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Well, thank you very much, and you all know the Safe Harbor statement on Slide 2 here. Good morning, everyone, and thank you very much for joining us today. This is Peter Herweck, CEO of AVEVA. And today, I'm joined by Brian DiBenedetto, our CFO; and James Kidd, the Chief Strategy and Transformation Officer.
As you will have seen, we've had a comprehensive trading update in April, so these results contain only really additional details.
2022 was a year of good progress for AVEVA. We've delivered a solid financial performance and made excellent progress in integrating OSIsoft, which was acquired just before the start of our fiscal year, if you will. We grew ARR by 10.2%, while our pro forma organic constant currency revenue grew by 7.1% and adjusted EBIT increased 7.7% on the same basis, of course.
The integration of OSIsoft is on track to deliver our targeted cost and, more importantly, revenue synergies. During the year, we've achieved initial revenue synergies of $10 million and cost synergies of nearly $15 million.
Importantly, we also delivered key integrated products which I had been talking about, such as the AVEVA Unified Operations Center with AVEVA PI System and AVEVA Predictive Analytics with PI System. So they will drive further growth synergies -- revenue synergies as we go forward.
A few words on the outlook. We're positive and confident in the long-term outlook for AVEVA. Digitalization remains key to driving customer efficiency and sustainability, and AVEVA is very well positioned with its broad, integrated, end-to-end software portfolio to drive sustainable growth.
Our forecast and our focus is on accelerating ARR growth and growing cash flow, and both will build as we progress with our key business initiatives. The PI System business will significantly increase ARR through the move to AVEVA Flex subscription, as we've told you before, while we expect to accelerate SaaS as more products become available on the cloud.
And one more important point later on, but for this -- before -- excuse me, we go there, let's have Brian go into the details of the financials.
Thank you, Peter, and good morning, everyone. Let's start with a summary of the results. Now I'm going to present these on a pro forma basis as if AVEVA had owned OSIsoft in the prior year, too, in order to give a like-for-like insight into the performance. And where appropriate, I'll also comment on organic constant currency changes. Definition of these terms are in the notes to the slides and this morning's news release, for those that want to be precise.
We grew ARR by just over 10%. This is slightly higher than our earlier estimate in our April trading update now that we've had time to prepare the full results and gone through our audit.
Both revenue and adjusted EBIT grew by more than 7% on a pro forma organic constant currency basis. Adjusted EPS declined slightly on an adjusted pro forma basis due to an FX translation headwind and a higher tax rate versus the very low rate that we had seen in the prior year.
Cash conversion was just over 60%. We're targeting significant improvements in both ARR growth and our cash conversion rate going forward, and I'll talk about both of those more later.
We're proposing to pay a final dividend of 24.5p per share. This represents a small increase over the prior year, reflecting a balance between our progressive dividend policy, the underlying growth achieved and actual growth in the context of our foreign exchange headwind.
So now let's look at the full income statement.
Revenue was GBP 1.236 billion, up 7% on a constant currency basis and up 3% in reported currency. Remember that close to 70% of both our revenue and our costs are in U.S. dollars, so foreign exchange translation has a significant impact on reported results. The revenue growth came from both heritage AVEVA and OSIsoft, although in the year, OSIsoft was stronger. The OSIsoft business had a very good Q4, underpinned by the integration work that we've undertaken and also some pull forward of business ahead of the price increase announced in April.
Gross margin improved slightly. Although we had higher cloud hosting and infrastructure costs, these were partly offset by cost reductions in both customer support and services, which have a relatively high cost of sale, both growing below the group's overall growth rate.
Operating cost increases were driven by higher employment costs. Overall, this resulted in a slight decrease in our adjusted EBIT margin, although on an organic constant currency basis, there was a slight increase due to the disposal of minor, less profitable noncore assets.
The pro forma assumes that we would have drawn down the term loan, which was partly used to fund the acquisition as of April 1, 2021. So this shows what the interest charge would have been over the last 2 years. And the reduction in interest cost in fiscal '22 is due to the falling LIBOR rate.
