Half-year results roadshow. For this presentation, Edward Chung, Chief Executive Officer, Stuart MacDonald, Chief Operating Officer, and Paul Jobbins, Chief Financial Officer, are on the call in Brisbane. There will be a presentation followed by a question and answer session. Participants on the phone who wish to queue for a question will need to press star followed by one on your telephone. If you wish to ask a question via webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to your host today, Mr. Edward Chung. Thank you, sir. Please go ahead. Thank you very much. Good morning, Stuart. Good morning, Paul, and good morning everyone down the video conference. Welcome to our H1 2022 results briefing. The presentation materials were lodged today with the ASX, and these are the first results with our recent acquisition of Scientia. Scientia's mission-critical timetabling and scheduling solution further evolves our already very deep OneEducation solution, and all information you see here today includes Scientia, unless otherwise stated. You're gonna see some really strong results today, something we're very proud of, and it's a culmination of many, many hard years and from our talented and innovative people to move us from a traditional on-premise license fee business to the very strong SaaS business you see here today. We've transformed this business not only once, but 4x over the last 35 years for our customers. Now, let's get into the results. Our key metric for our business is our SaaS ARR business, and you can see it grew strongly. SaaS ARR was up 44% to AUD 225.1 million, and that's all organic growth. Turning to the next slide, we now have 714 large scale enterprise customers using Technology One SaaS to power their business. That's up 24% from the same time last year. We added 138 customers, and you're seeing that's probably the largest growth we've had in one period, and there's truly an acceleration to SaaS from all of our verticals. Turning to the next slide, you can see our SaaS and continuing business revenue. That's AUD 169.5 million for the half, up 21%. This is now 97%+ of our business. It's a huge shift in recent years from our legacy license business to our SaaS business, which is performing very, very strongly. Turning to the next slide, we reported our 13th record year of half year profits. Our net profit after tax was up 18%. These are really strong results, and it really validates our SaaS strategy, which continues our growth trajectory in Australia and the U.K. SaaS continues to drive our growth, and the outlook for FY 2022 is very strong. I'll get into that in more details in our outlook section. I wanted to slow down now and just have a brief discussion. We all can see in the financial press that there's lots of news about growing inflation, growing costs, and a generally deteriorating economic environment. Over the last 35 years, Tech One has continued to grow really strongly through challenging environments such as this, and will do so again this year and many years to come. We do it for many reasons, and I'll just pace those out slowly. The first is the markets we serve, local government higher education, they're very resilient to challenging economic environments like this. The second is we provide mission-critical software. Our software runs local governments, it runs higher education, it runs government. So it's mission critical and will always be required in the markets we serve. In times like this, organizations look to streamline their business, automate processes, reduce their costs, and there's no better way to do it without moving to our global SaaS ERP. Recently, last year, we commissioned an independent research firm, IBRS and Insight Economics, to look at what organizations save by moving to our global SaaS ERP. They did a very high fidelity research and found that organizations save 30%+ on their total cost of ownership by moving to our global SaaS ERP. The fourth is that Tech One has never increased prices or our price book over the last 35 years, but right from the very start, 35 years ago, we built CPI into our subscription revenue contracts, and you can see our subscription revenue contracts is quite a large proportion of our revenue. Finally, when you look at our cost base, we will continue to extract the significant efficiencies and margin expansion that comes by having our single global code line, which is very efficient. Where we invest in one global code line for 1,200, 1,300 customers in six vertical markets, it's very, very efficient. In light of our strong results and our confidence going forward, the interim dividend is up 10% at AUD 0.042 per share. As per usual, the board will continue to consider different capital management initiatives. Turning to the P&L now, you can see down the bottom there that SaaS ARR is up very strongly, up 44%. That's all organic growth. Looking to revenue growth, total revenue grew 19%. The key metric for us is that revenue from SaaS and continuing business up 21%, as expected. Now, we're gonna look under the covers now to look at Technology One's underlying business before the acquisition of Scientia, and it was up strongly with net profit after tax up 16%. When you look at revenue growth there of 13% and expense growth 13%, it's in a very strong position going forward. I just wanted to reiterate and recap on Scientia. It's important to note that we've worked with Scientia for many, many years, 20+ years in same customer sites, integrating our products and providing that mission-critical tight integration between our student management product and Scientia's timetabling and scheduling product. We first acquired them late in calendar 2021, and it's a strategic product to further build out our footprint in our One Education solution in the U.K. As well as Australia. It's a mission-critical product. It's required by universities. It's very sticky. It helps run their business. And Scientia has a very enviable customer list. So here are some of the logos here on the slide. They have about 100 of U.K.'s top blue-chip higher education institutions as their customers. In the short term, we're investing in Scientia to move it to our SaaS platform. We've released our very first version of Scientia on SaaS. That's in the first 6 months of acquiring them. We've used our recipe, our knowledge, our processes, our experience in what we developed Cloud 1.0 10 years ago to the multi-tenanted SaaS we have today. With that recipe, we'll iterate very fast to give customers that same experience, so that they can get all the benefits that our SaaS customers get. By moving to SaaS, what those 100 customers will see is they'll log on to use Scientia, and then they will see Technology One's entire enterprise suite for higher education. They'll see the 14 products and the hundreds of modules that are available for them, and it'll help create this frictionless environment for us to sell Financials or HR & Payroll or Assets or Student Management to this very deep and rich customer base. It'll be frictionless from day