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Before I hand over to Wayne, just a little bit of housekeeping here. There will be question and answer at the end of the presentation. [Operator Instructions] With that Wayne, I will hand it over to you.
Thanks, Craig. Good morning, everybody, and welcome to the first quarter results for the 2023 financial year. Look, whilst it's been a slower-than-expected start to the year, where we have experienced some drag on revenue recognition and in closing out on some committed deals in Q1. Importantly, we understand the reason for the drag, and our issue is one of delivery and recognition as opposed to revenue opportunity, which is the good news. So as such, we've implemented some initiatives internally to release some of the bottlenecks, and with a high degree of confidence in our advanced-stage pipeline, we expect stronger performances in the coming quarters. Despite the slower-than-expected quarter, we did deliver 7% growth in total operating revenue year-on-year and 11% growth in recurring revenue year-on-year, and we've already seen a positive uplift in revenue contribution to the second quarter. With this positive momentum, coupled with the $3.1 million of total contract value, which we did convert and book -- sorry, which we booked in Q1, which will start to flow through in the following quarters, we remain highly confident in the performance for the remainder of the year, and we maintain our guidance of achieving cash flow sustainability in the second half of FY '23. So moving to Slide #2. Before we delve into the financial results performance, I wanted to provide an upfront summary of the current operating environment and a little bit on our outlook for FY '23. Firstly, the business continues to benefit from positive macro tailwinds. Despite some of the macro challenges that we've witnessed in the last year, the operating environment, particularly in our core verticals, is improving, with travel levels now exceeding pre-Covid levels, which is driving significant demand from particularly our airports, stadiums, and transit verticals. And with the current staffing shortages being experienced in many of these verticals, technology solutions are becoming mandatory requirements to help these venues manage throughput and operational efficiency. We exited the first quarter of FY '23 with a pro forma annualized ARR of $15.7 million. That figure was slightly lower than forecasted internally, and it was due to the impact of some of the one-off contractions in customers during the quarter. Net cash reduced slightly during the quarter, primarily due to delays in some key annual renewals in the EMEA and North America regions, which we do expect to convert in the coming quarter. There was also a seasonally slower start to the year just due to the extended summer break in the Northern Hemisphere. So this was consistent, however, with our internal forecasting. We continue to be positive about the outlook with over $31 million now of revenue currently in the advanced stage 12-month rolling pipeline. And with the initiatives that I mentioned being put into place to improve some of the delivery challenges we've experienced, we expect collections to improve from the second quarter. So with the improved macro conditions, coupled with our positive outlook, including latent recurring revenue deals already in the latter stages of contracting. And we -- I'll note that we have made a significant announcement this morning around a significant deal in the U.S. with a continued focus on cash generation. The company is still targeting ARR to grow to $20 million during FY '23 and to deliver cash flow breakeven and sustainable cash flow generation during the second half of FY '23. So moving to Slide #3. Just a little bit about the product. So we have developed -- for those of you who haven't joined some of these calls, we've developed a data intelligence platform predominantly used in physical spaces. The technology collects and analyzes multiple data sets, and we visualize insights that help drive operational performance, leading to costs and revenue efficiencies for the operators and to improvements in the experience for the customers. And we work today with over 200 different types of data, and our platform process is over 11 billion data points every single day.
