Ondo InsurTech (LSE:ONDO) — Full Year Results for the year ended 31 March 2026

0:00 Good afternoon, and welcome to the ONDO INSURTECH PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could 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 Mark Wood, executive chairman. Good afternoon, sir. Good afternoon, everyone. Thank you for that introduction. And just to reiterate, do please submit questions as we go this afternoon. And in particular, if as we answer a pre submitted question that prompts other questions, we'd be very happy to pick up those questions immediately.

0:50 The way we're going to approach this is we've got a short presentation which amplifies the results announcement, which many of you will have seen. Craig is going to run through that at a clip. But, again, if if there are points that we're not highlighting from the presentation that need clarification, do submit a question. And then we've got a number of presubmitted questions, which we'll, then turn to aiming to use the bulk of the hour on, on answering the questions that have been raised. So, Craig, over to you. Thank you, Mark. So we're we're gonna do this quick today so we can get into the q and a like Mark suggested. So very briefly for any, recent, shareholders or any prospective shareholders who are not that familiar with the company, just a very quick introduction as to what we do. So we're focused on the problem of water damage, in homes, and the problem that that causes specifically for the home insurance industry.

1:49 It's about 30% of all the claims that are paid out on household policies. To give you an idea of the scale of that, in The United States, that adds up to $25,000,000,000 a year that are paid out just to rectify houses from the damage caused by small leaks. Leakbot is, the leading predict and prevent technology for this particular problem for the insurance industry. We can reduce that cost by 70% with a proven return on investment for our carrier partners. And this comes at a time when the whole of the insurance industry is shifting towards underwriting risk into using, technologies like this to actually, manage, and reduce that risk. So we have a patented, a patent protected solution.

2:36 We facilitate our own, plumbing network to go in and find and fix the problem, And that's a solution that's fully funded by insurance carriers. So it works with our own proprietary technology. We measure the temperature through the pipe so the pipe does not need cutting, and we can detect leaks down to about five milliliters per minute. So very small leaks. It's the only known way in the world of detecting small leaks like that without physically cutting the pipe, and that's a proprietary technology that we own. That's relevant to insurers because it means it's a low cost device that they can afford to give away for free. The home owner can install themselves without a professional plumber, and, we own that, that that the proprietary patents on that technology.

3:26 Our model is fairly consistent around the world. We work with 26 insurers. In every case, the insurer is our paying customer. They pay for the solution and offer it to their policyholders for free. We send the device in the post. The homeowner clips this to the pipe and installs it themselves. That device has an average lifetime of about six and a half years. It will sit there, detect leaks anywhere on a mains water system. And if we detect a leak and we think that that requires a plumbing visit, we will facilitate a plumber to go in the home, find and fix the root cause of the problem. And it's, that that endpoint of the solution that ultimately delivers the return on investment for the carrier partner by finding and fixing, the root cause of the problem.

4:13 So let's get straight into the results. Group revenue grew 20% year on year to 4,600,000. Recurring revenue grew 51% to 3,800,000. It's now 83% of our revenue is recurring revenue. The annualized recurring revenue at period end was 4,600,000. That's 41% up on, the same point last year. And that contracted annualized recurring revenue, so that includes the anticipated recurring revenue from devices that have been contracted, ordered, and committed to by our partners but are not yet activated at period end, is up to 6,800,000. US is the standout country from a growth perspective. Our US business revenue grew a 117% to £2,300,000, and it now accounts for half of our group revenue.

5:06 Operating loss was 6,400,000. The active number of lead bots generating a recurring revenue grew 33% to under a 145,000. In The US, that number grew to 57,000. It's a 114% year on year growth. So everything in The US has more than doubled in twelve months. We fixed over 3,000 in home repairs in The United States this year. That's a 123% year on year growth. And our US net promoter score went up to 88 from 79 last year. So a world class score. We're particularly proud of that because we've obviously doubled the volume of repairs, and still customer satisfaction went up despite us adding lots of new, engineers to our network.

5:58 We had a range of new, contracts in The US. I'll go through these in a second. But also new signings both in The UK and in Denmark, as well. And then post period, we obviously refinanced the balance sheet, and we'll go through that in more detail, shortly. So that's the results in a snapshot. You can see in this chart here more of the historic, growth in revenue. It's actually our four year anniversary since we became a public company in March 2022. Since that point, our revenue has grown on a compound annual growth rate of 60%, through that four year period. Recurring revenue has grown at even a faster clip as we've deliberately, had a strategy of shifting our revenue towards recurring revenue.

6:47 You can see here the active footprint of devices that are generating that recurring revenue, 114% growth in The United States, flat in The UK, and a slight decline in Denmark, although the Denmark customer base has grown very sharply as we've come into this fiscal year. And the Swedish business now growing quickly, 36% year on year growth in active units. A range of contract wins through the year, just to recap, loads in The United States, most notably nationwide that expanded from 16 to 26 states, and post period end, announced a further commitment to, order another 35,000 units, in the second half of this calendar year.

