Good day, and welcome to the Superloop half year 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Paul Tyler, MD and CEO to begin the conference. Paul, over to you. Thanks very much. Welcome everyone to Superloop's first half results for FY 2023. I'm Paul Tyler, CEO, and I have Luke Oxenham here with me, our CFO. First half of FY 2023 was an action-packed and very eventful half for the company. We have a lot to cover in this call, we'll jump straight into it. We're on slide three in the deck. We just touch on the first half results here. If we start with revenue, we're in the final year of our three-year turnaround of the business, I think fair to say you'll see that progress is evident right across the company. On revenue, we were able to deliver well above market revenue growth, off the back of a strong momentum in all three of our operating segments. In our consumer segment, our business segment, and our wholesale segment, it's very encouraging that the growth has been evident across all three. Customer acquisition momentum continues to accelerate, and that approximately 32% increase in the top line wasn't just M&A funded. We actually saw on a like for like organic basis, growth in the order of 27% across the group. Again, well above any market benchmarks. That revenue growth has translated to a near doubling of underlying EBITDA against the PCP. A really key metric for the company, and one that I know has had a lot of focus over the last couple of reporting rounds, has been the cash conversion. We're really pleased to see the conversion there at over 100%. Of course, more than 100% cash conversion isn't, our target's not sustainable at that level. We're very confident that the result, you know, affirms that we're able to maintain our target of more than 80% cash conversion on an ongoing basis. That revenue momentum was fueled by strong customer acquisition and retention, just as importantly. If we move to the next Slide 4, and we look at where that revenue growth came from. As I said, it's really pleasing to see that it's come from all of our segments, and also pleasing to see the way that those segments have been trending up for quite some time now over a good number of periods. We have been quite acquisitive as you're well aware, and so we were, you know, it was important that we were able to show that the revenue growth here across our segments didn't just come from M&A. It has come from a growth in the underlying core business. Moving to gross margin on slide five. That strong growth in absolute gross margins across all of the segments is obviously a function of the revenue growth. For me, the standout from a gross margin point of view for the half has been the business segment. Really pleased with the progress that we've made in continuing to close the gap that the business segment has had against our midterm gross margin quality targets. There's a reminder, we set a margin target, gross margin target for the consumer business of 25%, 40% for the business segment, and 60% for the wholesale segment. Obviously, consumer and wholesale are there or thereabout, slightly under. The gross margin for the business segment was diluted heavily when we purchased Exetel, and we've been progressively working it back, and it's really pleasing to see the strong recovery trend continues. Of course, the revenue growth, the improvements in the gross margin and the increasing leverage in our business is what's led to that near doubling of EBITDA year-on-year. If I move to customers on slide 6, this is a new chart, and it's a chart we've prepared to try and be a bit more in line with the way the industry reports their customer numbers. We have the definition of customer numbers in the annex. What you We will continue to show this chart in future reporting rounds. What you can see here, of course, is tremendous growth in acquisition across all three segments. That growth has accelerated through calendar year 2022. The first half calendar year was positive, but it accelerated further in the second half. These numbers do not include the addition of some 50,000 customers from the MyRepublic acquisition that closed right at the end of the period. Those customers were only migrated over the last month. Those 50,000 subs will be added to this total. As we report our full year, we'll see, you know, obviously an even further acceleration of our customer numbers. Importantly, or as important as it is to acquire customers, we're also super focused on ensuring that we don't lose customers out the back door. We're encouraged to see that despite the, you know, the high level of acquisition, we're able to keep the churn at industry levels or industry averages, and we have a number of actions in place to further reduce. Slide 7. With the momentum in the business and the progress through that 3-year turnaround, it was high time we turned our attention to brand. You will have heard me discuss this before, but I'm glad to say we have now successfully launched our new brand. We purchased Exetel a little bit over 18 months ago, and we recognized that separate retail brands we had in the market needed streamlining and better definition around that external branding. Internally as well, we've had numerous cultures existing in the company stemming from the various M&A activities that have been part of Superloop's history. The rebranding for us was an opportunity to create a new brand identity, a brand that unifies both our internal organization, but also resonates with our consumer customers and is supportive of our business and wholesale segments. You can expect to see more of us in the media around the new brand. The livery, we're starting to be more and more present in the traditional out-of-home advertising, et cetera. You'll see a bit more of that. Go to slide 8 and build on that theme of business evolution. What you'll see here is the significant progress that we've made during the half integrating our various M&A projects. Both the current