The kinds of data sets that we work with currently include data gathered from cameras, people counters, LiDAR sensors, WiFi networks, CRM platforms, mobile data and device applications, social media platforms -- we work with IoT sensors and point-of-sale systems, just to name a few of the more common integrations that we perform every day. What we do is we stitch all of these data points together to form a comprehensive view of what is going on in these spaces for these venue operators. And in today's world, as venues continue to shift their focus to facilitate structural and operational changes as well as customer experience management, a great deal of our services are being used to help venues manage things like occupancy levels, monitor crowd density, optimize queue wait times, staffing levels and ultimately improve customer safety and security. So moving to Slide #4. And here, we've highlighted some of the key verticals that we work with or have worked with historically across 5 industry verticals. These are use cases that are the common reasons that these particular verticals engage with us and some of the reasons why we are a critical component of the technology and data strategy for these customers. For example, in the commercial property industry, venue operators use our products to understand and manage occupancy levels across floors and buildings. They use the data insights to understand space utilization to optimize the layout, the design, and, in some cases, the tenancy mix. We've engaged with various partnerships in the IoT space to help improve things like HVAC usage and to provide a monitoring service around that, HVAC being a major cost expense for these large physical spaces.
Retail properties use Skyfii to understand the audience, age, gender, physical behavior, trade area, these kinds of insights. And they use those insights to better engage and service customers inside and outside of their venues. Transport hubs like airports and train stations predominantly use Skyfii for wait time and queue management through ticketing, through security checkpoints, through custom border patrol, so we can help improve in real time the efficiency of throughput in these -- typically in these chokepoint areas for airports and train stations. Today, we have contracts in place with 15 out of the top 30 airports in the U.S., for example, by passenger volume, and that's growing. Equally, we have a huge amount of continued opportunity within those accounts. So we talk about airports as customers. Generally, at the moment, we're in -- I think we're in 60 airports around the world, but predominantly only in one checkpoint or one terminal on ticketing area at the moment. So a lot of growth is still to come in the existing portfolio. The stadiums and event centers, the use cases center around fan engagement, event attribution, sponsorship, and advertising monetization and generally to drive more ROI through the concession areas. This year, we have narrowed our focus to 3 core verticals: retail, transit, and quick-service restaurants. And again, I note the significant deal that we've announced this morning in the QSR space, which is where we expect to see the most growth potential in the coming 3 years. This morning, we announced a landmark deal with McDonald's in the U.S., and I'll go on to talk a bit more detail about that particular contract. And we expect to announce several new deals in the transit and retail verticals in the coming months. So moving to Slide #6, where I'll now hand over to John to present the key financial and operating highlights delivered during the quarter.
Thanks, Wayne. So moving on to the financial and operating highlights. If we move to Slide 6, Q1 FY '23 results. So in this September quarter, we delivered total operating revenues of $5.4 million, which was up 7% on the previous corresponding period. Recurring revenues of $3.8 million were up 11%. Recurring revenues remained flat when compared to Q4, which was really a combination of some churn contraction from renegotiating a number of key renewals in our international operations and a one-off credit note process for a large U.S.-based casino, which was discussed in our quarterly commentary. Our pro forma annualized recurring revenue exited at $15.7 million, and quarterly cash receipts from customers of 6.4% was up 54% on the previous corresponding period. Net cash outflows from operating activities was $0.9 million, and we'll discuss a little bit more detail in the next slide. So at the end of the September quarter, we had cash at bank of $4.3 million. The company has a $1.8 million project financing facility with Export Finance Australia, which is now fully drawn and is assisting with the cash management of large capital works projects in our international operations. Moving to Slide 7. A more in-depth analysis on our net cash flow from operating activities. So in Q1, the company experienced a cash outflow of $0.9 million, as discussed on the previous slide, which was exclusive of the impact of capitalization of employee, contractor, and other expenditure attributable to software development. Net cash reduced during the quarter primarily due to the following themes, delays in key annual renewals in EMEA and North America region, a seasonally slower start to the financial year due to the extended summer break in the Northern Hemisphere. The impact of the one-off credit notes that we talked about earlier for a large U.S.-based casino and just a slightly slower than anticipated working capital cycle. Despite all this, the business continues to review our operating expenditure driven by initiatives to offshore our resourcing requirements. In addition to this, we remain focused on improving our margin performance for new business activity to combat the impact of inflation and the increase in the cost of goods. Despite the cash burn in the quarter, the strong growth pipeline, strong ARR committed for the balance of FY '23, cost-saving initiatives, and the recent cost contract wins ensure Skyfii remains confident of achieving sustainable positive cash flow generation in the second half of FY '23. Moving to Slide 8. New contract wins. So during the quarter, the company delivered $3.1 million in new contract wins across the regions. Our international growth trajectory continues, with over 75% of new contract wins secured outside of the APAC region. The Travel Hub continues to experience strong growth as a return to travel, coupled with our emerging technology continues to cement Skyfii as the preeminent analytics solution in the transit vertical. And probably most importantly, we've seen a big pickup in terms of the sales cycle, with 79% of deals closed on were created in the last 6 months, signaling a significant improvement in our sales cycle. So thanks for your time. I'll now hand you back to Wayne to talk through the McDonald's deal we announced this morning.