7:33 New partnerships with Cooperative Insurance. Selective, announced a national rollout across their 15 states. A new launch with Bear River Mutual in Utah. Indian Farm Bureau, announced an extension into 15% of their customer base. Westfield became our tenth carrier partner in The US. We launched our pilot with Liberty Mutual, which we continue to run at the moment. Liberty are one of the largest, personalized insurers in The United States with 7,000,000 customers. And, also, we're halfway through a pilot, with Hanover Insurance Group as well. But also new signings in Europe as well. We signed a new deal with Admiral, and Aegis, two of the largest, home insurers in The UK.

8:20 And also, If, have merged with our partner, TopDenmark, which has created a broader opportunity running into this year. And we also sans signed another, large, personalized carrier arm brand in Denmark. We launched that right at the end of this reporting period, so it's had having a material effect on, the first quarter of this fiscal year. So we've continued to deliver world class levels of customer satisfaction. Don't need to say much more about this. You've come to expect us to maintain this. But most importantly, we've maintained the same level in The United States despite that very pass faster period of growth. Here's a summary of the p and l and the balance sheet from the accounts. Just a couple of things I will specifically draw your attention to. One is the gross margin.

9:08 So the gross margin on the business stands at 4.7% in the statutory accounts. It's important to understand two different drivers of cost of goods sold. There's the device activation costs. So when we activate a new leak bot, and that leak bot will sit there for six and a half years on average and generate a gross margin lifetime value of almost $200. There's a cost involved of manufacturing that device and shipping that device. We spent £2,400,000, think of that as a marketing investment on activating new devices, and 71% of that cost was in The United States. Below that, then we have the cost of servicing that installed base once it's live through the facilitation of plumbers into people's homes, and that was £2,000,000 of the cost.

9:56 So if you, look at what is the ongoing gross margin once the device is activated, the underlying gross margin is actually 58%. Now the interesting, split is if you look at that by country, 61% in The UK, 71 in Denmark, and 45% in The US. The reason it's lower in The US is because we're doing less number of jobs per day, so the plumbing cost cost us cost us more on a per visit basis. But that number of jobs per day is improving all the time as we expand, and drive density into those US states where we have plumbers. Already into, the first quarter of this fiscal year, the 1.6 has increased to 1.8. So we continue to make progress, and that underlying gross margin in The US will continue to improve to the level that we see in The UK and Denmark.

10:50 So one piece of feedback from shareholders has been it's been too complicated sometimes to understand our business. We've made a couple of changes which is gonna make our high level KPIs much easier to follow on a consistent basis. So we've moved to reporting active lead bots. It's a sharp measure of specifically, at a point in time, the active devices that are generating a recurring revenue. We'll also consistently tell you what is the annualized recurring revenue at period end. So those two numbers, can be calculated together, for example, to work out the average, revenue per active device. And we'll also consistently report the underlying gross margin and tell you what that looks like by country.

11:37 Those metrics together all enable you to, do your own sums on the business performance and project things forward and will bring a much greater level of clarity to to the accounts going forward. So the refinancing was complete post, period end. A very significant part of this was the restructuring of the home serve, loan notes. The interest rate was cut from 12% to 5% per annum. The redemption date was extended all the way to the 05/31/2030. That's delivered an immediate 1,100,000 benefit from the write down. But importantly, it's taken a requirement of 7,200,000 out of our future debt servicing requirements all the way through to December 2029.

12:26 We completed an equity fundraise. We raised £2,900,000 in July from a placing, but we've also secured a £2,000,000 convertible loan out and a further £2,000,000 committed credit facility. So together, that package of measures has materially strengthened the balance sheet with a broader high net worth investor base to support the company for the long term. So current trading and outlook, we've had a very good start to the new fiscal year. The active LeapBot base is now at a 167,000, so that's 15% quarter on quarter growth since the end of, the end of March, and that growth is coming from across the board. Denmark has grown, now now 25% up year on year really because of the ARM brand launch, since the since the end of March. Sweden growing 38%.

13:22 The US growing 64% year on year. The outlook, I won't go through each of these bullets, but lots of opportunities across our customer base. We expect lots of expansions with our existing partners. And to remind you, our existing partners ensure 15 and a half million homes around the world. So number one priority is to continue expansion and the penetration of those customer bases. That said, we have a good pipeline, not just in The US, but in The UK and Denmark too, and expect to announce new deals. We've also switched to new lithium batteries, which deliver three times the battery life. And also, we've entered a pilot outsourcing agreement with Beagle Services in The US. This will enable us to have a lower cost option to expand our plumbing services in some of the subscale, states.

14:15 So final thing from me, another to address another part of your feedback. Sometimes when we announce a new partnership, our partners don't often don't want to disclose any commercial details, and it makes it hard for you to sometimes understand the scale of each announcement. So one thing we're going to introduce is we're gonna give you a clue by announcing a a banding, and the band will explain how many active devices, are contractually committed in that partnership. So it immediately gives you some kind of a sense for how big, each of these deals are. So that was a a quick run through the results. We're gonna spend most of the time here today on on q and a. And, Mark, are you are you ready to start the the Yep. No. That's perfect, Craig. Thank you very much indeed.