one. Just wanted to reiterate that we didn't acquire Scientia for its earnings, as it recently made some losses, but we're already seeing some significant opportunities going forward as a result of this acquisition. It will have an impact to this year's group net profit before tax margin, which means margin will be flat this year, but then we'll get back next year into our normal group growth margin as you've seen in previous years. I just wanna reiterate that the margin will be in line with last year over the full year for Technology One, and that's caused by this Scientia acquisition. As per normal with Scientia, as we've done with all of our acquisitions, over the next few years, we'll continue to invest in R&D to completely rewrite and re-engineer the product into our global SaaS ERP and our SaaS architecture to extract those significant economies of scale that we see in all of the other Technology One products. Turning to the balance sheet now. Our balance sheet is very strong with cash and equivalents up 16%, and deferred revenue is up strongly as we grow our ARR. We should expect to see deferred revenue grow as our ARR grows. Put simply, all parts of our business are performing very well. We're trading very well, we're selling clean contracts, we're implementing very well, and we're collecting the cash. You're seeing all that in a strong balance sheet. Turning to the cash flow now. You can see we had cash flow generation of AUD 1.6 million. That's up AUD 4.6 million since our previous year. Traditionally, cash flow generation in Technology One is skewed to the second half, and that's because our revenue is spread evenly, being a SaaS business. But the customer anniversary dates when they pay their annual fee is skewed to the second half. This is as expected. If you look forward into the next slide, you can see that we'll have strong cash flow generation over the full year. As we disclosed in half one last year, we expect cash flow generation this year to be in that 85%-90% of net profit after tax, and then progressively grow over the next couple of years to be in line with net profit after tax in FY 2024 onwards. Turning to the next slide. Just wanna reiterate that we will continue to grow our margin to 35%, and it won't stop there. When we hit 35%, we set our ambitious targets, and we'll disclose those shortly, and we'll keep driving our business. These are coming from the significant economies of scale that we're getting from our single instance global SaaS ERP. It's a wonderful thing, and we've got initiatives as long as your arm to drive costs down, to make performance and security high for our customer, and importantly, to get the margin expansion in Technology One. I just wanna reiterate from the previous slide that margin this year will be in line with last year, largely affected by the Scientia acquisition. Going forward, you should expect to see increases in net profit before tax margin in the same manner we have delivered in the last few years. We're on the segment slide here, and you can see all segments are performing very strongly. I'll move to the next slide. We've got our normal results analysis and key metrics, largely for the investment community. Just wanna call out that our full-year return on equity will be very strong as usual. It'll be 40%+, which puts us in, you know, the top companies of any company in Australia when it comes to return on equity metric. I just wanna slow down now and deep dive into some of our significant achievements. There's no doubt that there's continuing strong demand from our global SaaS ERP. It truly transforms business and makes life simple for our customers. We're gonna slow down, as I said, take a few moments, and deep dive into how we do this. Stuart, can you take us through this now? Yeah. Thanks, Ed. Customers buy from us for many reasons. The first is the total enterprise solution. We have 15 products, and each product has between 20 and 30 modules. We're famous for our finance product, for which the company was started, and it's traditionally the first product for which we sell to a new customer. We then take a very traditional ERP strategy to leverage the enterprise. Every product is fully integrated, and they have a common look and feel. We have a standard product release, and each product has best-of-breed functionality, which allows us to increase our footprint. This is all underpinned by our 4th generation of ERP, our global SaaS ERP, enabling our customers to work anywhere, on any device, at any time. Providing defense in-depth security, and we're the only ERP provider to have that level of security across our suite. We have two releases per year, and that cadence allows our customers to take hundreds of new features and functions throughout. Then behind all of that, as Ed's already mentioned, because it's the power of SaaS, our customers are realizing a 30% benefit in cost of ownership. We then take it even further with differentiation of the verticalized solution. We're able to leverage our 35 years of experience and our close relationship via the Power of One design to fully understand our customers and thus the relevant industry. We then embed the IP gained into our products. This means our customers get a faster implementation, faster return on their investment, and therefore, we can increase our ARR with them and also significantly decrease our LaR exposure. We have six verticals we focus on. Local government, education, government, asset intensive, health community service, corporate, and finance. Finally, we ensure that our solution has mission-critical software for the verticals we serve. In local government, that'd be property and rating. In education, as an example, would be student management. This is again, unique in the SaaS ERP world. If I then show you an example of a customer we have to see how this works. This is a customer that joined us in 2013 in the local government space and acquired finance from us for AUD 367,000. They continued to increase their product purchases year on year, and with that, you'll see there's also CPI increase as well. In FY 2019, they became a SaaS customer. It should be noted that ratables is a metric we use for local government vertical to tie our growth within the council to the council's growth itself. Therefore, within each of our LG customers' contracts, they have a ratables metric. We would use student count for the education sector as another example. You'll see this customer crossed the growth threshold in FY 2019, resulting in an automatic uplift as well as the CPI increase. 