Getbusy (LSE:GETB) — 2023 Full Year Results

0:00 Good morning, and welcome to the GETBUSY PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by 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 it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Daniel Raby, CEO. Good morning, sir.

0:31 Good morning. Thank you, Lillian. And, thank you everyone for joining us. These are our twenty twenty three full year results, and we appreciate your time. Our mission is to make, software that helps people be productive and happy. Our values, our purpose, and our mission means a lot to us. We've achieved significant scale, and we've got ambitious long term plans. So, our company now produces 20,500,000 of recurring revenue, which is highly valuable. I think 96 percent of our revenue is is recurring. Our growth CAGR has been 16% of recurring revenue since our IPO in 2017, so we've proven consistent by levels of growth.

1:19 Within our business, we've created operational leverage in one of our companies, Virtual Cabinet, of 40, and we're confident we could do that over time through the whole group. So we are very experienced in SaaS, and we know how to make these extremely cash generative businesses. And we think as a group, we are headed in that way. We've got a very strong balance sheet, so we got plenty of cash headroom to be able to invest in our growth initiatives and to achieve the outcomes that we're setting out to achieve. So those are the outcomes. We are targeting 30,000,000 in ARR by December 2026, and we are confident that we can distribute about a 150,100 and 20, a 150,000,000 in cash to shareholders by twenty twenty thirty, which would be a significant return on investment for shareholders at today's price.

2:17 We're a significant force in the software ecosystem for accountants. I think sometimes it's lost just how relevant and how material our market share is in the accounting market and how reliant a big percentage of The UK and US accountants are on us to be able to successfully execute on their workflows. So we have 30% of the top 100 accounting firms using our software. Overall, we've got about 8,000 firms set, which is 70,000 professionals. We got 3,500,000 collaborators. So those are people who log in to our system where accountants have shared documents with them for them to either sign or comment on or to approve a workflow.

3:06 And through our system, there's about 20,000,000 documents shared annually. So that shows the kind of volume that our accountants are sharing with their clients and storing for their own purposes. At the bottom of the slide, you can see some of the leading firms that use our document management. And as you can see, they're some of the biggest and the best accounting firms in the market. So what exactly do we do? Well, we make our our accounting firms and our professional service firms productive and happy. And we do that by reducing their document chaos, supporting and making their workloads more efficient, solving the email mess, providing them security support, and then making sure that from a compliance perspective, they meet all the requirements.

3:54 So accountants using our software generally have improved client satisfaction. Their staff has less burnout. Got better retention of their staff. They reduced the risk of sanction and fines, and we got the added benefit of having a lower carbon footprint for the accounting firm. So what what are our products and what do they do? SmartVault and and Virtual Cabinet are our two most established products, and they are document management, client portal, digital signature solutions for predominantly accounting firms. And SmartVault is sold in The US and The UK, and Virtual in The UK, Australia, New Zealand. SmartVault is traditionally smaller accounting firms. It's a 100% cloud, and it's a 100100% subscription revenue.

4:46 And Virtual Cabinet is cloud hosted in desktop, and it's a 100% subscription revenue. Both of those products are very established. Virtual Cabinet, as I said, is a very cash generative business. SmartVault, we are very focused on scaling. Workhero and Hello Planner are newer products. Workhero is an enterprise content management, so it takes our learnings from SmartBot and Virtual Cabinet, and it builds additional value to those workflows for a broader market so that we can increase our addressable market in a long term, accelerate our growth. We're very focused on deep integrations into ERP. That's the market that we think we can create competitive advantage around, and we think there's a unique opportunity around. And so we're gonna be focused on more SMEs and global enterprise long term within a 100% cloud revenue and a 100% subscription revenue.

5:41 Final product, Hello Plan. What we heard from a lot of our clients and prospects is that they struggle with meeting scheduling. So not only can we help them with their documents and workflow, but also the simple task of scheduling a meeting and making sure the right documents are at the meeting, making sure that people know whether it's a video conference, where it is, how to get there, arranging it efficiently without the back and forth of the email would really help in terms of the efficiency of the way in which they were. They also wanna do it in a more professional sense. So, you know, meeting calendar, things like that doesn't provide a lot of context around the meeting, especially if it's a first meeting. Being able to provide additional context around a meeting provides additional customer experience for our accountants, their clients. So HelloPlan's a new application that we're bringing to market, and, hopefully, in the next couple of years, we'll start to produce some revenue and enhance our growth.

