Ondo Insur Tech (LSE:ONDO) — Interim Results

0:00 Good morning, and welcome to the ONDO INSURTECH PLC Interim Results Investor Presentation. Throughout this recording meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. To click Q and A, type your question and press send. Company may not be in a position to answer every question received 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, we'd like to submit the following poll. I'd now like to hand you over to Craig Foster, CEO. Good morning, sir.

0:29 Good morning. Thanks, Paul. So good morning, everyone. It's great to see, such a strong attendance. It's obviously a very exciting time to be an ONDO shareholder. So the last six months have really represented a very important chapter in our journey to build what I hope one day really does have the potential to be a billion dollar company. Back in May, you'll remember we came to you and through an open offer and a placing, we raised 4,200,000, and that was to support our strategy to expand into The United States. So I'm pleased to report to you today that we did exactly what we said we would do, and it has gone better than we planned and as well as I hoped. And what we'll do as part of the presentation today is we'll give you a real deep dive as to what is going on on the ground in The United States, which will help give you more of a flavor why myself and the team are so excited or so confident at this point that The United States is clearly going to be the key market for us for, the foreseeable future for our patented, LeadBot solution, which we now aim to establish as the industry standard solution for The US market.

1:41 We think this is the first step to build what has the potential to become a very significant, very large business, with high margins, recurring revenues, and something that I hope one day will really stand up as a success story on the London Stock Exchange. So I'm joined by our CFO, Kevin Withington, today. So the agenda is I'm conscious that some of you on the call may be more recent shareholders. So we'll do a quick very quick recap of our vision, mission, and our strategy, and then we'll get into the results. We'll cover the financial and operational results, for the six month period to the end of September. And then we'll, go into some of the regional specific, results and tell you what's going on in each of our geographic regions.

2:31 Then we'll go and do a a proper focus on The United States. What did we set out to do? What have we achieved? And what does the future look like in that market?

2:41 And then the overall outlook for the company. And then at the end, we'll do a very important section led by Kevin on some of the work that we've done to optimize our working capital model. A couple of really important changes, and wins that, that we've delivered that are really important and very relevant to all of you as existing, shareholders.

3:06 So I won't, talk to the exec summary. We'll go straight into the presentation. But to recap, if you're new to the story, at ONDO, our mission is to become a world leader in claim prevention technology specifically for home insurers. And our vision is to have our lead bot solution in every home, reducing waste and helping the planet. We listed ONDO was created in March 2022, where we entered the stock London Stock Exchange through a reverse takeover transaction. And this is a quick snapshot of the the progress that we've made since that date. The share price is up nearly three times.

3:51 Our registered customer number is up by three times. Revenue is up by five and a half times. Recurring revenue by 9.4 times, and the addressable households under contract that we can market to is now a 12 times increase versus when we hit that point back in March 2022. And the reason why this business has got big potential is because we're focused on a very big problem, and that's the problem of water leaks and the damage that they cause to homes and ultimately the cost of that to home insurance companies. This is a snapshot of the problem in The United States. There's 1,700,000 claims every year that cost US insurers over $20,000,000,000 every year to put houses back how they were before as a result of damage caused by water leaks.

4:45 It's 20 to 30% of all the claims on home insurance policies, and the average claim is about $14,000. So you think where the pipework is in your own house, it's hidden in ceilings, hidden in cavity walls, and those leaks start very small, and you have no idea that they're leaking. So they cause damage over time and be before you actually they've they've been leaking for weeks before you actually realize there's a problem, and that can easily be in The United States, $14,000 claim. Now here's some stats from The UK. So the average claim value in The UK is less than in The US, but what is impacting insurers around the world is rampant claims inflation. So there's some stats from the association of British insurers here that shows the trend of the average claim value over time.

5:34 And you can see that, in the space of four years, there's been an 84% increase in the average cost of a water damage claim. Now this is really relevant for our business because as that claim value goes up, the return on investment of our solution also goes up. And this is why I think we're having renewed interest from some UK insurers because of this, the impact on loss ratios that this increase is having. So our solution is a water damage prevention system that can predict and prevent exactly, these types of water damage claims. We partner with 21 insurers as of yesterday around the world to prevent these types of claims, and, we're present in The United States now, in The UK, in Denmark, and Sweden.

6:27 Paul, if you just run the run the video. So just to bring this to life, it's a small unit. We send it in the post, and it's offered to policyholders for free. And it takes just a couple of minutes to install the solution. So, you just clip this to the mains water pipe as you can see in the video here. It takes a couple of seconds, and that unit connects to your home Wi Fi, and that single unit can detect a leak anywhere on a mains water system, and it's sensitive down to about five milliliters per minute. We can detect a very, very small, drip anywhere in the house. So that connects to an app on your phone. If you, if we detect a leak, we let the homeowner know. And importantly, we have an integrated plumbing service.

7:15 So a homeowner can then also call out a plumber at no charge to them, and a plum trained plumber will come, and they're trained to how to find and fix a hidden leak in the property. Now we report all of this back to the insurance company, so they have a huge amount of visibility as to what we fixed in the home. And what we'll do shortly is I'll show you some of the actual rep reports from The United States, recently, of exactly the types of things that we're repairing. But the insurer has a good visibility across all of their installed base. And importantly, this enables them to accurately measure the return on investment and see in real time the, the installed base of units that they've got, around the world. So like I say, we do this now with 21 insurance companies. We've been doing this for a number of years, and we've proven time and, again, that, this is an effective way of managing this, what is in The United States, a $20,000,000,000 problem.

8:22 Thank you, Paul.

