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We'll get started. Welcome to the Ansarada Q2 results presentation. I'm Sam Riley, I'm one of the co-founders here and the CEO, and I'm joined by James Drake, our CFO. Good morning, James.
Good morning, Sam, good morning, everyone.
Yes. So together, James and I'll take you through our results and what we're doing operationally, what you can look forward to in the future. And as we do that, there's really 3 key points to take away today. The first one -- it has been another quarter of delivering record results consistently, and we've been improving our operating leverage every quarter as well. Secondly, we've been methodically building much more diversified and defensible revenue streams that are performing regardless of economic conditions. And thirdly, we are very early in our growth phase. The 3 key markets we operate in for our customers adopting our solutions and specialized Software-as-a-Service solutions. They're very early in their adoption cycles. So we've got a lot more growth to come. So as you'll see here, and you might already know, but for those who don't, Ansarada is, we're a SaaS platform. And we get used by a diverse range of customers across companies and advisory firms like legal, banking, accounting, governments using Ansarada every day. We have over 0.5 million users in our products. And they use us to collaborate, share information, automate processes for, for things like M&A deals, refinancing of debt, insolvency, running large scale high-risk tendering in projects like infrastructure development. They use us to manage their board activities, they use us to manage risk, they use us to manage their compliance activities. So the short message on this slide as far as results, as you can see every year since we started, we consistently grow our customer base regardless of what's going on in the economy. Ansarada always grows. And this year-on-year, we rounded out our first year as a public company. So it was pleasing to see 58% revenue growth delivered. We increased our average revenue per customer by 43%. We improved our operating leverage. Once again, we were cash flow positive with $4.4 million in the quarter, and we maintained in excess of $20 million in the bank, and we still have 0 debt. Finally, we did an acquisition in Q2, which was a cash-based acquisition of TriLine GRC. So that really strengthens our ability to deliver even more sustainable growth in that GRC market going forward. Now I did want to point out 1 little error that we discovered about 5 minutes ago. So this number here in our customer chart, that 2,702 was where our customers ended in June 2020. But as you'll see, each year is comparing what we did at the end of the calendar year, each point is a calendar year point year. So it was 3,030 -- so that 17% growth numbers in customers is correct. I just wanted to point out that it was 3,030 for December. So if you do operate in the world of business you would know Ansarada, you would know our reputation, 10 of the top 10 law firms use Ansarada; 10 of the top 10 banks; 4 or the big 4 accounting; most of the ASX 100 use Ansarada. So the pros in business know and trust us. And what these pros are saying around the forecast around 2022 is they're all saying they expect the M&A boom, which was a record in 2021 to continue. There's a lot of confidence, whether it's accountants, lawyers, companies, they all expect the M&A pace to continue. Now whilst that's very nice for us, and we will definitely capitalize on that, the key thing to understand about Ansarada is who is our core customer. So our core customer, the one who pays our bills and the one that uses the broadest range of products that we offer is the C-suite. So the C-suite do deals, and they're responsible for them and dealmaking is very critical for the C-suite. But it's not the only thing they do. They manage risks in the organization. Their job is to ensure compliance. The C-suites are constantly looking for ways to make their team, including their advisory team of accountants and lawyers more effective, more efficient. They want better data to make better decisions. And in this world, around risk and compliance, and ESG, they want to look for ways that can build more trust with their stakeholders. How can they demonstrate externally the great work they're doing. So all of these things are what occupy the hearts and minds of people in the C-suite every day. And the good news for you as a shareholder is that that's exactly what Ansarada has solutions for. That's what we're also at -- and we are a brand that they know and trust to govern information, and that's why we're positioned to continue growing as we leverage that. You can read through this slide, I always put up a bit of a commentary at the end of each quarter. You can read through it later. Essentially, I'll make a few points here. Firstly, we completed our first year as a public company by consistently growing every quarter ending on records. But what I believe fundamentally drives that is our culture. And there's a really good quote that says leaders create the environment or the culture and it's the culture that produces results. And our mission at Ansarada is really wanting to see people and companies and organizations. We want to see them realize their potential. And a lot of that comes down to protecting their potential as well. So that's what we're aiming for. And the way that we act and think and where we interact with everyone with what we do is based on our values. And we have got 4 values. We care a lot. We're very curious. The #1 question at Ansarada is always, how can we, how might we, and then based on our curiosity, we always have the courage to go act and introduce positive changes into the world. So the last point I'll probably make is around the 3 markets we operate in. So we do operate very strongly in the deals market globally. 