6:42 So the question how we win, generally, I find if there's a simple answer to that, then there is a clear path to being successful. And for us, there is a really simple answer to that. It's it's through deep integrations into mission critical software. So Virtual Cabinet, SmartBot, Work Hero, they're integrated into whatever the core source document creation mission critical software is within a firm, and then we provide the document workflows on top of that. So in the case of virtual cabinet and smartphone, that's traditionally tax software. That might be Intuit's Lacerte product. It may be TaxCal. There's a whole lot of leading tax products where we are the only ones deeply integrated into their solution.

7:31 And as a result of that, there's better data sync between the two platforms. There's a single source of truth. There's few few clicks. There's less errors, less admin work, and it streamlines the workflow significantly.

7:46 And those customers where they are deeply integrated into or we are deeply integrated into their mission critical software, we have four times better retention rate. That shows the value we provide by being deeply integrated. The generic sorry. If you just go back one. The generic applications like the Dropbox or Boxes, they just do not focus on these markets, and they are not integrated. So we win nine out of 10 times against them. Our conversion rate on our demos for tax accountants is, like, 70%, so it's a very high percentage conversion rate. And for Work Year, we're trying to achieve the same thing through our yeah. Through our integration into NetSuite. So that's us creating the same sort of competitive advantage that we've been able to create in the tax market, in the ERP market.

8:36 And when you look at NetSuite and the ecosystem and the integrated partners, there is no very focused document or enterprise content management for the NetSuite market. And so if we can achieve the same thing we've achieved with smartphone, virtual cabinet, and tax market, we're gonna be very successful in that ERP space.

8:58 These are some custom reports which validate the integration benefits. I'll let you read those in your own time. Another exciting opportunity for us is that AI and its ability to disrupt the way in which people work over the next couple of years and well into the future is gonna be significant. And we are very well placed to capitalize on that opportunity. So we've got this great foundation of a whole lot of rich data, whether that's over a billion unique documents, 3,000,000 professional client relationships where they're sharing information. So we're sitting on this really, really rich data, which in each one of those documents has generally important information, which we can interrogate and provide intelligence over and make sure that we are helping with clients' workflows more efficiently. So instead of, at the moment, it being automated and it's supporting efficiency, AI will enable us to increase that to intelligence and be able to help with answering questions and help with being able to prioritize information and help to understand client sentiment and analysis and recommend actions.

10:20 So AI provides a huge amount of opportunity for us. Our approach is gonna be one in which we focus on our core value, which is making sure that our client data is safe and secure. So our journey to AI is gonna be very much based on our ability to control the data because that's one of the core value proposition. We will not be giving our data to any external or third party to integrate to put AI engines on top of that. This is all gonna be self contained to make sure that we keep very important tax information secure and safe, and we live by that value. But we've seen a huge evolution within the market enabling us to start to build within our ecosystem and within our software AI, which is making our application even more valuable to our customers, and I think that's only gonna help long term with upsell capability, retention, and our ability to convert more prospects.

11:20 So how do we acquire our customers? SmartVault, Virtual Cabinet, and Work Here all have a transactional based model. And what that means is we build lead gen funnels, which includes a whole lot of top of the funnel work, which is like a high value content. We then nurture leads down a consideration funnel, so we give them a whole lot of information about our value. And then ultimately, we get them to sign up for a demo, and our team demo to us, to them, and our conversion rate is very high. And that typically works for one to 20 user firms. Workhira and and Virtual Cabinet also have a enterprise model attached to that, and that's more relationship by itself. So you still need to support with the consideration phase, but, ultimately, there's multiple decision makers within a larger firm, and it's about making relationships with each one of those decision makers and making sure that we're strategically aligned with the outcomes they're gonna achieve.

12:18 A new path to market in which we, over the last twelve months, have really accelerated is partnerships. So SmartVault's a good example of that with right RightWorks. And RightWorks now a significant contributor to our revenue. And what we're seeing is a whole lot of partners who sell into our clients, seeing the value of our application, and wanting to support us in taking these products to market. So I see partnerships being a very big part of our growth future. Work Hero, there's a whole ecosystem of partners around NetSuite, and, we announced today that we've signed five platinum partners who are committed to revenue. That's a perfect example of how we're gonna use partnerships to accelerate growth in the future. So finally, before I, hand over to Paul, for us, how to create value and realize value is really clear strategically.