15:03 So let me start off with a four part question, which was one of the presubmitted questions from a from a long standing shareholder. Firstly, why did we raise capital in the manner that we did rather than repeating what was done in the late autumn when we when we raised it twenty five p. And and why was why was the fundraising so dramatically dilutive? Well, when we raised money in the autumn, we had a short term exercise to raise a small amount of money to address a specific funding need, which had arisen from one of our contractors delaying an order by a very short period of time. We needed a a small amount of money, and there was no need to preannounce that in any way. The the circumstances for the the capital raise we've just done were rather different and required a great deal of deliberation by the board and our advisers, both our broker and our legal adviser.

16:13 And the the issue there was as many of you, know, were already aware was that we we have essentially been funding the working capital requirement of the business to a large part by the upfront payments, which are particularly on American insurers pay when they submit an order. So they essentially pay for the twelve months in advance that they're committing to upfront, which enables us to fund the manufacturing of a unit, the initial find and fix visits, and also the the operating costs that go with the with building out the plumbing network as we expand the number of active leak bots. We had we had for three completely separate reasons, we had three interruptions to the flow of cash that we had anticipated coming into the business.

17:04 And therefore, at the end of March and the beginning of April, the broad the board was confronted with a decision that we raise again a relatively small amount of money to find our way through this this period and wait for those orders? Or do we raise a much more significant amount of money which creates a firm balance sheet on into the future? When we announced the trade the trading announcement, I think there was a wide view, which was that we were actually in a much more serious financial position that actually turned out to be the case. And, of course, the share price collapsed. That created a problem because under the London Stock Exchange rules, the maximum amount that can be raised is 75% of the market cap of the company.

17:51 And so effectively, that put us in a position where we could only raise two of them two of them well, actually, it turned out to be 2,900,000 gross of fees. And and that in the board's view is not a satisfactory position as we were going through a period of accelerated expansion. And the dependency we had on timing of orders from our very large customers had to be removed. And so we created this structure which included a convertible loan mode, which sits outside the 75% rule. The other question you might ask that's related is, well, why didn't you do a full prospectus fundraise? A prospectus takes about four months to do and is about 500,000 to a £750,000 expense. And we just didn't have the pipeline, the confidence in the pipeline of cash flows to allow that to be the case. Hence, after a great deal of deliberation, the board took the decision to take the take the route that we that we chose.

18:54 I completely understand the concern around that that decision. But also as chairman of the board, I'm convinced we took the prudent course given the circumstances that we were that we were in. As a related question, the second the second question is, do we need to look at the board? I've launched a board governance review in conjunction with our company secretarial. We we outsource our company secretarial arrangements to specialists, I've asked them to conduct a board governance review, ready to look at the effectiveness with which the board operated over the four month period between recognizing the issue and resolving the issue, the way in which we dealt with the decisions around the announcement, and then subsequently how we navigated our way through those issues.

19:50 And so we'll have the outcome of that at the beginning of of September, and any result in changes, amendments, adoptions of new practices, construction of the board, all of that will be examined as part of the output there. The third question that we have pre submitted is to do with LeapBot Edge. You'll know that Leakbot Edge is an important development of the Leakbot functionality, particularly in The US because, of course, Leakbot works very well on temper temperature differential, and it relies on the water coming out of the ground and into the property inside the property. And it's for that reason that LeapBot in its current configuration doesn't work in condominiums, blocks of flats, hotels, hospitals, or in states where the the mean temperature is so high that there's no need to plumb under the building and into the building and come in outside the building and into the building. And you may remember three years ago when snow fell in Texas, the consequence of that was a lot of the water supply which rose out of the ground and into the house froze because it was so unusual to have subzero temperatures in Texas.

21:05 Now our major US, insurers are nationwide insurers. One's actually called nationwide. They they cover, multiple states, and, insure millions of, of households, our largest insurer loan insuring four and a half million households. And many of those households, particularly the larger households where LeapPod is particularly valuable are in the Southern states, Southern California, particularly Florida, but also the Gulf Of America band of of states. And so we're we have a development program which goes from the prototype, which was funded primarily by the largest household insurer in Australia. We're taking that prototype and industrializing it. And so there's a relatively small but but continuing investment in perfecting that technology, which Pure and Nationwide and Liberty Mutual are all looking forward to implementing in those Southern states. So although we didn't headline Edge as part of the capital raise, and but in a sense, there was no need because at at the moment, this pre industrialization of the technology is a relatively small spend.

22:20 Edge continues to be on its development program. And then the fourth question is a very topical one as as I look out at my brown lawn, which is given the level of water shortages that are being experienced in The UK at the moment, why is it that LeadBot is not an attractive proposition for the water companies? Well, in fact, probably, what would it be, Craig, eighteen months, two years ago, we developed a relationship with three or four of the water companies, and in particular, Portsmouth installed a number of leak pods. And, of course, discovered that a lot of the waste of water is to do with washers and the systems in toilets and, you know, faulty garden hoses, all of those things.