And finally, the tax rate on adjusted profit was 14.3%. This tax charge factors in the benefit of U.K. tax incentives on intellectual property and the U.S. tax deductions for the amortization of goodwill relating to the acquisition of OSI. The year-on-year increase, however, was due to increased U.S. alternative minimum taxes and irrecoverable withholding taxes. What's important is we expect the tax rate on adjusted profit before tax to remain at or below the level seen in fiscal '22 going forward.
So now let's look at the revenue breakdown on an organic constant currency basis.
We saw good growth in recurring revenue, in line with our strategy. Within this, SaaS grew particularly strong, albeit off of a low base. Maintenance revenue was flat with underlying growth being offset by some conversion of AVEVA Flex, which is part of our strategy to drive upsell and cross-sell once customers are on subscription. We saw double-digit growth in perpetuals ahead of moving the PI System business to subscription. This reflected the strength in that business area but is not likely to continue as we're going to prioritize AVEVA Flex going forward. And finally, services increased below the rate of the overall group growth, which is in line with our strategy of focusing on higher-margin software business.
Turning to ARR, we grew ARR by a little over 10% during the year. And as you can see, the growth was mainly driven by volume growth from our existing ARR base and new business wins, which underlines the fundamental strength of the business. This was partly offset by churn, which was a little higher than what we target, partly attributable to the timing of a few maintenance contracts in the PI System business expiring before March 31 with renewals expected in Q1 of this year.
As we go forward, we expect pricing to make a bigger contribution to ARR growth. We implemented an on average 10% list price increase on April 1, and this will feed through to ARR as contracts come up for renewal and when we win new business.
ARR will benefit as revenue synergies start to grow as integrated products are launched and grow through their sales cycles. Now both of these factors will boost revenue synergies in ARR terms. And of course, we're also expecting the PI System products to make much more of a contribution to ARR as we move away from a perpetual license model into subscription via Flex.
Finally, we've recently put in place revised sales incentives to drive a focus on new business and uplift to the value of contracts, and our sales teams are further incentivized to sell subscription and, in particular, SaaS.
So you can see how over time, as these initiatives bear fruit, our ARR growth will accelerate. Now moving on to costs.
As I mentioned earlier, cost of sales increased largely due to the growth in the business and included higher cloud hosting and infrastructure cost. The overall increase was below revenue growth, however, due to cost reductions in customer support and services, which have a relatively high cost of sale, growing below the group's overall revenue growth.
R&D costs increased due to investment in development of our cloud products and higher employment costs, reflecting a very competitive labor market. And these higher employment costs were also seen in our selling and distribution expenses, while admin expenses increased due to higher costs in IT and other support functions, with increases in our capacity being needed as our business scales.
Net impairment losses from financial assets represents the impairment of accounts receivable and contract assets. You see a small net positive in fiscal '22. This is due to the reversal of provisions that were made during the COVID crisis in fiscal '21.
I'll finish this slide by noting that while we see some fairly substantial wage inflation in fiscal '23, there are some signs that the heat is coming out of the employment market. Although AVEVA and our industrial software peers are seeing solid structural growth, some of the consumer tech names are scaling back a bit.
Now let's take a look at cash conversion. This is a metric that we'll have a core focus on going forward, and that will also be factored and reflected into our remuneration targets.
Conversion of adjusted profit before tax to free cash flow before tax was just over 60%. Within this, we've stripped out some payments that form part of the acquisition of OSI.
Cash conversion has been impacted recently by working capital relating to upfront revenue recognition on multiyear contracts and also exceptional charges relating to integration. We expect a significant improvement in working capital performance going forward as the transition to SaaS accelerates and also for our exceptional charges to reduce. As such, we're targeting 100% cash conversion in fiscal '23.
And finally, let's look at the balance sheet. And I won't dwell on every line here. There's lots of detail, but there are some points to highlight.
You can see that there was a further increase in contract assets during the year. This was due to higher point-in-time revenue recognition on multiyear on-prem rental contracts. We expect this growth to stop going forward as our mix from SaaS increases, leading to much better working capital performance.
Meanwhile, the growth in contract liabilities reflects the unwinding of the deferred revenue haircut which arose from the acquisition of OSIsoft.
