Tribal Group (LSE:TRB) — Results for the six months ended 30 June 2021

0:02 Good morning, ladies and gentlemen, and welcome to the TRIBAL Group Results for the six months ended 06/30/2021 Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Please just simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard and we will send you an email to notify you when they are ready for your review. I would also like to remind you that this presentation is being recorded. Before we begin, we would like to submit to the following poll. If you'd be so kind to give that your kind attention, we would be most grateful.

0:47 I'd now like to hand over to Diane McIntyre, CFO and Mark Pickett, CFO and CEO from TRIBAL GROUP. Good morning.

0:56 Good morning. Thank you very much. Good morning. Thank you for attending, everybody, and welcome to this TRIBAL investor briefing and the results for the six months to 06/30/2021. So my name is Mark Pickett. I'm the chief executive officer of TRBLE, and I'm joined by Diane McIntyre, our chief financial officer. So this presentation is really for those new to the TRBLE story. So we are looking forward to explaining to you who we are, what we do as a company, about our customers, their requirements, their their pain points, talking through our strategy over five years, and particularly why this is an interesting time to consider an investment in education technology, EdTech, as the market is going through a is it a once in a generation disruption as education institutions move from their older systems that might have been in place for the last twenty five years or so to transition to solutions that they would expect to have in place over the coming twenty five years.

2:02 So who are we? We are already two separate businesses. We are a software technology business, is our largest business, and a services business providing quality assurance inspection services to schools predominantly in The UK, The US, and The Middle East. This is a really good business. Our education services business, robust, profitable, and cash generative. However, for today, our focus is very much on the larger software side of our business as that is the business that will drive much of our growth and profitability over the sort of coming few years. So our software business manages the student life cycle for universities and colleges. And and what does that mean?

2:50 Well, universities have a lot of different systems, ERP systems, HR systems, library systems, learning systems, but the core system for them is the student management system, and that manages all of the data relating to the students, to the courses that the universities are running. It is the most critical system they have. We operate in a number of different countries. Our core markets are in The UK, in Australia, and in New Zealand. Increasingly, we are in Singapore, Malaysia, and spreading across Southeast Asia. So within The UK, we have something approaching two thirds of the 140 universities in The UK are using our core SITS system, about 30% in Australia and New Zealand.

3:45 And within further education colleges, we have something around 40% of the market in our in our core markets. So if I just move on to our overall vision and goals, our vision is to empower the world of education to so to provide solutions to support our educational institutions. Critically, though, as a business, our core goal is around being a pure play education technology SaaS business expanding to a global reach. And this is important in in terms of pre previous technology was, very much focused around software and services, creating complex systems for universities, that now they want to move to as a service systems delivered in the cloud. So very much more product focused software as a service, solutions.

4:48 From a global reach, previously with the very large systems that existed, have previously existed, it has been a challenge to move into a global, in in as a global organization. We have moved to the six different, regions I've described, but actually with the more disruptive technology in the cloud, we are able to expand to new addressable markets, which we'll come on to describe. So our products fall into sort of two groups. Our existing products of student management system products and then our new products, which we call edge products, which I'll come on to. So the existing product sets are student management systems within the different sectors of the market. So SITS Vision is the name of our product, which has the nearly two thirds market share in The UK, Australia, New Zealand, and is our core product for higher education.

5:52 EBS is also a student management system, so it does very much what SITS does, but it's focused specifically on the further education and vocational education market. Matas is a product specifically for apprenticeships, and more recently for degree apprenticeships and traineeships. Calista is also a student management system, specifically in Australia. It's a business we acquired a number of years ago, from a group of Australian universities who developed the product themselves. We no longer sell it, but it is the student management system that continues to run those universities. And then we have a smaller schools business called School Edge, specifically for about 1,200 schools in Australia.

6:42 These are products, that we continue to sell, and in terms of SITs and EBS particularly, are still market leaders within their market. And for customers coming out for a complete student management system, these still are, the best, on the market, and we continue to sell them.

7:03 Customers also are looking to take their existing implementations of existing SITs or EBS product and move that into the public cloud so that it is managed by the vendor, by tribal rather than themselves. And tribal cloud is our offering to these customers, and increasingly, we are seeing revenue opportunities in moving those customers into this into the tribal cloud, and we'll refer to it later. So when we talk about tribal cloud, we mean the existing technologies and existing solutions moved into the public cloud managed as a service for those customers. Our second group of products is called Tribal Edge, and Tribal Edge is the name we use for the portfolio of products that are next generation native cloud products.