23:07 The difficulty is finding a commercial proposition which allows the water companies to justify the capital investment in installing sufficient leak bots in order to get a material change in the amount of water usage. We suspect the way in which that's resolved is by a water company and a household insurer entering into a partnership because in a sense of the insurer wants to avoid the leak in the property, and the water company wants to save water from the leak being resolved. So there's a mutuality of interest there. And it may be and actually it's worth just picking up on on an element of Craig's, if I can just jump around a little bit, an element of Craig's presentation.

23:56 Craig, I think when you were talking, you mentioned The UK growth rate in contrast to all the other territories being pretty much flat. The the reason for that primarily is that Hiscox, our oldest customer, is already at a 40% penetration of their insured base. And Admon is just coming to the end of a pilot phase, and in fact, have just initiated an order. NFU is also just coming to the end of a pilot phase. And Direct Line has, of course, been acquired by AVEVA. So we expect to see growth in The UK, but for this unusual confluence of pilots and a major acquisition, the the take out has been relatively low. But it may be in The UK that the water companies and one of these major insurers can collaborate in in to to perfect a financially justified model which enables water shortage to be addressed in part by the application of leak bot. Craig, what's our next question?

25:02 You might be muted. Can you hear me? Yep. Got you now. Yep. Sorry. They cluster into a few themes. So some are Yeah. Backward looking, and, many are forward looking. So I suggest we go for a few of the backward looking ones and do do do them together. Great. So let's start with some of the punchy ones. Someone got the cash flow forecast so badly wrong that the company had to undergo an extremely expensive emergency recapitalization, a huge long term at huge long term cost to shareholders. As As the CEO and CFO have not been dismissed, who was responsible for this critical mistake? Shareholders are owed an honest explanation for for what went wrong. Yep.

25:48 Are you gonna cluster a few, or are you gonna give me one at a time? Yeah. There's another related one said, of the three contract deferrals, how many are still paused or uncertain? Yep. What was the problem that caused the price crash, and and has this been resolved? So I think that it's a similar similar question. Yep. How did the company arrive at a crisis position without a solution already in hand? Yeah. Yeah. I said Okay. Well, let Yeah. That that's very helpful. Just I'll I'll pick them out in in a different order for a reason I hope will become apparent. The price crash issue, I think, was primarily because when we announced we were looking for funds, particularly on the social media and the chat rooms, I think there was a lot of speculation that we were going out of business effectively and they they the price discounted down to that level. And of course, the market the way the market functions that, you know, there are those who trade in anticipation of such circumstances.

26:58 So I think that was the the reason for the price crash, the the the two sentences that referred to a fundraising requirement. A crisis and no solution. I mean, I think all of these concerns are entirely legitimate, frankly. The the why is nobody being sacked, which is probably at the heart of all of this frustration that people are are feeling, is, you know, investing in a in a high growth fintech company is not a risk free activity. And we've been very deliberately running this business on a skimpy capital base. And part of the reason for that is that all of our customers are double a or triple a credit rated major insurers.

27:51 The difficulty is that the with the phase that we're in in terms of the growth of the business is that we're getting very large orders for the first implementation of LeapBots with a insurer. So the insurer pays us for twelve months in advance. We get to work manufacturing the units, installing the units, sending the plumbers, and we're paid twelve months in advance to do that. And providing those orders continue to flow as expected, the need to raise further capital is removed. And so we've had a you know, the the cost of capital there for the company, therefore, drops. In twelve months' time, we're going to we're going to be in a position where the monthly payments, which insurers pay at the end of the twelve month period that ElitePod has been activated, will accumulate in the order of £450,000, which is the current burn rate for operating the business.

28:52 So these three order, interruptions to the expected orders came at an absolutely critical moment because we were in we were coming to the end of the phase where we're reliant on these big lump sum payments and quickly moving into a phase where the monthly payments will be the equivalent to our monthly our current monthly operating costs. So it couldn't have come as a worse time. Now what what what's the situation with those three, circumstances? Well, number one, nationwide, where we were anticipating between a 30,000 well, their largest order to date had been 25,000. So we were expecting, given the success of the roll rollout, step up from that. They've confirmed the 30,000 unit order to be implemented in in the second half of the year. So in the period up to the December 31 for the ones who've done this year calendar year.

29:50 The the other two, one of them has was coming to the end of its contract. They haven't done their actuarial modeling to their satisfaction, and they have agreed a six month extension to their contract. And their return on investment calculations are looking extremely positive. So we're so our our expectation is that during the period between now and the thirty first of of December, we put the contract extension in place. We get their order, and and off they get. There's there's there's no negative adhere there at all. And the third was really a change in personnel, which led to a change in marketing priority. And and frankly, their relationship was so early with at that point.