And finally, I should note that our cash and debt balance in sterling terms is impacted significantly by FX rates. Our debt is held in U.S. dollars, in alignment with our revenue mix, and we also hold the majority of our cash in dollars.
Thank you very much for listening, and I'll hand it back over to you, Peter.
Thanks, Brian. I'd now like to talk a bit about the operational aspects of our business, particularly the progress we're making with the OSIsoft integration and, of course, within our businesses.
I'm going to echo the same message that we've been communicating to you in the last few months. The integration is going well and even more so now that the initial teething stage is behind us. We're well on track to achieve both cost and revenue synergies in line with our original acquisition model.
As we've mentioned during our April trading update, we've made good start on achieving our revenue synergy target of $100 million by fiscal year '26. During fiscal year '22, AVEVA achieved initial synergies of just over $10 million. We expect these synergies to build as more combined AVEVA and PI products come to the market, offering incremental value to the customer and also a faster way to value. Key integrated products already launched such as the Unified Operations Center with the AVEVA PI System and Predictive Analytics with PI out there. Now Production Management with PI as well as other products under development are expected to be launched later this year and then also further in the following year.
The pretax cost synergies are expected of not less than $30 million per annum on a run rate basis by the end of this fiscal year, 31st of March 2023. Nearly $15 million were achieved during the last fiscal year.
Now moving to Engineering, and let me start with what is included in Engineering. It consists of Engineering and Simulation software. In turn, Engineering software includes Engineering & Design, Project Execution and Engineering Information Management, while Simulation includes simulation & Learning and Value Chain Optimisation.
Engineering contributed roughly 31% of pro forma revenue in the period. On an organic constant currency basis, the revenue decreased by 5.7%. This decrease was due to a tough comparative in the prior year that included a significant contract renewals period, as you all know. We will see the benefits of the next cycle of these renewals in the next fiscal year.
Underlying business performance was good with a broad range of new order wins being achieved, particularly in the energy market, which is undergoing a recovery, as we had mentioned before. Significant orders were also won from companies like Aibel, Saipem, SBM Offshore and Worley, showing a positive trend in the energy market which we had talked about before. And we're seeing real progress in newer areas such as hydrogen. For example, we won a great contract with Australia's largest hydrogen power producer, where AVEVA's engineering tools have been mandated as standard across their entire power network.
Moving on to Operations, which consists of Asset Performance, Monitoring & Control and Information Management. That's how we call the PI System.
Operations contributed to 69% of pro forma revenues in the period. On an organic constant currency basis, revenue increased by 14.2%. We saw good performance across the business units, from Asset Performance, Monitoring & Control and, in particular, from Information Management. The PI System business delivered solid, double-digit growth in the year with performance significantly strengthening in Q4 as the benefits of integration began to take effect. The growth in Monitoring & Control revenue was, of course, supported by a significant contract extension and renewal with Schneider Electric, which is a substantial element of point-in-time revenue recognition, as you know. Other significant orders came from companies such as General Mills, PepsiCo, Nestlé and Rio Tinto.
As always, I'm excited to share customer examples with you that underline our progress. Let me start off here with Mitsubishi Power. It's a case study of Mitsubishi Power, a real synergy deal extending an AVEVA PI System deployment for data management which they've had for many, many years with AI-infused AVEVA's Predictive Analytics to deliver advanced warning for issues to enable corrective action and prevent downtime.
The AVEVA PI System data feeds hubs in the U.S., in Germany and in Japan. These hubs provide connected software and services to monitor and provide early warning of impending issues to avoid units to trip, reduce energy efficiency losses and help with avoidance of unnecessary maintenance. So they're all driving also sustainability. This use of remote monitoring and advanced analytics help to make power plants more reliable and, of course, more profitable.
The next client I'd like to talk about is EDP, a renewables customer and an example from a Portuguese company who is an energy provider, EDP Renewables.
The team at EDP is building a single data repository for all their locations to optimize maintenance and performance. Now AVEVA Data Hub in the cloud, together with the PI System, will help to optimize wind farms located across regions with streaming data collection, history, recovery capabilities, wind power analytics and operational KPIs. The combination of the PI System and the cloud with AVEVA Data Hub, really marvelous.