ones from the last couple of years during the turnaround, but also the historical acquisitions that we've done. During the half, we completed the VostroNet and the MyRepublic acquisitions. This chart really lays out that corporate development history during our turnaround. To remind you, our M&A activities during this period of time have been highly focused and very deliberate. We've been able to execute the M&A at fair prices and deliver on all of the promised synergies that were part of the business cases for those projects. Most importantly, all of these M&A targets have been highly complementary to Superloop's core business. Exetel was purchased back in mid-2021. It gave us the scale in the consumer and small and medium business space. It also added scale maturity into our system stack. We monetized our Singapore and Hong Kong assets. That was all about portfolio optimization and simplification of the business. We executed that transaction at a great price. That led to a significant strengthening of the balance sheet. Acurus, we purchased in mid-2022, primarily for its white label capability. That was a channel expansion initiative. It allowed us to sell our core products to a whole new segment in the market. The pipeline for that white label capability is strong, with a couple of quite advanced opportunities. VostroNet, more recently, is an acquisition that we've only had in the stable for a couple of months. That gave us additional portfolio. It gave us more scale in that managed Wi-Fi market in the student accommodation sector. It also gave us exposure to new opportunities in the fiber to premise market, new developments built to rent multi-dwelling units. Again, leveraging Superloop's core competence, the provision of internet, but with higher margin on net opportunities. Finally, MyRepublic at the very end of the period. A simple scale bolt-on. Well, MyRepublic's customer base. Very well priced and further leveraging that core capability. That deal closed on the 30th of December. The migration has run during the month of February. It completed yesterday. All synergies have been delivered, all synergies achieved. We have some 50,000 subscribers now on the Superloop platform from that purchase. If we move to slide 9, just wanna touch on that all corporate development is not just about M&A. We put significant focus in the half and made a lot of progress during the half with our digital transformation journey. This is a program that's intended to fully integrate the business into a single set of systems, processes, and workflows. Obviously, that leads to greater efficiency and ability to scale the business without needing to similarly scale costs, but also, and perhaps more importantly, leads to a further improvement in customer experience. As you can see from the chart here, there's a lot of activity in this program, and we made a lot of progress through it. To highlight as just one example, as of the end of January, for the first time in many years, Superloop is now using a single finance package company-wide. That's NetSuite. We're in the process of retiring all the legacy packages. On slide 11, slide 10, sorry. The final point I wanted to make on the topic of corporate development is around fixed wireless. A little over 6 months ago, we announced that we were commencing a strategic review of our fixed wireless business. It's one of the last remaining parts of the Superloop portfolio that we had in the consideration set for optimization. In particular, our business-to-business fixed wireless assets, which whilst generating a positive EBITDA on a cash basis net of the leases that supported that business. They had an outlook of being a cash flow drag. Following the strategic review, we considered a range of options, or during the strategic review, we considered a range of options, those from full disposal of the business through to really doubling down and reinvesting. We explored the best path to. Well, from a cash point of view, to optimize those assets, and we now have a clear path forward. The conclusion we reached on the optimum way forward is not to do a one-size-fits-all and dispose or massively reinvest, but it's rather a cocktail of solutions that on a area-by-area basis, really delivers the optimum outcome for cash maximization We've been executing on that set of actions during the first half. We'll complete the execution during the second half. To date, we've divested or shut down a number of underperforming assets, and we've refocused the remaining parts of the business to deliver a sustainable positive cash flow. Specifically, the actions we've implemented or planned to implement, we've divested a whole series of assets, most notably to Field Solutions Group, you know, FSG. In another part or in other parts of the network, we've migrated a series of services off some subscale parts of the network, moved them to our fixed line network, and we've shut down those subscale base stations. We've actually invested in some other areas where there's low penetration of available fiber because we believe we can promote further revenue-generating activities there on the fixed wireless assets. There's been various other cost control initiatives, labor, supplier renegotiations, et cetera. Going forward, we've now got an outlook of a stable positive cash flow. There is an in-year impact from this program on EBITDA. It's approximately AUD 2 million of FY 2023 EBITDA impact. We believe it's a very sensible step to have taken, and it's all about cash preservation or cash maximization. Cash maximization for us is more important than a bit of a hollow contribution to our EBITDA. Now if I move forward to the segment updates, and I'll start with the consumer segment on slide 12. As you can see here on the chart, very strong continued growth in net additions. As I mentioned, if we look at the calendar year 2022 and the growth that was delivered over the calendar year, which was very strong, it's pleasing to see that