30:38 We're we're absolutely confident there was no reflection on the the assessment of the efficacy of LeapBot. It was it was just simply a shift of personnel and a shift of priorities. Craig, is there anything you want to add to that, that set of explanations or responses to these four very important questions? That that sums it up. I mean, I empathize from a distance. It's hard to understand. But I think think when you're in the middle of that, I think you explained it very well, Mark, the timing could not have been worse. So we had a long period of the upfront payments as you you very eloquently explained, and none of those deals there's obviously a gap before while we run the prepayment down and then those active devices start to generate monthly cash flow. So we were at a moment in time where The US business was not generating any monthly cash in on a regular basis, But the very first deals were about to go over the line where those chunks of devices then start creating an annuity.

31:39 And like you explained, Mark, over the next year, that that annuity goes up to something like £500,000 over the next year, eighteen months, something like that. Yep. And those three deals, well, the the the delays were all totally unrelated to to each other. So it was a huge amount of of bad luck and and and bad timing that that led to that, fortunately. Next question. There's there was another one on a similar vein. There was there was two that relate to the kind of the business model and to profitability, Mark. So one said from March to June 2026, you increased the US league bots from 57,000 to 66,000.

32:26 That's a total of eight and a half thousand over three months. Surely, you need 12,000 a month to start the road to profitability. So I think, we've added we're adding about seven and a half thousand a month over the last three months. So I guess the question is around, you know, what's the what's the run rate that you need to Yeah. Okay. So there yeah. Yeah. Very helpful. There are two there are two really important elements to this question. And, you know, everybody's gonna be thinking, when do we get to breakeven. And there's also an important line of thought with which is we're building in a state of leak bots that are activated that will generate revenue on into the future. And so there is an argument to say we should push breakeven out further into the future in order to accelerate the rate at which we're installing units because every one of those units generates value in terms of the capital value of the company.

33:25 We have a we have a manufacturing capacity today of 40,000 units, and we have the option because of the arrangement that we have with our outsourced manufacturer based in in The UK in Bedford. We've got the and it's an entirely robotic production line, so it's not it's not, in any way, not movable. Got the option of replicating that in The US, which at some point will become worthwhile, and that will increase our volume. But the 8,500 calculation is flawed for one specific reason. And that is if we didn't install another leak bot, if another if no more leak bots were activated in fifteen months' time, we'd be at breakeven because we'd have the current cost base of £450,000 a month, and we have a monthly income of £500,000.

34:24 Now that's an illusion because that's clearly not gonna happen. We are gonna add more plumbers. We are gonna have more infrastructure. There'll be a bit more management supervision. There'll be some more account management for insurer relationships. Possibly, the manufacturing cost moves around a little bit. And and as we do all of that, the breakeven point moves out a little bit, but the value of the company goes up because the installed base grows. So so I think that's the way to look at it. There are two key components. Greg, does that make sense? Yep. I think so. One of the problems with a format like this is you you answer a a complicated, sophisticated question like that and have no feedback from anybody as to whether you're talking nonsense or not. So maybe we'll get that questions as people supplement questions as we go through this.

35:17 Where next? So there's a few kind of commercial ones for you relating to the presentation. So it's one I can take this one. I know this year, the device has been manufactured with new batteries. Are they still replaceable? Is there any change in the unit cost, any supply constraints, any change in expected lifetime lifetime revenue? So, yeah, it's a it's a small change, but it has a big impact for us as a recurring revenue business. So the, the existing the previous batteries, on average, maybe lasted about three and a half years. Customers do replace them, so we have a very good hit rate of customers replacing them. We alert customers, let them know in plain tablet. It's another thing for something for people to do. It's better if there's, you know, no batteries to replace.

36:02 So we've made a simple change to, lithium AA batteries. So they're still AA batteries. They look like AA batteries. You can replace them with regular AA batteries, but in lab testing, it's a rep they're relatively new. And in lab testing, we're getting three times the battery life, out of them. So it's certainly a positive change, and it's a relatively modest increase, in cost per per cell. So it's not added much to the manufacturing cost, but obviously adds a lot to the lifetime value, of a device. Question from Stuart. You you mentioned last year that Helen Lonsdale had been out to The Nordics to discuss deployment. What strategies have caused the uptick, and in particular, what rethink of the LFTECH subscription?

36:50 What rethink of the LFTECH subscription that was harming Leafbot uptake. So, we've made some progress in Denmark recently. Helen's done the deal with ARM brand, which has started really well at the end of March. You can see that in the numbers. The customer base very sharp customer base growth in in Denmark as we started the the new year. So sometimes with these things, what we've learned is insurers go at their own pace, and that's certainly the case in Sweden as well where we, in hindsight, were over ambitious as to how quickly the Lancerschafengar rollout would would go in Sweden. They made some integrations, so they now use their own app to install a device. Took longer than we anticipated. And they're quite you know, there's lots of different units across Sweden. It's a a relatively decentralized organization.