9 years later, this customer has gone from AUD 367,000 in ARR to AUD 3.5 million. It's very important to highlight the TAM for this customer, which is currently AUD 6.2 million, allowing us to have significant growth as well. The TAM for this customer will continue to grow as we continue to release new modules and new products. They use more of the solution, again, the ratables, and then obviously the CPI, as we've already mentioned. Thanks, Stuart. That's to take everyone through a journey of a real-life customer growing 8 years ago from AUD 360,000 to AUD 3.5 million, and there's a lot of runway to grow. That's why we're very confident that we've only got 15% market penetration in any vertical. There's a bucket load of runway, as you can see from that single customer example that Stuart showed us. On average, you'll see that customers have six products in a couple of slides. There's many more products, modules, CPI, and growth that we can get with our customers. You can see here that we continue to grow very strongly in all of our verticals. Just to call out the top three there, local government up 19%, higher education up 49%, and government up 21%. Stuart, can you take us through some of the notable new business ARR wins through the half? Yeah, absolutely. Swinburne, another great story for us. Customer of ours for 10 years. Again, like the LG example, they started with finance. They've now become a significant student management customer for us. In the first half, they took their full solution to the SaaS platform, and at the same time, they bought a tremendous amount of new modules through that purchase. Mornington Peninsula is an interesting story. We actually lost this deal in 2018 to Oracle. Oracle was unable to deliver the project, and the council went back to market in late 2021. We won this deal in the first half at almost twice the original value. Royal Conservatoire was a great win for us in the U.K. It's a very prestigious logo, and it solidifies our position and our growth in the education market in the U.K. Derby. We've done very well historically in the U.K. in the council level, and we've mentioned before that a unitary council is significantly bigger than a council in the U.K. We won our first unitary council last year, and in the first half, we won our fifth unitary council with Derby in the first half. Ministry of Justice. This is another significant win for us in New Zealand and solidifies our position in the government sector. Thanks, Stuart. Thanks for those customer stories. Turning to the next slide, you can see that we continued our very strong customer retention at 99%+, which means churn was very low. In fact, churn was less than 0.1%. We introduced a new metric at the full year, which is Net Revenue Retention, and that's your sales of new ARR to existing customers. Anything greater than 110% is seen as good, and we've had very strong expansion performance of 114%. As I've said before, it comes from those stories that Stuart told around landing with maybe financials and expanding over time with many, many products and modules that our customers can take up. In fact, there's over 350 modules. It's frictionless for our SaaS customers. All products, all modules are available for all customers to see. It's what we call open license. You don't need to buy a license. You can try before you buy. You can use it, and we can see what you're using and then approach you to have a conversation if you love using it to buy that product or module off us. It's very predictable, and there's a low cost of sale. We're very happy with these results at the half year. Turning to the U.K. now. You can see that we delivered a profit of AUD 2.3 million. That's up 100% on the prior year. Total ARR in the U.K. is AUD 17.6 million. We introduced that we had new leadership. It's working very well, and we have very happy and referenceable customers. Previously, we talked about completing our customer-first remediation. We're right at the tail end of that now. We're poised for growth, and we're focused on growth. Looking forward, we've got strong references, a strong pipeline. The U.K. student management product is just around the corner. Our customer is in UAT, and we'll go live this year. We delivered five live HRP customers. With the recent acquisition of Scientia, we've integrated the teams. We've got a very enviable customer list. We're poised for growth in the U.K. Just reminding everyone on the next slide that we called an end to on-premise in August last year. We gave customers lots of runway to move to our SaaS ERP. This end of on-premise has aided the acceleration of customers to the SaaS ERP. We're well on track. We've got commitments from most of our customers, and we will deliver all of our customers to our SaaS ERP by the end of 2024. This is a watershed moment for us. I can't reiterate how long it's taken to get here and the hard work and the innovation, creativity of our team 10 years ago, coming on the SaaS journey, totally re-engineering our product, factoring our organization, new culture, new policies, new everything. You name it. Technology One has made the shift. You saw it in the metric there that 97%+ of our business now comes from SaaS and continuing business. I can't think of any other company that's moved from on-premise to SaaS and done it without missing a beat, done it without impacting our customers, done it without impacting our profit. It's just been a fantastic journey that our team has delivered. Now that our customers are on the global SaaS ERP, they can take advantage of our latest generation product, Ci Anywhere. They can take advantage of the future through things like artificial intelligence delivered through our DxP. It's a very exciting time for our customers as well. Looking forward to the runway for moving our on-premise customers to SaaS by FY 2024. Significant runway to go. That's AUD 142 million of additional SaaS ARR from existing on-premise customers. That does not include any product penetration, does not include any new logos. That's simply from coming from on-premise to SaaS. We continued our significant investment in R&D for future growth. You can see there that we invested AUD 41.5 million in R&D. That's 24% of revenue for future growth. There's a few things to call out there. Over the last 10 years, we invested AUD 500 million in R&D to maintain our innovation, our leadership position. That deep ERP that you saw really focused on those verticals. Continue our two releases a year with the 22A release recently released to our customers with over 470 new features and functions, and 22B is just around the corner. I'm gonna now focus on DxP. Just to remind everyone that this is a long-term strategy. Technology One is very, very strong in the back office when it comes to DxP when it comes to our global SaaS ERP. You know, that's the ratings clerks, the accountants, the payroll clerks, the people processing our rates in councils, and now we're reaching into what we call the front office, the end users, the employees, the ratepayers, you and I in councils, and the students that attend university. It's gonna be a long-term strategy. Just like we invested AUD millions in cloud and then SaaS, and we made losses at the beginning, it's contributing significantly to our business today. That's the same with DxP. We're making significant investments in DxP, which will be a future platform for growth, and it'll be quite a good platform for growth going forward. Our first LG DxPs has got phase I live now in three customers, Moreton