some 70% of that growth came in the latter half. You saw an acceleration of growth throughout the year. Actually, to that point, according to the ACCC Market Indicators Report in September, Superloop shared the equal first spot for the fastest-growing NBN RSP in Q1 2023. Whilst we're growing really strongly, and that's very encouraging, it's good to see the product and the brand resonate. We wanna maintain a focus on running profitable business. It's encouraging to see that despite that high level of acquisition, we've been able to maintain our gross margins, you know, at or close to the 25% target. It really highlights our focus on cost, in particular on cost to serve, which we're making good inroads into. Not including these results above, of course, are the MyRepublic numbers, which as I said, finished its migration yesterday and will be added to the numbers at the full year. This all really contributes to our midterm target of getting to a 5% market share in the consumer segment. If I move forward to the business segment, very strong performance in the business segment across all of its sub-segments. That being the enterprise market, the mid-market, and the small and medium business market. I am very pleased with the way the margins continue to rebound here and tracking closer and closer to that 40% gross margin target we set for the business. The progress has come in a number of different areas. We've been quite successful in seizing the market around security and software-defined wide area network, SD-WAN. SD-WAN, SASE and general security consulting services with some great new wins and new logos in the half, some of which you can see on the chart above. One proof point of the success with the proposition would be we were awarded Palo Alto's ANZ Managed Security Provider of the Year award. That was vying up against some much larger, much better-known organizations. We're quite proud to be given that recognition. Another significant milestone in the half was the acquisition of Austranet. With that acquisition, we've moved to the clear number one position in the provision of broadband into the tertiary student accommodation market, which is really good and encouraging. As exciting is the new capabilities and the new markets that are now presented to us with the fiber to the premises market, leading us into multi-dwelling units, build-to-rent, new developments, et cetera. This part of our business continues to benefit from the recovery of the international students back into Australia, and also from winning a bunch of new buildings in that space. You can see the significant increase in the scale in the chart above in the bottom right, where we've laid out the number of committed buildings connected and active services that are a part of that sub-segment. We're really quite excited about this part of our business. The pipeline is strong. We have good coverage of end market opportunities, and we think it's going to be a success story in the years to come. The final segment is our wholesale segment on Slide 14. We have seen continuing strong momentum in the Superloop Connect platform. As you will recall, this is a platform that was only launched back in September 2021, and it's now covering some 35,000 subscribers. We've also had some key re-signs during that period, such as with our largest customer of that platform being Symbio. The white label business also sits in wholesale, and we see that pipeline maturing with a number of advanced opportunities we hope to convert in the not-too-distant future. The gross margin in this segment has come down slightly. It's been impacted by a number of new wins, where we've been incurring the ramp-up costs, but are not yet fully contributing from a revenue perspective. Those costs will obviously be offset by the revenue coming in in the second half. There has also been some price erosion in this segment on a number of products. Net-net, we expect to see the gross margins for the wholesale segment to recover back to the 60% for the full year, FY 2023. With that, I'll hand over to Luke for a bit more detail on the finances. Thanks, Paul. Firstly, I'd just like to add my welcome to everyone who's joined us on the call today. Thank you for your time, we very much appreciate your interest in Superloop. As Paul's mentioned, he's already spoken about the highlights of the first half performance, I'm not gonna go over too much of that again. Instead, my section in the following pages is gonna focus on a little bit more of some of the detail and the financial detail behind the headlines. Turning firstly to gross margin on Slide 16. Overall, the group delivered gross margin of AUD 49.5 million excluding other income. This represents an increase of AUD 14.1 million or 39.8% when compared to the first half last year. As Paul has noted, the growth in gross margin has outstripped the growth in revenue and reflects our continuing focus on cost optimization at a cost of goods sold level. The other pleasing thing is that the group continues to enjoy a well-diversified split of gross margin from each of the three customer segments. The overall increase reflects strong profit growth in the consumer and business segments in particular. As Paul's highlighted already, the wholesale margin growth has been a little bit more subdued, but like Paul said, we expect this to be largely a timing issue as the first half has been characterized by increased expenditure for new contracts. We're certainly expecting, as Paul mentioned, for that margin to be back above the 60% level by year-end. Next on Slide 17, we're gonna take a look at the progression of underlying EBITDA on a half-on-half basis over the last 5 periods. The table at the top left starts with underlying EBITDA of the group that was reported as a headline in each of those periods. Thought it was useful putting on the slide so that people can refer back to those ASX announcements and releases and see those numbers and get familiar with them. You have