37:45 But that they're now growing 38, 40% year on year of the active basis. It just took a while. It took a while to get going. It's the same with the partner delays. The insurers go at their own pace, and we, at the end of the day, are are a supplier of services to them. So they they they they work to their their own timings. And but Helen's been doing doing a good job managing that. The ROI case makes a lot of sense in all of these markets. And the longer we have devices deployed, the easier it is to measure the ROI case for every individual carrier. So I think that's It's a very interesting it's an interesting dynamic in Scandinavia though, isn't it, Craig? With with being the largest insurer in Sweden, the top Denmark being acquired by if is a massive I mean, they they I think it's a four and a half million household insured base there, so as big as the BS that we've got in The US.

38:45 And and the distinct element about if both in their motor insurance proposition in Finland, Denmark and Sweden, and in household insurance is that their their mantra is move to digital, analog to digital. So we are absolutely central in terms of the way in which they are developing out their household proposition. And then on brand, again, know, massive footprint in in these specific markets. Mhmm. The an eye watering 6,400,000 operating loss recently revealed, it it appears there is no clear pathway to profitability profitability.

39:33 Is the business model broken and unsustainable without future fundraisers? Yep. So the annual the contracted annual recurring revenue at the March 31 is 6,400,000 as we've 6,800,000 as we've reported. The current cost of running the business per month is £450,000. And in twelve months' time, we're receiving fifteen months' time, we're receiving £500,000 a month, not from any assumed growth, but simply based on today's actually, not even today. It's March 31 installed LeakBot. So we're already ahead of that schedule, that fifteen months number.

40:24 And so, arithmetically, you can see, as I said a a few moments ago, if nothing changes, that's the point of breakeven. But, of course, things will change. But it does helpfully, think, put the operating loss into perspective because that just over £500,000 a month, including a bunch of one offs, which are nonrecurring, is is cleared essentially by the projected cash flows based on the current installed contracted activated Leapbox. Similarly to this, Mark, what is the dynamic that caused losses to widen while revenues grew?

41:10 Oh, yes. I well, Craig, why don't you talk about the pace of development in The US and the the the number of states, the expansion in terms of the number of states, and then the the the sequence by which we build up the plumbing base? Yeah. So I think we may have already touched on this to to some degree. So one thing is that split of our cost of goods sold that I explained as to why the the currently, gross margin in the static accounts is compressed to the 4.7%. That's because the largest part of that cost of $2,400,000 million pounds. You should think of that as a marketing investment. Every one of those devices we activate is going to generate $200, just under a $197 of gross margin over over the 6.5 average lifetime.

42:00 So it's a very good return on on that investment. So the faster we grow, the bigger that cost is, above the line as a as a cost of goods sold. The below that, the the fixed cost base, the, although it grew, year on year, part of that were one off costs as well. There was FX effect and, some so a few elements of technology that we invested in as a nonrecurring cost on a contract basis. We built an ROI dashboard for our partners in The United States. We wanted to accelerate that. That was an investment well worth doing because now all of our partners use that as a way to monitor all of the installed device devices across across their portfolio.

42:49 So a couple of specific investments, but I think about 800,000 was a nonrecurring cost anyway. What next? Let's have a look. I asked Thames Water if they would be interested in Leapbox. They said they were aware of it but didn't protect their assets. How do you get water companies interested? So we've put touched on water companies already, I think, Mark, haven't we? I think the thing I would add is we've proven with some of the water company trials that we can fix exactly the things that are causing water losses. What we've learned is the water industry is a very different base from the insurance industry. It requires different expertise in the sales team, different go to market model, and it's regulatory.

43:37 From a regulatory point of view, it's quite complex in terms of what actually is the value that you can deliver to water companies. Their incentives are entirely different to insurers. So for a company at our stage, there is actually some discipline and some benefit to having a very clear and pointed, pointed strategy, which we do do have at the moment. Yeah. I think, you know, it's not impossible after this extraordinary period of weeks that we've had that we get some form of approach based on the earlier work that we did, but we just simply couldn't get to a commercial model. And we've got so much commercial potential with the insurers. But it's this stage in the development, you know, one of the hardest things for a management team to do is to decide what not to do. And we, you know, we simply decided the priority was to, as as Kevin says, farm the existing base, you know, where we've got 15,000,000 households insured by our existing customers.

44:36 And we're just at the very earliest stages of rolling out LeapPod across those at a state. Yep. There's a couple of questions about plumbers. How are you going to increase the speed of hiring plumbers in The US? What's the expected split between Beagle versus Leakbop plumbers in the future? So I'll take that one first, Mark. Yeah. Great. You you can add to that. So we have plumbers, 14 plumbers in The US located in nine specific states. They are, as you can see in the accounts, in 1.6 visits per day, which is lower than, what we achieve in Europe, but it's that's improving all the time. The important thing there is even at that level of unit economics, the unit economics work for us in The United States. The contribution per active device in The US is already, level with The UK, in terms of the gross margin generated from each device at that level of efficiency, and that's only going to keep getting better. Why does it keep getting better? Because as density builds in a state, it gives us more ability to book two or three jobs per day, and we've already got US engineers averaging, over that benchmark already. So that would just keep, getting better.