8:26 So our strategy, has remained very consistent. Our primary customer, a b to b, customer has been home insurance companies. So all of that's provided for free to their policyholder, but they pay us mostly on a recurring basis to provide that solution. We're focused today on four core markets, The US, The UK, Denmark, and Sweden, and we offer this as an end to end solution for our insurance partners, to drive those recurring, recurring revenues. And the reason why we're gonna be successful and continue to be successful is because we have a unique and differentiated sensor technology. We own the patents on that sensor technology around the world. There's nothing else like it being offered to, this price point that works for the insurance the insurance industry.

9:14 Also, what's unique is that integrated plumbing service. So we actually find and fix the root cause of the problem so we can demonstrate the return on investment, and we have high homeowner customer satisfaction. And I'll show you the latest results on that in a second. And, our immediate priorities, and these have not changed, is focus on top line growth, a focus on The US, and a focus on getting to cash flow breakeven, and we've made some important headways since the last, results update on on each of these elements. So to get into the results, so this is for the six months to the, end of September. The registered customer number is up 36% to a 114,000 in period. The revenue is up on an annualized basis to 3,400,000, so that's a 42% increase, year on year.

10:06 Now what's interesting is the source of the growth. So in that period, 60% of the customer growth was from The Nordics. But what's interesting since the full year results is The US is starting to have an impact. So already 27% of the growth in period was from The US, but The US contracts are much more lucrative than our other markets because the problem on a per household basis is the bigger problem in The US. So we have a a a ability to charge more in The US market. So if you look, the the, the 5% of customers that are on, the recently acquired US customers are actually contributing 16% of our recurring revenues already, and this is when we're just getting started in The US. We deliver consistently high customer satisfaction scores. So these are the results to the end of September, 5.93 out of five satisfaction with the in home visit and a plus 82 net promoter score.

11:06 And the key here is being able to prove that we could do this in The United States the same as we've achieved in Europe. On these results, you see a plus 77 net promoter score. Anything above 30 is world class, but The US is slightly behind UK and Denmark here. I'm pleased to report that post period, we've actually entirely closed that gap now, and on the latest results, The US is exactly in line with The UK and Denmark. So let's take a look by region. So The UK is obviously we're a British company. We started in The UK first. It's our most mature market. Now in The UK, people pay a lot less for home insurance than they do, for example, in The United States. So we first set out and targeted high net worth, insurance books, which tend to be smaller, but the business case is much easier to, to get this proposition where everything's free to to pay out and deliver return on investment for the insurer.

12:04 So what's interesting is The UK partners only have 92,000, insured households between them, but we've penetrated almost half of that opportunity in The UK with 45,000 registered customers. Also noteworthy is in The UK, the gross margin is almost 50% because this is a more mature business. Our gross margins on new business in the first year tend to be lower and then are bigger on the out years. So that's reflected in in the high gross margin in The UK. Now what's interesting is post period, we announced, we've announced some new deals, one of which was NFU mutual. They're a mid to high net worth insurer, but with a large book of business. So we think because of this recent progress in The UK, we've probably had about a 400% increase in the number of households we can now target.

12:56 The marketing started. It's going very well, and we think this is a really important development in The UK, which is gonna fuel some some new growth in this market and more to come. If we turn our attention to The Nordics, taking Denmark first, our existing partners in Denmark have about just over 400,000 insured households, in in the Danish market. We're in 35,000 today, so that's a 7% penetration.

13:28 Again, what's interesting is just, yesterday when we announced the results, we also announced a new partnership with the ONDO INSURTECH PLC, who are one of the largest, nonlife insurers in Denmark. So we estimate that's probably doubled the number of addressable households available to us in Denmark. So good good progress there too. We're also in Sweden. We work with the largest, nonlife insurance in Sweden, Lance Schaffingar Group. I think if anything everything in the results, this is probably the one that's been a a bit of a frustration for for us as we thought this would go faster than it has done. The reason is we did a pilot in one particular region, and we penetrated 40% of that region during the pilot period. And then we signed a a rollout agreement to expand this across the LF group. What the central group, have, been doing recently is they've created a bundled proposition that's sold to the customer, including a leak bot along with some of the smart home devices.

14:29 We, I've seen other insurers try to make this work, and it's quite a difficult proposition to get, you know, insurance customers to buy kind of smart home kits from an insurance company. So we haven't seen examples of anyone managing to to, make this work. That said, some of the regions in LF are still, emulating the original proposition that we believe in, is where the device is free and the repairs are free. So we do think, we will, roll out as planned with with LF. There's just been a bit of a delay while they experiment with different, different propositions. So the overall results from an insurance perspective, in the last six months in that six month period, we've been in almost 3,000 customer homes, fixing leaks. Nearly 700 of them are damage causing leaks that could cause claims with an estimated claims value of £5,500,000.

15:26 So it's a 145% return on investment for our insurance partners. The results we deliver are good for the environment too. So those same, 3,000 in home visits have saved a 132 megaliters of water. If you extrapolate that over a year, that's enough water to fill 50 Olympic sized swimming pools. So this is the reason why we've got the green economy mark on the London Stock Exchange, And, this is becoming increasing importance as we also, have slowly made inroads also with the water utility industry. More news on that to to to come, but I think it's this benefit that really is the thing that's interesting to the to the water industry specifically. So let's now talk about The United States.