The next one is, again, a synergy deal that we've driven forward with Agropur, this time a Canadian dairy company. Agropur is using the PI System together with AVEVA's MES, manufacturing execution system, and our HMI solutions to move from a paper-based to fully digitized operation through a progressive, again, hybrid cloud implementation. Nice synergy deal with cloud.
Now we've had also our first in-person customer win, having shared with some of you our recent customer wins. We've had, of course, a lot of discussion here at this in-person customer event, AVEVA PI World, in Amsterdam, where we hosted a lot of customers live and even more also online. It was a great event. It was 3 days. We featured 70-plus customer presentations, so customers talking to other customers how they use our product; 160 global speakers through dozens of industries; and more than 40 AVEVA portfolio and deep technical presentations. Overall, the PI world event attracted at 1,255 paid in-person delegates and, of course, a couple of our own people and then people who participated virtually.
In the interest of time, I won't go into further detail as it's simply impossible to cover off all the portions and all the things that were presented, displayed, discussed, shared at the conference, so I encourage you to take a look at some of the recorded sessions which are available on our website. The mood was very good at the conference.
Now let's move on to the first competitive wins in Q1 as truly some of you are interested how we've started the year.
So the example that I'm showing here is a competitive win, a competitive cloud win against one of our competitors, underlying our strategy and the drive for net new business.
This leading refiner was selected -- has selected AVEVA's Value Chain Optimisation SaaS solution to modernize and enhance crude valuation and refinery plant decision-making as part of its digital transformation, moving away from a competitor's legacy on-prem product.
Now hybrid, cloud-based solution will deliver enterprise-wide scalability benefits, boosting productivity, simplifying business processes, improving decision-making and ensuring security and visibility of supply chain knowledge, very important these days. I'm optimistic that when I'm presenting to you again in 6 months' time, we will have several more of these exciting examples to share with you, underpinning AVEVA's strong long-term strategy.
Let's move to the summary and outlook to conclude.
AVEVA has emerged from fiscal '22 with a solid financial performance. During the year, we made excellent progress with the integration of OSIsoft and have recently launched integrated products that will drive further revenue synergies.
We're excited about the opportunities ahead of us as AVEVA enables the digitalization of the industrial world with our several key markets showing positive trends such as energy, power, shipbuilding and infrastructure. We're also seeing good structural growth ahead of us in key areas such as energy transition.
Our customer-facing markets, such as food, are broadly resilient even during macroeconomic uncertainty. In fiscal '23, we're focused on accelerating our growth in annualized recurring revenue to deliver longer-term growth in free cash flow.
Thank you much for listening. And now Brian, James and I will take any questions you may have.
[Operator Instructions] Our first question today comes from George Webb of Morgan Stanley.
I have a couple. Firstly, can you just give an indication on how you see seasonality through FY '23? I presume it's fair to assume ARR growth will be more second half weighted as you accelerate from that 10% exit rate towards that 15% at least lower bound. But also, what you see around seasonality on revenues given the revenue recognition factors at play and the FY '22 base comps?
And then secondly, on your broad energy vertical, how much growth did you see there in FY '22? How much acceleration are you expecting this year?
And Peter, I'm wondering if you have any views after speaking to industry on how much of that improving energy CapEx budget outlook may prove less price sensitive as energy supply chains need to be reconfigured after the situation in Russia versus perhaps what would be more quickly cut if there was a sharp reset lower in the macro outlook and energy prices.
So let me take the first couple of parts there. I think the first question was around ARR growth and the trajectory in the fiscal year.
I think you're right to expect that, that will be mostly second half loaded. We expect ARR to move over the years -- over the year, excuse me, as the initiatives we've put in place take effect. Particularly, pricing is a big variable there. As you know, our maintenance contracts typically renew in the December time frame. And then also, as we start to accelerate subscription and go through the transition of subscription with PI, that will take some time. And so we don't expect all of these to show through immediately in Q1 or H1. And we also have to take into consideration that it will be somewhat impacted by the strong close to fiscal '22, which was partly assisted by the pull forward of sales ahead of the price increase in April.