to remind everybody, though, that this half is the first half out of the last 5 that has not had any contribution from the discontinued business in Singapore and Hong Kong. This table adjusts for those contributions and shows a clearer picture of the progression of underlying EBITDA from the continuing operations. As you can see, over the course of the last 2 years, this has improved dramatically. When you compare the first half of FY 2023 to the first half FY 2022 on a like-for-like basis, underlying EBITDA has increased 88.8%. When you bring all of that together in a picture, what I hope that people can take away from today's result is that as a business, we've managed to grow revenue roughly in the order of 30%. We've grown gross margin roughly in the order of 40%, but we've grown EBITDA 90%. I think that's a key takeaway that I have certainly from this result. As was the case last year, we do expect that there will be a heavier split of the full year performance in the second half of the year to deliver on the guidance that we have reaffirmed today. I'll speak more about that at the end of this presentation. On the face of it, there does appear to be a small decline in underlying EBITDA from the second half of last year to the first half of this year. When you analyze that in more detail, there are a couple of factors that you need to consider. Firstly, FY 2021 and FY 2022 both included approximately AUD 2 million of underlying EBITDA contribution from the CyberHound product. Specifically, the underlying EBITDA contribution from CyberHound in the second half of last year was AUD 1.4 million. As we highlighted at the time of releasing those results back in August, the change in accounting standard for the CyberHound product was always gonna be a drag on the company as a total and in particular on the business segment as we moved forward. Secondly, you can see from the chart on the bottom right-hand side that the marketing spend in the first half of this year has increased significantly from the first half last year. It's also AUD 2 million higher than what was spent in the second half of last year. This marketing spend's obviously been a very deliberate decision to reinvest in the organic growth of the business, and we'll continue to attempt to balance overall growth versus the delivery of underlying profit growth. Next, on slide 18, let's take a look at the operating expenses. I'd just like to make some observations around those. As I just mentioned, the increase to marketing expenditure has been considered a deliberate decision. What's most pleasing is if you put that aside, as well as the transaction-related costs, operating expenditure has only increased 17.5% in comparison to revenue that has grown in excess of 30%. On a pre-marketing basis, OpEx as a percentage of revenue has fallen from 23.3% to 20.8%. From my perspective, this is an early indicator of the operating leverage that has been created in the business from the transformational activities of the last couple of years. This operating leverage is going to continue into the future. Let me give you an example. We've now onboarded an additional 50,000 subscribers from the MyRepublic transaction. As a consequence of that, we have one additional headcount in Australia. We have added a dozen or so additional headcount in our call center in Sri Lanka, but obviously at a much reduced cost relative to Australian employees. It should be noted, though, that the first half of FY 2023 did not include a full six months of Exetel operating expenses, and there are also additional operating expenses that have come from the acquisition of Acurus and VostroNet. If you wanna look at an organic basis, like-to-like, putting aside all of those factors before marketing, operating expenses have increased 6.7%. The vast majority of that was a consequence of the fact that we have, for the first time in a number of years, been in a position to be able to absorb a meaningful salary increase for the majority of the staff in the organization. Looking ahead, we're continuing to focus on a number of initiatives that are designed to press home what we believe is our competitive advantage as a low-cost provider. Not least of which is the digital transformation program that Paul spoke about earlier. If we turn to slide 19 and have a look at the full income statement. We've spoken about the components that have led to the EBITDA performance. There are just a couple of factors that I wanna highlight below that line. Firstly, the transaction costs for the period relate to the M&A activity for Acurus and VostroNet, as well as the Uniti Agreement. Next, we have booked a small impairment of assets of AUD 1.8 million in this period. This primarily relates to assets that were acquired and held on the balance sheet prior to 2019. As we've been going through the exercise of cleansing the balance sheet ahead of migration into the new finance system that Paul spoke about, we identified that the carrying value of these items was overstated, and we've taken the decision to write those values down in this half. This is not part of the regular impairment testing exercise, which at the half showed clear headroom between the value in use and the carrying value of the group's assets. The other feature that I know will be of interest, certainly to the analysts, but to others that follow the stock as well, is what's happening on the Depreciation and Amortization charge for the period. This has obviously increased from what it was in the first half of FY 2022. It's related predominantly to a number of factors. Firstly, the booking and commencement of the Singapore IRU that we acquired as a consequence of the divestment of the Singapore and Hong Kong business. Secondly is the amortization of assets which have been acquired through each of the three transactions completed, since June 2022. Lastly, there's been a slight increase to the depreciation as a consequence of capital investments that have been made