43% of our revenue is generated offshore. We do operate with all the advisory firms that are increasingly standardizing on SaaS. The other market we're heavily involved in and growing rapidly is infrastructure and tendering. So we signed a $1.2 million enterprise agreement in Q2, which was a landmark deal. And that's kind of evidence around government departments globally, adopting better solutions, SaaS solutions for delivery of infrastructure, and that's a massive $4 trillion a year pipeline of infrastructure globally that's required. The last 1 is governance, risk and compliance. And this is another area we strengthened ourselves in the quarter, and that's really forecast to grow. So essentially, we've got 3 big sales up, and the wind is behind us on all of them. So with that being said, I'm going to hand you over to James, who will take you through a bit more granular detail on our results.
Thanks, Sam. So the following slides are Q2 financial year '22 quarterly highlights. As Sam mentioned, the business continues to perform with consecutive growth across key metrics since we listed over 12 months ago. Now this first graph illustrates the year-on-year and quarter-on-quarter recognized revenue growth that the business has achieved with an acceleration in growth in the most recent quarters. The acceleration in growth is a combination of a number of strategies to deliver long-term sustainable growth. We have consistently increased customer base. We continue to transition to subscription contracts, which builds revenue, as you can see in the chart, but also deferred revenue balances. During the calendar year, we diversified our revenue streams geographically, integrated with thedocyard, launched Ansarada board product and in Q2, we completed the acquisition of TriLine GRC. So it's the continued execution of these strategies that's driving the growth rates and that's why we ended up with a 58% year-over-year comparable. This graph illustrates that the growth in revenue has also been profitable with positive cash flow from operations, adjusted for clearly onetime costs, which are the transaction costs. The next slide is our new wins, our new wins, which are just new signed contracts in the period, and they increased 26% year-over-year. Now as Q2 is affected by our seasonal low. The new wins dropped towards the end of the quarter, which is what we've seen historically for many years and is related, obviously, to the holidays in December. And that affects quarter-on-quarter. However, the comparable period that's relevant is the year-over-year. And that's where that 26% year-on-year growth rate indicates the performance of the business. Customers. Customers reached a record level, again, at 3,559 active customers. And that's obviously despite the Q2 seasonality, and that represents 17% year-over-year growth. Underlying the growth in customers is our subscribers, which is our next graph. As we continue to transition to subscriptions from the legacy contracts, our subscriber growth year-over-year is 32%, which outperformed our total customer growth, and we ended with 2,738 active in December. ARPA or average revenue per account or customer per month, improved significantly with an increase year-over-year of 43% and 24% quarter-over-quarter. ARPA includes e-commerce general in all periods, and we've now included TriLine GRC in Q2. Now the reason for the continued increase in ARPA is our strategy of bringing more into the funnel and moving to enterprise agreements, which are multiyear relationships and have higher ARPA. So the drive to enterprise agreements, just as an example, can take multiple contracts for multiple projects or transactions and replaces it with a higher ARPA longer duration contract where the customer can standardize across all of their transactions on the 1 platform. The second part of it, as I said, was we focused this year, calendar year on bringing customers on top of the funnel. And in Q4 last year, we launched new pricing and packaging, which included 3 and 6-month contracts. The new pricing and packaging has increased ARPA, and that's now starting to flow through as we sign up new customers on that new price and packaging. It's actually replacing some of the base with a higher ARPA contract. So the good news is when all of these key metrics are combined, it illustrates the methodical and sustainable trends in our business and is evidence that the strategies that we are undertaking are being executed. Now the next couple of slides go into a little bit more detail. As I said, our customer numbers reached record levels, 17% year-over-year, which is -- and slightly up quarter-on-quarter due to that seasonality. Now customers are defined as those with