I think on your second question relative to seasonality, we don't expect material changes in the half 1 versus half 2 shaping of the overall business from a percentage basis and that really what we're watching is the evolution of ARR over the year, as I just described.
I think, Peter, the third question is around the energy for you.
Sure. Absolutely. And thanks for the question. As we've said before, we see some good signs in the market. There have been some early renewals towards the end of last year which are continuing, our EPC clients and also the shipbuilding. As you know, in shipbuilding, we're very much also into energy vessels, if you will. They are very busy with engineering work, with pre-FEED and with FEED. And they're expecting project decisions to be done this year, which then will also drive for us incremental value in the operational part of the software, which is usually, from a timing perspective, coming later on.
So there is quite some movement given that also the decision of OPEC to increase production. So many people who haven't invested enough in maintenance and need to bring additional pipes, if you will, into production is good for us. It's also good for full Value Chain Optimisation, so we're positive on this market.
While at the same time, a lot of the cash, of course, at the clients is also deployed into their transformative energy transition, if you will, to more hydrogen, to more renewables, to more carbon capture, all of which we're a part of in large projects that I had also outlined earlier, I think one of them, and that's all important for us and good.
Okay. And if I can tag one more on. What's the response from customers been to the price list increase? Has that been relatively well accepted?
It's early days. The -- of course, nobody is ever happy with price increases, but we have a very competitive portfolio. And from that perspective, we're -- we continue to be confident because we're not only increasing prices, we're also delivering more value to the clients. And from that perspective, I think there -- these are good discussions to have.
Our next question today comes from the line of Kathinka de Kuyper of JPMorgan.
First of all, you expect the margin this year to be around 400 basis points lower than last year. Can you just comment on the building blocks of the improvement you expect to see in FY '24? And then are there any risks that you would need to invest a bit more into the cloud than the €20 million you pulled forward? Can these costs become more structural?
Thanks, Kathinka. I'll take the first part of that question and Peter the second part.
What we guided in the April 27 trading update is that we see a significant renewal cycle which will drive revenue and ARR in fiscal '24. And that's the biggest contributor to the margin recovery that we see in fiscal '24 versus fiscal '23. So it's a volume recovery from revenue.
And as it relates to the cloud investment, Kathinka, we said that this was a pull-in. So it's a onetime effect in '23 and will normalize out in the following year.
Let's see how customers go for it. If the growth is better than anticipated, we'll -- we may discuss again. But at the moment, this is the plan.
And then if I can just squeeze one other in as well. You mentioned that you've seen significant wage inflation last year. Can you quantify that? And what are your expectations for this year? Are you further increasing salaries?
So, I mean, look, I think let's focus on looking forward for the fiscal '23. We've instituted the 10% list price increase. We think that's going to help to mitigate the salary inflation.
In terms of our salary inflation, I mean, overall average is sort of in the mid-single -- low to mid-single-digit range, and that's baked into our margin guidance that we've given on the 400 basis point reduction that you noted earlier.
Our next question today comes from the line of Toby Ogg from Credit Suisse.
Maybe just to come back on the targets for 2023. If we just take the revenue growth guidance first, which obviously leaves room for quite a wide range of potential growth scenarios. Brian, perhaps -- or Peter, perhaps you could just give us a feel for your level of visibility on 2023 at this moment in time just given all the moving parts.
And then secondly, what gives you the confidence that you can actually grow organically this year given the lower contribution from upfront revenue recognition, obviously the full impact from Russia and then, of course, the headwinds from the transitions in OSIsoft and the SaaS piece in the Engineering business?
And then just on the margin guidance for 2023. Obviously, as we discussed, you called out the 400 basis points lower on the trading statement. I guess similar question. What gives you the confidence that, that really is the floor in the context of the extra investments, the Russia cost headwinds and, of course, the ongoing transition?
Okay. Yes. Thanks for your questions, KB. Maybe I'll start with the second part firstly because it sort of all interrelates. But if you can recall, I mean -- so from a guidance perspective, you talked to the numbers. We talked about 3% to 4% on the revenue side, 15% to 20% growth on the ARR side and the margins being down by 400 basis points versus fiscal '22.