8:02 So they're designed to take advantage of cloud technologies that scale, but also can be that can leverage the technologies that exist in the cloud like artificial intelligence, like the the security opportunities that exist within those that in in the cloud providers that we're developing as core native cloud systems. We're also developing them as multitenanted solutions in the cloud, and that will then help drive our increased margins, and Diane will come to talk about that. We are building out a complete portfolio of products. At the moment, we have released to the market these five products in blue, and we've recently acquired a company called Semestri.

8:51 So these products differ from the student management systems insofar as they provide best of breed solutions to a part of the solution that previously would have been covered by student management system. So we have a student recruitment and marketing solution, which is addressing the desire by universities to market to prospective students. They would then apply to a university, and we have an admissions product, which we are have now recently released to the market, and we have two customers who have signed up to our admissions product. We have a a student support, a well-being product. This is this helps universities manage mental health challenges for students, a submissions product, which about regulatory returns for universities, and a mobile application, Engage.

9:47 So these are all our future next generation products native cloud. We then acquired a business called Semestri, which also has a native cloud solution, in the space of scheduling and timetabling. So literally scheduling of courses and then providing individual timetables to students. Over time, we will continue to build these products out, and we will look to, build or acquire other products, that we will put within our tribal edge branding. So what is driving the business opportunities for us? So universities have, for many years, had a traditional student management system like SITS where it is the key system that runs their student life cycle.

10:42 But over the twenty or twenty five years, they may have had that single solution. It has got become more and more complex, more and more expensive, and difficult to run. What the universities want to do is to simplify that, standardize the solution as far as they can, and have it managed as a service offering.

11:06 And that is the tribal cloud service that we offer, that we provide to our customers. What they also want to do then is to address, the student experience. So it is about providing a more personalized interactive experience for students in their everyday engagement with universities. The traditional products like SITS were very much written from the perspective of a university and how to manage the university. Students today expect to be able to interact with the university right from when they go to an open day or express an interest in the university. They expect to have social media tools that they can interact with to do it through their mobile, through their iPads, their their tablets.

11:59 And providing that solution to students is critical for the universities. And that is where the new Tribal Edge products come into play. So we are selling to our customers, moving their solutions to Tribal Cloud, but also digital solutions that address, the need to provide improved personalized experience for students. So our addressable markets, have traditionally been the left hand two quadrants here where we are selling have been selling a product such as SITS into a limited number of new customers and then selling some increased components and modules within that existing product to existing customers.

12:50 Increasingly, though, with the cloud innovation and new cloud products, we have then new edge products that we can sell into our existing customers. And those are products also that over time, we will be able to localize them for new addressable markets. So countries that we have not been able to take historically our existing SITs and EBS products into, we will be able to address those with the next generation of products and so move into all four of these quadrants where previously it's been really focused on the left hand two quadrants. If you look at the sort of potential and we look at the potential by, you know, the number of students that are to be addressed by our by products.

13:43 At the moment, our core geographies of The UK, Australia, and New Zealand together have four to four and a half million students. So the business we have addresses predominantly the student requirements in those those three countries. Over time, the ability to take our products, localize them for other markets such as in North America, such as in Europe, and further in in Southeast Asia

14:16 opens up the addressable market in terms of the number of students hugely. You know, there are approaching 20,000,000 students in The US, and that is a market just like every other that is being disrupted. The current incumbents of student management systems are competitors that that we see who have that same existing technology

14:40 that has that has been in those institutions for many, many years and is being disrupted by this education change. So that gives you a sense of the markets that we can, over time, move into. So if we look at our 2021 overall objectives, we have set them around the overall objective of becoming a a an EdTech pure SaaS business. And the key indicator for us that we that we manage is our annual recurring revenue. So our ARR number is is essentially a number of

15:19 the contracted bookings that we have for annually recurring revenue. So it's a forward indicator. It's a leading indicator of the revenue that will come from the bookings that we have made. So it's a point in time booking, and Diane will come to talk a bit more about the the ARR and our EBITDA numbers. So that's a that's a key for us, and we've had a a a significant success in driving our annual recurring revenue. We have also a a key objective of building out our customer position, so more new customer wins and more migrations to TRIBAL GROUP, and we'll come onto that in a in a slide in a minute. And then building out our TRIBAL Edge product, so our future products.