Thanks very much, John. If we can move to Slide #9, please. So it's naturally extremely exciting to announce today a new 3-year initial deal with McDonald's, which has got a total contract value of $2 million. The agreement will see Skyfii provide McDonald's with an industry-first, real-time whole-of-venue monitoring and analytics solution, which is focused on improving store operations, service efficiency, food freshness, and customer satisfaction in these venues. As I think we've all experienced, particularly over the last 18 to 24 months, changing consumer patterns, have increased the need for things like mobile ordering, delivery services, and drive-through pickup, which have introduced new challenges around food freshness in quick-service retail outlets, and that's what we are targeting with the solution.
So McDonald's has engaged Skyfii to build a solution, which we've developed, which is an industry-first product to monitor their 12 in-store service channels, including ordering a counter, ordering on mobile and drive-thru amongst them to determine, amongst other outputs, the time that it may take for the customer to receive their order. McDonald's will utilize our software, which harnesses LiDAR and thermal imaging technology as well as a bespoke algorithm that we've developed to automatically categorize and analyze the movement of both crew and customers as they move through and around the restaurant themselves. The data and the insights provided by us will allow McDonald's to understand in real-time how long it takes to complete each step of service. So we're literally tracking food being put on the grill, into the buttons, into the bag. We're measuring the temperature of that product. And we're helping them to determine what factors may lead to a customer experience that does not meet their standard. This will allow them to continuously improve operations, food freshness, and customer satisfaction in the stores. The current diver solution is only live in 4 restaurants. We have a total of 8 under the initial contract. So a further 4 to follow. Under this initial engagement, we do obviously have some confidence that that's going to grow. I'm exceptionally proud that as things like consumer behavior evolves, and we've seen a massive shift in that in the last couple of years and the needs of our customers change that we are able to adapt our solution to provide a meaningful product to solve real challenges for this industry. And so, with a large global quick service restaurant market now available to us, the ability to leverage this technology, which is industry-first, partnering with arguably the most research and development-focused brand in the world in this space. There's a lot of growth from this initial contract across not just McDonald's themselves, but across the vertical itself. So we're really, really excited about that. It's why we've got QSR as a core vertical for growth and development in the business moving forward. So we move to Slide #10. Here, we've just sort of depicted some of the reports that we're generating in the products around the solution, LiDAR, and thermal. The use of LiDAR for this kind of analysis is extremely important given that LiDAR does not capture any personal imagery, unlike cameras. It is also a technology that is versatile in terms of the range of deployment. And so what that means is far less privacy concerns and generally a more aesthetically pleasing installation for the venue itself. What we've depicted in this slide is some of the real-time reports that we're delivering at the 12 service delivery channels. So we're excited, as you can tell, about the potential for growth here, not just within McDonald's but throughout the QSR vertical. This solution provides tangible ROI benefit to measuring and optimizing food freshness to ensure maximum customer satisfaction, but it also provides restaurant operators with the ability to reduce exposure to what are hefty fines that can be levied by the service delivery customers such as Uber Eats, if food is delivered late or not fresh. So moving to Slide #12. So our 12-month rolling pipeline remains very strong at approximately $31 million. Currently, we have approximately $2.2 million sitting in the final stages of contracting and then a larger pool of just over $7 million worth of deals in the client evaluation stage that is on stage back from being contracted. I note that these figures represent current financial year actuals, not TCV or total contract value. So meaning specifically that these dollar amounts will fall into the financial year if we can convert them all. It's also worth noting that approximately 61% of the opportunities in our 12-month pipeline are deals in our international markets. It's pleasing to see offshore investments paying off. We're seeing a strong