13:11 So, we got very high valuable cloud revenue. We have very predictable and sticky subscription. Our gross churn levels are very low. Our net revenue retention is very strong. We got a strategically valuable customer base. If you look at historically what accountants' tech is valued in the market, it's generally very high. We've got a whole lot of a rich dataset, which we can put AI insights on top of it, and we've proven that we've got highly profitable businesses within our portfolio. And overall, we think the growth the group can become very profitable in the

13:47 future. In the medium term, we believe that we can create and realize value in The US accounting market. And longer term, we think to accelerate our growth, we're gonna broaden addressable market into the content management enterprise content management market. So in terms of returns for shareholders, we're targeting 120 to 150 by 2030. We're still confident that we're on that journey. And the way in which we do that from a capital allocation perspective is make sure that we are very clear on return on investment. There's a lot of visibility to the way in which our funnels perform, and therefore, we're very confident around where we invest and what return we're gonna get out of that. And we're starting to support that and complement that with inorganic technology that's nice add ons to the core markets that we sell into and helping us with upsell and and supporting net revenue retention. So overall, strategically, we're very clear. We feel like we're headed in the right direction, and so we are very focused on continuing this path.

14:53 Good morning, everyone. So we do all that with what we consider to be a very enviable customer base. So our customers are loyal. They churn at very low rates. So our average churn rate per month is naught point 8% per month. That's on last year. And if you consider that maybe 65%

15:13 of our customer base are SMEs and the average industry churn rate selling b to b SaaS to SME customers is about 3% per month, You get a feel for just how great it is selling into accountants and just how sticky they are once you are in. We have high net revenue retention rates, a 100% per month. That means that upsell and expansion and price increases to our existing customer base offset churn entirely. And over the long term, our customer base tends to grow. So if you take all of the customers that we had at IPO and fast forward now to those customers that that we've retained since IPO, the revenue from those customers that we have retained is 35% higher than our entire customer base was when we IPO ed just over six years ago. So over time, these these customer bases are very valuable.

16:08 As Daniel mentioned earlier, about 96% of our revenue is recurring in nature.

16:14 The remaining 4%, it's nice to have the cash. It's around onboarding fees, training fees, migration fees, those sorts of things. But our focus as a business is very clearly on that high value subscription revenue. So a large degree, it's self funding, so 75% or 70% rather of our customers pay us annually in advance. And a metric that we focus on in terms of the the cash value of our customer base, if you take the discounted gross profit of our customer base at our current net revenue retention rates, that discounted cash value is about £230,000,000 in terms of cash inflow to the company over the lifetime of those customers. So you can see why we are very attracted to subscription revenue models.

17:02 And we're doing all of this in some very large and attractive markets. The numbers at the top are headline numbers. I'll go into the a bit more detail further below, but suffice to say, they're all a lot larger than our current revenue base. We've got a lot of room to play out in these in these markets. And what's particularly attractive about these markets is they're driven by some very compelling

17:25 and enduring tailwinds. So to cut a long story short, a lot of accounting businesses are struggling for staff, and those accounting businesses are also under enormous pressure pressure from security concerns, privacy concerns, compliance, and all those sorts of things. That's compounded by a push in The US towards private equity ownership of accounting firms, which is putting a lot more pressure on the profitability of those firms, moving the industry away from a sort of lifestyle partnership mentality. And that is excellent news for companies that produce software that make accountants more productive, and we are a part of that software group that is benefiting from those tailwinds. So we look at our markets along the integrations that we have. So because we're very specific about the way we go to market, Daniel described earlier how we tend to win where we have strong integrations.

18:23 So if you break down The US accounting sector, which overall employs about 1,200,000 people, That overall is about $600,000,000 annual market potential for us. But if we break that down by integrations, our strongest integration and our longest standing integration for SmartVault is with Intuit's Pro Series and Lacerte tax preparation products. There's about 200,000 users of those products in The US, and that for us is about a $100,000,000 annual market. So we're about 10% of the way through that market at the moment. Excitingly, in July of last year, we launched our integration with the UltraTax product, which is part of the Thomson Reuters family.

19:11 In terms of user base, that product has approximately the same number of users as Intuit's product, so about another 200,000 users. And so by opening up that integration, we've roughly doubled the size of our accessible market in the medium term, another $100,000,000 onto that ARR potential. What's particularly interesting about the client base in Thomson Reuters is that it tends to be slightly larger in terms of firm size than those customers of of Intuit. And so we've seen since we've been selling that integrated product that typically our average selling price is about 70 to 75% higher than it is for the SmartVault base as a whole.

19:57 And what we find with larger customers is they tend to be stickier. They churn at a lower rate. So that's very exciting for us from a long term value or lifetime value for the business. We designed that integration in a way that can be repeatable across other core tax applications in The US. Most notably, the CCH suite of tax applications. They tend to be targeted towards larger firms. There's about 300,000 people who use those applications, about a $150,000,000 ARR market for us. And then Drake, who tends to be at the smaller end of town and about 60,000,000 ARR potential for us there. So you can see how over time we look to build these integrations out and build the the accessible market for SmartVault. And all of that's complemented by our channel partner, Wrightworks, who contributed something in the region of 15 to 20% of new business for us in 2023.