16:07 We have released our submissions product, sold it to all our existing customers, and to one customer that is actually a new customer to us.

16:19 That's in Australia. That was the first sort of true edge module. Second, our admissions module, we have recently released and sold to two early adopters, and we also acquired the semester scheduling and time saving solution I referred to earlier on. So if we look at the deals that we have closed in this half year, they're grouped within our tribal edge products and then our existing technologies, EBS and Matas and SITS Vision, and then into our moves into TRIBAL Cloud. So from our existing products, we have sold in EBS two new customers, Liverpool City Council and the Wananga, Tewari Wananga, which is a further education college in New Zealand, specifically focused to indigenous Maori education.

17:16 And this is key for two reasons. Firstly, because we have a strong presence in New Zealand, and winning a Wananga is a it really consolidates our position in New Zealand. But, also, the icon is in the tribal edge section as well because around that existing EBS sale that we made, we also sold new products, our recruit, our well-being product, which are tribal edge products. We also sell

17:50 successfully sold tribal edge products to existing customers in Middlesex, in Brunel, and St Andrews, well-being products, recruitment product. University of the Creative Arts in Aberystwyth, we sold our new admissions products too, and we won a new university with our semester scheduling product in the University of Leiden. And this is important not only for the progression of of semester, and we see a significant opportunity number of opportunities to to further grow our timetabling solution. But Leiden is a university in The Netherlands that we've not had dealings with before. So being able to build out simply the number of customers that we have allows us to have those conversations to cross sell our other edge products into at the appropriate time.

18:44 But as I said, the existing products like SITs and EBS are still the best in the market. Right? So whilst the transition is is underway to new native cloud products, and that's a significant opportunity for us, we still sell to to new customers looking for a complete student management system solution. And in this year, we sold in this half year, we sold two new customers, University of West London and Southampton Solent, who have acquired the full SITS solution.

19:14 We also have recently signed our third deal to take a large existing on premise SITS customer and migrate their solution out into the TRIBAL cloud. And this was the University of Warwick. Before I pass on to Dan for these financial numbers, I did want to make a reference to our environmental social governance credentials. This is a very important, matter for the board. So for we have then established a, an individual board committee chaired by, one of our nonexecutive directors to make sure we have proper advocacy and focus on our ESG. And within each of those three headings, we have two specific initiatives we're working on, and you can see some comments there. A couple we're particularly focused on is the way we have moved during the COVID period to working remotely in in all across all of our business.

20:18 It's been very successful, and we will continue doing that. And that clearly plays into our environmental credentials as well as as a course of of giving us a cost benefit there. We also are very focused on diversity and inclusion and have set out a number of

20:36 ways in which we are going to drive greater diversity, greater inclusion within particularly around our hiring, and we've set out a specific recruitment charter. So on that with that, I'm gonna pass to Diane, and she'll take you through our finance numbers. Cool. Thank you very much, Mark. So today, just I'm gonna talk through the first half results and bring out some of the key themes and look at the key performance indicators for our business. So on the first slide, you can just to put these numbers into context, I'll be showing them in a constant currency basis, and that's because 40% of our revenues are outside The UK. So this means that any Forex, fluctuations can distort the underlying trading forms of our business. So these are showing on a constant currency basis.

21:25 And where you see terminology such as adjusted EBITDA, that refers to the fact we've excluded any material one offs and things such as acquisition costs and share based payments. So again, we're trying to show here the underlying trading performance of the business. So if I start from the left hand side and look at the revenue numbers, you can see we're up 1%. So we've gone from 39 to 39,300,000. In here, there are hides two fundamental performance, within with the two sides of the business. So on the SIS side, we've increased by 4%, and on the ES side, we've declined by 11%. When you look at the SIS side, we increased by 4% due to the great number of new sales we've had in the business. It's definitively our core strategy, so that's exactly as we might expect. On the ES side of the business, we've gone down by 11%, and this is due to COVID.