in the network over the last 12 months. At a bottom-line level, the net loss of the business has widened slightly. With the second half EBITDA skew expected, we would expect to see material improvement in this metric in comparison to the previous year at the full-year results. If we look at slide 20 now and cash flow and some other balance sheet metrics, I know that underlying operating EBITDA to operating cash conversion has been a key focus for many investors. At this half, that conversion was strong, just over 100%. I wanna make the point this is not a sustainable number and has benefited from the cash receipt of revenues booked in the prior year, as well as the fact that the underlying EBITDA includes accrued expenses that have not yet seen cash outflow by the end of the period. I would, however, continue to expect that a sustainable operating cash flow to EBITDA cash conversion rate for this business would be, as Paul mentioned earlier, in the 80%-90% range moving forward. From a debt perspective, the business is lowly geared. Current leverage ratio is below 1x, and we continue to try and operate comfortably at or around the 1.5x net debt to EBITDA level. We have AUD 24 million of cash as at December 31. This is after the settlement of AUD 10 million of the MyRepublic consideration on December 30. We also have access to another AUD 48 million of debt capacity to fund growth opportunities that may come along in the future. We're going to move on to some final comments then in relation to the outlook, and I'll start and then hand back to Paul. On slide 22, we've included a bridge from first half to second half, knowing that the skew between the two halves will certainly be a point of discussion in relation to these results. Obviously, we've maintained our guidance at AUD 33 million-AUD 36 million, that does imply a significant increase in the EBITDA in the second half. Let me take you through how we believe that those numbers can be derived. If you start with the assumption that the base for the second half result is the performance in the first half, there are a number of factors that will deliver higher underlying EBITDA from that base. That's gonna be augmented by the benefits stemming from the Uniti arrangements that we see the full benefit in the second half of this year. In relation to VostroNet, the first half only included two months of contribution from that acquisition, obviously the second half is gonna include a full six-month contribution. Next, the first half had no contribution from MyRepublic. The second half is gonna have around four months of underlying EBITDA that will be derived from the fact that we have now completed the migration of those customers onto our network. From a cost perspective, we have a natural skew of higher marketing spend in the first half, and the current plan is to have a slightly lower spend in the second. I would note, though, that this does remain a key lever for the business as we move through the second half. Finally, as Paul's spoken about already, we have to consider the impact of the finalization of the fixed wireless review. When we provided the original guidance of AUD 33 million-AUD 36 million for underlying EBITDA around the time of the AGM back in October 2022, we did make the point then that it was subject to the outcome of that review. With that now complete, the ultimate outcome is gonna be an AUD 2 million drag on earnings in this period. Thankfully, we've been able to absorb this without changing the guidance range. I acknowledge that today's announcement is the first people will have gained any clarity on the impact that the fixed wireless review will have on our business. Now I'm gonna hand back to Paul for some closing remarks. Thanks, Luke. If we just look forward, slide 23. We're gonna continue to focus on the company's growth strategy, and we're gonna continue to extract further value from our various acquisitions. We're gonna continue to invest in our brand, we're gonna develop our channels and continuously increase the leverage on those fiber assets. We have a strong balance sheet that allows us to fund our growth. Notwithstanding the outcome of the fixed wireless strategic review and the in-year headwind that that creates, we've been able to maintain guidance, largely as a result of offsetting fixed wireless with the MyRepublic upside. We're really pleased with what we've achieved in the first half, and we're very well positioned to finish the year strongly. With that, we'll hand over to Q&A. Thank you to Paul and Luke for the presentation. At this time, I would like to remind everyone, in order to ask a question, please press star, then 1 on your telephone keypad. Your first question comes from the line of Nick Harris from Morgans. Your line is open. Thanks, guys. Appreciate the questions and great set of numbers, operating leverage, and also love the rebranding. Got a couple of questions. Please. Excellent. Just the first one, appreciate you spelling out that organic revenue growth, that 28%. That's fabulous, and obviously a really good outcome. Just trying to unpick it a little bit, and I know that's not an easy thing to do, but is it fair to say most of that came from consumer and business, and wholesale was kind of a little bit slow, but it's quite lumpy, so might sort of step up slowly going forward? Is that how we should think about the organic growth in the business? I think that's fair. When we're talking about revenue, I mean, the reality is the wholesale market is a much smaller market at an absolute dollar level than consumer and business, which is why we've repositioned the business to have exposure there. I think it's worth, you know, touching on the margin contributions there, and the different margin profiles. We have a strategy to try and balance the business at a contribution level across the three segments. By and large, we've been able to continue to do that. We think there's real strength in us having that balance between