an active platform at the end of the period and comparisons are [ pro forma ] year-over-year, which simply means Ansarada and thedocyard in financial year '21. And we now also include TriLine in Q2 financial year [ 2021 ] but obviously, will be included in periods going forward. Subscribers also reached record levels, 2,738, 32% year-over-year and slightly up 1% quarter-on-quarter. So these strong leading indicators from prior quarters and this quarter are now flowing through into record revenue results. And as is the case -- and that's a 58% year-over-year and 30% quarter-on-quarter. As is the case since we've listed, the growth has also come profitably. Now even though our cash balances declined, we acquired TriLine for $5.2 million post transaction costs in Q2. So excluding the acquisition, we generated over $3 million in cash flow in the quarter and ended with $20.9 million in cash and 0 debt. Importantly, our adjusted cash flow from operations was $4.4 million in the quarter, which indicates a strong margin, low cash payback and strong conversion to cash. So these results have set the company up to drive momentum and allow us to invest further in top of the final opportunities, which also to our future growth. So in summary the Q2 is similar to prior quarters in that we have achieved record customer levels and revenue growth and we've also continued to generate positive cash flows. And with that, I will hand back to Sam.
Thanks, James. Yes, let me take you through what we're focused on operationally in Q3, and it's very much a continuation of what we've been doing because it's working really well. So what we're going to be doing is, like we've said all the time is, we're going to invest more and more in brands and digital that we build more trust with our customers and people in the market and convert them. We look at our customer acquisition cost as we do put those increases in. Last quarter, that was running about 3.2 months payback, so 3.2 months of revenue from a new customer was the payback. So we've got a lot of headroom to continue doing that as it's continuing to work. We will be improving the experience for customers by removing risk for them to sign up, try Ansarada, even expand into multiple products. The way we're going to do that is something that we tried and successfully last year, and that's freemium versions of our product. So totally free to try Ansarada, we're going to expose more products to more people under that freemium offering and we think our revenues conversion rates will go positive as a result. The third thing we're doing is strengthening our ability to sign up more of those enterprise-level higher-value contracts, which we've been doing more and more. That's going to be more investment in our product team, more investment in our go-to-market team, which we've been ramping up consistently. And the fourth thing, as you would have probably heard around the place, attracting talent and retaining talent is pretty key in this market. There's the war for talent that's discussed heavily in technology sector. And that is critical to fuel sustainable growth. So we're focused on that. And we've actually been focused on that for almost since inception where 10 years as awarded as one of the great places to work in Australia. So we've got very mature people practices that are proven to deliver great results. In last quarter, all about talent acquisition metrics improved. Our time to hire decrease. We had more applicants per role. We had more offers accepted. We had better and better reviews on various job sites, which was great. So we're going to invest in that. Lastly is optimizing customers' journeys into your products and through your products is essential. That's what leads to conversion rates and it allows you to open the tap on marketing spend more confidently as you see those great experiences show up in the customer journey. Now that all comes down to having the right data at the right time and utilizing the right software tools that are out there these days to produce that experience for your customers. So we've been obsessed about that, and we're going to be scaling that. We want every customer to get a very simple, but personalized journey that delivers a lot of value to them, very quickly with as little effort on their part as possible. So that's what we'll be doing. And this is our last slide just before we open up for questions. But essentially, this slide dovetails nicely with what I just discussed that we're doing operationally. And all of these things we've progressed since the Q1 update. There's a lot more ticks on these slides, which is great. And essentially, they're designed to do 3 things. So the first thing is that they're designed to keep delivering consistent record results and improving operating leverage. They're designed to continue building more diversified revenue, that defensible revenue streams that are going to grow regardless of economic conditions. And the third thing is they're designed to capitalize on the growth phase that we find ourselves in and the opportunity in the 3 core markets that we operate in, which are all multibillion-dollar markets. So it was a great quarter. We are back on the tools working hard, but I wanted to open up for Q&A. So Lauren will facilitate that for us. Thanks, Lauren.