22:12 So in The UAE region, various numbers of schools have been closed, and where we have a material contract out there for ADEC, as the schools have been shut, we haven't managed to do the school inspections. So that will hopefully then rebound in half two, whereby as the schools open, we'll be able to go back into the schools and continue our school inspections. However, on the ES side, it's worth mentioning that in half one, we have had a few really good deals as well. So we've been doing new deals with the Bahrain and The Cayman Islands, and that has helped, voice to our revenue in half one. In terms of the adjusted EBITDA margin, you can see we're up 7%. We've gone up from GBP 8,600,000 to GBP 9,200,000. This has increased our margin percentage by one percentage point from 22% to 23%.

22:59 And this is due to the good cost control in the business. So we have our financial and some of our back office operations in Manila, and we also are developing our professional services and some of our more technical teams out in Malaysia and KL. So with that and some, ForEx benefits as well, we've increased our margins by about 7%. On the right hand side, can see we're very proud of the fact this is actually our fifth consecutive year of margin improvement. So we increased from 19% all the way up to 23%. So it's a good improvement over time. On the next slide, you should be able to see some additional performance indicators. On here, can see our statutory profit after tax has gone up by 17%. That reflects the good underlying performance of the business. Our annual recurring revenue that Mark was talking about earlier has gone up by 5%, and the 5% is in the six months. So that's from December 20 until, the end of June. So that's 5% over the six month period, and I have a slide coming up which explains that in a bit more detail.

23:59 The committed income, which is basically the annual recurring revenue, but it takes it on a total contract basis, that's up 1%. It's So gone from a 143,000,000 up to about a £144,000,000. Our net cash has decreased, and this is purely due to the investment we've made in some of our acquisitions. So we've acquired Symmetry and Crimson. Symmetry is a timetabling business that Mark talked about earlier, and Crimson is our dynamics business, which sells the student recruitment, and well-being modules, and so that forms part of our new edge portfolio. In there, spent £5,500,000 which explains the decline in cash. But our cash flows on the adjusted free cash flow basis, you can see, are very strong. So we've held up at 4,300,000 straight £4,200,000 and that will enable us to invest in our future trading sorry, in a future kind of tribal edge investment and any future acquisitions.

24:50 Our earnings per share have gone up 11%, so that's up from 1.9 p to 2.1 p. So again, a good performance overall. If I flip to the next slide, this shows the increase on our annual recurring revenues. So you can see that from December 2020, forty seven point two, we've increased by 5% to 49,600,000. Since then, though, we've also won a couple of major contracts. So with UWL, University of Warwick, and Leiden University, that's added an extra 1,000,000 to our ARR. So as well as all the sit sales we've made with Solent, all the Edge new module sales, such as admissions, our student well-being and support, our marketing recruitment, they've all added to our ARR numbers, and it means that from June 20, we've actually increased by a CAGR of 15%.

25:38 Now that's in line with our strategic objective where we said in five years' time, we're gonna be doubling ARR, and that equates to a 15% CAGR per year. Of that 15% CAGR, two percentage points will relate to Semesteri. So Semesteri has added two percentage points, and the remainder is organic growth in ARR. So the next slide breaks out our segment results. So in here, you can see the two sides of our business. So SIS is our core software business, and then ES is the education services business, which, as Mark talked about earlier, has things such as school inspections and surveys and benchmarking. The SIS, as I've talked about before, has gone up by 4%, and the profit has stayed stable at £12,000,000. The margin percentage, though, has gone down by two percentage points, but this is purely due to one off benefit we had last year.

26:28 So last year, as COVID hit the business, we reverted to a four day working week, and that means that for May, June, and July, we had a one off benefit to our overheads. This equates to around a two percentage point reduction. In the ES varied business, even though the revenues have gone down, the margin has held up very, very well. And in fact, we've increased by 23% on the margin side. This is due to the fact that we have had some high margin contracts in the first half of the year and also reflects the fact that as a business, we have a very variable cost base for ES. So we have a very good associate contract model, so we can scale up very quickly and down very quickly as the business fluctuates. And as I mentioned earlier, as the UAE region starts to reopen again post COVID, and fingers crossed, we are hoping that will take place in half two, we should see some of those revenues recover.

27:20 Overall, segment results were flat on a total margin basis at 3036%. But as I said, with some of the overhead increases, our whole operating profit margin has gone up as a result. So this slide here just breaks out some of the student information systems, that software side, and breaks out into a bit more detail for you. So of the £31,000,000 worth of revenue, you can see it split out into various sections. So cloud services, for example, at the bottom is £3,800,000. Now this is our core revenue stream for the future. This is where all our SITS customers base and our EBS customers base are moving themselves onto the cloud, which enables us to take over their back office operations and kind of take all that responsibility away from them. That has, as you imagine, has increased by 24% and will be a key growth driver for the future.