contribution in the pipeline from our core verticals, including airports, train stations, and from the QSR vertical, collectively representing around 35% of the current pipeline. Finally, over 22% of the pipeline has been generated in the past 3 months. So to John's point, speaks to the relative short-term decision-making evident in the market, but it is also a positive reflection of the investments that we've made into our sales team during FY '22. So with that, we'll move to Slide 13, the outlook and strategy. So whilst as we pointed out at the beginning of the presentation, the exit Q1 was slightly below the levels that we expected internally. As you can tell from the pipeline, recent contract wins, we continue to see positive momentum, and we expect the pipeline to convert meaningfully in the second quarter and moving forward into the rest of the year. We remain confident on delivering $20 million in ARR by the end of FY '23. And in addition to the ARR growth, as John mentioned, there are deals currently contracting at the moment that is providing some latent ARR growth that obviously hasn't come through in the numbers, but we know is coming through the balance of the year. So that $15.7 million, obviously, isn't necessarily reflective of what's currently in the committed stages for the rest of the year.
We are continuing to pursue cost efficiency initiatives, including the offshoring of several of our support and engineering functions, which is progressing well and is forecasted to deliver significant cost savings throughout the year or by year-end whilst providing the business with scalable platforms to deliver more growth in the future. These initiatives, supported by our revenue outlook, gives us the confidence to maintain the guidance and particularly that we will deliver sustainable positive cash flow in the second half of FY '23. So we remain confident about the rest of the year. We're buoyant about the pipeline conversion about the new contract wins. We believe we've set reasonable growth expectations based on our revenue outlook and current pacing. And so with that, I thank you for your time and your support. And I will now hand it back to Craig to invite any questions.
[Operator Instructions] Wayne, as you expect quite a few questions rolling in around that McDonald's contract announced this morning. First one is, is the McDonald's contract a research project, the exercise for McDonald's to get some information to redesign the restaurant? Or is it really an operational tool that will be ongoing for multi-years and potentially be rolled out across more restaurants than initially?
Yes. It's actually both. And so the initial rollout to the 8 stores, which we do expect will grow. These are friendly franchise owners, and there is scope to move that rollout into more of the McDonald-owned stores. Those stores we expect to stay installed with the technology to act as the research hub for a continuation of projects that we anticipate through McDonald's, hopefully, for life out of each of those projects, and this one is the first one which has been focused around what's called ready on arrival, tracking food delivery from service delivery apps, ordering through to the delivery piece. That has resulted in a product which we do expect to productize under that initiative. But then the research is going to provide us more and more opportunities to build out further solutions in time. So it's really both.
Can you just elaborate a little bit more about what's included as part of that contract? When are you responsible for installing the hardware? Is it just purely a software application that matches into existing hardware in the store, just a little bit about the rollout, please.
Sure. So we're actually doing it end to end. And so, we built this contract as an infrastructure, as a service opportunity. So it's all going to be collected as ARR. We have procured through third parties. We've installed the thermal imaging sensors and the LiDAR sensors in the stores, and we're providing a managed service around that infrastructure, and then we've deployed the store operations solution on top. So all of that has been bundled into a solution. So we control that infrastructure and software for the stores on going. And so yes, it's all-inclusive. McDonald's, as we understand, had been looking for a business to help them solve this issue for some time when they came to us. So this is the result of a long exercise that they've been undertaking to try to find something that could perform these insights essentially. So we're getting a lot of support from them now that we've managed to deliver this successfully, and it is an industry-first solution. But yes, to the way that it's built, it's built as an ARR contract, and we expect that to continue to move the needle for us moving forward.