the three segments. Absolutely. That makes sense. Thank you. I'm not sure if these are Luke questions. Certainly one of them is, which is the D&A question. Just you mentioned, obviously, it's moved a bit in this half. There's been a lot of different moving parts. Should we think the 1H 2023 D&A number is the sort of ballpark number going forward and maybe add a couple million AUD a year for MyRepublic? How do we think about the right number looking forward on a, whatever you wanna talk, second half annualized basis, whatever you're comfortable with? Yeah. Look, it's a good base to start with, most definitely. I would expect that the second half is gonna be, you know, pretty much in line with that, potentially slightly higher. As you said, there are, you know, there are assets that have come on board as a consequence of the MyRepublic subscriber acquisition that we'll need to amortize over the course of the next 3 years or so. You will need to take that into account. Yeah, you know, I can't speak about what might happen if there are other acquisitions and other things that come along. On a steady-state basis, if nothing were to change in terms of the assets that the business owns, then, I would expect the number that you're sort of seeing in this first half to be a sort of repeatable for the next couple of halves number before it begins to decline. Got it. Thank you, Luke. Maybe just the last one from me, the fixed wireless. Thank you for explaining what's happening there. Obviously, it's a little bit complicated, as Paul you said, a bit of a cocktail. Just as we think about FY 2024, I'm just trying to get my head around how I kind of layer it in. You said it takes AUD 2 million off EBITDA in the second half of 2023. Can we just take the 2023 number and assume there's no EBITDA drag going forward? Do we need to take another AUD 2 million off for annualizing? Obviously you've done some changes to it, so that changes that. It should be a cash positive, not cash negative business. Yeah. I know it's a strange question. Can you elaborate, please? No. Obviously, we haven't given guidance for 2024, and when we do give guidance, it'll all be rolled up. The way I'd think about it, Nick, is it's becoming a, you know, a less and less irrelevant part of our business. Obviously, those actions we've taken have reduced the revenue associated with fixed wireless and ultimately the EBITDA contribution from it correspondingly. It's getting smaller. Whilst it's getting smaller, it's gone from, you know, as I said, being a cash drag to being a cash contributor, albeit on, you know, reasonably small numbers. No, I wouldn't look to a further reduction into FY 2024 from the fixed wireless business. Thanks, Paul. That's great. Obviously it's really good to see things normalizing. As Luke said, this is the first half where you've kind of got some clean numbers. Good to see that all happen going forward because you don't have more discontinued stuff. Excellent. I'll let someone else have a go. Thank you. Thanks, Nick. Thanks, Nick. If you would like to ask a question, please press star then one on your telephone keypad, and we'll pause for any further questions. Your next question comes from the line of Cameron Bell from Canaccord Genuity. Your line is open. Good morning, guys. I'll just go through a couple of questions, if I may? Firstly, on the wholesale business. I heard your comments, Paul, but I see the target gross margin for that segment has been adjusted a bit lower. Yet your subs growth looks a little bit soft. Could you maybe just flesh out what's driving those two things? Yeah. We used to talk to a target gross margin of 70% for wholesale. That's absolutely correct. When we divested the Singapore and Hong Kong assets, which had a, you know, obviously a very high margin quality of just not delivering the return relative to the amount of AUD tied up in those markets, we have adjusted our gross margin target for wholesale accordingly 'cause the mix changes. It moves to include some other items with some a little bit higher cogs associated with them. We have been talking about for a while now a 60% gross margin target for the wholesale business, and that we think is the right level on a go-forward basis. I mean, I... It's clear that the last period has sat slightly under that, you know, 1 point something points under the 60%. I am confident that at the full year we will report a full year 60% number for the wholesale segment. The drivers of that, you know, there are some structural drivers. You know, there is no question there is some price erosion in some of the products there, IP transit being a good one to point out, which is becoming very competitive. There's some mixed topics. The main impact on why we're short of the 60% target in wholesale, in the 1st half is really a timing related discussion around some wins we've had and taking ramp-up costs but not taking the billings into the P&L at that point in time. That obviously washes out in the 2nd half. I just reiterate, you know, I think 60% is the right number to target, and I'm confident we will get there for the full year 23. Yep. Okay. Luke, you mentioned that drag from CyberHound. I think you said one and a half or so EBITDA in the second half last year, or the first half, was it? Yep. What was the actual EBITDA contribution from CyberHound this half given the accounting changes? It was under 100,000. Okay. You also mentioned, and you said cash conversion typically moving forward, you're going to see 80%-90%. Now I take it that's a full year FY 2023 number, or are you talking specifically second half 23 and FY 2024 it will be 80%-90%? No, I guess I was talking more generally in terms of. Yeah. the range that you'd expect for the business, you know, moving forward, not only this year, but in, you know, the next couple of years while we remain in a strong growth phase. yeah, I guess it was a general comment. It shouldn't be taken as sort of specific guidance around what the cash