28:09 The license and development fees at the top is also a key growth area for us. That's gone up by 23%, and this is a result of all the key wins we had in the prior years. So you can see in here submissions, marketing recruitment, student support and well-being, all those are starting to lead into that revenue number. And then the two middle sections, the support and maintenance fees, that has held flat. So it will have grown by things such as inflation or have grown from the number of university students going up as well, and then that's slightly offset by the reduction in some of our long term contracts such as TAFE in New South Wales and Australia. So together they offset each other and it's flat year on year. The implementation services are broadly flat as well. There's a very slight delay of some contracts into half two, but broadly, they're flat.

28:54 So overall, it's a good performance in the business. It's increased 4% in the first half of the year. So moving on to cash flow. On the cash flow, you can see the adjusted free cash flow on the left hand side. It's worthwhile pointing out that this one, cash flow for TRIBAL is incredibly seasonal. So in the half one of the year, our cash flow is, lower, and then in half two, the cash flow will have material upside, and that's because of the timing of our contracts. So we receive cash flow in advance from our customers yearly in advance, and a lot of that revenue a lot of that cash flow comes in half two. So our cash flow does recover in the half two, season. So from the adjusted free cash flow of 4,200,000, we then have spent that money on investments primarily. So you can see the tribal edge investment in there, 4,500,000.

29:42 We've committed ourselves to spend £10,000,000 every single year until 2024 developing out this new tribal edge product set. This is the core of our future, as Mark was talking about earlier, will enable our revenues to grow, and our aim ambition is to double ARR in five years' time, and this tribal edge investment will enable us to do that. We're also investing in some core M and A activity. Not going completely off piston quite well on this. This will be very targeted M and A activity. So, for example, in here, we spent £4,500,000 in here on Semestery, which was a timetabling solution that we're now selling very successfully. And the third consideration there refers to 1,300,000 for dynamics. I mean, again, that's our student well-being, our marketing and recruitment modules, which, again, are selling very, very well.

30:29 In the second half of the year, the Dynamics business has been fully paid off for, and the semester just has one further payment of about £1,500,000. So for the end of this year, then that will be done and dusted, they will all be paid out. The loan drawdown we have in here of £2,500,000 and, obviously, it comes back out again when we talk about net closing cash at £4,300,000 But I'm pleased to say the loan has already been fully repaid. In fact, it was repaid yesterday, so we are now completely debt free as a company. A cash conversion percentage up there, 66%. That's equivalent to last year, which was 68%. And as I said, it's quite a seasonal business. So when you look at the full year numbers, you'll see a much, much higher cash conversion percentage, the same as last year. So I move on to product development. Product development has, showing our increase in TRIBALG investment.

31:19 The £6,800,000 you can see in there for half one is a GBP 4,500,000 of capitalization spend, which is against the edge. And then we also spend GBP 2,000,000 worth in our P and L, which is expensed, and this is to run our underlying corporation. So this is our SITS modules, our EBS modules, Matas, etcetera. We've driven those down to be a very efficient model. We're running at £2,000,000 for the first half of the year, and this maintains all those great revenue streams we have from those product sets. But the 4,500,000 is investing in the future. And as I said, we're planning to run about £10,000,000 every single year. So in summary, we see our core growth coming from the cloud movements. So as all the six customers move across into the cloud, that will dramatically increase our revenue streams. And then the edge numbers as well will start to increase, and this will enable us to double our ARR.

32:07 So the ES the ARR numbers are looking very, very good. Our SIS revenues are looking very good, increasing 4%. Our ES margins are very, very stable. In fact, they've gone up. And then all that money and that strong cash flows we're having, we're using it to redevelop the business and invest in TRIBAL GROUP So that will set us up very well for the future. We go on to the next slide, and I shall hand back to Mark. Mark, over to you. Thank you very much, Diane. So so to round off this presentation, would firstly say some of you may have seen we we did a Capital Markets Day presentation, which if you haven't seen that, I would encourage you to perhaps have a look at it. The the the link is on our on our website. And in there, we did talk in more detail about our five year objectives.