And on that, was it a competitive tender process, or this came about just given the strong relationship that you had with McDonald's with one of the other partners?
No, it was -- look, when the deal came -- when the opportunity came to us, it came to us through their technology consultancy, which is a company called Halverson Group that has been working with McDonald's on these types of initiatives for about 18 years. So the long history stands with Halverson. But Halverson had been through a series of tried and failed pilots and things with other companies at the point that they came to us. So whilst specifically, when we received the opportunity wasn't competitive, it was kind of the end of the line that they've been through some unsuccessful trials to get there. So in that way, it was exhaustive in terms of the search process.
Question, you mentioned that it was in America. Can you just provide the regions within the states? Is it centered on one city? Or is it spread out across the U.S?
At the moment, it's just focused on the Pacific Northwest. In fact, predominantly Seattle, which is where they've got some friendly franchise owners that are prepared to let their restaurants become these sort of hubs, if you like. But the rollout plan, it hasn't been confirmed yet, but the conversation is talking about – McDonald has 10 -- basically 10 regions that they focus on throughout the U.S. And so the idea is that they would like to get to 10 stores in each of the 10 regions as a next step. And then -- well, not as a next step, but as an ultimate goal for this particular project. And then from there, assuming we productize these solutions, which we're on path to do at the moment for this one, it then gets taken out as a McDonald's endorsed initiative across the franchises, and there's 25,000 other restaurants across the U.S. alone that we would then be targeting.
A question on the mass of the contract, 2 million, 3 years, 8 stores comes out to about $60,000 per store per year. Would that be the rough metrics as you roll that out across other McDonald's franchises?
It's -- so the math is correct for the initial deal, yes. I imagine we're going to need to create a bit more efficiency in that pricing as we scale to 100, but we're working through how that can be delivered. Obviously, part of that billing is infrastructure related. So as the volumes go up, we will be able to get margin back from the hardware providers to ensure our margins stay consistent. But look, I don't expect it to be a rollover of the exact pricing as we get to 100 stores, no. But it will be absolutely significant to us.
Is there any exclusivity with this product? And can you leverage this into Burger King and other QSR retailers around the world?
Well, look, it's difficult to get the QSR industry to give you exclusivity, obviously. But what we do have is a sufficient moat in place technically because, as I mentioned, the process that McDonald's went through and for those who understand the industry, McDonald's are arguably the most progressive-- the most take forward QSR brands in the world. They're very, very research-oriented. So the fact that they couldn't find anybody to deliver the solution means that there's not really much out there that's going to compete with us, particularly now as we have it deployed in the wild if you like, so -- and it's proven. So the opportunity for us is to take this further. We don't have any -- well, I think, sorry, if I understand the question quickly, this is not exclusive to McDonald's. So no, we don't have any restriction on it just being a solution for them. This is absolutely something we can now take out to all QSR brands. And McDonald’s are happy to have been first to market, but it's not exclusive to them, no.
Yes, I think that was the angle of the question. Obviously, topics, there's a couple more in McDonald's that I'll ask you. You mentioned it's already live in 4 stores. What's the feedback been from those so far in terms of the performance of the technology?
Look, it's been fantastic, really. I think I made some comments just around some of the more softer items here. LiDAR as an installation product. It's very -- it's discrete. It doesn't take up a lot of space. We've -- there's less devices required than we would have otherwise used if it was a camera-based solution. So all the aesthetics for the venue operators, they'd be very happy with how we've done the install, and it hasn't affected any of the store operations negatively. So feedback there has been very good. McDonald's feedback is extremely positive. These are the insights they just never had access to before. So it continues to be really positive. We're learning new things every single day as real-time behavior changes. So they're very pleased. And so I actually am traveling back to the U.S. in a couple of weeks' time to do a 2-day workshop to -- with McDonald's to actually continue the conversation around what's next. So I'm excited about that.