20:52 So that partnership is is very strong and very additive for us. We approached the ERP market for Workhero in much the same way. So initially, we are strongly integrated into Oracle's NetSuite ERP application. There's about 37,000 companies that use that product, and we estimate overall that's about a $600,000,000 ARR market for us conservatively for enterprise concept management that's deeply into ERP systems.

21:25 So moving on to the 2023 results. ARR was up 10% at constant currency to 20,500,000. As I said earlier, our recurring revenue percentage is now 96%. That's the leading percentage on AIM. And we achieved that ARR growth through a combination of 12% growth in our ARPU, that's average revenue per user, and a slight reduction in our paying users to just over 73,000. That user reduction is a consequence of our choice to target higher value customers. So really the accounting customers and customers who are deeply integrated with the product. It is possible to use applications like SmartVault in a standalone manner. Generally, those customers are at a lower price for us.

22:15 So our focus increasingly in the future is on customers who are deeply integrated and where we generally see higher prices. Our average revenue per account, our ARPA, is just over £2,500. That's up 10% year on year, and that equates to just over 8,000 customers around the world. Churn rates of naught point 8% per month are an improvement on 2022. We would expect that churn rate to gradually improve over time as well as we target larger customers and as we target customers who have deep integrations into into our products. Our net revenue retention remains strong at 100%, and we're still acquiring customers efficiently. So for every dollar that we spend on acquiring a customer, and that's through sales and marketing personnel, sales commissions, and marketing spend, Google AdWords, all that sort of thing, we generate about $4, over the lifetime of that customer at the gross profit level. So the investment case for us, the sales and marketing spend is very clear.

23:22 If we look at how we got from our opening ARR position to our closing ARR position, We acquired about 1,800,000 in in new customers. Our net expansion, which includes upsell, downsell, so increases in debt and decreases in users and also expansion. So that's selling more capability, more modules to our existing customer base was about 1,900,000. That split roughly 40% from expansion, so additional capability to the existing users and about 60% in price adjustment, which include people moving up through our pricing tiers. We churned about 2,000,000 of ARR. That equates to the naught point 8% a month that I discussed earlier. And we had a small currency headwind in the year that knocked it back about 500,000, closing at £20,500,000.

24:18 Moving to our p and l. Overall revenue was up 10%, which comprises a 12% increase in our recurring subscription revenue and a small decrease in our nonrecurring consulting, onboarding, training, migration revenue, all that sort of thing. We saw a small improvement in our gross profit margin to just over 90%. That's principally a result of the increase in our average revenue per user, which doesn't necessarily lead to an increase in our in our platform costs, offset by a slight increase in our revenue shares. Overall, overheads were up about 10% year on year. That comprises investments principally in sales and marketing activity, and our development spend was roughly flat year on year at the at the at the post capitalization level.

25:14 Pre capitalized cash spend was up about 6% year on year. So all of that led to an increase in our adjusted EBITDA of about 51% to a million pounds. A question we're often asked on forums like this is if we were not investing to grow the business in the medium to long term, I e, if we're essentially looking at an inflationary growth to the business, what level of EBITDA would we achieve? Or but another way, what level of growth investment do we have within the business? And The answer to that is about £5,600,000 of growth investment, which is a combination of sales and marketing activity. So the sales and marketing, which pushes our growth rate above inflationary levels. It's also the excess onboarding, delivery, consulting costs, and excess indirect costs that we have to support that in large sales and marketing base.

26:07 So at the standstill level, our EBITDA would be around about £6,600,000, which equates to about 31% EBITDA margin. Breaking down our cost base, about 27% goes into sales and marketing activity. About 25% goes into product development. So we're a true development house. We're not just milking the products we have. We're investing in those products for the future and to ensure that we are sustaining the retention rates of our customers. And the rest of our cost base is broken down across a variety of of support and corporate functions. Moving to cash. Essentially, the cash flow in the year followed our adjusted loss number.

26:55 We had not underlying cost of about £250,000 related to the restructure of the business. So that's essentially incorporating intermediate holding companies so that each product sits in its own individual statutory division. Working capital movements, including deferred revenue, were fairly benign in the year, and we've been a recipient of UK r and d tax credits over the last few years and continue to be so, although the quantum that we will receive year on year will start to decline as a result of the change in The UK regime. So at the end of the year, we had about 3,900,000 of available cash headroom. That comprises 1,900,000 of net cash and an undrawn growth loan facility of £2,000,000, which is committed to 2027.