33:00 Diane touched on the key objective of doubling our annual recurring revenue, which at the end of December twenty twenty stood at £47,500,000, doubling that over the five year period. What we see at the moment is increasing confidence about 2021 and and the successful outcome to this year, but also increasing confidence in terms of the customers starting to really move into the cloud. We have a good pipeline of opportunities within tribal cloud, but also within our new edge products, and we'll we see that growing through 2022, 2023.

33:48 And at the moment, much of our opportunity is around driving tribal cloud and selling our existing products and some of our new edge products. Over time, we'll be continuing to sell existing products in the tribal cloud, but we'll sell more of those new products. And then over time, we'll be able to take those new products into those new geographies. So steadily, the number of products, the number of markets where we're able to sell those products will increase, and that's what will drive us to that successful outcome of that doubling ARR in five years. So increasing number of customers interested. We have a expanding market opportunity, and we think it's an exciting time in education technology.

34:38 So thank you very much for for listening. I'm gonna hand back to start the q and a session. That's great. Mark, Diane, thank you very much indeed for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just while the company take a few moments to review those investor questions submitted already, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your Investor Meet company dashboard, and we will send you an email to notify you when that's ready for your review. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, you'll be redirected in order that you can provide feedback to the company so they can better understand your views and expectations. Mark, I haven't given you an awful lot of time to review the questions that have come in, but we did receive some questions ahead of the event. So perhaps before we look at the live questions, we could look at the ones that were pre submitted.

35:34 The first one reads as follows: I'm interested to hear more about your M and A strategy. Is there anything in the pipeline at the moment? And what do you actually look for in the transaction, both in terms of partners and new capabilities? Yep. So we have an ongoing m and a m and a strategy, and that very much forms part of of our drive to doubling ARR over that five year period. What we look for are businesses that are, within our definition of the student information system. So they are adjacent businesses to the products that we have already. So semester, for example, that timetabling scheduling, that's a space that that actually is not really very well covered by existing student management systems, but it's very much an adjacency. It's about universities scheduling scheduling the courses. So curriculum planning, curriculum management, for example, might might be another example.

36:36 So so we look for things that are very much within that ed tech space in which we operate. We look for, particularly, disruptors, cloud native technology. However, if there are businesses out there with older legacy technology where we have the wherewithal and the technology that could migrate those existing customers successfully into a cloud solution that we have, clearly, we would look at that as well. And we do have an active program of looking at those opportunities, and that is led to we do have a pipeline of m and a opportunities we are we are looking at. We've acquired two already, Crimson, which is the CRM opportunity that we closed last year, and then earlier this year, Semestri, and we do expect to acquire a number of businesses over the coming years.

37:37 In terms of new geographies, you know, one of the things we also look for is the not only the product and the technology that they have, but also the geography in which they operate. So Semestri had about 20 customers, most of which were actually on on the continent, so within Belgium, Netherlands, and The Nordics. And acquiring those as new customers has been really important because when those customers are looking for recruitment and marketing admissions, when they're looking for student well-being solutions, they know TRBL, and we'll be at the table talking to them about those those solutions. So that cross sell opportunity is also part of what we look for in acquisition.

38:27 Thank you very much indeed, Mark. Next question really around competition and reads as follows. Are there any new competitors on your radar? And who do you see as your biggest threat? I'll take that one as well, if I may, Dan. So so historically, traditionally, the competition has been student management system providers. Our biggest competitor is a company called Ellucian, and they have a large share of The US market. And they're within The UK and within Australia, and they have a student management system solution. So very much on new sits opportunities, we will be often head to head with Ellucian and maybe one or two others.

39:14 Increasingly, though, as we move into the new edge products, the competition is going to be from best of breed niche providers of timetabling like semester of of curriculum management. And there are a lot in the market. They they also are going through their own disruption. But as we start building out our best of breed products, they will be our competitors. Where where we feel confident that it's an opportunity more than a threat for us is that if you own the student data, you own the academic model and the courses that we do in SITs, building out, for example, a curriculum management system, you are going to you are going to have a more efficient, more deeply integrated, and embedded system if you're the core provider than if you're an independent coming in and and trying to sell. But that competition is beginning to change, and we are very alive to that.