Bay Regional Council, City of Canning, City of South Perth. We're working on phase II. The software is delivered to the early adopters, and in 22B, just around the corner, the third and final phase of DxP LG will be delivered. We're very excited about it. The early feedback is fantastic from our customers. In DxP Student, we've done very, very deep research. It's right at the beginning of its journey with 3-4 years of significant development ahead of us to create a great digital experience for students. Just wanna now recap all of that in the summary. You can see we delivered record half one profit revenue and SaaS ARR. Our SaaS ARR, all organic, up very strongly, 44%. Total ARR up 23%. Importantly, our total revenue's up 19%, and revenue from our SaaS and continuing business was up strongly to AUD 169.5 million at the half. That's up 21% and 97% of our revenue. Profit after tax up 18%. U.K profit at AUD 2.3 million, up 100% and poised for growth, and very strong cash collection as usual. We are on track, locked and loaded, and to achieve our AUD 500+ million ARR by FY 2026. Of course, none of this could be achieved without the people at Technology One. It's their grit and determination, them working tirelessly to solve significant complex problems for our customers and deliver the global SaaS ERP you have, we have today. You can see there, a bit of a myriad of all the photos. We recently celebrated our service awards for people in Technology One from 5, 10, 15, 20, all the way to 30 and 35 years. It was quite a fantastic event to see everyone and celebrate their longevity. People join Technology One for a number of reasons, but there's three that we're focused on, and one is their career. People stay with us a long time and move with us and grow with us as we grow and have fantastic careers in Technology One. The second is we focus on their well-being, you know, their mind, their body, their soul, their finances. The third is our purpose. People join Technology One because we solve complex problems using our global SaaS ERP for local government, higher education, all our vertical markets. By doing that, we streamline those businesses so that they can focus on delivering their critical services, their critical infrastructure, to you and I, as ratepayers, as students, as people that live in Australia, New Zealand, and the U.K. To the Technology One team, thank you very much. We couldn't do it without you. These results are from all your blood, sweat, and tears, and we look forward to continuing in the future. Turning to the outlook now. Bit of a reiteration of the story I told earlier. We read in the financial press that there's, you know, increasing inflation, growing costs. There's many, many quotes we could have pulled up. You see one there on the slide. We've been here before and, we've navigated these challenging environments, and we grow strongly and will continue to grow strongly. It's because our markets are resilient, local government, higher education. We provide mission-critical software. It runs their business. It powers it. They couldn't operate without us, and they turn to our global SaaS ERP in times like this to save 30%+ on their total cost of ownership. Our subscription revenue contracts, which is a large portion of our revenue base, has always had CPI built in from the very beginning, and that continues. Then we look at our own cost base. We focus on continuing to benefit from our single instance global SaaS ERP. We're very confident for the full year and beyond. We give our outlook of continuing strong profit growth, and we'll deliver profit growth of 10%-15% for the full year. A couple of other metrics here that I just wanna call out to help with guidance. SaaS ARR growth, that's the key indicator of the strength of our company, and it will be 40%+ all organic. That's organic growth not coming from Scientia. As we continue to aggressively grow that SaaS business, we'll continue to reduce our legacy license fee business. Last year it was about AUD 18 million. This year it will be AUD 12 million as planned. That's an integral part of our strategy as we focus on growing our SaaS business and reduce our legacy license business as planned. Turning to the long-term outlook, we're positioned well for growth, and we'll continue to double in size every 5 years. Our SaaS is growing strongly. We've got significant opportunity in our customer base with more products, more modules. That customer journey that Stuart showed really highlighted that. Continuing growth in all regions, in APAC, in the U.K., and our profit margins will be 31% this year, same as last year, largely caused by Scientia, and will continue to grow to 35%+ over the next few years in the same cadence that you've seen previously. We'll grow total ARR to AUD 500+ million. Our team is myopically focused. We've got detailed plans with our customers. We'll deliver that, and then we'll let you know what our plans are for next. Of course, we've got a very diversified business. six vertical markets, 15 products, hundreds of modules, geographic expansion. We're very excited about what the future holds. Thank you, ladies and gents. I'll hand over to Lexi now for question and answer. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to queue for a question, please press star followed by one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star followed by two. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question is a phone question from Nick Harris from Morgans. Please go ahead. Thanks, and good morning, everyone. That's a great result and really appreciated that customer journey slide. That's really helpful. Just a couple of questions from me. Just the first one, you added 138 new SaaS customers in the last 12 months. Could you give us an idea of how many of them were flipped from on-prem to SaaS? Just to understand whether as in how many net new versus flipped. We don't disclose that level of detail, Nick. But you can calculate from the NRR slide that we've probably done about circa AUD 9 million-AUD 10 million of new business, Paul. The rest of the businesses come from SaaS customers moving to SaaS or buying more products and modules, Nick. Okay. I'll work my way through that. Thanks, Edward. Just on the inflation side, could you just? Mm-hmm. Appreciate you've got CPI pass-throughs. Just talk us through the detail of how that works. Do you basically every annual renewal reprice things or e very July there's a new number? Yeah. We've, as you know, Nick, we've got customers with anniversary dates all throughout the year. We use the CPI that's the closest or the last published before their anniversary date. It's not a once a year, it's a cycle. When the customer's renewal comes up, whatever the prevailing CPI is at that time, that's what's passed through to the customer. Thank you. Just my last question. Obviously, just the PBT margin side of things. Mm-hmm. As you come to the end of life for the on-prem, should we expect, you know, your cost base to drop reasonably and a big sort of step up in