27:48 Excellent. Thank you, Paul. Well, I'll finish off with the outlook and then hand it over back to Linen. So our strategy and what we're trying to achieve out of this business is very clear. And I believe in our ability to achieve that is based on some core fundamentals. First of all, we have a very resilient market. We've got very sticky products in those markets.

28:14 They are the leading product. They are the leading document management for accountants. Our customer base is very loyal. Our net revenue retention, our gross churn shows that. Our ability to acquire new customers is clear. We And have a very strong balance sheet, so we've got adequate capital to achieve the goals in which we're looking to achieve. So in summary, what we're looking to do is target sustained double digit growth over the next couple of years, continuing to create significant value in The US accounting market. We're gonna complement with some small technology acquisitions because there's a lot of good opportunity out that's out there at the moment, and we're gonna continue to invest our cash in high growth opportunities. Overall, our business is well set up to, in the medium term, achieve the 120 to 150 cash distribution to shareholders, and then beyond that, to create long term growth.

29:10 We thank you for your time, and we'll hand it back over to Lillian for questions, I believe. Daniel, Paul, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed by our investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Can I please ask you to read out the questions that give responses where appropriate to do so, and I'll pick up from you at the end? Yeah. Of course. Thanks very much. So we'll start, I think, fairly with the pre submitted questions for those of you who are more organized. So the first question here is what is the new new sales average subscription ticket size? I assume by that, you mean the average selling price over the the last year. So across the business, our ASP in 2023 was about $1,800, about £1,500.

30:12 So that's a blended rate of our direct direct business, which tends to be at a higher ASP and the business which we we we do through our partnerships, which tends to be at a lower ASP because we offer those partnerships discounts in order that they can go and sell onto onto their end customers. But the blended rate was about $1,800. Next question here is how many salespeople do you currently employ, and are there plans to increase that number in the next year? So as of now, roughly 10% of our employee base work in direct sales. That's about 15 people. Behind that are what you might call indirect sales heads. So you've got people who are working sort of bottom of the funnel leads before they get to that sort of demo direct sales team.

31:08 And, obviously, you have marketing teams sitting behind behind them as well. But in terms of sort of direct people closing business both with customers and with partners, it's about 15 people right now. In terms of how we our plans to increase that number, we don't give specific numbers around that, but I can explain our ethos and the way we go about it is when we start seeing returns from a ramp in sales and marketing spend, then we invest behind those returns. So if as we see the, you know, the heads that we have delivering and delivering at capacity, then we'll backfill that with with additional capacity as things progress. But we don't have any specific plans to achieve a certain number by a certain time.

32:00 I might ask you to answer this one, Dan. Are you before the Sorry. Did we miss one? We missed one. So what do you perceive to be the biggest single challenge facing the business this year? I think that's a very good question. I think this year is no different to any year in the fact that we're a people business. So our success or failure is based on our ability to motivate and culturally and strategically align our team to outcomes and make sure that each day they do better than the last. So our biggest challenge is always making sure that we've got the right environment for our people to thrive. Outside of that, you know, we're no different to any other company affected by the current macro climate, and I think budgets for tech just broadly across the the SaaS market is less than it's previously been.

32:54 And so that's naturally gonna have an effect on us like like any other SaaS provider. Excellent. This question here from Ben. Are you exploring the integration of AI and machine learning technologies to enhance document management and workflow automation, and how might this impact your value proposition? Another great question and probably one in which I could spend an hour in itself answering. To summarize, yes, definitely, Ben. I think AI is our future. We're mobilizing our whole business around it. It has significant advantages to our customers in making sure that they can use the information that we house for them to build intelligence around that information so that it proactively helps them with workflows rather than reactively helping them with workflows.

33:47 So you can expect over the next couple of years AI to be a core part of our applications, and I think that's gonna add a lot of value to our our customers. Excellent. Gary asks, beyond The US and UK, are there plans to expand SmartVault or Workhira into new geographical markets? And if so, which markets are you considering? What challenges and opportunities do you foresee? Well, I don't think Do want I don't yeah. In terms of Workhero, that can be sold anywhere anywhere. So we're already seeing customers coming from Europe. We're seeing customers from Australia and New Zealand. So Work Here, because of its integration to NetSuite and because of NetSuite's success globally, gives us the opportunity to sell into basically any geographical market.

34:39 In terms of SmartVault, it's very focused on integrations into tax systems, and those are very much in The UK and US. So I don't expect us to sell SmartVault outside those two geographical locations anytime soon. Excellent. A question here from from Ed. I'm a long term shareholder and have always valued your frank and direct investor communications. I hope that doesn't mean we've been breaching at some point, Ed. We have. I have some questions. First of all, Cavendish gives you an FY twenty five estimate of 5% revenue growth slowdown in recent years. Is this something is this estimate something you agree with? I think I would answer that very generally, Ed, which is if you look back at our history over the last six years, we have tended to guide the market very conservatively.