40:17 Thank you very much indeed, Mark. I think you touched on the acquisition of Symmetry, but the next question reads, how has that acquisition progressed? So I'd like to say on the numbers side. So Symmetry has progressed very well. So as we talked about, there are a number of new sales in Symmetry, such as University of Leiden. The revenues are going well. We're investing in the business for the future. So we're looking at the best ways that we can invest in the new sales teams and kind of back up the operation because we've got some really great potential in there. So by investing in its future is something that can really help accelerate the growth. I can also say as a profitable business, that's really great. So we're gonna take it from a small business and just grow it out over time. But, also, I think the semester acquisition allows us to go into different geographies, I think, Mark mentioned before. So it opens up the opportunities for more sales in more countries. So I think it's a great investment for the future.

41:06 Yeah. And we have a significant number of ongoing opportunities with Symetry and more and more within The UK as well as in its markets that I touched on earlier on. And, of course, we're looking to take it into our other markets as well into particularly into Australia, New Zealand, where we have a number of ongoing opportunities as well. The final pre submitted question ahead of looking at these coming during the meeting itself is around Brexit. How has Brexit impacted the business and or your customers? I'd say Brexit as a business for us hasn't had actually a major impact. As you can see from where we're positioned, we have big operations in Australia, ES is also in The US regions, and and then kind of Southeast Asia. So actually, a business perspective, Brexit hasn't had a huge impact.

41:55 I think for our customers, it's a slightly different story because obviously universities have flows of foreign students. But obviously being a good worldwide operation we can actually see the benefits in different areas. So for example in The UK we've actually had more foreign students coming in. That's probably more of a result of COVID than it is Brexit. I think COVID's had a bigger impact on our business than Brexit has. Mark, is there anything you want to add to that on Brexit? No, Thank you. Well, look, thank you very much indeed, Diane and Mark, for addressing those pre submitted questions. If I could ask you guys, please, if it's possible, just to open up that Q and A tab that's on the right hand corner of your screen. Investors have taken the time to submit questions. So thank you to those investors that have submitted questions this morning. Perhaps I could hand back to you, Mark and Diane, if I could ask you to read out the question and where appropriate, give a response and then I'll pick up from you at the end where we redirect investors to provide you with their thoughts and expectations.

42:49 Okay. Great. Thank you. So let me take this read the first one. So the first one says, who typically do you sell into at universities? How long is the typical sales cycle? What is the length of a normal contract? And I assume once used by a university, it's fairly sticky. What are the lengths of relationships with your clients? So who we typically sell to would be the sort of two sides of the house in a sense. There's the technology side, so the CIO will be very focused on on our products, And then the the business side of it, so, generally, the the registrar. So the registrar will generally own the the student side, and we would we would we would sell to both of those.

43:41 The length of a sales cycle, it depends. So so sits and existing products are very much sold by long tender processes that could often be six or nine months of tender and negotiation. Now with the latest generation of products, there often is a tender process, but it's can be shorter. So but with TRIBAL GROUP, it's generally not a tender process. It's a it's a negotiation with the university. So tribal cloud moving an existing on premise into the cloud is a cycle really of probably nine months or so. And then beyond that, it will take maybe six months or more for the system to be fully migrated into the cloud and up and running.

44:34 So from the point where the university expresses an interest, it could actually be fifteen or eighteen months before the whole thing is done, assigned, and we've migrated the system, and we're seeing that annual recurring revenue being delivered by by it being in the cloud. Sticky? Absolutely. So so TRIBAL's products are really the stickiest products that I think you'll find. So I talked about the the SITS product being, right at the beginning, often customers having having been with us twenty, twenty five years. You know, that they would have bought SITS maybe the millennium, and and they have people who've who've worked with them and know as much about the SIT system as we do, who've spent their career working on SITs. So SITs is so deeply embedded.

45:33 If you were to to take out your SIT system and replace it by a competitor, it could take you from beginning to end five years to actually go through the process of evaluating, tendering, and replacing. It's just not something now that the universities want to do. The migration to the cloud means that they will, piece by piece, migrate to the next generation, and that's where the TRIBAL GROUP system of these, integrated products comes in. So very, very sticky. Moving, for example, into the tribal cloud, one of the significant things about Warwick or Sydney or King's College London being now in the tribal cloud is they've taken their existing on premise system.