16:17 Like I said, we came to the market, and we raised 4,200,000 back in May with a a goal of expanding in The US. This is exactly what we said we would do at the time and what we said we would use the money for. We said we would hire some new roles in customer success, customer facing

16:37 roles to enable our US general manager to focus really on new business growth. We said we would invest some money, in marketing. We would hire some customer support staff, some field engineers. And we indicated without putting any timeline on this that our aspiration was to expand from the existing four states into eight, then 18, and then 32. So as soon as the fundraiser was done, we set about executing exactly this plan. This is why it's exciting. There are there there are actually over 300 insurance companies in The US, but the top 100 cover a 100,000,000 homes that are spending $20,000,000,000 a year putting homes back, how they were.

17:22 So the plan, the four point plan is really simple. Number one was prove that it works in The US, and we can deliver the same results as what we've delivered in Europe. The second was can we get ideally a market leader to expand, across multiple states? And then three, can we get other partners to follow into the same footprint? And finally, number four, can we then use that to really establish our solution as a market leading industry standard solution for The US market?

17:57 So this is the start point, in the reporting period. So we have, five partners in four states. They, in those specific locations, insure 270,000 people, and we have already penetrated 5% of that opportunity in The US by period end. And in importantly, we went to in 539 customer homes on the back of seven and a half thousand new installs to find and fix leaks. Now what, I've mentioned in previous results calls about something called rep reports, and then I've seen comments afterwards saying, what the hell is Craig talking about? What are these rep reports? So hopefully, this will bring it to life. When we fix something in the home that's causing damage, we provide a lot of information back to the insurer. I'm gonna just give you a flavor for some of the things that we fix in the home.

18:55 So here's an example. This is, in a in a house in in in Washington. And you can see here, you can see here, water, coming out of the pipe here. If you take, if you zoom out, hopefully, you can see that here. You can see the a puddle of water, kinda gathering here. So this is in a crawl space. In a lot of US homes, this is the a typical construction where there's wooden beams holding up the the ground floor, and there's this crawl space gap underneath the floor, and a lot of the pipework flows under here. So this is a one inch, kinda mains feed, and it's kinda spraying a small volume of water at the moment. The homeowner has absolutely no idea that this is leaking.

19:45 Our device picked this up, and, here's a picture of the repair that our engineer made while he was, on-site. So you can imagine if this was left over time, that pipe is eventually gonna fully fail. That entire crawl space is gonna fill with water. The first time the homeowner's gonna know is when water starts to come through this floor. So this is the floor immediately above. Now our engineers

20:09 carry FLIR, thermal imaging cameras, and we use these as a way to show. Although you can't see the damage, you can see in this section here, the darker color shows where the moisture is coming through the floor and causing damage to the property. So the average claim value at this insurer is about $25,000 per claim. A claim like this could be much more expensive, as as you can imagine if it's, the water comes all the way up through the Ground Floor of the property. Here's another example. This is, these are water feeds going into a water heater. So the the engineer tracked down this leak. The corner of this room was full of stuff as most people's houses are. Once we removed the the items, you can see here there's actually, mold through the corner of the room here where this is, dripping down. But again, we caught this when it was a small leak. No serious damage has been done to the property.

21:06 Once everything's out of way, look, you can see some of the staining on the floor here. But what we've what we've, see time and time again is leaks start small. So these things start off as a small drip. They get worse over time until the pipe fully fails, and it's normally at that point that the homeowner is aware, and it's at that point that it turns into an insurance claim.

21:29 Two I think there's two more quick examples. So I think this is, this is a feed to a kitchen sink. So I don't know what it looks like under your kitchen sink, but under mine, there's loads of stuff crammed in there. And what we typically find is, this is a common place that pipework will leak, and the homeowner's got no idea because the cupboard's full of stuff. And, eventually, that leak will get worse. Eventually, the pipe will fail, and then you know about it when water comes from, you know, under the kitchen unit. At that point, the kitchen units are buckled, the

22:01 floor's buckled. That can easily be tens of thousands of dollars of insurance claim. We catch these things when they're just a small drip. I think one more thing. This is another crawl space example. So, again, you can actually see in this example the water, coming from the pipe here. Again, another crawl space underneath, underneath the property. So these these are these are typical, examples, of the types of things that we fixed. In this case, in that period, we fixed, you know, 500 of these for those partners in in in The US. So one of our partners actually made a customer testimonial video that I'm just gonna take a minute of the meeting just to show you. So this is not something that we had made. This is something that one of our US customers decided off their own back to create a a video to kinda bring to life what it is that LeapBot can do to protect customers' homes.

23:03 LeakPod is a sensor that's attached to the the main water line going into the house. The sensor will determine if there is a slow leak of water. And if it determines that, it will send an alert saying that there's a problem that you may want to address. My insurance carrier, Mutual of Enumclaw, had been soliciting this as an option for homeowners and as a way to passively monitor your home for any small leaks that could cause, you know, significant issues later on. I'm not a super handy person, but, as far as how to actually install it, you need to locate where your main water line is coming to the house. Once you gain access to that, it's really pretty straightforward. It's got a clip on the back of it, and it just clips right onto the main water line. After that, there is an app that you download, and that syncs with the LeakBot, syncs with your phone, and now your home is being monitored for any, incoming water leaks. It was, I believe,

23:55 within a couple hours of doing the installation, got a notification on my phone. Leak bot has detected a leak. So at that point, you open the app, and it's got a series of questions that you go through to hopefully self identify what the problem is. If the problem has not been corrected or you're not able to diagnose it, they would ultimately schedule a plumber to come out and visit and see if they can diagnose where your problem is. This was not at my expense. This was free of charge to me. They did find a pretty significant leak that was going on in an area that I did

24:26 not have access to behind walls. I'm very grateful they found when they did. I mean, water damage, mold, all of those things are things you do not want around your family at all. So I am very grateful they found it when they did, and we were able to get it repaired. I really cannot speak in stronger terms on how positive my experience was, with LeakBot and with Mutual The fact that I can have something like that going on in the background that provides me peace of mind is absolutely worth the time it took to install it and everything involved with it. I cannot recommend it highly enough to anyone that has access to Thank you, Paul. So when you take a look, at what that means, I showed you a couple, just four examples of these types of things that we were fixing in customers' homes.

