Release Date: February 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 15% year-over-year to $115.1 million, with customer revenue up 6% to $82.3 million.
- Underlying EBITDA improved by 50% to $33.4 million, and net profit after tax (NPAT) turned positive at $9.5 million from a previous loss.
- The company has made significant progress on its EML 2.0 strategy, focusing on a global operating model, revenue engine revival, and a single technology platform.
- Interest income increased by 49% due to higher bond returns and treasury management activities.
- The cash balance improved by $7.5 million, reflecting positive operating cash flows and strategic actions like the sale of Centennial.
Negative Points
- The loss of several customers in the second half of FY24 suppressed customer revenue growth.
- North American revenue was down 7% due to lower breakage revenue across incentive customers.
- Interest rates are expected to moderate further, potentially impacting future interest income.
- The company is still in the early phases of its EML 2.0 strategy, indicating that full benefits may take time to materialize.
- Operating cash flow conversion was below the long-term average, impacted by timing differences in bond interest income.
Q & A Highlights
Q: Can you elaborate on the pipeline growth and expected conversion rates?
A: Anthony Hynes, Executive Chairman: The pipeline growth is primarily coming from the USA, which is encouraging. We aim for a $90 million pipeline and expect to convert about 20% of that.
Q: Could you expand on the focus on new verticals?
A: Anthony Hynes, Executive Chairman: Our strategy involves driving more from the core, exploring new markets, and focusing on new verticals. We are putting more energy into identifying which verticals make the most sense for us.
Q: Is the earnings guidance conservative given the strong first-half results?
A: James Georgeson, CFO: We reaffirm the guidance range of $54 to $60 million. The first half is typically stronger due to seasonality in the gifting business. Interest rates have started to decline, and one-off revenues in Europe also impact the numbers.
Q: What is the outlook for operating cash flow conversion in the second half?
A: James Georgeson, CFO: We expect cash flow conversion to trend back towards the 60% average. The second half should see stronger cash generation, although Project Arlo's spend may slightly impact this.
Q: How is the float managed in terms of fixed and variable interest rates?
A: James Georgeson, CFO: Approximately 40% of the interest-earning float is in UK government bonds with an average duration of 1.8 years, earning about 3.9%. The rest is in cash, typically earning cash rates across jurisdictions.
Q: What are the plans for capital management given the improved financial position?
A: James Georgeson, CFO: We are considering options for capital management, but it's early days in the recovery. We will provide more clarity by the full results. Franking credits are not a priority due to tax loss positions.
Q: Are there any plans for inorganic growth or acquisitions?
A: James Georgeson, CFO: We are mindful of past challenges with acquisitions and are not currently pursuing inorganic growth. Our focus is on running the business well and achieving growth through our existing strategy.
Q: How is the leadership change impacting the company's strategy and targets?
A: Anthony Hynes, Executive Chairman: The strategy and targets were a collective effort, not just one individual. I am fully committed to the business and energized about the opportunities ahead.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
