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As it is now 9:03, we'll commence. Good morning, and welcome to -- and thank you for joining Volpara's Q1 FY 2022 Quarterly Results Investor Webinar. Joining us on the line today is CEO, Dr. Ralph Highnam; CFO, Dr. Craig Hadfield; and Executive Vice President, U.S. Sales and Marketing, Jill Spear. [Operator Instructions] I would like to also remind you that today's presentation is being recorded.I would now like to hand over to Dr. Ralph Highnam. Please go ahead.
Thank you, [ Greg ]. Well, thank you, everyone, for your time this morning to hear our busy Q1 FY 2022, which ended 30th of June 2021. Volpara is a health technology company who integrate breast care platform, assist in delivery of personalized breast care. This business model is predominantly based on software-as-a-service, or SaaS. And we're on a mission to save families from cancer. There'll be much to cover today, including an update on FY '22 strategy and CRA Health acquisition; the traditional 4C cash numbers, which again show strong cash receipts; and then a review of the SaaS metrics showing solid growth over the quarter.As [ Greg ] just said, I'm joined today by Craig, our CFO, based here in Wellington; and by our Executive Vice President of Sales and Marketing for the U.S., Jill Spear, based over in South Carolina. We are all going to be available for questions at the end of the main report, which you can ask via the Q&A function on the Zoom call or raising your hand to speak verbally. Before we jump into the main commentary, let's note the changing U.S. dollar versus New Zealand dollar.So you'll see we start to get results in terms of U.S. dollars, New Zealand dollars and some of the changes in terms of constant currency. So just be aware of that as we go through the presentation. Okay. Let's recap then whilst continuing to obviously sell and push out to market our quality assurance products, analytics and so on, our focus for FY '22, as previously communicated, is risk and genetics.And we're doing that because throughout FY 2021, we saw tailwinds developing in that space. And that led us into the acquisition in early February of Boston-based, CRA Health, experts in breast cancer risk and genetics and with strong technical and commercial integrations into the major electronic health record companies. Somewhere between 10% and 20% of all breast cancers are related to genetics so this push into risk and genetics, which we as a company are doing. Obviously, there's lots of governmental tailwinds as well.Well, I could really see a significant number of cancers caught early, not prevented all together, which is our ultimate aim as a company. The integration of Volpara and CRA continues to go well and we're into what we call Phase 2 now with new reporting structures coming into play, but also importantly, really pursuing all the cross-selling opportunities, which are flowing around the 2 organizations, and Jill will talk a bit about that later on.And there are 2 particular groups that we're focusing on. One, customers who are on patient hub that moved to electronic health record systems of various flavors over the last 8, 9, 10 years. That's been our main source of churn over the last few years. So if we can install CRA into those customers, which have moved out patient hub, we'll see far increased ARR coming from those sites. And two, then customers who are very active Volpara users and Epic users, but do not at the moment use CRA. We are actively pursuing bringing CRA into those relationships. Those relationships are ones where we have all the IT contracts in place. And obviously, we know all the key players to lead the commercial discussions.So the tailwinds around this space really continues to develop, with groups like the American College of Radiology pushing for risk and genetics testing by age 30. But also, we're now starting to see state laws developing such as in Nevada, which are reinforcing the federal laws around risk and genetics and apparently moving towards reimbursing certain uses of risk assessment software. It's a very exciting area for us and very exciting announcements coming out of places like Nevada and North Carolina and so on. And we're seeing a lot of activity in those states because of it.Now our role in the risk and genetics world then is to provide that simple and easy IT workflow to make sure all women get risk assessment before the age of 30, and once they start having mammograms done and to continue that each year because risk does change with factors like BMI, age and so on. So part of that smooth and easy IT workflow then is linking right away through to genetics companies so they can talk directly to the women and explain about the value of having genetics testing and then actually arrange you to get that testing.There's a possibility they might find one of the very strong BRCA genes, for example, which indicates of extremely high risk of developing cancer. Now in April 2020, we announced a new relationship with Ambry Genetics. That was a Volpara relationship. CRA has always had a strong relationship with Myriad Genetics, and you will all have seen our recent announcement regarding Invitae, a U.S. testing company with a multibillion dollar market cap. Those relationships are important. Some of our customers have their own preferences of genetics companies, and we need to offer them the choice of genetics partners to suit them. While those companies recognize the key to getting women to genetics testing is detecting cancers early is that smooth, easy IT workflow. And that's what Volpara, with its automated density, patient portals and best-of-breed risk models offers, not just into the radiology world, but also now because of the relationship we have with CRA and the EHR companies into the referring doctor world.So our ability to offer risk has really been expanded with this whole CRA relationship, and we see that as being a major driver of our sales this year -- this coming year. So