25:25 In that six month period, we were in 539 US homes, and a 106 of the things that we fixed were those damage causing leaks. So on US average claims values or the the average claims values of those particular partners, that adds up to 2,000,000 pounds of, claims prevented. In that same period, we charge those same US insurers a 150,000,

25:51 for providing that service. If you combine that with the plus 77 net promoter score, so 94% of nationwide customers, as an example, would highly recommend LeapBot to their friends and family, and a 4.8 out of five customer satisfaction score with the in home visit. You can see why The US insurers are enamored by those results. So the key then was, what happens next on the back of the first part of the plan on proving that it works in The USA. So the next step was can we get a market leader to expand?

26:27 So we absolutely did achieve that with Nationwide Mutual expanding LeadBot to all new and existing customers across 16 states, which means we're now active in a total of 18 states in in The US. Mark from Nationwide in our press release said that that they've now fully integrated LeapBot into their smart home platform to so they can use this to prevent water damage claims in in their members' homes. The results in his own words have been remarkable, and their ambition is for Nationwide is for all customers to benefit from this type of predict and prevent technology. So we at the time when we did the fundraise, I anticipated that that we would be able to get nationwide to to expand into some states. I didn't think they would go into 80 16 states as quickly as they did, which was really a a remarkable, great result.

27:28 What's also interesting is, can we get others to follow? It happened almost straight away. So we signed a new deal with Indiana Farm Bureau who followed alongside Nationwide in the state of Indiana. They're a really interesting partner because there's loads of farm bureaus, and they're all state specific. So they're noncompetitive, they all talk to each other. So I think, Indiana will also lead to a lot of other a lot of other deals, but, they're, you know, of a significant size in in that, in that one state. But then our existing partners also followed. So Mutual of Edenclaw have followed into Oregon. Selective have followed into the four states where they've got decent numbers of customers that overlap with the Nationwide footprint. And the the other partner, the one the partner that's so shy about having their name mentioned, have also expanded into another four states that follow Nationwide's footprint. So when a market leader follows, absolutely, when a market leader takes the lead, others absolutely do follow.

28:29 So our existing partners, have got they ensure a million households in that footprint, of states. So we're immediately getting to work, to, roll out the device and penetrate those households. So can we take the next step in the journey to really establish Leadbot as an industry standard solution for The US market. So one thing that we did on the back of the the money that we raised is we made a small investment in getting some extra help with our PR and social media. And, you know, that was something I used to do off the side of my desk, and it's been good to get a bit of professional support with that. And, really, the the goal of that has been to use that to, get the message out and drive brand awareness with our, insurance partners. There's some interesting stats here on the slide which show of the posts that we put on LinkedIn, who's been watching them in The US, and who do they work for?

29:28 And you've pretty much got all of the top 10 US insurers, on on that list. So we're well on our way. There's definitely eyes on us in The United States, and many of these insurers, obviously, we're in active conversations with and are in our pipeline, and we're looking forward to providing updates in in due course. And to give you a sense for how big the opportunity is, each of those houses represents 10,000 homes, by the way. So if you look at that million homes that are in the the partners that we've signed in those active states, the the green dots there represent a zoomed out view. That's how many households the top 10 insurers insure in the 18 states that were already active, 27,000,000 homes.

30:18 And if you take the rest of the other 32 states, there's another 39,000,000 homes there to go at. So you can see signing any combination of those top 10, top 20 insurers, we've got the potential to be a very significantly sized business.

30:34 So all of that is well and good. Do we have the right business model, and working capital engine to grow this business in a way that's efficient? This has been something that myself and the board have been really focused on, and credit to our chairman as well for kind of spotting this well in advance. We're all significant shareholders. And what we didn't want to do as a recurring revenue business is have a very working capital hungry model that meant we constantly needed to fundraise, and we were limited to how fast we could grow the business because of working capital concerns.

31:08 So we've made a couple of important changes that to all existing shareholders, you should be pleased about because it really increases our ability to grow, grow this business. So I'll hand over to CFO, Kevin Withington, who'll explain a couple of these elements. Good morning, everybody. Yeah. So as Craig has as Craig has indicated, for for the last twelve months, we've been looking at optimizing our working capital across the business, bread and butter to me, and it's certainly something that we've focused on driven by Craig and the Board to make sure that we don't constrain growth. As you as you shareholders are probably also aware, in any contract, a lot of our costs are upfront in terms of device manufacture, device device deployment costs and engineer setup.

31:59 So what we what we've done is looked looked to optimize optimize each contract to do that, and here's roughly how it works. So each US partner and other partner sign a master services agreement that enables them to enables them to execute multiple orders on on under that original contract. And we tend to we tend to run about a thirty day payment terms for the first twelve months of fees paid up front. So, for example, an order of 10,010 units, we would invoice 600,600 thousand dollars. It would normally be paid before any devices start to be shipped. And the key benefit is that the order and the contract remains cash flow positive and doesn't create any additional working capital strain.

32:53 So when you look at the look at the two the two charts on the screen, as we as we install devices, we draw down monthly fees against that prepayment. And in this exact in a normal example, this will be fully utilized by about month fourteen in this say, in the example shown. But in the end, what we've what we've achieved with with our partners is that the second order is triggered. So the second order for, say, another 10,000 is triggered triggered once the first 10,000 are dispatched and installed, not when the not when the advance is fully utilized, which, again, on a steady rollout is around about month four. So so at month four, you're in a position where you've received you've received $600,000.

