mehta, with us, as well as Peter Whiting, who is, chair of yeah. Chair of remunerations, Monica Biddleff, who handles nominations, and Helen Gilder, who handles the audit committee. We appreciate your time today and, look forward to taking any questions that may come up. There is a q and a tab there, and suggest that if you have any questions, this would be a good time to present there to submit those to us.

1:18 Otherwise, this will be a a pretty short meeting. I don't see any questions coming through here, Tom. Just monitoring q and a. I don't either. Yeah. We'll we'll give it a couple more minutes here just to make sure that if anybody has anything, they get a chance to send it through and to hear from us. Excellent. And I think while we're while we're waiting on that, and for those that didn't see the r and s or hadn't been following along, I mean, all resolutions passed in the in the polling as well that r n s went out.

2:08 And, yeah, we've got our first question, looks like. So can you give some color on how the direct sales team is performing? So as a reminder, for those of you that might have been part of the results presentations about a month ago, about a month ago, we hired a a new rep in EMEA who is fully up and running, and running his, his prospecting efforts with his BDR business development representative and doing quite well and and got his feet, but it didn't understands the product quite quickly, and we're moving through that process. In The States, we're recruiting another rep, and this is due to volume. So we're seeing some good positive momentum from a a marketing and lead gen prospecting perspective.

2:54 We've we've continued to evolve our approach there. We've brought on some agencies to support from a marketing perspective under the guidance of our CMO, and that's led to to quite a bit of an influx at top of the funnel as well to to work through. So all things considered, the new processes are showing promise. We're seeing deals moving more efficiently. The qualification process of deals is much more strict, which which is changing our approaches to demos as we've talked about before, where where we're only going in and actually demoing the platform when these things are are fully qualified. And so these these processes have been embedded in now for several months, and things seem to be flowing in a in a in a constructive way, and we're seeing some some positive momentum building, on both sides, the top of the funnel and and as we're working through the deals themselves.

3:43 Let's see. What else we got here? It looks like we've got a few. What ARR growth should the business realistically sustain? And we've got another one on on ARR growth as well. So from an ARR perspective, our our goal is 20% growth in ARR. That is that is a a net growth number. So that's what what we're targeting as a business. We believe that that's a level of consistency that we can sustain. That's how we're building our business plans and our strategies. Obviously, last year, you know, was we fell short at 10.3%, would have been up around 17 if the the two existing customers didn't have a change in in in offloading some of their markets. But, ultimately, we do believe that that's sustainable.

4:31 That's what we're built the business around. That's what all of our budgeting is built around and and all of the controls that we've put in place. And we think a business of our size, that that is something that we can achieve. Obviously, that's something we need to prove to the market, and that's what we're working on right now. In terms of new deals close to being signed, there are several deals moving through the pipeline. That's another question here in the in the chat. Several deals moving through the pipeline going through their qualifications. There are several in legal stages in various forms as well, so we're we're quite happy with the progress that that we're seeing there. What else we got?

5:14 Basic assumption of the data that you produce makes you beneficiary of AI rather than disintermediated. Is that correct? Did your customers see that? So this AI question comes up quite a bit after some of the clickbait articles written about how AI is gonna eliminate all software, and value of software. You know, the the marketing tagline that our teams come up with is is ultimately that we were built for this moment. You know, CELEBRUS as a platform is something I've been working with in various capacities for over twenty three years. The challenge the the benefit of CELEBRUS is that it makes the data collection for digital and and and and and easier and provides a structure to that data. And and as a result, it's more complete. It's more accurate.

5:59 Doesn't require a lot of human intervention. So it lacks a lot of the biases that come in in in solutions where you have to write a lot of custom code. That's all fine and good. 23 ago, I'm not sure if people cared as much about that, if I'm being honest, but we continue down that path of keeping digital data, functional and and making that easy as the web grew, as mobile apps developed, etcetera, etcetera, and and and digital became more complicated, more complex, and regulations like GDPR and and even browser regulations like Apple's intelligent tracking prevention, etcetera, have come into play. We've we've been able to mitigate all of those for our customers. So what that means is it's better data. And and any good article about AI talks through how important good data is as an input for AI and the value of AI to be realized. So we do actually see ourselves as as a beneficiary of that.

6:53 We also benefit internally from it in terms of efficiencies. And for those of you that have been following the story on on LinkedIn, perhaps, if you don't follow the business on LinkedIn, by the way, it might be something you wanna do. There's a lot of business content that goes out weekly there on that channel. It's been quite effective for us from a marketing perspective. But we've launched our own AI capabilities on top of our data as well as an option for customers. So so we see it as a as a a tailwind, something that we can benefit from and something that has allowed us to make the platform much more business friendly, which has been a goal of ours over the last several years with some of the interfaces that we've launched from digital analytics all the way through to the new, the new AI platform as well. Think think I got them all so far.