46:18 They've put it in the cloud through tribal cloud, redeployed those people. So they don't have any people who are managing sits anymore. It's all being done by us. So once that's there, to reverse it would be extremely challenging. Right? It's very much once it's out there, that will be very sticky for for for many, many years to come. So length of relationships with customers are decades, simply put. Dan, do you want to add anything? Nope. I I was gonna pick up another question, actually. Okay. What was your bigger question? There's a really good question around, do you see revenue from educational services normalizing as we come out of COVID? Yes. Absolutely. I think as The UAE starts reopening back up, we can just go straight back in there with school inspections. We have a really good pipeline for ES as well, so I'm quite positive about those normalizing as we go forward.

47:12 Also, the second part of the question was around, do you see your margins improving further? And absolutely. So our five year aim for TRIBAL is to grow up until the kind of low thirties in terms of operating profit margin. And the way we're gonna do that is by moving the customers from the kind of S and M support and maintenance type model, then adding revenues to give us the cloud modules, which we've talked about before. So on average, cloud revenues are about a 150%, on top of the S and M revenues. And then for the edge products, it then increases our margin further. So in the cloud, it works at the moment as a single tenanted solution. And as you move to edge, it goes to a multitenanted solution. So we get improvements in our cost base as we go from one to the other. And then as well then as that revenue and the cost margin improvements, then you start adding the extra modules. So then you get even more and more and more revenue coming from those customers. So we're gonna increase the share of wealth of the customers as well.

48:05 So I think between the increasing margin numbers and the operating cost benefits of moving to this multitenancy solution, it will be able to increase our margins from the 20% of the ground at the moment up to early thirties in five years' time. So we definitely see our margins improving further as we go through. Great. Thank you. So let me take another one. So how does the education services side of the business fit with the goal to be a pure tech SaaS player? Is it a SaaS solution? Will it be divested? So so education services, as I said right at the beginning, is very good, profitable, as you've seen, robust business that's that that has produced, you know, good margin percents through COVID, and we expect it to bounce back as Diane has has talked about.

49:00 It it is not a SaaS solution. So so fitting in with it it doesn't ultimately fit in with that strategy of being a pure tech SaaS player. However, it is a good cash generative business. What what decision may or may not be made in the future, it it it, at the moment, is a core part of what it is we're doing as a as a as a business, and and we look we are looking at opportunities of how we develop that business, you know, further also into other geographies and opportunities that we may have to cross sell some of that that business. Okay. I'll pick up the next one then. So it said about cash conversion.

49:46 Yes, will be similar to last year because, I said, the seasonality of the business is quite extreme and tribal. So even though the cash conversion in the first half of the year is quite low, it then recovers in the second half of the year. So I would expect the cash conversion for the full year to be similar to last year's, absolutely. And do want should I pick up the last one then, Mark? Yep. Go ahead. On the last one, it's talking about our edge. So it's trying to understand where we are today in our edge, and I presume it's kind of how it fits into our current revenue streams. So if you look we had a SIP slide up there which showed the revenue breakdown of our software business. At the moment, Edge is actually quite small. So you can see in there the license and subscription revenues is running 4,000,000 for the first half of the year, and Edge is under half of that. So in terms of the future, edge has a great growth potential because at the moment, it's fairly small. But as you can see from our sales, we are really beginning to sell very hard into that area, so that will start flowing through the revenues in the future. As we said, ARR is a leading performance indicator and those revenues will then drip feed into our revenues as we go through and actually develop and deliver, sorry, into the customers.

50:51 So, small at the moment, but I think it's got good growth for the future in there. Mark, Diane, thank you very much. I might just come in here now, just given the time and the fact that you've answered every question that's been submitted by investors. So thank you to those investors that have taken the time to submit questions in this morning and obviously thank you, Mark and Diane, for your responses. We are coming out to the hour, so perfect timing. Thank you very much indeed. Perhaps before I redirect investors to provide you feedback, which I know is important to you both, I can hand back to you, Mark, maybe just for a few closing comments before we redirect investors. Great. Yes, thank you very much and thank you all for attending. Hopefully, we have explained what we see as a really good opportunity for TRIBAL over the longer term about doubling our ARR. It's about taking our EBITDA margins to the low thirties, and we believe we have a a strong story and a strong there's a real strong opportunity out there in the marketplace for us to be successful over that five year period and beyond beyond that. So thank you all for attending.

51:59 Mark, Diane, thank you once again for updating investors this morning. Could I ask investors please not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but I am sure will be greatly valued by the company. On behalf of the management team at TRIBAL GROUP, we would like to thank you for attending today's presentation. That now concludes today's session and good morning to you all.