45:49 So the unit economics work where we've got the right level of density. We know how to hire the plumbers. We have a a a very well formed process, how to bring them on board, and how to immediately get them performing, to the right level of of customer service and claims, reduction for the insurance carriers. That said, it it The US is a big place. It's hard to expand. So the partnership with Beagle enables it gives us another way to turn some of that into a variable cost, gives us another way to expand. So we're piloting first with Beagle. It's difficult, very difficult to say today what the split will be over time. The first thing is to, pilot with them in a couple of different locations, and we'll, we'll we'll we'll take it from there.

46:35 But it's a good, a good addition to to our our operating model, I think. Anything you want to add to that, Mark? No. No. That's perfect. I think we're I think what, you know, one of the issues as we grow the business is the cost base and the revenue are always out of line. You either got two months revenue for the cost base, or you've invested in the cost base and the revenue hasn't yet caught up. What the Beagle deal does is to give us a little bit of flexibility in terms of, you know, cost per visit. So whereas the the the the model that says we ins we we hire, train, develop, and operate plumbers ourselves, training and developing plumbers that are owned by somebody else and being charged a a slightly high unit cost, but a variable cost just improves the mix and allows us to smooth over those periods where we're investing before the revenue is caught up. And that's that's really the underlying thought to this outsourcing operation.

47:43 The the although in Craig's presentation, he may he really underscored, and I think it's completely correct because it is one of the extraordinary differentiating factors about Lee, but the the the very high level of customer satisfaction that we deliver, you know, insurers or certainly my experience of running insurance companies then, you know, we might get a we might get an NPS of 45, something of that order. And, of course, when a a policyholder makes a claim, the NPS goes down because the good what however good you are, the claims experience is always something that people preferred that they didn't go through. And it's not, you know, it's not necessarily the insurance company's fault in every case. It's just a bad situation that people don't enjoy going through.

48:30 And and, of course, also the churn rate, the number of people that renew goes down when a claim is made. To deliver for an insurance company, an NPS which is double what they're getting across the portfolio in the environment of a claim is really astonishing. And I think one of the things that will keep enabling us to attract new insurers is this phenomena of being able to upgrade their customer satisfaction in circumstances where their customer satisfaction would normally drop. Very good. Thanks, Mark. Question from Tom. Can you please outline the £217,000 gross contribution? Surely, there's a lot of devices now in year two, so we'd expect this to be higher. I think this is where the perspective of the underlying gross margin comes in. So Yep. The thing that drove that gross margin in the accounts was £2,500,000 investment in activating the new customers.

49:29 If we didn't activate another device, that same recurring revenue would a 58% gross margin would 58% gross margin would deliver, what, £2,700,000 contribution if we just switched off the tap of new new business. So I think that's a that probably explains that. A question from James. Are many of the contracts with insurers pilots? And if so, when should we hear whether the pilots have been a success? On average, how long do these pilots pilots last? So we have quite a well honed way, of doing this, James, which is our basic our sales approach is, in the early phase, we offer insurers a free a free pilot. So we say, look.

50:16 Let's give we'll give you 10 devices. Give them to your executive team. Try it out yourself, and then we'll show you what, we can see in the data, what we can see about your home. Hopefully, a couple of you will have a leak, and we'll send one of our guys in. That's always very effective at then opening up, a first, you could could call it a pilot or a first order. A lot of our contracts in The US are a master services agreement that work on an order to order basis. So a first order is typically five to 10,000 units. And what we say to partners is that is still unlikely to give you the actuarial evidence of the claim saving purely down to statistics because the number of exposure years you need to reliably re read, to a high degree of confidence, reduction in frequency is something more like 50,000 exposure years.

51:10 But it will we tell them exactly what to expect. We do expect to report to them this many claims savings, this many claims mitigation reports that they'll receive on their desk, and, this level of customer satisfaction. We can reliably predict that, then we deliver it. And then what we suggest from there is depending on the size of the carrier, either a rollout into their customer base, which is what we've seen in the results this year with the likes of Selective, Indiana Farm Bureau, rolling out into the rest of their customer base. For the bigger carriers, the next step is, okay. Let's measure this on an actuarial basis, which means 20,000 devices live for, you know, a couple of years or immediately a bigger deployment. And an insurer like Nationwide is able to set up a control group, a like for like control group, and then measure on an actuarial basis the claim saving.