margin then just by virtue of not having to support the legacy stuff? Or is it more a gradual sort of sliding scale transition as you wind down the old stuff and r einvest that into new stuff. Yeah, it's more the latter, which is that gradual transition. If you think back to previous sort of results presentations, Nick, we've talked about us transitioning, you know, staff away from on-premise to SaaS, and we'll continue that all the way to the very end. What you will see is margin expansion as we've, you know, put out before, from the 31% it is to 35%. I got asked the question before, you know, how should I think about that? If you look back at our past and the growth we've got every year, think about it that way. I just wanted to reiterate, that's not the end. We'll get to 35%, and before we get there, we'll set the next long-range target, and we'll deliver on that. We have a list of initiatives as long as your arm, in our SaaS business, which do a number of things. They either increase performance for the customer, increase security for the customer, and using new tech. You know, we can take advantage of that and increase the margin in our business. You know, we have this great relationship where we continue to provide more value to our customers using those initiatives. Thank you very much. Thanks, Nick. Thank you. Your next question comes from Josh Kannourakis from Barrenjoey. Please go ahead. Hey, Josh. Hi, Edward, Paul Jobbins, and Stuart MacDonald. Thanks, guys. A couple of questions from me. Firstly, just on the SaaS transitions, just to get into a bit more detail. You previously mentioned the sort of 2.25 multiple in terms of from some of the on-prem to the SaaS lifts. Is that still the case on some of the new ones, or are there any trends you can talk about in terms of how that's transitioning? Mm. Maybe, you know, whether new customers are taking additional modules or any other extra color on some of the new b ids you've put through the business, we'd be glad. Yeah. Thanks, Josh. I'll give a similar response to the full year. 2.25% is our standard approach, but it's probably better to use 2.0%. The reason for that is we have what we call behavioral discounts in our business. A behavioral discount comes in many forms. If you buy multiple products, you get a discount. If you buy more products, you get a discount. If you sign standard agreements without changes, you get a discount. If you take on an AMS contract, you get a discount. Our standard price is 2.25%, but knowing that customers of all different shapes and sizes, you know, buy different things and different bill of materials, we guided at the full year to use 2% as your indicator for modeling. If you can continue that would be great. Awesome. Thanks, Ed. That's great. Just maybe Ed for you or for Paul, just on the cost profile in terms of OpEx. How should we be thinking about it over the sort of next 12 months? Are there any major sort of moving factors or other inflationary pressures that we should be taking into account? The final one is just around that Scientia acquisition, just that looks like there's a bit of a reduction in contingent consideration. Has that? You know, where has that sort of gone, and is that something we need to factor into the cost base? Yeah. Great. Paul, do you wanna tackle both those? Yeah, Josh, I'll start with the continued consideration for Scientia. At the time of acquisition, we bought it very close to the end of the year. When we were preparing the financial statements last full year, we really didn't have a very clear picture of how the business was operating. We knew that it was a very important strategic product for our overall enterprise solution. We didn't buy it for earnings, as Ed said. The change to the total consideration was actually a reduction based on the first earn-out, which we now know they haven't achieved. We're still recognizing the deferred consideration for the second earn-out, and operations for that business so far are actually going really as we expected. The first part of your question, Josh, was more about costs for the full year. You'll be able to see in the slide the contribution to costs from Scientia, and that has led to, I guess, a flat year-on-year margin, compared to last year. All our costs do grow broadly in line with revenue. We've also made a statement in the results summary that costs for the full year will grow in line with revenue growth. As Ed said during the presentation, margin for the full year will be largely flat year-on-year. I think that gives you enough, you should be able to work out what we expect our full year cost to be. If you. Can I add then, Paul, after that, Josh, when you're thinking about next year, we expect margin expansion to 35% over the next few years, using the same history that you would have seen us. As we get close to that, we'll set the next goal, and we'll deliver on that as well. Yeah. Okay. No, got it. Just on the SaaS numbers as well in terms of the, y ou know, the SaaS fees, it looks like you're getting, you know, a bit of good leverage on that side in terms of the sort of relationship between the SaaS revenues versus that line. Is that one of the other drivers of it over the next couple of years or? Yeah, definitely. You're right. We'll continue to grow SaaS very strongly, not only this year but over the next few years as we move people to software as a service and sell them more products and more modules that you saw in the customer journey slide, Josh. Okay. All right. Cool. Thanks, guys. Thank you. Thank you. Your next question comes from Mitchell Sonogan from Macquarie. Please go ahead. Hey, Mitch. Morning, Ed, Paul, and Stuart. Can you hear me? Yeah, sure can. Yeah, great. Maybe just following on, just on the guidance for the full year, you put a bit of information there about, cost growth. Just on the R&D expense, can you maybe just t ell us what's baked in, from a capitalized R&D perspective into that guidance for 10%-15% PBT growth? Yep. Should we expect the total R&D expense to remain at 24%? Thanks. Yeah. I'd probably more look at the physical number we spent in the first half and extrapolate that to the second half, Josh, rather than use 24% of revenue. When you think about R&D investment, that is our people that are building our products for now and for the future. Our people. We invested in our people. There was wage growth, which was a good thing. That's largely where the R&D investment growth came from. Do you mind if I add, Ed? Yeah, please. The full year R&D development and capitalization will very much be in the range that we've stuck within since FY 2019, which is 55%. That's right. The activities that are capitalized is based on the actual activities that the development team perform. Thanks, Paul. Yeah. Excellent. Thanks, guys. Maybe just looking at Scientia costs. Mm. You're talking about moving the product over to your SaaS platform and integrating it. Yep. You're also going to follow that with complete rewriting and re-engineering. Yeah. Can you maybe just, I guess, talk through what