Great. Last one for the moment on McDonald's. Are there any defined KPIs that you need to hit, or can you share some of the milestones that you need to get from this to be able to roll out through more McDonald's stores?
Yes. So the initial KPIs are quite simple. They wanted a solution that could accurately count -- well, sorry, accurately monitor the 12 service delivery channels within the restaurant footprint. So that was really the main KPI. So installing it without disruption, providing a solution that was properly supported, and then providing a dashboard that reports on the 12 delivery channels is the 3 KPIs and we've delivered against all of those. So there's no risk of it not continuing with the current contract based on those KPIs. But what it is now becoming is, as I mentioned earlier, that particular product around the 12 delivery channels and tracking food from ordering to delivery is now a product that we're going to be productizing and looking to reprice for other restaurants and other brands. But then we're moving on to that to different initiatives now within McDonald's. So we'll use the same stores, but the KPIs will now probably change for different product development opportunities that are going to come out of that. So it's an ongoing opportunity for us to continue to build up more solutions.
Great. Just moving away from McDonald's, a few other questions that have come in for the rest of the business. Can you just give us some color to the size of that credit notes from the U.S. casino that happened over the period? And why was there a need for a credit note within the business?
Yes. So it was -- John, you might correct me if I'm wrong, but it was around about 75,000, I think, out of the coin terms of the credit note. The reason for that is -- we actually received a PO from the customer for 12 months. And as you would expect, recognize that revenue because it was a purchase order. But then, as we were delivering the solution, the parameters that the customer wanted the product to cover changed significantly. They wanted us to build out a significant amount of new features into the product that we didn't have. They weren't prepared to sort of adopt a time frame for that. What it all sort of guarantees around that. And the scope just fundamentally changed, and we weren't prepared to take that on, given the other opportunities that we've been working through, like McDonald's. So we made a decision at that point to sort of pause and move away from that particular contract. Having said that, we are still now back in discussions with that particular venue. I'm not going to suggest that we're going to get that back on track fully, but I do think that there will be some business to come in the future. But it was unfortunate. I think we did everything that you would expect when you were CPOs, you generally recognize them, but they moved the goalpost late in the piece for us, and that was just frustrating and disappointing.
Another question just on retention. You mentioned a couple of other contracts during the quarter, churn staying around 3% as been any noticeable move in that customer retention churn rate through the course of the quarter? And where do you see that going over the remainder of the year?
John, do you want to take that one?
Yes, sure. Look, I think the churn is pretty consistent, but I think in line with one of the other questions, we did see a bit of contraction in some contract renewals in our international markets. And so that obviously made the recurring revenue story, including the credit note, a bit subdued in the quarter. So certainly, through renegotiation, we've managed to retain the customer. But in a competitive environment with some of our product lines, we've had to work a little bit harder in terms of getting those customers to renew. But look, I think that gives us a good platform to use the balance of those contract terms with those customers that did renew to upsell them into other products and services like Wayne talked about today. So that's the summary.
Question on employee costs annualizing over about $15 million at the moment, the question states. How many employees are there in the business? And what kind of cost initiatives are you putting through to really try and accelerate that pathway to cash flow breakeven?