Okay. There's a few questions that have come through already. And there's a couple that specifically relate to ARPA. So let's start with those. One from Nick Harris. Monthly ARPA jumped a very material approximately $300 quarter-on-quarter. Can you talk through that movement and whether we can run rate that going forward? Or it's a temporary jump due to some one-off projects, example, in New South Wales Transport or other deals. There's a very similar one from David relating to ARPA asking for a bit more color around the significant rise and 1 that's asking if it's mainly due to the TriLine business. Who would like to answer that one?
I'll take that one -- for the question. So the New South Wales tender deals included in ARPA. We've historically not included tenders because of exactly that reason, large contracts multiyear. So -- it is actually something we probably will include going forward, and I'll answer you another part of ARPA and also that deal in a second. But you can consider this as sustained increase. It is very much to do with our pricing and packaging. The way we've restructured and even the 3 and 6 months contracts, which are shorter duration and therefore have higher ARPA than, say, an annual contract is a trend in the business, and so it's not a onetime. We've seen pretty steady month-on-month increases as the new pricing and packaging starts to replace what we previously had. So just so it's not due to onetime large deals, it's very much a sustained trend. In terms of the TriLine GRC, so we completed that transaction October 30. So it's only really a couple of months of revenue. So it doesn't have a huge impact in ARPA. The ARPA is higher. If annually, we acquired about $2.1 million, $2.2 million in revenue. So it's still a small percentage of our overall business, but that's off a little over 84 customers. So the ARPA is higher, but it doesn't have a material impact to date because of the volumes.
Thanks, James. There's a couple of questions which relate to the deal with New South Wales Transport. So 1 with Nick Harris and 1 from David [ Mahon ]. We recently signed a $1.2 million agreement with the New South Wales government in the Transport division. What is the potential for more subscription deals with other divisions of the government within Australia, but also overseas?
Yes, I might get that, James. Yes, so our tenders product that we crafted years ago as it gets more traction with various government organizations around the world. The natural progression for them is to move from using our tenders product for single projects into standardizing on it for their whole department as a standard tool. So that's what happened with New South Wales Department of Transport. It was actually a division within New South Wales Department of Transport, not even the whole department. It's the infrastructure in place division. So they use Ansarada for dozens and dozens of infrastructure work from multibillion dollar Sydney Light Rail, but even $20 million new bridges in some regional town. So instead of signing up Ansarada one by one, they just said, look, you guys are great at this. We love your product. It helps us a lot. We're going to standardize on it and just move to an annual subscription. And that was a material uplift in spend. We didn't just convert old revenue into subscription. So our ability to do more and more of that. We do have hundreds of organizations that have and do continue to use us for their tendering needs. So we've got a pipeline of organizations converting into that standard subscription. And just like any other industry that SaaS tools start to become adopted in, the rest of the market tends to follow the leaders and New South Wales Transport having delivered the types of things they have across the state and the city of Sydney is globally renowned as a world leader. So a lot of -- we're leveraging that and a lot of people follow what they're doing and how they're doing it. So -- we recently too boosted our tenders capability by getting some very, very experienced business development people on the ground in the U.S. We already have won infrastructure contracts in the U.S. but that's something we're looking to expand as well throughout the rest of the year.
Great. Thanks, Sam. We've got a question here from some anonymous attendee. And it's what portion of your revenues are now sourced from GRC and tendering use cases?