look, we're very pleased with the investment into risk and genetics. We see these areas continuing to grow. And you'll see many of the sales over the last quarter have been related to risk and genetics. Importantly then, as we'll then have, not just the risk data, but the genetics companies as well in one electronic workflow, we're going to get access to more and more data. And we're seeing now almost on a daily basis how important that data is and how that data really enables us to develop new products and bring new value to women who are getting breast cancer screened. And really, as we've talked around before, our aim as a company is to move from screening from being early detection right away through to prevention.And we could do that by predicting who's going to get breast cancer much better than anyone else can today by then monitoring the breast over time, and then detecting cancer if it does occur. Just bear in mind, we talk about genetics, we're talking about risk. But all the while, we're playing into this big kind of data play sitting in the background. And the AI team here is getting increasingly excited around the amount of data we have flowing and the value that we can see coming down the road around that.Okay. Let's review the 4C cash metrics here, which we posted up earlier today onto the ASX platform. We're happy to say that during Q1, we had cash receipts from customers of NZD 6.4 million. That's 30% above what we recorded last year despite our move from capital to SaaS, the U.S. dollar-New Zealand dollar exchange rates and the effects of coronavirus. It does include some cash receipts from the CRA acquisition. In constant currency, that would have been 50% up in terms of cash receipts, which is a great result given all the changes and fluxes around the world over the last year.Looking more deeply into those cash receipts shows that the all-important subscription-based receipts were over $6 million. That's over -- that's up 60% or so in constant currency. During the quarter, we had net operating cash outflow of NZD 3.2 million, down 20% on Q1 of last year and reflects, again, our move on the path towards being a scalable profitable company, which has started to become a real focus of ours. Cash on-hand at the end of Q1 was just over $29 million, leading us to a very strong bank balance to support through that transition towards being cash flow positive. It should be noted, I think, at this point, that we do not intend to do any more major M&A in the foreseeable future. Turning now to the SaaS recurring revenue metrics. Let me remind you all that -- all the quotes that go out the door now from Volpara are all SaaS, although there are still a few historical capital deals coming over the line. During Q1, despite coronavirus, lack of physical trade shows and the U.S. summer, which all tended to add up to being quarter -- to Q1 being one of our quietest quarters, we added over USD 600,000 of net new ARR. That's both organic sales and deals coming from CRA, with the main theme being around risk assessment, both Vol Patient Hub and Vol-CRA electronic health record integrations.That brings our ARR today to over USD 19 million, in fact, up to USD 19.2 million, which is just under NZD 28 million based on exchange rates today. Major new deals came in from bigger sites during Q1. Those bigger sites are the ones -- exactly the ones that need really smart IT systems to run their clinics, include Sentara, OU Health and Wellstar. Deals in the quarter range from USD 1.06, up to USD 5.87 in terms of ARPU. Most deals in the quarter were for single products, which is reflected in the average ARPU for new deals being $1.55. And that meant the average ARPU rose from $1.40 up to $1.42.It's important to note that this is just a single quarter and does not represent the trend we see going forward. The pipeline we have ahead of us has got a large number of multiproduct platform deals in the pipeline, and Jill and her team have got a real focus on upselling our new products, as we discussed a bit earlier, into the installed base as well. So it's really simply a matter of time when these bigger deals come over the line, that they increase ARPU in place.Churn of SaaS ARR remains low, and we now have one product helping about 33% of the U.S. screening population. That means we are now close to helping -- 1 in 3 women are being helped by our software in the U.S., which is a fantastic testament to the company and the growth we've seen over the last few years.In short, Q1 was strong despite the challenges. The integration of CRA is going well and we're looking forward to relish in the year ahead, especially as Jill and her new marketing team start to really bed in with a range of new initiatives, to really drive accelerated growth from the expanding product base that we have in place to date. With that, [ Greg ], I'd like to open up the floor to questions to either myself, Craig or Jill.
Thank you. [Operator Instructions] Your first question comes from Scott Power.
Ralph and Craig and Jill, can you hear me now? Yes. Okay. I'm just wondering if you could -- Craig, if you could reconfirm the revenue guidance for FY '22? And Jill, if I could just ask you a question across into the U.S., just with COVID sort of starting to moderate over there, just in terms of the volume of new screens that you're seeing and if there's any sort of complications from COVID that you're actually seeing across the screening population?
I'll jump in with the first one, Scott. Yes. So the guidance we gave, just a reminder to the others on the call, was between NZD 25 million and NZD 26 million for FY '22. We're tracking in that range, Scott. So obviously, the U.S. dollar is playing some part. It's right in based on our assumptions of $0.70. So we're looking good at this point. We're getting a lot of installs in now that hospitals are opening up post-COVID. Delta strain to be determined, but yes we're tracking towards that NZD 25 million to NZD 26 million at this point. So looking good.