52:06 I was in, Hartford at Travelers head office two weeks ago, and we, presented a white paper to the insurance industry. It's the first time anybody in the predict and prevent space, I think, has prevent presented that kind of data because on the LeapBot cohort, we now have 370,000 exposure years of data. And all of our insurance partners, when they have claims on the leak bot cohort, they send us the details. So we have the claim date. We have the details of what happened. And we, especially with an AI overlay over the top, are increasingly able to compare that across all the huge amount of data we have, the algorithmic data from the device, all the data from our network operations about what we fixed, when, how did the customer respond, what did we see on-site, what pictures have we taken. The amount of insight and understanding we now have over this peril is more than any individual insurer has, and it's that increasing confidence, just in the delivery of the ROI, but in what levers to pull and how to drive it leaves us very, I would say, exceptionally well placed from here to continue to to grow the business. And importantly, we've over we're over the actuarial threshold in The United States as well. We're at 80,000 exposure years in in The US as well, and that paper was was very well received. I don't think insurers are used to hearing technology and service companies like us speak their language on an actuarial basis like we are now able to do. Yeah. And, of course, the important

53:38 thing there, Tom, is whilst we've been in this growth phase is to to a certain extent, we're meeting with skepticism about whether the tech works, whether it's reliable, will the plumbers turn up on time, can they fix the problem? We, you know, we are demonstrating that through just purely you know, we let the numbers tell the story, basically, as as Craig's been describing. And what that means is as we're negotiating with new insurers, it's much so so if we top them out, for example, that there's no point in a pilot in in that expansion of the franchise because they can they can just look at the data and they can see that it works. And more importantly, with the white paper, we can say to them, just go live. You know, give us your first minimum order of 15,000 units or whatever it is.

54:26 So there should be a virtuous circle here. And in particular, in The UK, you'll remember I mentioned earlier that Admiral NFU are both coming to the end of pilots, and DLG, obviously, has been acquired by Veeva. So the the the the the The UK ought to experience the the post pilot uptick in deployment quite considerably. And the so the next time we're reporting, I'd be disappointed if we're showing this this showing The UK as an outlier in terms of low volume because of this pilot effect. Great. We've got I think we've got my grandfather clocks ticking ten minutes early, but, it just chimed. But I think we got five minutes to go. Is that right? Okay. Yeah.

55:12 Let's go through a few to try and wrestle a few. As always, there's too many to answer, but I'll I'll take a few in order here. What is the churn rate of active devices? Is it in line with expectations? 1.27% per month is in The US presentation. It's in line with expectations. Yeah. And then let's just unpack that briefly. So that's everybody who moves house, who changes insurer. You know, there's a there's a kinda there's an underlying pace there that, again, has got nothing to do with lead bot. Mhmm. What's the potential impact of AI on the competitive landscape and on ONDO operations? Again, I could talk about that for hours, but the quick answer would be, hugely substantive. So already, we're running a Claude Enterprise across our organization. All of our developers are using Claude code.

55:58 The the massive gains in efficiency and throughput we've already experienced is huge. It's very interesting for a company our scale because we can be essentially AI native through our scale up stage. This has huge implications for variable costs as we grow when it comes to things like customer support. We're already using AI to, answer customer, customer emails, for example. So it's very advantageous for for us, but it's gonna have a transformative impact on the insurance industry as a whole. For example, Nationwide's vision, they're investing $1,500,000,000 over the next three years in connected home technologies like us and Ting and AI, and they see the whole of those three things absolutely connected together. That's why they're already ingesting all of our data of our platform into their own systems, and they see putting an AI overlay over that. The insurance company that does that first is gonna have a huge competitive advantage. So it's gonna transform the insurance industry as it's gonna transform every industry.

56:58 Mark? Great. Great. Let me just hold you there because we got three minutes to go. I just wanna say if there are further questions people want to submit, please submit them. We will reply to all the outstanding questions, and and we'll do that in person, not with an AI chatbot. So we should probably just pause there and thank everybody for participating. Craig, is there anything final you just wanna say as we wrap up? This is a good one. What can you tell us about the two new significant shareholders that have appeared on our shareholding, Jeremy and James Vanderberg, what specifically attracted them to the ONDO story, and can we expect them to have any input into the future direction of the company driving the business forward, etcetera? Well, James and Jeremy, I think we're among the people that we approached during the interregnum between announcing that we were hunting for funds and resolving the problem.

58:00 And I think, in particular, they were the ones that really saw the potential of the of the business and had a had the risk appetite consistent with what we needed within the time frame that we needed. Subsequently, they have both well, I think I think they've both given us exceptionally valuable feedback in terms of their own interaction with people that have used the service, and I think have been very positive about that. I mean, we are a quoted company, obviously, so we've got a whole range of shareholders from, you know, very significant individual shareholders such as James and Jeremy through institutions, through a large number of retail shareholders.

58:49 And of course, Craig and I are in that category along with the rep very substantial portion of the employees. So our job as a board really is to, you know, run the business on behalf of all shareholders. But as this session illustrates feedback from shareholders and, you know, guidance, thoughts, prompts, challenges are always welcome and then always valuable. So probably at that point, as I see, we're at fourteen fifty nine. Can I can I give you one more? This is a good one. You both have substantial shareholdings in the company. Are you as comfortable a shareholder as you were a few months ago knowing the outlook for the business? Yes. Yes. I would agree. So thank you everybody for for taking the time to be with us. I hope this has been a clear and valuable session, and we look forward to more of them.

59:40 Thank you very much. That's great. Thank you for updating investors today. Please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will take a few moments to complete and I'm sure will 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.