Yes. So it's -- we've got about, I think it's 106-107 employees across the business today. We've -- and the focus is absolutely on ensuring we're getting maximum efficiency out of the OpEx model, and predominantly the OpEx model is the headcount. The cost-out initiatives really relate to movement from more expensive markets like Sydney and Los Angeles, where we've had traditionally our engineering support product-related roles, and starting to move some of that into other markets, notably Philippines. We've opened up an office in the Philippines to start to bring up some of the service and support functions there. We've recently opened up an engineering hub in Lisbon in Portugal, which again is a high talent pool, more cost-effective in terms of headcount. So those are issues that we've employed this year to start to realize some cost efficiencies in the OpEx model moving forward, and you'll start to see that coming through mostly in the second half and then the into next year. Outside of that, we've worked through some other areas where there's sort of less requirement on the operating model for us to continue to invest. And so the result being that I think we will be realizing at least $1 million or $1.5 million annualized year-on-year cost efficiencies throughout the next 12 months. And the business will still continue to grow, and actually, it will be on a more scalable platform in the future. So it's rationalization, not so much cost out, and just creating a more efficient operating model for the future. So it's really important to us. We're obviously not immune to the macro backdrop out there, and all the different cuts at all the different tech companies are making. But we're a smaller cost base relative to those businesses. We have not, in the past, really ever looked to take advantage of offshoring as an opportunity, but it's a really big one for us, and it's -- it makes a lot of sense. So these initiatives will make -- will ensure that we accelerate that breakeven position as hard as possible. In addition to that, though, as we try to make the point in the quarterly commentary today, the challenges that we've experienced, predominantly in Q1, has been around collecting and recognizing revenue. It's stuff that's basically booked and contracted and hasn't -- we haven't actually been able to close out the project for and collect the revenue one. Less so try to go out there and bag the big whales. We don't have a sales pipeline problem. We have a delivery challenge at the moment. And so the recognition challenge. And so that's where we're focusing at the moment internally to ensure that we create better processes around that to collect. And if we collect what's out there and essentially due, breakeven will be accelerated even faster. But we're staying conservative on that. The guidance is in the second half. That's what we're focused on, and we'll get there.
Data security is obviously very topical at the moment. Who owns the data that you collect with your customers? And then, what safeguards have you got in place to protect that data on behalf of your customers?
Yes, great question. It is very topical. The ownership is with the customer. So the actual customer we contract with owns the data. We don't own the data. But we do, under the contracts, store it and have access to it. And so we -- security is a major, major investment in the new year for our business and not just because of recent events, we've been doing it for years. One of the major areas that we invested in FY '22 was in an internal security and cybersecurity function. And so it's really part of the DNA of the business. And specifically, we store data in data warehouses, which are provided to us by Amazon Web Services, Microsoft Zero, Google Cloud. And so we adopt all the security and storage, I guess, protocols that those companies stipulate. In addition, though, we have our own additional encryption that we layer over all of the data to ensure that it is deidentified and fully anonymized, even if it is already anonymized. And it's also stored -- the way we store our data is across a number of relational databases so that it's not all sitting in one place, which would become potentially a cybersecurity threat opportunity, right? So we've taken, we believe, all of the necessary steps to ensure that we're sufficiently sort of -- our endpoints are protected. The data was diversified and -- but equally, there was a lot of owners on the actual customers themselves, who are the ultimate owners of the data as well. We're also about 90% of the way through our ISO-27001 compliance, which is a major, major milestone for a business like ours. And that's just providing even more rigor around our security and privacy posture. So we're already GDPR compliant. We're already CCPA compliant. So we follow all of the data regulations very, very closely. And we have a full-time team dedicated to making sure that that continues to be the case.
Tumor Chris is in the queue. One, you mentioned you're on about 15 of the top 30 airports in the States, but only in 1 or 2 of the checkpoints in each of those. What's the competition like at the remaining checkpoints? Are they competitor’s technology or nothing is being used on those checkpoints?