35:30 We are, you know, as individuals, not the sort of people who want to, you know, hypermarket up. We've often been encouraged to do so. It's not something that we do as a business or indeed personally. So, you know, generally, stance is that, you know, the the numbers that are in the market for GETBUSY are numbers which we feel reasonably comfortable with, And, usually, we would on the side of of of caution and conservatism with those those numbers. A follow on question here is your stated ambitions require double digit revenue growth for the next five years. Please give us a view on how much needs to come from an increase in users and how much from ARPU growth. I think it's a combination. I mean, longer term, you know, businesses like ours need to grow from user growth. But as we've seen with, for example, the accounting unlimited plan in The US, which is a a new plan that we launched in November of last year, which packages a lot of the existing capabilities that we have into one plan.

36:36 We launched that in November. We've seen the strongest expansion revenue that we've ever seen in our business in those final two months of of 2023. And typically, customers who are moving on to that accounting unlimited plan are paying us around about 50% more than they would be paying on the plan that they were on. So customers are clearly seeing value in the products that we have, and arguably, there's a lot of untapped value within our existing customer base by selling to them other capabilities that we have within the group and specifically in SmartVault bundled into the SmartVault application. So I do think there is a strong ARPU growth story for our business, but, clearly, we're investing in sales and marketing teams to also grow the the logo number as well. So I'd expect both of those to have a strong play over the next next few years.

37:33 There's a third part to this question as well, which is can you give me a give give me your view on how much your price per use compares with other SaaS products that are very useful but not essential productivity tools? So examples there in Slack. I mean, Slack and Asana are cheaper products than than our products. Particularly, Slack is a cheaper product. But I would make a distinction between those sorts of applications and our applications in that Slack is a standalone product. It's a generic product. It's not solving specific challenges for specific industries with deep integrations. And as Dan said earlier, that is where we see the value in our applications, and that's why we can command the pricing that we that we do as you can very clearly see in our ARPU numbers. So I'm not sure that comparing our pricing to what you might call discretionary spend or, I'd say, decreasingly discretionary spend with applications like Slack is necessarily a a useful comparison.

38:36 So moving down to more questions. Question from Sunil here. How is management incentivized to achieve the medium and long term objectives? I'd refer you to the remuneration report in the the annual report. Sunil will give you all the information that that that you need for that. Our 2023 annual report will be published over the next few days as well on the website, so you'll be able to see an update on that on that. Question from Paul. How does Work Hero inflect, and what is needed for you to be confident to say that it has? So I think if I just describe the current status of Work Hero, which is we have, you know, the strongest pipeline of opportunities that we've ever seen.

39:26 We have a committed partner reseller base with Work Hero who are committed to revenue targets over the next next twelve months or their annual revenue targets. And we're seeing, I would say, an increase in the both the quality and the quantity of leads that are coming through from those partners as they become more educated in the the problem that Workhero solves. And I guess the range of of circumstances in which Workhero can be inserted to solve those those problems. So I think as we start to see an increase in the predictability and the run rate of those leads and ultimately converting those leads through opportunities into new business will be the point at which we would consider that to be to be an inflection point.

40:15 If you look at the leading indicators, you know, I believe we are very close to that point now. That pipeline has never looked as strong for us. The engagement of those partners has never been as strong, and we've we've we've sort of shifted our approach there a bit on focusing on higher value committed partners. Think maybe two years ago, we were we we spread that net quite wide, whereas now, you know, we we we understand that ecosystem better, and I think we are making a lot of progress, within it. That said, anyone who has, you know, procured ERP systems or related technology, in their working lives knows that these aren't things you just decide, you know, in in a half hour meeting. They tend to be consultative sales processes, you know, with with with with some level of of of committee type decision making. So sales cycles tend to be somewhat longer, I'd say we're closer to that point than we've ever been in the past, Paul.

41:15 Moving to the questions. Another one here from Paul. 2023 and many other years since IPO have seen clean your client base in terms of low value, low commitment customers, meaning ARPU increases are diluted by customer losses. What's the two to three year view on this dynamic? So I think the last couple of years have seen that dynamic, I think, particularly magnified, Paul. I think we're at the tail end of that process now of of essentially customers have had eighteen to twenty four months to choose whether or not to stay with our products if they're not integrated and to pay prices which makes sense for us. And I think we're probably at the tail end of that of that process.