costs you incur doing that over what timeframe? Yeah. Can you talk about when you expect margins in that business should approach the group margins? Yeah. Thanks, Mitch. It's our recipe, right, where we partner prime acquire, which we have done with Scientia, and then we re-engineer into the global SaaS ERP platform. We don't intend to add staff to Scientia. It's refocus them and their R&D efforts into rewriting it. It takes about 3 years when you look at our history with our spatial business that we acquired, the strategic asset management business, and any other business that we've acquired. Then when we're there, the customers get all the significant benefits that everyone gets from being on the global SaaS ERP. So to answer your question, in short, we won't add a lot of cost to the Scientia business, but we refocus the team to rewrite it in the TechOne way and on our global SaaS architecture. I can't remember if there was a second part to your question, Jules. Sorry, Mitch. No, mate, that's pretty clear. Just in terms of over what timeframe, you've answered that. Right. Maybe the final one from me. In terms of your year end of on-premise on October 2024, you've obviously given the customers a bit of timeframe or upfront lead time for them to make a decision there. You mentioned y ou've had commitments from most customers. Yeah. Can you maybe just talk through what some of the sticking points are for those final customers in terms of committing to go over to the SaaS business? Thanks, guys. Look, it's a similar story to when we announced it in August last year. We maybe had about 400 customers remaining on-premise at that time. We probably had less than a handful, less than 3 or 4, that wanted to have a conversation with us 'cause they weren't too happy. To be honest, we've talked to them and they all understand that it's inevitable. If you think of the market today, you would not see one tender of any business that's going for an on-premise, you know, solution. It's all software as a service. They're all moving there. We've worked with that, those handful of customers, and we've got a clear path for them. There is not really any objections, other than our customers are long-range planners and wanna plan and put in their budget cycles and have project teams set up. We've worked with all of them now, Mitch, and developed those plans with them and are literally signing them up quarter by quarter so that they can get there before time runs out. Yeah. Thanks, Ed. Thanks, Mitch. Thank you. Your next question comes from Jules Cooper from Shaw and Partners. Please go ahead. G'day, Jules. Hi, guys. Thanks for taking my question. Ed, you made a comment earlier that the new SaaS ARR was AUD 9 million or AUD 10 million, which I guess is sort of a 12-month view. How should we sort of t hink about the first half, second half kinda contribution and, you know I don't know whether you can sort of just provide that for this half, j ust compared to the full year number. Yeah. We don't go down that level of detail yet. I can understand once we've done a few halves of disclosures, you can work it out. But to answer your first part of your question, Jules, the skew is the same. A lot of our business is done in the second half because of the buying cycles of government, local government or higher education, whether that's towards the end of their financial year, 30 June, or at the beginning of a budget year. So we still will see largely a skew of new business to the second half, Jules. Got it. Okay. If we were to sort of think about, I think it was roughly AUD 33 million added from the full year to now in your SaaS ARR. Yep. Scientia hasn't contributed to that line, has it? It's all reflected in your total ARR number. Yes, that's right, Jules. Spot on. Yep. You can't sort of help us with just understanding the expansion with existing customers that are on the SaaS platform already in that 33? We can. There's a little bit of a back solve required. I might hand over to Paul to just pace that out for you and everyone on the call, Jules. Jules, it's a similar profile that we saw at the full year. It's of the new ARR added by existing customers, which as you identified is largely roughly AUD 33 million. 2/3 of that was the increment from the flip and the other third is new product into existing customers. I think that answers the question, Tim. Got it. Thanks. Paul. Yeah. No, super helpful. If we look at the U.K., I mean, you know, great to see, you know, signing some good logos in that market. If you back out Scientia, the growth in the ARR was about AUD 700,000. There's probably maybe some currency moves there. Mm. Just trying to understand, you know, these customers that you're signing, they're obviously starting quite small. Is that the way I should think about them and they will scale over time? It just seems not a big increase for what looks to be. Yeah Some really good unitary success. I think you already answered the question in your two parts, Jules. If you think about last year. Yeah. I think total new ARR added last year in the U.K. was about AUD 1.5 million. We got very, very close to that in the first half. Unfortunately, currency resulted in the number that you saw in front of you. We're very happy with the first half new ARR added because it was almost the same as full year last year. You nailed it. It was currency. The second part of your question is, yes, we are landing and expanding in the U.K., so largely we're selling core products. Stuart? Yes. It's important to note that we only have 8 of our 15 products in the U.K. As we land and we sell what we have today, we'll still be porting more and localizing more products in the future. That's part of our strategy. That's also, if you go back a couple of years, London School of Economics and Political Science, that's why they bought us in the first place, is they saw our strategy of when we're gonna bring HRP, which we've now done. Student is in and completes, and they'll be taking that over time. Thanks, Jules. That's excellent. Great result. Thanks. Thank you. Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Michael Aspinall from Jefferies. Please go ahead. Yeah, thanks. Hi, Michael. Good morning, Ed, Stuart, and Paul. A couple from me. Thanks for your comments so far. It sounds like we should expect ARR to benefit from CPI next year. Is there any scope for customers to push back on that given inflation is gonna be at much higher levels than what we've seen historically? No, there isn't, Michael. Our customers are used to CPI right back to 35 years ago. When CPI is 0%, we pass on 0%, and when CPI is 3%, 4%, 5%, we pass that on. Yeah. There is no scope for that, Michael, to answer your question. Okay. The conversations we have with our customers is providing more value. You know, we invest AUD 80 million per year in R&D. For that, our customers get new features, new functions. They're always on the latest tech. They're on the fourth generation software, our global SaaS ERP. We don't charge customers any more for moving from generation to generation, unlike SAP and Oracle would. We've developed, as Stuart said, the most trusted SaaS in the world. Our global SaaS ERP is certified IRAP PROTECTED. You'll find there's no other provider like that, and that all comes from the single fee that our customer pays every year. Our conversations with the customer are more about providing more and more value to them rather than as an additional cost. Yes. Okay. Just to help my understanding it, are those contracts, the SaaS contracts, kind of 3-5 years, and even when you're sort of signing a new contract, CPI just rolls through? Yep, that's right. CPI, as in our contracts, is not at the end of the contract. It's yearly. Yeah. Okay. For cost, at the full year, we spoke about how you retain staff outside of just remuneration. I'm just wondering what you're seeing, though, in terms of labor cost increases and w hat you're thinking in terms of if you'll be adding headcount or kind of just staying flat for the next year or so? Look, there's no doubt that it's very competitive out there, and we pay competitive wages. At the full year, we discussed that, we set aside a healthy budget for this year to stay competitive and to invest in all those things that we discussed, and we've done that. Also at the full year, we disclose an eNPS result for the company. So every 6 months, we poll our staff. We ask them the normal NPS question, but this is focused on them, and give us feedback on where we're doing well or not so well. You might have seen in the sustainability report that was released, I think in about November last year, Paul, through this period. Yeah. Through the, you know, competitive pressures with our investment, our eNPS went from +1 to +17. Our staff are telling us, "You're moving in the right direction." Can we do more? Sure. We can always do more and different. We saw it, we budgeted for it, we've addressed it. We'll continue to watch it. We'll continue to work with our people. We are planning to grow our business, and grow headcount, as we continue to scale and add more products, more features, more functions, for our customers. Great. Thanks for that. A couple from Paul, maybe. Just following on, I think it's Josh's question on contingent consideration for Scientia. It sounds like have you recognized provision on the balance sheet on the initial earn-out versus running it through the P&L? Michael, we're still in the provisional and accounting period. We'll finalize the formal acquisition accounting with the full year. It's at that point where we finalize all the fair value accounting and the purchase price allocation. We were able to adjust effectively the opening balance or the initial consideration because w e realized that we didn't have the full information at the time of acquisition and at the time of completing last year's financial statements. There hasn't been an adjustment through the P&L, and it was an adjustment to the provision on the balance sheet. Okay. Yeah, cool. That, that's great. Thanks. I think it was Jules' question. Just looking at the U.K., your ARR increased, I think you said ex FX from about AUD 1.5 million. If I look at your disclosure on where revenue comes from, I think it's slide 42, you showed 13% of revenue from the U.K., which is about AUD 22 million or AUD 12 million excluding Scientia, which is up about double first half last year. I'm just wondering how I reconcile kind of that change in ARR of about AUD 1.5 million versus the change in revenue ex Scientia, was up about AUD 6 million. Revenue also includes consulting revenue from implementation projects. That's total revenue. This is based on license revenue. Yeah, I think the difference could be consulting, but I'll We'll confirm that with you. Yeah, we'll confirm it. Yeah. If that was the case, then consulting had a good strong half in the U.K. It did. You can see that on slide 45, the contribution from U.K. consulting. Okay, cool. Last one or two more, quick, hopefully quick ones. Capitalized commissions went up from 1.8 to 4.4 and a half. Is that a shift in the channels that you're using to sell or something else that's driving that? No, it's not. We don't work with channel partners. It's a reflection of the fact that more of our sales are ARR and SaaS ARR, in particular, with longer term contracts. In the past, a proportion of our commissions would've been based on initial license fees, what we now call legacy license fees. We've seen that shift. The majority of our sales now are SaaS ARR. Under AASB 15, we're required to capitalize. Match it against the length of the SaaS contract we sell, 3-5 years. Thanks. Okay. Yeah. That makes sense. Last one, maybe back to you, Ed. Just thinking about if there are any further acquisition potentials in the pipeline. There's always acquisition potential in the pipeline, Michael. If you look at Scientia, its timetabling and scheduling product, look at DMS, the spatial product, Icon, the planning product, JRA, the strategic asset management product. We are first and foremost after product IP that makes us deeper into the verticals we serve, so local government and higher education are our main target areas. We get lots of approaches all the time. Firstly, it has to be a product that makes us deeper in the verticals. Secondly, we do have very high hurdles in our business. It has to pass those two things. If I hear Paul talking to me, we won't squander the money, and we'll do these acquisitions carefully. If you look at our recipe, they're largely smallish acquisitions that make us deeper in the vertical markets that we can quickly bring into our ERP, rewrite it, and continue to sell to all our existing customers. Okay, great. Thanks for that, guys. Thanks, Michael. Thank you. Your next question comes from Chris Savage from Bell Potter. Please go ahead. Thanks, and good morning. Just a couple of questions that haven't already been asked. G'day, Ed. G'day, Paul. G'day, Stuart. Just the guidance around the initial license fees of AUD 12 million for the full year. Yeah. Surprised it's not coming down faster given the accelerated SaaS flips, and I'm guessing there's some level of discretion in those license sales as well. Yeah. My question, Ed, is, are you dependent on that level of initial license fees to get the top end of the guidance, or could you potentially do lower and still get, you know, towards the upper end? Yeah. It's a great question, Chris. We've got lots of levers, as you know, in our business to achieve our profit guidance, and we're comfortable we can get there. To the extent we can, we would love to drive license fees down, because then we sell it as a SaaS deal, which is, you know, not profit for this year, but for next year, and it builds our recurring revenue base. You'll continue to see us do that, Chris. Right now we're comfortable at guiding at that AUD 12 million number. Significant headwind and drop from last year of circa AUD 6 million. If we can drive that lower and still deliver profit, we will. Yeah. I think I know the answer to this one. It's probably more for Paul, but