33:41 You've basically you've basically earned against that about a 110, so you're 18% in, and you already got another prepayment coming in. And the reason the partners accept this is is because they do accept that our our our costs are front end loaded and that we have and they appreciate that they appreciate that the the p and l charge to them goes through goes steadily through their steady through steadily

34:07 through their p and l. But from our point of view, it's crucial because what what we're doing is we're pulling cash into the earlier periods against the manufacturing and other costs that we have to incur. And it basically means that the growth actually helps to fund the business, and there's no need there's no need for any further debt any further debt finance or any sort of fundraising to do to do that. And and as we continue to deploy, we're building a cash generative base from our cash generative base and recurring revenues from the installed installed devices. So it's a very, you know, it's a very unique way of doing this, but it also means that your growth is nowhere near constrained, and we don't need to raise further equity from any of any source. So and and it's really, I mean, it's really a really a positive thing a positive thing, and I expect the deferred revenue to grow over time as we get more and more more and more devices deployed using this this method. And this contract this template is in place for all of our US contracts.

35:13 So very, very positive. The second the second thing is the the HomeSURVE the HomeSURVE vendor loan note. So this this loan note, 6,400,000 came from the original purchase of when ONDO bought LEADBOT from HomeSURTECH March 22. It was a it was part of the overall consideration. It came alongside HomeSURTECH shareholding in the business, which is currently 12%, and there was a cash payment, which is all documented in previous accounts. And what we've done what what we've basically done is we negotiated the deal with HomeSURTE. We've extended the facility by an extra year. That's enabled that the first principal repayment could be pushed out another year. And so the so the first full first repayment is due in March March twenty seven.

36:04 It's about 1,800,000 in the in the in the sort of medium term in the period to March 27. And we've also agreed an additional roll up of interest for the year to year to year to March 26. So that's another point. About about 900,000 8 to 900,000. So I you know, why have we done this? Well, a, it's it's a good it's a good thing for the business to do just to again, coming back to the general principle of optimizing working capital. But we've previously been told by investors that the loan note repayment terms were a concern The because the the first repayment was March thirty first of March twenty six. They said it was a concern. We by doing this, we've completely removed that concern, and and it's an overall benefit, I'd say, of about 2,700,000 to the March 31.

36:57 And it it it also means that we further move the obligations under the loan note into a into a into where we expect to be heavily cash generative. Means that we can we can fund that loan note out of trade our future obligations meet our future obligations from our traded revenues, again, without any need for any further financing from shareholders or or anywhere else, really. So those two two things. So we now think we've got a solid base with the loan note. The loan note terms, you know, complete completely happy with those, and the ongoing business model doesn't constrain doesn't constrain growth at all. And if anything, it's a cash positive. So we were very pleased to get that very pleased to get all that done. And, yeah, alongside all the business development.

37:44 And yeah. So I think rather than explain it too anymore, I'll hand back to Craig. Thanks, Kevin. And I'd like to, in front of all, I guess, on the call just to say well done to you because that was a a really good job that you did on on that renegotiation. And, yeah, just so that to underline the point, those two things are are just super important because it means with that repeat prepayment structure, it means our growth is funded by our customers. And with the great work that Kevin's done there on the low note, it means that we can meet those obligations from our future trading revenues. So in summary then, we're really at an inflection point, driven by The United States. We've proven out the products. We've expanded now into 18 states, on the back of that initial success, and we've proven that other partners will immediately follow as a market leader expands.

38:40 The results largely driven by Scandinavia. Our revenue up 42%. The customer base up 36%. But as the chairman said in the interim statement, we do expect quite quickly that the business, the access will shift towards The US where they will become the majority of revenues, the majority of registered customers, and a very nearly already the majority of the addressable households, under contract. So addressable households under contracts grew by a 128%, and that really was already driven by the The US. And those changes in the working capital profile really set us up well for success. We see EBITDA positive trading insight in the second half of twenty twenty five with no further funding required for us to get there.

39:30 So that's the end of the formal, presentation. I think we'll go now to, the q and a. So thank you for the some of the questions that have already been presubmitted. I believe it's, open. So if anyone wants to submit a question or they thought of something as we've been talking, by all means, please, submit a question. Paul, can I just ask, for some reason, I can't see the question anymore? No problem at all. I was gonna say, stealing my job. Yeah. If you see a little blue bubble in the bottom right hand corner, just double click on that. That may just pop it up for you. Yes. Very good. Thank you. See. Yes. If you don't mind just reading out the question where appropriate to do so and either taking it, passing to Kevin, I'll pick up from you at the end. Thank you. Very good. Okay. So in no particular order then, we'll just go through some of the questions that have been been submitted. I can see loads of new ones have come in, so we'll try and, give succinct answers so we could get through, as many, as many as possible.

40:29 So one of the questions is, a while ago, we announced a fully funded twelve month pilot with the venture and innovation arm of IAG in Australia to develop a solution for the Australian market. Can you advise the current status of the initiative? Will this lead to to new markets? So that that kind of r and d project has been going well. We've run over a year, but we're we're it's still fully funded, so we're we're, carrying on with the project in Australia at the moment. We've, we think we've figured out the technology. So this is the difference in Australia is that the the stop tap of the supply line are outside of the property on the exterior wall. So we tested a few different versions. We found something that works. We've actually filed patents on that technology because it works in a slightly different way to the existing product.