42:04 To a degree, it never ends, but I think in terms of the bulk, we're we're definitely at that point now. Question here on broker forecast, which I think I answered earlier. Christian, how do you plan to make up for the loss of a million pounds a year in UK r and d tax credits? Ultimately, growth helps us with that. You know, we have always managed the business in line with our cash means. Would we prefer that million of UK R and D tax credits? Yeah. Absolutely, we would. So for 2023, we'd expect or the the the cash we received in 2024, we expect in the region of about £600,000 for that, and then we'd probably expect about half that amount in the in the following years.

42:54 But, you know, we have always architected the business around the means that we that we have in order to maximize growth from within those means and to avoid any dilution to to shareholders. And we can expect to continue that ethos throughout. Question here from Mark. I believe you said your conversion rate with tax accountants was 70%. Is that rate from your partners or your direct salespeople? So that's direct to salespeople. You'll see many of existing customers whilst getting 1.9 of new on which you have to pay new sales commissions. How many of the existing customers are still poorly integrated? That's a good question. It is a decreasing percentage, I would estimate, and you're have to excuse me. This is an estimate. It's probably less than 10% of our client base, which is not deeply integrated. We don't always get visibility of those integrations from the data we receive back from from the products and our our customers' usage.

43:57 But based on information from our sales teams, the way we go to market in a very focused way, it will be fewer than 10% of our customer base are essentially operating in either a very loose integration or no integration at all. Part three of that question, how do you intend to return cash of a 120 to 150,000,000 to shareholders by 2030 through dividends or or an exit? I mean, essentially, as we described earlier, we believe there is substantial value within elements of our customer base around around the business. And we believe that there are a number of that those customer bases would be strategically very interesting to other businesses as well.

44:49 So, you know, we would not expect to return that level of of of value through ordinary dividends. It's more likely to come through special dividends or capital return. But we're invested in this business for the long term, so we are not looking to exit the the entire business in any way. And we, you know, have a very strong shareholder on the board and, you know, believe we are well protected from, you know, sort of low share price bids that unfortunately have plagued The UK market over the last last couple of years. Some of these questions, so I'm just scrolling through, are fairly similar in in nature. Brendan, can the business grow top line fast at mid teen percentage, and what can you do to organic what can you do organically to to achieve this?

45:49 So I think we've seen, you know, strong growth rates over the last few years through a combination of new customers and and expansion upsell. You know, absolutely, you know, driving our business to that sort of mid teen growth level is is achievable. It's what we what we target. It's what our targets are are based around. You know, the the line together is never a straight line, but that's certainly what we what we target. Another question here from Brendan. What percentage of your revenue was from sectors excluding accounting? So roughly 75% of our business comes from the accounting market, also the broader accounting consulting market, and the rest is from a tale of professional services, so financial services, insurance brokers, real estate, those sorts of businesses that have similar problems to accountants. So high high volume of documents, complex workflows, and a need to rely on a sort of core back office system like practice management, matter management, those sorts of those sorts of things.

47:07 Interesting question here from Les. Reckon in Australia is pushing very strongly into The US legal market. Do you see this as an opportunity for your your product? Yeah. It's an interesting question. Potentially for WorkEuro in the future. So at the moment, we're very focused on the RP to create that competitive advantage. Assuming we're very successful in that, then we will branch out into additional addressable markets, and they go to potential for us. Yeah. Question here from Tim. Is the current cash balance the low of your business plan, and what is the low, and when will that be reached? I'd expect that to be over the next twelve to eighteen months.

47:56 Tim, if you look at the the broker forecasts directionally, they're they're they're, you know, where we would where we'd expect them to to be. But as I said before, we, you know, we we manage our investment within our current means and based on where we're seeing the highest returns within our business. The great thing about a business that has recurring subscription revenues is you have excellent cash visibility, excellent revenue visibility as well. So we know exactly when our customers renew, when that cash is coming in, and the proportion of customers that tend to renew at each renewal as well. So that level of visibility is is excellent. We don't start, you know, each each financial year on zero. We start from, you know, a very strong, predictable position. And our strategy in the in the medium term is, you know, as I said, not to generate, you know, a sort of reliable ordinary dividend stream, but to invest for specific areas of value creation and value realization within within the business, and that will remain our strategy.

49:09 A question here from from Tristan. The UK has grown 80% year on year, The US at 12% per the results announcement. UK is more of a cash cow historically, whereas the most investment is in The US. Could you please explain why The UK has performed stronger than The US? Yeah. So if you remember about eighteen months or so ago, Tristan, we we started or more than twenty four months ago, we started our process of bringing a lot of our UK customers up to current market pricing. So we introduced a sort of an all in plan where all of our capabilities and modules are bundled into one called Virtual Cabinet Unlimited. The UK business is substantially dominated by the Virtual Cabinet product.