Now if you -- one of -- the second part of your question was around, well, is that the floor. From an investment perspective and a cost perspective, we think that's very well managed in terms of our assumptions. You might recall I did point to a scenario where it's possible that the SaaS transition moves faster than what we have modeled. And in that scenario, we would see a higher ARR contribution and potentially a lower revenue -- reported revenue, which would drive the margin down a little bit further. So I wouldn't say it's a floor. But in that scenario, it's actually good news in terms of the underlying growth of the business.
In terms of confidence in how we see all the moving parts for fiscal '23, today we remain consistent with our projections previously communicated.
Yes. If I may add, Brian, Toby. If we go back to Slide number 9, I think if you look at the bridge and the building blocks for ARR and the -- you see the 4 building blocks. We've been strong at winning new customers and exploring the base. The -- and that will continue.
Secondly, you've seen the contribution on price. Of course, that's going to be accelerated in this year. And from that perspective and the move of the PI System to subscription, so we're fairly confident to achieve the value that we've put out for '23.
Our next question comes from the line of Nay Soe Naing of Berenberg.
I have a couple, if I may. Firstly, starting with the guidance, particularly on FY '26. Obviously, back in April, the trading update, you have reaffirmed the FY '26 targets. I just want to double check that you're still committed to the targets. And then secondly, on the...
Hi, Nay.
Oops, sorry. Yes.
Your line has been cutting out. So please, bear...
No, we hear you very well. Continue, please.
Oh, okay. Perfect. And the second question is on a structural trend. We've talked about the recovery in the energy sector. Another trend that I want to get your opinion on is the energy transition part of it. Obviously, you've entered into a partnership with a plc as well. So any updates in terms of how much is the acceleration, the drive in the energy transition that you are seeing so far in the year? That would be great.
Yes, let me start off, Nay. So for -- so 2026, yes, we confirm again. Energy market in -- as I said before, I think we're seeing three things. Number one is there are a lot of established assets out there that need to increase productivity and sustainability. That's a driver for us. The resiliency and the change in the production environment given the situation that few people only want to buy the oil from -- or the gas from Russia will trigger incremental investment.
And the third point, where we're all well placed, the third point is a lot of the -- all the energy companies, not all and -- not a few, all of them, are investing into decarbonization and decarbonized energy forms, and we're ideally situated in working with them. I think at last call, I outlined the largest hydrogen plant that Aramco is building where we're part of, I just mentioned, I think, early in this call, it may have been another call -- where we're working with a supplier of decarbonized energy forms in Australia and all their partners. And from that perspective, I think we're well positioned on all streams that I mentioned, all the three streams in the energy market, and that gives us the confidence.
Was there another question?
No, that's it. Very helpful.
Our next question today comes from Sven Merkt of Barclays.
Great. I wanted to come back to the midterm targets. The biggest building block in your bridge to your FY '26 ARR target is the contribution from volume growth from existing customers and new ones. And given the importance of this, I was wondering if you could break this down further for us and maybe how much is coming from new versus existing customers and which segments will drive this.
Well, thanks very much, Sven. And we understand that this is, of course, always a question of how -- what's exactly the shape when we're saying 15% to 20% per annum and how much is new customers, how much is existing customers and so forth.
While we have a solid idea how we want to do it, timing, of course, also plays a big role in when certain contracts will come and when the decision points are. I think understanding that it will be 15% to 20% per annum is a solid outlook at this point in time. And we'll -- as we move forward, we'll show you customer examples and so forth. So this time, it was a competitive win which is actually the most difficult one. If you're displacing a competitor, you move to the cloud. And with one of the largest players in the field out there, this is one of the most complicated ones. It gives us confidence.
Our next question today comes from Michael Briest of UBS.
A couple from me as well. Just in terms of the cloud transition this year. Obviously, you're making investments in the product, so we should assume that the technology is going to get richer as the year progresses. So from a revenue and ARR perspective, do -- well, more from a revenue perspective, I guess, do you think cloud is going to be meaningfully bigger in revenues this year? And then how that impacts the next 3 years? By my math, you sort of need to be doing low, mid-teens, maybe 15% growth per annum for the next 3 years after '23 to get to your original goal. Will that be pretty linear? Or is it going to be more back-end loaded, so we start at a lower number of growth and exit at a higher growth rate? And then I just had a question on cash.