7:42 No. You described here comes one more. You described CELEBRUS as the trusted data layer for agentic AI. Five years from now, what do you think competitors will find hardest to replicate? I'm not a big five year guy. I don't like looking that far ahead because god knows what's gonna happen in five years. But I think the thing that you can't replicate candidly is the data. You know, business interfaces come and go. You know, reporting interfaces come and go. Things become commoditized, in terms of sort of business layers. But the part that you can't replicate, you know, and the part that we've been doing so well for so long and have IP around is is our ability to establish consumer identities in a compliant way across websites, mobile apps, etcetera, our ability to capture that data in the first place,

8:34 and the timeliness of it. You mentioned agentic AI in your question. Agentic AI implies that the data or requires that the data is available in the moment to be able to do that. You kinda go from traditional analytics, which is a look back. Right? You're you're reporting on something that's already happened, whereas agentic AI is a is a forward looking workflow based on in the moment data if it's done right. Now now if you unpack this for a lot of vendors and a lot of brands, you'll find that their agentic AI is running a lot of historic things in a in a more automated way because that's all they have from a data perspective. We're we've got some articles and some things coming out on this topic, actually. It's it's quite topical and top of mind for us.

9:21 But, ultimately, for AgenTic to work well, it needs to be real time. And our data is available in in milliseconds. You blink and the data is updated. So from that perspective, keeping that speed at scale, which we've done for some of the largest brands around the world, is going to be in a very important part to agent to AI. And to give you a use case, because I know, otherwise, I'm just saying buzzwords, and it might not make sense. But to give you to give you a use case for this of one that we're actually that we've actually done for a customer in the in the insurance realm, call centers are still very much a thing. You know, conversations with with customers are are very much a thing. When those reps are receiving a call from you, they can pull up using their identity applications and and report and the data layer that we're providing.

10:11 They pull up a record of everything that you've done up to that moment on digital. So if you call in and, you know, I call in and say, hey. It's it's Bill. They they literally type into the CELEBRUS application, give me everything on Bill, and that will include all the way up to the last page I was viewing on your website or screen on the app.

10:30 So what that means is it's a much more informed conversation that that rep can have to be able to to bring to a resolution and create value on both sides of the equation. So, Ash, I'm gonna let you speak to this next question. I'll read it out for you in case you're not looking at it. But it's talking through the move to smoother ARR, which I think we should clarify a smoother revenue. The ARR is the same, but, but, ultimately,

11:04 you know, it's talking through profitability and and kind of our our sort of overall approach from a financial perspective, if you don't mind just touching on that briefly. Yeah. Sure, Bill. So the question centers around sort of how where the business can get to in terms of profitability in a couple of years or so based on the levels of ARR growth that we've described, I. E, being around 20% per annum. The approach to that is really is that we monitor this on an ongoing basis. Obviously, increased ARR, Let's say, the 20% growth this year will take us from GBP 15,000,000 to GBP 18,000,000 of CELEBRUS ARR. And if we assume roughly 90% gross margin, as you see from our annual report, in fact, it's slightly higher than that, that gives us GBP 2,700,000 of additional contribution.

11:51 Some of that, of course, has to be funded towards sort of growing the infrastructure and the delivery, but some of that will be directed also towards front end sales and marketing activities as well to continue that further growth. Obviously, if you're trying to grow 20% on a larger base, you need more resources to do that. So this is an ongoing discussion in terms of what those levels of investment for the front end customer facing and the delivery customer facing functions would be. We're not overly obsessed about sort of profitability, but we recognize the importance of cost control and managing those costs within that ARR growth. So sorry, it sounds like I'm fudging the question. The answer is effectively we monitor it regularly. We decide what opportunities there are in the market, what ROI will be on that investment. And, you know, on the back end delivery side, we're obviously looking all the time at customer satisfaction.

12:41 We measure that in a number of ways. So it may well be that we will continue to invest perhaps in the short term such that profitability doesn't materially increase. Or it could be that we, as we benefit from the economies of scale, as we grow, that there will be an increase in profitability in the short term. But certainly, the medium term, and I know Bill said he doesn't like to talk about five years, but if you try to model our business with that 20% growth year on year over five years, that gets us to a reasonably significant sort of revenue base and the synergies within that ought to enable us to get to a decent level of profitability for companies of our size and our nature. You know, it's not unusual that a company could be doing somewhere around a 20% net margin. So that's kind of the path that we'd like to be on.

13:32 I think the only thing I'll add to that just to just as a final note, and then we'll throw things over to Alex because it looks like the the questions are complete here is just as a reminder that the revenue will always lag ARR, and it's the revenue that has smoothed out month to month. The our contracts, we would recognize the license upfront each year on the anniversary in full, and now it's divided over the twelve month period. Our standard contracts still remain three year deals. Our clients continue to pay upfront each year, in the in those deals, but that's the bit that you'll always see lag behind the the ARR growth. Yeah. And on that note, Bill, let me also just remind everyone that for this current year for the previous year, this current year, and the next financial year, FY '28, because we're in the process of moving all of our contracts to a straight line basis, As we do that through renewals and also with new contracts as well, these three years, FY '26, '27, and '28, are sort of difficult to interpret because revenue through that recognition change process, revenues are dampened. And so the income statement isn't necessarily a true reflection of the underlying activities. You're better off looking perhaps at cash flow and operating cash flow to get a better sense of how the business is performing.

14:53 That's great, guys. If I may just jump back in there, and thank you for taking those questions and updating attendees today. Could you please ask attendees not to close the session as you now be automatically redirected to provide your feedback, which help the company better understand your views and expectations. Behalf of the board, we would like to thank you for attending today's meeting, and good afternoon to you all.