41:24 And, we are excited about it because not only is it relevant for the Australian market, but any kind of hot climate where you have the same construct where the stop tap is outside, we think it will work. And it it might possibly have other applications as well where there isn't a current solution, for example, in apartment buildings. So more news on that to come. It's very exciting, but on the flip side, as we've already done this before, we also know it takes, you know, a lot of time and effort to check turn something like that into a mass manufacturable product. So it's one for kinda later down the road, but it is nevertheless a really interesting product. As the as we move towards the patents getting published, we'll reveal more and and tell you a bit more about how how it works, but at the moment, that's confidential.

42:15 Another question. You said that, in the announcement about factory capacity, you said that there were multiple reasons why you were increasing manufacturing capacity. Have all the reasons now been revealed with the recent announcements? No is the answer to that question without saying anything else as to why. So, no, it's definitely not. You you haven't seen all the reasons why we decided to to do that. Can you advise if consideration has been made to list within The US at some point in the near future? Kevin, do you wanna answer that one? Yeah. We have we have started to we have started to look at it, but it's not you know, there there are obviously other requirements, but it is something it is something that we've it is something that we've looked at, but no plans in the immediate term at the moment.

43:08 Thanks, Kevin. One question I think we've answered, it was about how how are the deals structured, and do you get a prepayment on the second deal, or is that just on a $5 per month basis? So I think we've answered that, but just to underline, each order with under a master services agreement follows the same construct. There's a prepayment on the first twelve months fees, and then it goes to $5 a month, and they pay cash on that basis. But a next order is triggered as soon as the devices are installed, and we get another prepayment. So, hopefully, that's now that's now clear. What progress has been made with dual billing across insurers and water utilities? So, there's definitely something in this. I think the, I think the thing that I've learned is sometimes myself and the management team are impatient for things to happen quickly.

44:04 And then when they don't happen quickly, sometimes we think we kind of assume it's not gonna work, and then things have a habit of coming back around and surprising us. So I think water utilities might be in that category where I think there's a lot of promise in that sector where the leak bot has been proven and a couple of water unit water utilities have tested it to reduce a lot of leaks. Things seem to be progressing very slowly, a lot slower than we would like, so we thought, well, obviously, the the we should just stick to our our core market with insurers. But, things are progressing quietly in the background, and I think there is interest from the water industry. And I think what you'll see more, in in due course. And I do think there's something in this model where the same house only needs one leak bot and only needs one plumber to come, but delivers two different benefits for a water company on the water saving and for the claim saving for the insurer, whoever the home insurer is. So, yeah, we still think there's something in that model.

45:09 More more news to come, on that in in due course. One second. I'm getting confused, where we are. At what point does production get switched to to The US for contract fulfillment? Kevin, do you wanna answer that one? Yeah. I mean, in terms of the so, obviously, you know, we have looked at US, and they still flash our facilities in The US. But at the moment, we're quite happy we've got we have enough capacity in The UK. Actually, in terms of the in terms of the in terms of the product, a lot of the actual component parts are actually UK manufactured.

45:58 So it doesn't necessarily it doesn't necessarily mean that you would you would move to The US immediately, but it is something that's heavily on the radar. We have a we have a plan that we have a plan that we could set up a US a US facility. But it's a US US facility as it's required. Okay. Do you think there might be any mileage in offering a lower cost service without the plumber or repair element to enable deeper market penetration? The short answer to that is, no. I don't think there is. And the reason for that is the reason why insurers buy our solution is because it reduces the claims. And the reason why we reduce the claims is because we actually send the plumber to go and fix the root cause of the problem.

46:50 The offering the sensor without the plumbing service, the reason why we don't think that works is because homeowners, if they can't see a leak, they tend to be skeptical as to whether there's any whether a leak exists. Because if the if you can't see it, you just assume, oh, maybe the, you know, the sensor's just it's a false alarm or something like that. So that's why we really think it's important to offer the plumbing service as part of the proposition. Now do we always have to provide that ourselves to our own employees? Not necessarily. We could do that through different models as we scale. But what we found works right now is that we employ the plumbers. They turn up in a leak bot uniform. They're trained by us how to fix exactly this type of thing. They gather the right information in the home. And the key insight really is that we don't need that many plumbers to service the units. At the moment, the ratio is about one plumber for every 7,000 devices installed, and that will only get more efficient over time.

47:50 So we think that's the model that works for for now. Selective have expanded into four of the 16 states when Nationwide are rolling out. What stops Selective expanding into more? I think they've just gone into the overlapping states where they've got, a kind of half decent number of customers. So I think that is just the the degree of the of the overlap, basically is an answer to that question. There was some indication of the size of the second nationwide order in the Dowgate note. Does the upfront payment for each rollout limit the size of each order due to the amount the customer is willing to pay upfront, or is there just a slow and steady ramp? Yeah. I think the I think the assumption in the question is correct, that, there is the the MSAs are set up so that you can execute multiple orders. So they'll execute an order. It may well be that the order is fully used up in a in a few months, and then it triggers the next order.

48:53 And that's if you take a similar solution like Ting that prevents household fires in The US that's in 2,000,000 homes, that's exactly how their order flow has gone with with partners like State Farm where there's just been repeated orders of 25,000, 50,000 at a time. So I think that's just how it will go. I don't think the cash prepayment, honestly, is a limitation with the insurers. They seem like, you know, you know, 7 figure number seems like a big order to us, but that's not a big ticket to procurement payment to these absolutely giant American corporations. So I don't think it is a a limitation. How long do the batteries last? Kevin, do you wanna answer that one?