No, it's generally not competitive. It's generally greenfield. These airports have only recently, and recently in the last 4, 5 years, started to adopt this kind of technology to improve security checkpoint and customer water control and ticketing throughput. Prior to that, it was people just sitting on a chair observing flow and human interaction. So it's greenfield. And the delay generally is that each of the checkpoints has a different capital works budget, a different procurement team, potentially, certainly, each of the terminals are kind of silo P&Ls as well. So we have to go through the motion of getting various approvals done. So it doesn't happen necessarily simultaneously. But the good news is that whilst airports are slow-moving and slow decision-makers, they are also -- they stick long term. So once we're in 1 airport group, the expectation is that we will continue to be their partner as those capital works projects get approved, and we can move through the terminal. So it's a big focus for the team. It can take a year for us to get a deal across the line. So it's kind of painfully slow, but they're signing 5-year contracts, and they're typically not churning. So there's long-term stickiness in that revenue base. We expect significant growth in the existing customer portfolio. We've already started to see that coming through in the pipeline. And again, they move through the pipe. It's no less of a competitive situation because we're already an incumbent partner and more of a -- they're waiting on a terminal to be refurbished, or they're moving a checkpoint, and there's a bit of building works happening, and then we can go in and install. So these are the things that we manage through our projects. And it's part of the reason for some of the collections delays as well.
Question here, there's actually 2 more that come in. Can you talk about the covenant and how you're managing cash? You've over $4 million worth of cash versus that covenant that you have?
Yes. So we have a rolling sort of cash flow that we manage as you'd expect, pretty much daily. We have a facility in place with EFC at the moment, which is a rolling 12-month facility, which we use for offshore projects, and we talked about 61% of our pipeline being propped up by international deals. So we don't expect any -- we have no concerns about that facility continuing to be available to us as a project financing and working capital facility. So that's how we're managing it. In parallel, we've got those cost rationalization initiatives happening. We've got about $1.6 million, I believe, of outstanding sort of collections that is owed to us. So all these things are there, and we expect to realize those collections by the end of the calendar year. And then, with these new deals coming through the pipeline, McDonald's being obviously the most recent one internationally, we'll continue to utilize that working capital facility to make sure that we're not at any risk of breaching covenants.
Last question that we have a strong outlook in the airports. You've talked about McDonald's with a quick service retail. What are the other business conditions looking like across the other verticals you've got in terms of stadiums, malls, et cetera? So like a bit of an outlook in terms of what you're seeing coming down the pipeline.
Yes, good question. So look, it's -- the majority of the deal is in the bottom half of that funnel that we showed you are airport, stadium, restaurant, and retail-focused deals. So they're all there. We're on the cusp of some of those deals converting. Predominantly, I think you'll see in the short term, some airport contracts being announced, new airport contracts being announced. So that's definitely on the pointy end of the funnel. The restaurant expansion opportunity through McDonald's is obviously potentially fairly imminent. And then in the retail space, lots of growth in the existing portfolio that we're already installed in a little bit like the airport business in some of our legacy customers, there's still new malls being brought online. And so there's growth upside there as well. So we're very, very confident and comfortable that those core verticals are going to perform and contribute meaningfully to this financial year and it's there. The deals that are there, we're not sort of waking up tomorrow hoping to receive a brief. They're already in a pipe. It's just about managing timing as to when those deals are actually going to convert and when we collect.
That's it for the questions. I'll hand back to you, Wayne, if there's any closing remarks.
Well, thanks, everybody, for the questions. And we -- as I said, we're a little bit frustrated with the sort of the end result for Q1 but extremely buoyant about current actuals for Q2 and the rest of the financial year. So it's why we're confident in maintaining our guidance. We're focused on delivery. We're focused on collections. There's no shortage in the opportunity coming into the funnel. So we're very, very happy with the sales volume. We're just trying to focus now on making sure we deliver and collect, and that's where the focus is. Our outlook for FY '23 as a result is, I think, suitably conservative. We understand the macro environment is not great. We understand that there's potential recession concerns in Global Climate, and we're cognizant of all these things as we move forward. And despite all of that, we're still confidently maintaining the guidance that we put out there. So with that, we thank you for your time, look forward to being back in front of you at the end of Q2, and thanks for your support.