flow will be for the second half. Yep. Okay. Paul, I know you've got that waterfall in your guidance, but I also know I'm probably gonna be asked this question half a dozen times over the next few days. The company the last few years has shown a pretty big skew to the second half. Can you maybe just outline why that seems to be a naturally occurring phenomenon? Yeah. Naturally occurring may be too strong language. When this happened in FY 2022 and now is again in FY 2023, in both cases, there were some things that sat outside of normal organic growth. Obviously, any business you write in the first half is gonna benefit, not the first half of the second half. We naturally get that kind of growth. It's the M&A that has really exaggerated the SKU in both years. Again, does so this time around. This SKU is slightly less than the SKU that we had in FY 2022 that had a lot of attention to focus, and obviously we comfortably delivered on the FY 2022 SKU, and we have no concerns about the SKU this year either. Okay, great. You know, actually. Sorry. Sorry, Cam, I'll just add to that. It's difficult to sort of say, but I'd expect that you know, absent sort of any more acquisitions, I'm not saying that they won't happen, it's certainly still part of the strategy moving forward. You know, to Paul's point, certainly this year, those acquisitions have definitely added a bit to the SKU first half versus second. Absent those, you would not expect it to be as- Yeah. great as it is. Correct. Correct. Yeah. Okay. The last one from me, just on marketing spend. You've justifiably increased that number, a fair bit the last 2 years, and I think you made a comment that it would come back perhaps a touch in the second half. Longer term, should we still sort of think of, you know, that kind of 7 run rate as appropriate, annualized? Cam, we obviously haven't given guidance. Yeah. for 24, I don't wanna sort of go into that as much. When we look at marketing spend, we look at ROI. We've set ourselves a really strict return requirement on our marketing spend, and we've been delivering against that. We've discussed that with you in the past. We've been delivering against that, whilst we're, you know, getting that kind of high teens return, it's a central place to invest. If we have the capacity and we are getting the returns, it seems like something that we would continue to do. That's not saying is it gonna be higher or lower than it currently is, but it's currently working, so why would we back off, is kind of the sentiment. Yeah, I'm not sure I've answered your question, but, you know, we continue to look at it as money well spent. I'll probably get kicked under the table for this, Cam, but I think the way to think about it is, It's unlikely to be materially lower from where it is this year going forward. Yeah. Okay. That makes sense. Thanks, guys. Your next question comes from the line again from Nick Harris from Morgans. Your line is open. Thanks. I just wanted to have a crack at asking Cam's question a slightly different way, which was the payback on that. Happy to hear that. Yeah, yeah. We'll roll the dice and see how we go. Obviously, you just mentioned sort of the payback. The returns there are impressive. Well, I think they are. You know, are you seeing any change in that trajectory? 'Cause some of the telcos out there have said it's got more competitive. I guess if you interpret what they're saying, that would imply the return on marketing spend is getting coming under pressure a little bit. From your perspective, are you seeing it kinda similar to where it was 6-12 months ago, or is it coming down a bit? Yeah. Acquisition costs are rising. There's no question it is a competitive space. Again, I come back to the point I made before about the balance in our business across the three segments. We do dive in and then withdraw from the market in terms of marketing investments based on CPA. The gentleman who runs our consumer business, Mehul Dave, and our CMO, Ben Colman, both have very data-backed, you know, writing instructions around where and how much to spend and the return that's expected. When things get too ugly from a competitive point of view, you know, around marketing costs, et cetera, we do back off and then that allow, you know, the fact that we have the strength in our business segment and our wholesale segment means it's not devastating to the business. Yes, as a general sense, you know, CPAs are rising, but we still sit at the very low end of the market, and we think we can sustainably sit at that point. Sorry, Nick, I'll steal from you, and I'll see if I can have a go at sort of Paul's answer as well and just maybe add something to it. You know, I think the cost per acquisition is one element of the equation in relation to the profitability of the consumer base that we acquire when we go down this path. The other element, and it's, you know, it may be not as come out as strongly as we'd like and would hope that people can sort of understand this is. Send it. We are aiming to be a low-cost provider, and that's, that is deliberate so that we can deliberately position ourselves in a, in a place in the market that we think will allow us to continue to grow. The cost per acquisition relative to what everyone else is doing is one component of the equation. If that's getting more challenging, as Paul's alluded to it has been, we have to be very focused on our side at making sure from a cost perspective, that we're doing everything we can to drive cost out of the business on the other side. You know, you don't unfortunately get to see a lot of it from the outside looking in, but there's an enormous amount of effort that's gone into improving the cost base of the consumer segment full stop. There's an enormous amount of effort that is currently going into digital transformation, which will improve the cost base of the company in totality as well. you know, we have to be ready to respond to a competitive market with the actions that