You want me, Jill, if its...
Yes. I was just covering up. Thanks. We really have seen -- what's very nice about Volpara is historically, we can see the mammograms get uploaded, so we can see our own customers' trends as we do density scoring and analytics on all of the mammography volumes. So we can really see what was historical volume in 2019. We can see how 2020 impacted that volume, and how quickly the mammography screening rebounded. That doesn't mean that, automatically, they turn on their budgets. So a lot of hospital budgeting is October to October, but what we have definitely seen a trend in the last 60 days, I would say, is some of these opportunities that are 15 months old, 12 months old are all of a sudden asking for requotes and reissuing POs.We're really seeing a bounce back on the purchasing activity. So while we always saw the mammography screening volume come back, and I think we're sort of -- I don't see an expected big dip in mammography screening with the Delta variant. I think people feel very much about we're okay going back to our physicians' appointments and our doctors' appointments and everything. Whether that's masks or vaccinated or whatever, we're absolutely seeing a return in purchasing. So that's a very positive signal to us right now. I'd say right now, we're sort of in the slow summer months because it's summer here and buying isn't as active. But we -- but I will turn around right after I say that and tell you the amount of activity that we've seen in requesting for final quotes and going to execution of contracts is at noticeable leap.
Your next question comes from Hugh MacNally.
Ralph, I was wondering what the sort of flight path had been for some of the original or older contracts that you've written in terms of revenue per user? Is there a sort of predictable trend in the number of products that hospitals take up?
Yes. That's a great question, Hugh. So if you think about our journey as a company, the -- we went SaaS in 2016, which is about 5 years ago. And certainly, over that period, people start off with -- start with analytics and then they kind of move -- well, they kind of expand into density and then they kind of move on from there. I think -- let me answer that kind of question though in a couple of ways. One is we're certainly seeing a trend recently where some of our long-term analytics users, in particular, are coming to us now and they're starting to say, "We'd actually like to expand what we do. We'd like to actually move into risk, and we don't want to move into -- even into the full patient reporting system as well." So there is certainly some predictability from going from analytics and density over into risk. And again, that's, I think, heavily related to the tailwinds, which are out there today.And the other thing I'll add as well is I think as a company, we've kind of been fast-tracked for the last few years whereby most of our salespeople have been walking in the door doing a sale and then they tend to walk away up like you did in the old capital world. I think now, the -- over the last 6, 9 months in particular, we've become much more, what we call, a true SaaS company, and there's a lot more emphasis now on the installed base. And we have one person, in particular, Kris Bravo, who come across with Jill, whose entire focus is that installed base and actually getting people once they're on analytics move up to risk or if they've got analytics and they've got Epic, then let's bring in CRA into that mix as well. So yes, I think we've had success of it in the past, and we've had some great customer start off it. We're probably $1.50 and then go up towards $3, $4 at certain sites, but we want to see more of that, and that's why we've got dedicated people now really focused onto that area.
[Operator Instructions] Your next question comes from John Hester.
Apologies, I just missed your response to that last question, Ralph. But I just wanted to -- with focus on the genetic stuff for a minute. My question is you've done a couple of genetics deals. In the most recent quarter, you talked about the -- offering the choice of genetics partners to your clients, whichever ones they prefer. What's your commercial relationship with those contract providers or those genetics providers? How are you getting paid through them?
Yes. So we have relationships in place with Myriad, Invitae and Ambry, and is a mix of commercial arrangements with those companies. But the general gist is, well, some of them will pay us to install software per site. So effectively, the site doesn't pay for the software, but the genetics company will pay us to install our software to provide that smooth IT workflow, right the way through from patient entry all the way through to genetics testing. So that's kind of one model and then the other model, which one genetic companies that does is every time a woman actually goes over a test, we get a certain payment. And yes, so there's a mix of models. They both appear to be working pretty well at the moment. And again, we see a lot of tailwinds across the U.S. around genetics, but the key to genetics testing, which obviously we don't do, the key to that is that smooth workflow. Again, risk assessment done so the right women are going off the right exam at the right time.
So you talked about Nevada and North Carolina at the start of the call, and they're really focusing on this. What has driven this big push by individual states now? Is this all related to the sort of the FDA sort of increased regulation in this space, perhaps?
Yes. John, it's a good question. I wouldn't say necessarily related to the FDA. But certainly, I think there's a bigger understanding now that, yes, 10% to 20% of all cancers are genetics testing. The genetic testing is becoming affordable, and if we can really identify the right women to go on, that there's a real opportunity to catch 10% to 20% of those cancers much earlier than they normally would be. Jill...[Audio Gap]