49:46 Yes. I mean and how is it easy to replace them? Yeah. I'm not gonna do a demo live on a webinar, but you clip the front off and you just clip the batteries in and clip the batteries the batteries out. It's very easy. Two AA batteries. But, yeah, the, I think the the battery lasts that battery lasts on a deployed leap about three to four years. It does it slightly depends on the distance from the router, but there's on the we have continual ongoing work to basically optimize how the the device talks to the platform and to extend the extend the battery life. But, yeah, it's, you know, it's a solid three years, if not if not a bit more. But they're very easy to the back the batteries are easy to replace. You just clip the front off, replace it, and it and it's done. And if and if I could do it, it's anybody can do it.

50:36 Yeah. And we and the statistics are very good as customers replacing the batteries when they do run out. And, also, our software guys are always making, clever changes in the background to to elongate the battery life on the on the service side as well. I think we might have answered this question, but it made me smile anyway. You would be pleased to know that as the share price reached 30 p, I am now out of hiding. And my share club would like to know, more detail about the plumbers who pays for them. Are they self employed? So, hi, Alister. I think I know who answered this question because I do remember one of our shareholders has been particularly aggrieved at recommending, an entry point, and then the share club all been crossed with him when the share price went lower. So I'm very pleased that you share club, and I'm happy with you, Alister. I think we might have answered your question already, a few moments ago as well.

51:31 Okay. So let's let's have a look at some of the ones that have come in while we've been talking. Are there plans to monetize the vast amount of data that's being harvested? For example, commercializing APIs. Question from Rob. So that's an excellent question, Rob. So we do have a huge amount of data that we are collecting. And you'll notice that our business case, the way that we talk about to insurers is all about the immediate return on investment that we can deliver by preventing claims. However, as our partners get more mature and they have more data, it's clear that you can start to use that data in other ways that could drive value for insurers. One of our US partners has integrated, the APIs on our products directly into their own system.

52:21 And you can see over time how that data can be very relevant in terms of gauging and pricing risk. So I think there is more more to come on that. I think it's an early stage. And, you know, we haven't, it's not something we charge extra for at the moment, but that could be the way that things evolve over time. Probably just to add to that, and we do have and we do have the commercial gateways to be able to do that. So the investment or the tech investment has already gone in. Yeah. Carl, do you have other products in the pipeline? Are you looking at deploying a lead bot in other regions? So other products, I think we're always evolving the product, improving the product from a from a software point point of view. The, there are other kind of software products that we're working on all the time, especially ones, aimed at the insurer, some of the APIs that we're talking about, some of the dashboards and the reporting tools that we use.

53:16 In terms of, other regions, the product has a global, relevance. The reason why we stick to those four markets at the moment is real really just a a strategic choice to do with resources and management bandwidth. It's not a kind of pure a tech pure play, insofar as, you know, you could just launch an app on an app store anywhere around the world. What we find is to go into a new market, we need to really understand the local nuances in the local plumbing, and we need to be able to set up that plumbing service. So that's why we don't, you know, lightly go into a new market. But over time, absolutely, you know, lots of other European markets would make it would make sense. Canada would make sense. Our chairman's excited about Japan at some point.

54:05 So we will get to it. And the platform that we've created now and the success, you know, especially driven by what's happening now in The United States will absolutely create a platform for us to to, expand internationally. How does your product compare to the GrowA SenseGuard and not just from a price point? So the the Hansgrove product is a kind of big, plumbed in, system where you cut the pipe. There are there's lots of these variants variations of the same thing. So it plumbs in, and then it will detect a leak, on the system. So I I I don't I haven't got the exact stats on the Growway one to hand, but when, we compare the Leakbot system to system similar to that, they're normally a similar kind of efficacy of detecting the leak.

55:00 So the difference is all around. Is it is it part of a scalable solution that fits with what an insurance company needs? So the hands grow solution in the quest that's mentioned by Lindsay in the question. And the last time I checked, it's about €500 for one of those, systems, and they require a professional plumber to come and cut the pipe. So it's very difficult certainly to give one of those away for free with a free install. And then if it detects a leak, they still haven't figured out anyone to go to the property to actually find and fix the root cause of the problem. So it becomes a very niche thing that a homeowner you know, you would have to have a very big house for that to make sense to go spend $5,600, euros on a system like that to to hopefully get some kind of discount on your home insurance.

55:52 So the thing that makes Leakbot unique is, the fact that it's a small low cost sensor, clips onto the pipe, doesn't need a professional installation, but is as sensitive as those types of systems at detecting a leak. But it's low cost to the point where it can be bundled in a full end to end service that we provide that includes a plumber actually going and fixing the root cause of the problem, for much less of of a of a fully loaded cost than what a system like that, would cost. So that's really the the point of difference. How do you foresee the pace of monthly rollout accelerating over the next twelve months? So I can't answer that, Christophe, directly because it'd be a forward looking statement.

56:42 But we have the capacity. Yeah. Well, let me think. Yes. So That is lovely. I think you can you can probably read that from multiple angles. You can read it in the the number of deals that we've signed recently. You can see it in anyone who's got access to the extra the market broker forecasts will see what the market expectation is from from an analyst point of view. You can see the fact that we've increased our factory capacity, recently. And the other way that I can answer that question is, day to day in the team on the inside of ONDO, everything that we're talking about is how do we execute well through this period, making sure we've got enough stock in the right place at the right time, making sure we've got the right partner inserts that go out in the box, making sure we've got enough people to answer customer queries, plumbers in the right place that we can handle all the interactions with all the various partners to to report on.