Yes. Let me start off with cloud and then Brian can talk a little bit about shape and cash.
The cloud investment, let's make no mistake, we've said there are three components. So there's R&D., there's operations and there's also sales, that's what we said, to drive it forward. So from that perspective, we're trying to accelerate on all cylinders.
The real figure, I think, you want to look at, Michael, for cloud and performance is ACV because it does give you a view on the annualized contract value because timing, of course, in a SaaS contract, if it's the last day of a fiscal year, would just generate 1 day of revenue. But the annualized version, and you can see also the performance of ACV growth when you look at the annual report, for example, you'll see that we're growing quite significantly there.
The next two components on revenue, I think, shape and cash, I'll give -- hand over to Brian.
Yes. Thanks, Michael. Our stated objective is to get to a 25% revenue mix for cloud by fiscal '26. So you can do the math and see the CAGR that's required to get there is above 80% from where we are today. From a shaping perspective, we're expecting the cloud business from a revenue standpoint to double in fiscal '23 and more than double in fiscal '24 and then linear from there in that CAGR context. I think you were going to ask a question on cash?
Yes. So just looking at your cash conversion methodology, it's sort of pretax. And I appreciate maybe that's just the sort of unpredictability, but should we assume that cash taxes and P&L taxes are broadly similar?
Yes, there are some moving parts with respect to the calculation and some of the underlying adjustments for the OSI integration and whatnot. So we're looking at it on an operational basis free cash -- pretax, excuse me.
From a tax rate perspective, as that may also be on the mind as the number was slightly higher in the year-end results, we see the 14% as sort of being at the high end of our go-forward range. We previously guided 13% in the OSI perspective. There's been some statutory rate increases, particularly in the U.K. and some other moving parts which landed us on 14% in fiscal '22. But we see that as the peak and the sort of a stable high end of the range going forward.
But from a cash perspective, there's a bit of volatility. But cash taxes and P&L taxes shouldn't be wildly apart over the medium term.
No, that's correct. They should be more broadly in line.
[Operator Instructions]. Our next question comes from Charlie Brennan of Jefferies.
Perfect. I've got two, if I can. The first is just around the volume of new business wins. I think, Pete, you said you were quite happy with it during the year. Are you able to break that down between OSI and maybe core AVEVA? And is there anything more you need to be doing within core AVEVA to get the new business wins up?
And then secondly, just on a small point of detail. You've highlighted the contribution from Schneider during the year, and I think you disclosed over GBP 100 million of revenues from Schneider. What are you budgeting for in 2023? And I guess if we look back at the GBP 100 million from last year, why did Schneider opt for more of a point-in-time revenue recognition contract rather than something more ratable?
Great questions, Charlie, and good to have you here. The -- if you look at the volume growth of new business wins, the -- it's been across the portfolio of the company. And there is, of course, quite a few things that we want to enhance. And as we're bringing the portfolio elements closer together, you've heard about UOC and PI System or Predictive Analytics in the PI System, and the next one is when we're moving to Simulation. The -- so we'll be able to move new product into existing clients with -- because it's going to be a much more flawless integration there and a much faster path to value for our clients. So that's one component.
The second component of it is really winning new customers and also in new end markets. And in particular, our cloud offers will help you there -- will help us there. The whole sales force is absolutely incentivizing clients and new products throughout the complete portfolio. And the amount of new offers we're bringing out is just staggering, if you will.
Now you had a question on the Schneider contract, and Brian is eager to answer that one.
Yes. Thanks, Charlie, for your question. I think based on the backlog that we have with the contracts in hand with Schneider and the timing of the rev rec, you should expect to see about a GBP 40 million decrease in revenue on a comparable basis year-on-year, and that's been baked into our projections.
That was our final question today, so I'd like to thank everyone for their questions. And I'll now hand back to the AVEVA team for closing remarks.
Well, thanks, everybody, for joining today and talk to you soon with more progress report on how we're doing.