49:56 So a lot of that price increase for UK customers was in place by the end of twenty twenty two, so that opening run rate of revenue coming into 2023 was very strong indeed. All of that exercise for The US business took place essentially twelve months before. So you saw very strong growth in The US in 2022 because of the very strong opening position, and The UK was experiencing exact same thing in in 2023. Question here from Brendan. Why did the revenue decline in your Australia, New Zealand business? So at constant currency, it was essentially flat, Brendan.

50:45 There was a weakening of the Aussie and New Zealand dollar that caused it from a reported point of view to be to be slightly declining. We do see the great opportunity in Australia and New Zealand, particularly with with Work Hero. But bear in mind, the size of those markets is always going to pale in comparison to the size in particular of The US market. So in terms of long term returns for us, The US is is very attractive. That said, we do see, you know, potentially in the Australia, New Zealand region for particularly for Workhero integration into into NetSuite there. And we'll be strengthening our team there to achieve precisely precisely that. Question from Mark. I think we've got probably got time for another two or three questions.

51:35 Hello, Mark. You targeted 50% ARR growth over the next three years, which would require mid high teens ARR growth annually. What needs to happen to achieve that, and is it a realistic target? So, yes, we consider it to remain a realistic target. It's what we've been gearing the business up towards. You know, as I said earlier, we expect that to come from a combination of ARPU growth, and that ARPU growth is most sustainable when we are selling additional capabilities into that customer base. So the the accounting unlimited plan in The US is a great example of how we can drive ARPU growth sustainably over the long term and also by acquiring new customers both in new products, so in Work Hero, but also in our existing products and particularly in in SmartVault.

52:28 A follow on question here from Mark. With ARPU expected to be up 8% in 2024 according to the Cavendish note, that implies organic sales growth of two to 3% hit double digit ARR growth. Is is that blend of price versus sales volume and outcome you think is likely? So I think that's it's clearly a range of outcomes as as you well know, Mark. We we tend to guide the market relatively conservatively. So I would say that is within our range. Is that what we're targeting? You know, I think I think no would be the answer to to that, but it's certainly within the range of of outcomes. I'd also note that Cavendish is expecting 24,000,000 sales in 2025, so they don't expect you to get close to your 2026 target. I'd emphasize what I've already said around how we've traditionally guided the market in in the in in the past.

53:26 Another question from Mark. Are you still confident you can fund the desired growth of the business from your existing resources? Yes. Absolutely. And it's how we've always gone about structuring the the business and the capital allocation within within our business. So we have a lot of areas in the business that are very controllable from a cost point of view. We have a lot of visibility on where we are seeing return, and all of that helps us to to plan to grow the business within our existing cash resources. I think we have time for one more question. So let's go this one here.

54:12 Another one from Mark. Can you discuss your sales strategy in The US? It looks like reseller partner growth is strong, which implies your direct sales are much weaker at the overall ARR growth. It's been decelerating throughout the past year. This deliberate or temporary due to Salesforce restructuring? So let me answer that bit first, Mark. It is the it is the latter there. So it is where we've been restructuring that that Salesforce and the whole of our sales and marketing process in the in The US. And we believe that's now in a position where, you know, we'll start to see return from that over the the next twelve months. And is it a function of shrinking but large US accountancy market? No. I don't believe the the overall challenges of The US accounting market, which is, you know, there are not enough accountants coming through every year to serve The US market.

55:02 I think we're a very long way from that impacting our business adversely. And at the moment, I definitely see that as a net benefit for productivity tools for accountants. So I certainly don't think the the challenges there are challenges for for us, the challenges for the sector broadly in accounting. But what it's also doing is it's encouraging things like offshoring. So more and more US accounting firms using outsourced providers in other countries, often in South America or in India. And, again, that just strengthens the demand for products that allow secure collaboration across the cloud. So, again, that that works perfectly for the sort of products that we that we sell.

55:50 So with that, I'm afraid we're out of time for for questions. Lily, I don't know if I wanna hand back to you. Daniel, Paul, thanks for answering all those questions you can for investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to yourselves and the company, Daniel, could I please just ask you for a few closing comments? Of course. Well, we thank everyone for your time and for your questions. As a company, we're very clear on strategically what we're trying to achieve, what success looks like for us. That makes that decision making process very easy. We're confident we're on on pace and on on path to achieve those outcome.

56:37 And over the next couple of years, we're gonna keep our heads down and very focused on those so that we can distribute the kind of returns we hope to to shareholders. Daniel, Paul, 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 may 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 GETBUSY PLC, we'd like to thank you for attending today's presentation, and good morning to you all. Thank you.