57:46 So I think there's a huge amount of excitement in the team. We feel like we've been working for years to get to this point, but the the the thing that keeps us all awake at night at the moment is making sure that we can we can we can execute well through this period of growth. So hopefully, gives you a kind of flavor without giving you an exact number. Let's have a look. How are addressable households targeted by insurers or ONDO drive register customer growth? Okay. This is a I've noticed a couple of questions that are similar to similar to this. So, basically, there's a few different ways. So I'll try and give you the we haven't got a lot of time, so I'll try and give you the quick answer. Historically, what partners have done is an opt in email. So they email all their customers or a cohort of customers said, would you like this? Is it now included as part of the policy?

58:45 They click the email, and then we send you a device, and then you download the app, and then you can access the plumbing service. We typically get 10, depending on the partner, depending on the geography, five, ten, sometimes 20%, take up rates in those types of opt in emails. So the degree of penetration is often down to the partners, how programmatic that is, and how often they repeat the campaigns to drive take up. We've had partners get to a 20% penetration, 40 penetration quite quickly. We've had other partners where the penetration's been a lot lower because they've sent out, you know, one email a year. So it kinda depends on the insurer's, kind of marketing plan in that degree. The things that we've seen recently is that it can accelerate this is something that we call auto ship, which is where we send an email saying, this is about to arrive in the post. Click here if you don't want one, and then we just send them in the post. That's exciting because we can distribute a lot more devices a lot quicker.

59:44 But we always test it, we're quite cautious with it because we've had really varying degrees of success with the installation rates. You know, sometimes it doesn't work at all. We've had other examples where the installation rate can be higher than an opt in campaign. So we're always experimenting and to and that's a key focus is how do we drive that penetration within a partner quicker. ONDO is in the earliest I think we're we're on the hour, aren't we? I'm sorry. We've got there's so many more questions that have come through as we've been talking. Do you wanna keep going if we're allowed to? I don't know. What does You can if if if you wanna carry on, can do. Of course, you can review all the questions, post the event and type responses back as well. So entirely up to you guys.

1:00:30 Well, I wanna be respectful of people's time. But how why don't we do we'll do a couple more questions, and and then we'll we'll try and answer everything. We'll try and come back and announce on all the things, we'll give written answers after after the call. So ONDO is at the early stages of fulfilling its promise, must surely be a tempting target for private equity. How will the board prevent a takeover over the next two to three years? Kevin, have you got any bright bright ideas on that? I think we just keep go we keep going as we are. I mean, there's quite a there's quite a a reasonably strong, investor base in terms of the management and the management, a few institutions and some other and obviously a lot of very positive retail shareholders. So we would have to we would have to review any review everything at its at its merits, but but I think as long as we keep going, we just keep driving the price Yeah. The price up. There's an there's another one in there that says that I've just saw that come in 31.

1:01:32 What would you do differently if you were you weren't cash constrained? Well, I'm not cash constrained, so I just keep doing them more the same. I think that that was the key point of the working capital optimization discussion is that we don't feel that we are cash constrained. So one very quick one. I'd like I would like to answer this one. Do you have any update on the g four s trial? It said it says in Sweden. It's actually in Denmark. So this was a trial where we it was a security company, and we did a trial to see if they wanted to basically use insurance companies as a way to drive leads. So I can in indirectly answer that, but I said there was a recent announcement within the last couple of days of a new Danish insurance partner. That was the outcome, basically, of that trial. So it didn't quite go in the direction that we initially thought, but it led to us eventually signing this this the second largest home insurer in in Denmark.

1:02:34 Another one there, 41. Is there a provision for inflation in subscription prices incorporated into the contracts? Yes. To keep it simple. Alright. So I think well, let's end it there. This this unfortunately, this thank you for everyone's interest. There's a there's an absolute ton of questions on here. Let's see one more. That's a good one. You're only now one month on from the ITC conference in Vegas. What has follow-up been like? Has there anything happened, that you wouldn't have been able to predict before, before attending? I think just the I mean, obviously, the the prediction and the goal of going to things like that is because we're trying to drive the momentum with The US market, but that absolutely is the thing that's that's happening. So yeah, it's going as planned. We've got a really interesting pipeline in The US, multiple insurers, you know, some of some of whom are in the the top 10, the top 20, and some of these deals, you know, are we're not talking about months and years away from from hopefully coming to fruition. So we look forward to being able to disclose some more details in in due course, but the The US pipeline looks good. Do you wanna look at 52 or not?

1:03:58 Yeah. Probably can't. Yeah. We'll talk about that soon, but let's talk about it when we can properly talk about it. Yeah. I guess on that note, guys, thanks so much for addressing so many questions from the investors, and thank you to to everyone who submitted those. As Craig said, the team will be able to review all those questions, and we'll get responses back to you on the investment company platform once the guys have had a a moment to review them. But just before redirecting investors to provide you the feedback, know it's particularly important to you and the team. Craig, if I could just ask you just for a couple of closing comments, please. Well, I think we've covered it all in in the in the presentation, but I just wanted to thank all of our existing shareholders for their level of engagement, the level of support. Thank you for backing us on the open offer back in back in May, and I'm I hope you've been, pleased with the the progress that we've made so far and are excited about the future. Certainly, sense of excitement, among the team is palpable because we really do feel, like we've cracked this, and we've got a really exciting opportunity, in the coming months to create a really valuable, and really interesting, success story of a UK based tech business.

1:05:12 And, and we look forward to being able to continue to execute execute that and update you on the on the next set of results in due course. Fantastic. Craig, Kevin, thanks again for updating investors today. Now please ask investors not to close the sessions. We automatically redirect it to provide your feedback in order the team can better understand your views and expectations. So it'll take a few moments to complete, and then they're greatly valued by the company. On behalf of the management team of ONDO INSURTECH PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good morning to you.