we can take on our side to keep costs under control. Thank you. That's great. I guess it kinda leads into my last question, which is just the system consolidation. I was just trying to find the slip through to find that slide. You talked about somewhere rolling or consolidating systems, basically. Obviously, there's been a lot of systems in the business. That's a pretty big deal. How's it going? You know, how much more work have you got? What's the outcome, I guess, as we look forward, logically one would assume your operating costs would decrease, all things being equal, which I know they won't be as a result of that. Can you just talk a little bit about what you're doing and the implications? Yeah, sure. It's a very broad program, and I mean, very simply, it is to move the whole business. That's the historical Superloop business, the various things we've purchased over the last couple of years, but also dating back many years to some of the legacy acquisitions, going back a lot of years, and move the whole business to a simple single set of systems, processes and workflows going forward. It is a very large body of work, but we haven't just started it. This is a program that's been ongoing now for quite some time, and we've made a lot of progress through it. The CRM was actually the first cab off the rank. We've done a lot of work around there consolidating to Salesforce. Obviously, the finance package I spoke about or finance packages. There's a bunch of other things, ticketing systems, all sorts of systems that we're working our way through progressively. Yeah, of course, it leads to increased efficiency. It dovetails into what Luke said a moment ago around ensuring we have the lowest possible operating costs in the business. Will you see that immediately fall out in terms of EBITDA improvement on a unit basis, or does that just create additional capacity that we can grow into that, or, you know, scale into without without scaling costs? That's, you know, something we're working our way through. We need to become more efficient. We will continue to have an aspiration to become more and more efficient every time we report. This program really leads us a long way down that path. We are putting a significant amount of CapEx into the program. It obviously has to have a return which we tightly govern. That's great. Thanks, Paul. Your next question comes from the line of Bob Chen from J.P. Morgan. Your line is open. Hey, morning, guys. You've obviously done a bit of a rebrand recently. Can you just talk a little bit about sort of the changes in your go-to-market strategy from here on the back of this rebrand? The rebrand is actually tied up in this whole systems transformation as well. What we've done is we've brought both the Exetel offering and the Superloop offering onto a single set of systems. In the past, they've been run on two separate systems, that's meant the product offering that we had under the two different brands is, you know, being a little bit fragmented. For instance, we weren't able to offer mobiles on the Superloop brand. We were able to offer on the Exetel brand. Superloop was only a broadband play. As moving towards a common set of systems, we're able to have a much better opportunity to drive multi-product holdings into both brands. We get better efficiencies behind the R&D spend that's tied to the underlying systems. You know, the external brand that you see in the marketplace, both Superloop and Exetel are just, you know, the retail face or, you know, the brand face. There's some nice new colors and livery, et cetera. The real rebranding is vastly deeper than that, and it goes into the, as I said, the, the products that are offered, the, all of the elements of price, position and portfolio, and the systems that it all sits on. Okay. That makes sense. Just in terms of, sort of, the overall competitive environment, across sort of NBN reselling, I mean, there's, you know, obviously some providers out there, essentially selling below cost and being subsidized for that. Like, how do you think about, you know, that sort of impact to your business or your ability to grow subs? Yeah. Look, I know the providers you're talking about. It's not an enormous part of the market. I look at it slightly differently, Bob, which is we're kind of, you know, 3% market share there or thereabout. We are, you know, we have a huge TAM that we can go after. Yes, there are some certain use cases where someone might, you know, buy a subsidized NBN product by bundling it with a home loan or something like that. That's a very small part of the market that kind of offering is gonna be appealing to. We've got 97% of the market sitting out there that we don't currently serve. Our growth opportunity is huge. Yes, there are some parts of the market that will prefer that kind of an offering. The market is more than big enough for us to expand quickly and aggressively as we have been. You know, this is not a promise and a hope. It's very evident if you look at the level of success in customer acquisition over the last couple of periods to see that our proposition, which is a value proposition, is resonating in the marketplace. Great. Thanks, guys. There are no further questions. I would like to turn the call back over to Paul for closing remarks. Thanks very much. I'd just like to thank everyone for their time. It's been a reasonably long call, but it really was a positive period for Superloop. We believe the first half, we kicked a lot of goals, and they're very demonstrable in the numbers that we've just talked our way through. We feel optimistic that the growth, sorry, that the momentum that has been evident in the first half will continue into the second half. We feel quite good about where that's gonna lead us to the full year, which is why we've confirmed guidance. Thanks very much for your time, and we look forward to continuing discussions in the one-to-ones. This concludes today's conference call. You may now disconnect.