I'll take that one. We will report in a little bit more detail on our full first half year results towards the end of February. But just to give you an indication, financial year '21, tender's a little over 10% of our revenue. And that was at a $34 million revenue number. And as I said earlier, TriLine GRC, we acquired about $2.1 million in revenue. So those 2 combined still present a small part of our business, but obviously huge growth opportunities as the TAMs are in .
Thanks, James. Question here, which also relates to the TriLine acquisition. Can you talk a little around how the integration of the TriLine acquisition is going? And when do you think the integration will be completed Who would like to take this question?
Okay. Yes, so we've completed the kind of -- you'd probably call it the operational integration aspects, which is the first thing you do. The people at TriLine are just fantastic. So we're working really well with them. The third thing, obviously, is the product. So we're going to make it easy for anyone with an Ansarada Login. They use our name in the password to be able to access TriLine, that's a focus. We're working on modularizing some TriLine features so we can offer them individually to our customer base. We're working on some design and UI and UX improvements. And also, we're working on taking that kind of customer journey optimization skills that Ansarada has and the data capability, and we're going to establish that same environment in TriLine. So all of those things are going to just take time. And as we do them, they're going to show up in the numbers. But yes, it's all on track. There's no red flags for us there. And it's something we do see so much opportunity with.
Thanks, Sam. We've got a question here from Mark Williams. It says, is Q2 revenue a reasonable indication of the run rate we should think about for Q3, Q4? Or is there any seasonality in Q2 that are different in Q3, Q4. Who would like to answer this question?
I'll do that one. So Mark, the answer is the transition to subscription is building our deferred revenue balances. So what that basically means is we're able to recognize a lot more consistent basis our revenue. So even though there might be a drop in December due to new wins because people aren't doing as many deals in December because the holidays, the revenue is a lot smoother. So it's reasonable as we grew our deferred revenue balance that we will continue to sort of see that those levels based on the results and the trends that you saw today.
Perhaps another 1 for you from an anonymous attendee. Do you expect improved operating margins to be sustained in the second half?
So I'll take that one here as well. So as you saw and heard from Sam, we have continued to run the business on a CAC payback about 4 months, and we're investing along those lines. Now we're actually less than 4 in the current quarter. But we will continue to invest in top of funnel growth, and we'll do that through our sales and marketing channels. So in terms of our target, our target is top of funnel growth and our revenue growth, but we will continue to remain profitable from a cash flow perspective, as you've seen in all of the quarters since we've been public. So you can expect that trend to continue.
Thanks, James. We've got another question here from Jack Mullen. Can you comment on revenue split across geographies, i.e., ANZ, U.K., Europe, U.S., et cetera? And which markets are you pushing for growth/most excited about. Who would like to answer this one.
I'll start with that one as well. So we'll provide a bit more of a breakdown by region in our full half year results. But just to give you an indication, about 44% of our revenue came from outside Australia in the most -- in the half year that just passed. We'll provide a bit more of a breakdown. In terms of where our growth is coming from, I'm happy to say it's coming from all areas, but Europe, in particular, continues to be a strong market for us. And we have our Chief Revenue Officer, Stuart Clout over in London. He moved over there during the half -- first half of the year. So that indicates that it remains a big focus for us.
Another question from an anonymous attendee. Can you please advise if you are investigating additional Board members to increase independence? Who would like to answer this one?
I'll get it. The short answer is, yes, the Board is actively looking for an additional nonexecutive director that would have the background skills, expertise to help us continue growing sustainably and tackle more market share in those key areas we operate in.
Thank you, Sam. Thanks, James. There's no further questions. I'll hand back to you.
Okay. Well, look, thanks, everyone, for attending. Like -- we mentioned briefly, we've got a 12:00 today, we've got our AGM. And in February, we'll be back out to you shortly around the middle of February with some half year results as well. And we'll go into a bit more on our strategy in the half yearly results presentation. So we will do some more product deep dive on our products as well and maybe showcase some really cool things that we've got going on. So thanks for attending, and we'll see you soon.
Thanks, everybody.
Thank you.