continuation of an earlier question. If there is some gain on contingent consideration at the full year. Sorry, I'll reword it. I'm assuming the guidance doesn't assume any gain on contingent consideration for the full year. Yeah, that's true, Chris. Anything that is recognized is upside? Yeah, that's right. Yeah. More or less. Okay. I mean, as I said, the business is operating well. We've been able to implement some good cost synergies, and we see some real revenue synergies. We see some real benefits from being able to transition Scientia customers onto our SaaS platform in time. We believe there's a good opportunity for them to hit the second earn-out, and we'd be happy if they did. Yeah, sure. Last question. Ed, I think I ask this every result. The cash, b uilding and building. I mean, it's pretty obvious it's gonna be north of AUD 150 at the full year. Any thoughts around capital management, buybacks? Yeah, yeah. Special divs? I know you've got some limit on franking, so what's your thinking? Isn't it great to have such a strong business churning out lots of cash, is what I'm thinking. Look, we won't squander it. That's probably the first thing. We've continued to look at ways to utilize it well in capital management alternatives. Gives us a war chest, you know, to acquire businesses that make sense that are in that sweet spot that we talked about, Chris. The message from me is we won't squander it, and we are looking at ways, different capital management alternatives, as you put it. Thanks, guys. Thanks, Chris. Thanks, Chris. Thank you. There are no further phone questions at this time. We'll now move to the questions from the webcast. Your first question comes from Bruce Carmichael with TeamInvest, who asks: Over the last 5 years, the major contribution to the growth in earnings has been economies of scale, with the sales growth being the minor component. In time, growth with economies of scale will plateau. How do you see earnings growing after this plateau? Great. Thanks for your question, Bruce. I'd argue it's been quite the opposite, to be honest. We have managed the business very carefully to ensure that we've continued profit growth and looked after our customers over the last five or so years. It might look like headline revenue has come down, but you've got to remember we've had significant planned license fee reduction year on year, which is a key hit to revenue and therefore a key hit to profit as we've been growing this fantastic SaaS business over the last few years. If I recap license fees, in its top was about AUD 75 million, which came down to AUD 47 million. That's about AUD 30 million dollar hit to the P&L in that year, which went to 27, which is about a AUD 15 million dollar hit, which went to 17 or 18, Paul, a AUD 7 million dollar hit. So that's been the big drag on what looks like top line revenue, but we've been growing our ARR and SaaS ARR business quite strongly. We're largely through those headwinds now, Bruce, so now you're seeing top line revenue this half at 19%, and when you look excluding Scientia, it was at 13%. Importantly, our SaaS and continuing business growing at 14%. We set a goal to grow that consistently at 15%, and we're almost there. We're right at the cusp of that. We've managed through the transition of on-premise to SaaS to rebalance our business, to focus on margin, to extract huge margins from the SaaS platform through key investments in R&D to deliver consistent and steady profit growth of 10%-15% and always at that top end of guidance. We will continue, Bruce, to sell products and modules to our customers, continue the growth in U.K. We're investing in new platforms for growth like DxP. Got some exciting new investments, a little bit too early to talk about. We drive revenue growth through ensuring we have those many, many platforms for growth. We're very confident that we'll continue to drive the business forward and deliver 10%-15% profit for as long as we can see. It's very exciting times, Bruce, and in the next few roadshows, we'll be able to talk to you about some of those additional investments that we plan to make in R&D for future growth. Can we have the next question, please, Lexi? Yeah. Your next question comes from Troy Renauld from Polen Capital, and they've asked: Should we view the Scientia acquisition as a sign of management and the board is willing and open to use acquisitions to further scale the U.K. Businesses? Thank you for taking my question. I think when it comes to acquisitions, if you think about how we answered the previous question is, we're always looking at acquisitions, provided that they make us deeper in the vertical markets we sell, and service. We've known Scientia for a very long time. Their product is fantastic. We've integrated with them, Stuart, for. 20 years. 20+ years. If we see more acquisitions like that, we'd be willing to make them. I would note that we're not after David and Goliath-sized acquisitions. You know, we do things that are comfortable for us, that we know we can integrate, that we know we can execute well, that we know that will add significant value for us and our customers going forward. Lexi, the next question, please. Of course. Your next question comes from Roger Taylor from Morgans Financial Limited, who asked: Stuart, I'm not sure if you've covered it already. Could you give us more details around the growth in modular per user, please? Yeah. It's a bit of a challenging one to answer because we have 300-350 modules that we sell. I think an easier way to answer your question is the customers we have on the SaaS platform on average have about 2 whole products more than on-prem. Mm-hmm. We sell a tremendous amount of modules into our customer base day on day. I can't give you the exact number other than once we've moved them all across to the SaaS platform because of the frictionless experience, it's just so much easier than just for them to start absorbing the modules and take benefit of those modules. I can't give you an exact number, but I can tell you that it's more than two products per customer that moves from the on-prem to the SaaS platform. Thanks, Stuart. Looks like there's one last question on the call. Lexi? Yes. Your last question comes from Gareth James with Morningstar, and they've asked: Any price increases based on headline or core CPI? Thanks for the question, Gareth. Typically, it's based on headline CPI. Obviously, it's different in each country. In Australia, it's typically the national headline CPI. In New Zealand, inflation has been running a little bit higher there as it has in the U.K. So it's the appropriate inflation metric for each region, and typically, as I said, headline. Thanks, Paul. Lexi, it looks like there's no further questions from the webcast, and we're just on time. We might thank everyone for joining the call today. It's been a great result. Thank you again to all the hardworking people at Technology One. Lexi, can I hand to you to wrap up the call, please? Of course. Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect.