Ford Motor Company $F Q1 2023 Earnings Call Transcript

Thank you for standing by, and welcome to the Pushpay Holdings [inaudible 00:00:04] annual results [inaudible 00:00:06] debriefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to push the star key followed by the number one on your telephone keypad. I’ll now hand the conference over to Ms. Gabrielle Wilson, head of investor relations. Please go ahead.

Thank you [inaudible 00:00:28] and welcome to the Pushpay Holdings [inaudible 00:00:30] annual results investor briefing for the year ending 31 March, 2022, For annual report and annual results investor briefing presentation as it relates to the [inaudible 00:00:39], please visit our website pushpay.com/investors/announcements if you don’t have a copy.

(00:46)
Before we begin today’s [inaudible 00:00:48] information and this presentation [inaudible 00:00:50] disclaimer on slide two of this presentation. All currency amounts are in US dollars unless stated otherwise.

(00:58)
Starting with slide three, today you’ll be hearing from our CEO, Molly Matthews, and our interim CFO, Richard Keys. Following [inaudible 00:01:06] presentation, Richard Keys, our chief growth officer, Jason Rupert, and our chief operating officer, Kevin Kuck, and our chief technology officer, Aaron Senneff, will also be available [inaudible 00:01:16] questions.

(01:17)
During the presentation, you will be in listen-only mode. Once the presentation has concluded, they will open the call to questions. We ask that questions come from analysts and investors only. Members of the press are able to organize interviews [inaudible 00:01:30] following this briefing. [inaudible 00:01:31] questions made by [inaudible 00:01:33] investors [inaudible 00:01:33] and I will arrange it. Thank you for your attention. I will now hand it over to Pushpay’s CEO, Molly Matthews.

Thank you, Gabby. Good morning and good afternoon, everyone, and thank you for joining us for Pushpay’s investor briefing for the year ended 31 March, 2022. I’d like to welcome any [inaudible 00:01:52] shareholders who have joined the call and take this opportunity to thank all of our shareholders for their continued support.

(01:59)
Following my first full year as the CEO, I’m pleased to be reporting to you today with more detail on how we have continued to lay the groundwork for growth across the next five years. We have made a very deliberate and conscious decision to invest further into our business over the next 12 months, particularly into people [inaudible 00:02:20] our teams with highly talented individuals who will help us to innovate, develop, and expand the identified growth opportunities. I would like to take a moment to recognize our Pushpay team who admirably adapted to the challenges of this last year and continue to deliver exceptional service and world-class products to help our customers and their communities across the globe.

(02:46)
Pushpay’s purpose is to bring people together by strengthening team unity, connection, and belonging. Our innovative technology solutions empower customers to increase participation and engagement and build stronger relationships with their communities, which is now more important than ever.

(03:06)
Over the last year, our business continue its positive growth performance, welcoming new customers, increasing the number of products utilized by customers, increasing our total processing volumes, and delivering solid financial results for the year ended 31 March, 2022, or FY22.

(03:25)
Pushpay delivered a revenue growth, underlying EBITDA growth and net profit growth over the period, while maintaining sustainable margins and underlying operating metrics. We will cover performance in more detail later in the presentation, but before we do that, a key highlight of mine during the financial year was the acquisition of a leading video streaming provider, Resi Media, in August of 2021. We are delighted to have welcomed the Resi team to Pushpay and are excited for the future of our business as we continue to integrate our solutions and provide increased value for our customers.

(04:06)
On to slide five, looking at our key metrics over this 2022 financial year, we saw a year-on-year growth with all of our key operational metrics. We will cover these in more detail on later slides. In summary, we grew total customer numbers by 30%, increased total number of products utilized by customers by 40%, and increased processing volumes by [inaudible 00:04:32] percent.

(04:34)
During the year, 36.9 million transactions were processed through our platform. We had 2.9 million unique donors, and the average transaction value processed increased to $206 per transaction. Pushpay has maintained an average annual revenue retention rate of over 100% on average for the last five years, including the FY22 period.

(05:03)
Turning to slide six, we also saw year-on-year [inaudible 00:05:07] in our financial metrics. We will go into more detail on performance later in this presentation, but to highlight just a few, we surpassed the 200-million-revenue milestone for the first time ever, with operating revenue increasing by 13% year-on-year to $202.8 million. Pushpay also [inaudible 00:05:31] for the year ended 31 March, 2022, with underlying EBITDA increasing by 8% to 62.4 million.

(05:40)
Moving now to slide seven to look more closely at our total processing volume, which increased by 10% to $7.6 billion. [inaudible 00:05:48] we saw positive year-on-year increases in each trading month of the year, processing accounts for 68% of Pushpay’s revenue and growth, and this was driven from a few different factors: continued growth in the number of donor management system or giving products utilized by existing and new customers; further development and enhancement of existing products resulting in higher adoption and usage; and we maintained the level of digital adoption within our customer base.

(06:22)
Turning to slide eight, operating revenue increased 13% to 202.8 million, growing by 23.7 million over the year, including 12.1 million from Resi Media. As we continue to execute on our growth strategy, we have initiatives underway to accelerate monthly recurring revenue growth. Early benefits are now being seen with the full benefits expected from FY24 onward.

(06:53)
Now on to slide nine for an update on customers. The total customer base increased by 31% to 14,508 customers over the year, primarily due to the acquisition of Resi Media. The acquisition was a part of our strategy to attract an increased number of new customers across multiple segments. Over the year, we added 3,409 net new customers, of which 2,858 were added at the date of acquisition of Resi Media. Excluding Resi, the level of net new customers adds of 551 new customers over the last year was softer than we expected due to FY22 headwinds, which I will cover in more detail. I’ll also cover the improvements that we are making to address these challenges.

(07:46)
Overall churn rate improved by 1%, reducing to 8% of customers, with churn in the medium and large segments improving on last year. We saw a slight increase in small segment churn, primarily due to the nature of customers in this segment and the impact from COVID-19, which is the consolidation of some churches. The medium and large segments remain our core focus as we continue to execute on our growth strategy.

(08:13)
Moving on to the next section and taking a look at operating environment, our response to market conditions [inaudible 00:08:23]. At the onset of COVID-19, our business [inaudible 00:08:30] a strong tailwind with the fundamental shift towards digital giving, which has remained. The pandemic environment has, however, created headwinds for our business. We have seen a change in the [inaudible 00:08:43] behavior and consolidation of some churches in the small segment. Travel and in-person events were still restricted to varying degrees, and we also felt the pressures from the increasingly competitive labor market in FY22.

(08:59)
These headwinds affected our go-to-market strategy and our net new customers, including our [inaudible 00:09:05] market performance, which were lower than our internal expectations, with a higher percentage of small churches in our new customer mix.

(09:14)
We implemented a number of initiatives during the year to respond to market conditions and drive growth. In particular, we appointed Jason Rupert as chief growth officer and completed a comprehensive review of our sales and marketing organization to ensure that we are aligned and optimized. This work began in FY22 and will continue in FY23 as we focus on driving these initiatives to address the market and position the business for future growth and success.

(09:46)
In response to the labor pressures the company did a company-wide remuneration review, which increased costs and headcount, and it enabled us to continue to attract and retain great talent in a more competitive labor market.

(10:04)
Looking at slide 12, the 2022 financial year was a year of investment as we set the foundation for the long-term growth of our business. To call out a few of the highlights that I’m proud of, we completed the strategic acquisition of Resi and completed the integration of an in-stream giving button into the Resi streaming just six months after the acquisition was made. Resi’s streaming is now available in app for [inaudible 00:10:33] customers.

(10:35)
We maintained our established strength in our core market and completed our first year as investment into the Catholic segment. We also welcomed several new leaders and more members to Pushpay, who I am quite proud to be working alongside. We’ll be talking about them a little bit later in this presentation.

(10:55)
Turning now to the next section, I’m excited to share an update on our strategy and our growth plan. On this slide, we have outlined our near-term, medium-term, and long-term horizon opportunities and areas where we are investing in for growth and to add value to our business. In the short to medium term, we remain focused on integrating Resi Media into our portfolio of products, growing the number of products utilized by customers and growing our share of customers within our target market. Our medium-term growth opportunity is continuing to expand into the Catholic segment, which offered a significant and exciting opportunity for our growth.

(11:39)
As we have previously stated, the Catholic initiative is our first step in investing to grow our customer base outside of our existing core customer vertical. And we have set the goal of acquiring more than 25% of the total number of Catholic parishes as customers over the next five years. We believe this is the best way to maximize shareholder value in both the short and long term.

(12:09)
Turning to slide 15, Pushpay has a clear strategic pathway, focus on long-term growth drivers, which include growing customer numbers, increasing the number of products utilized, expanding and enhancing Pushpay’s suite of products, and increasing share of wallet. Key priorities and initiatives continue to be executed under each of these and are expected to deliver significant growth.

(12:37)
By focusing on each of these four areas, we will grow our business in a sustainable and profitable manner, delivering value for our shareholders. We will now look at each of these growth drivers in turn and key initiatives under each of them.

(12:54)
First, to slide 16, we looked at growing customers numbers. Our primary focus is on growing the number of medium customers in our mix. These customers have lower acquisition and support costs, as a percentage to the revenue, and offer a significant growth opportunity in which we can achieve a higher digital penetration rate. Our go-to-market strategy has now been customized to better target this customer segment. And while large customers and small customers remain quite important to us, growth in our medium customer segment is a key focus.

(13:33)
The Catholic opportunity is one of our most exciting mid to long-term growth pathways. To reiterate, Catholic services generated $30 billion for approximately 25% of the US-based giving in 2016. For Pushpay, our total addressable market has been estimated by a global third-party consultancy firm to be between 600 million and 700 million. There are approximately 17,000 Catholic parishes in the US, and our long-term target is to have 25% share of these parishes using Pushpay products.

(14:18)
On to slide 18, we have a clear three-year roadmap for entering into the Catholic market. We have just completed our first 12 months, and we have made significant progress. We introduced ParishStaq, our tailored solution for the Catholic sector, built our Catholic team to 34 people, and have made great progress in building relationships with key partners and diocese in the US, including the Archdiocese of Chicago.

(14:47)
These diocese are very important to our sales model. The diocese approve vendors for their areas, which enable the individual parishes with these diocese to adopt the product, and this can represent hundreds of parishes within each diocese. So our team is focused on first getting added to an approved vendor list for each diocese, and then marketing our products and solutions to each individual parish. [inaudible 00:15:13] even after only a very short time of having the product in market, we already have 173 parish customers. This is a strong start, and we expect [inaudible 00:15:24] rapidly over the next few years as we continue to invest and market our offer. On slide 19, we’ll talk about the number of products utilized. Pushpay offers three products, our donor management system, church management system, and more recently, streaming solutions. Donor management is our core product. Our aim is to increase the number of products utilized by each customer with our overall [inaudible 00:15:53] goal is to have customers utilizing integrating solutions with all three products. The more products utilized by each of our customers, the more valuable our integrated solution is to them, thereby increasing retention.

(16:09)
On slide 20, you can see the mix of products utilized by our customers and the growing number of each new product used as they’re integrated into our suite. We saw growth in all three product groups over the year, with total products utilized growing by 40% to 19,039 products. The focus is on driving adoption and increased use of multiple products through adoption of one of our integrated solutions.

(16:40)
This slide shows the number of customer [inaudible 00:16:42] using one, two, or three products. As I mentioned earlier, our goal is to have customers using all of our products through an integrated solution. Customers who subscribe to multiple products deliver significantly higher

… higher revenue than a one-product customer, and using multiple products, as I’ve said before, helps with retention. [inaudible 00:17:10] we saw an increase in the average of our products per customer in FY22, and this also shows the growth opportunity [inaudible 00:17:17] for us in products referral and bundling.

(17:21)
We’ll move on now to talk about Resi Media. When we acquired Resi Media in August of last year, over 70% of their customers did not subscribe to an existing p- Pushpay product. This provides us with significant cross-referral opportunities for many customers to utilize Pushpay solutions, and visa versa. As we move on to slide 23, you can see that we have a clear three-year roadmap to leverage the value from the acquisition of Resi Media.

(17:35)
So I’ll focus on the seven months since this acquisition has been on integrating Resi into Pushpay’s product fee and core business system. Resi is now available in Pushpay’s custom app and we are continuing to add to its functionality. In FY23, we will continue to integrate Resi into our sales marketing incident, and we will be focused on the significant cross-referral opportunities in the existing Resi and Pushpay customer base, as well as attracting net new customers to the Resi product. FY24 will continue to see revenue growth greater than 20%, and will result in positive underlying EBITDA [inaudible 00:18:33] from Resi Media.

(18:37)
As we move on now to slide 24, we’ll talk about expanding our existing product space. One of Pushpay’s continuing strengths is our ability to deliver seamless, quality products and features that make it easier for our customers to increase [inaudible 00:18:52] engagement and build stronger relationships within their communities. Just a few of the features we have launched in this last year include a simplified process for distributing giving statements, the ability for individual community members to manage their volunteer [inaudible 00:19:12] directly from their mobile phone, and app analytics which provides deep insights into the church’s digital congregation and mobile app engagement.

(19:22)
A big focus for our development team during the year was integrating in-stream giving and engagement into Resi Media. Since April of 2022, a Pushpay in-stream giving button was integrated into Resi Media, enabling churches to embed a giving page or in the URL, directly into their stream as a call to action.

(19:45)
On to slide 25. Our [inaudible 00:19:47] first driver is to increase our share wallet. This is the amount of a customer’s total giving that is digital, and processed through Pushpay’s platform. We saw a transformational shift to digital giving due to COVID-19, and we have seen digital giving remain constant over the past year. Over time, it is expected that adoption and digital giving will continue to increase, and we are working with our customers on initiatives to both enhance giving, and to increase digital adoption.

(20:20)
Now on to slide 26. The US [inaudible 00:20:24] sector is [inaudible 00:20:26] approximately $2.5 billion, with around 131 billion in giving each year. With Pushpay operating revenue of 202 million in FY22, and processing volumes of 7.6 billion, we have a significant opportunity ahead of us to grow our share. As you can also see, the opportunity to grow in the [inaudible 00:20:53] is a huge first opportunity for us.

(20:58)
Moving now to slide 26 for an update on our people at Pushpay. As we continue to execute on our strategy, attracting and retaining exceptional talent is critical to our success. We have consciously grown our talent pool this year, increasing our head count by 7% to 437 people, excluding Resi Media. This is slightly lower than our expected total at year-end due to turnover and new hire onboarding signing.

(21:29)
With the acquisition of Resi Media, we are delighted to welcome 122 new colleagues, based primarily in Texas and Colorado. We have also invested in our people with a remuneration review and reset to attract and retain high-quality individuals. We are extremely proud of our purpose-driven culture and our people who continue to adapt to the challenging circumstances of an evolving macroeconomic environment. We also strengthened our leadership team with a number of strategic appointments. This includes Kevin Kuck as chief operations officer, Jason Rupert as chief growth officer, Angelique Rothermel as VP of marketing, Natalie Burrows as VP of product, and Richard Keys as interim chief financial officer. The expanded leadership team plays a vital role in executing our strategy and delivering value to our shareholders.

(22:32)
Turning to slide 29. We were also pleased to welcome two new US-based directors to our board in September of 2021, Sumita Pandit as an independent director and John Connolly as a non-executive director. Sumita is the chief operating officer of dLocal, a technology first payments platform, and it brings local enterprise merchants to connect with billions of consumers in emerging markets. Prior to joining dLocal, Sumita was a managing director and global head of FinTech investment banking for JP Morgan. Sumita brings nearly two decades of experience in investment banking, advising companies across verticals in FinTech, including payments, financial platform, neobanks and [inaudible 00:23:20]

(23:18)
John is a senior advisor to [inaudible 00:23:24] providing guidance to portfolio company CEOs and management team on strategic and operational issues associated with both. He brings a 30-year track record of innovation, vision, and execution in creating successful growth company. John and Sumita will both be standing for election by shareholders at this year’s annual shareholder meeting. And with that, I’ll now hand it over to Richard Keys, our interim CFO, for a financial update.

Thanks, Molly. Good morning and good afternoon to everybody. We’ll start with the slow [inaudible 00:24:02] of the income statement on slide 31. The financial year ’22 results reflect seven months’ earning and expenses from Resi Media, which was acquired on the 21st of August, 2021. Pushpay’s operating revenue grew by 13%, exceeded $300 million for the first time, which is a great milestone for the team. Other revenue decreased, reflecting a great decline to spend at [inaudible 00:24:31] collection centers, as the credit again [inaudible 00:24:34] This is mutual for our net profit [inaudible 00:24:38] Underlining of [inaudible 00:24:41] increased by 8% to be $63.4 million and was in line with our guidance.

(24:49)
Looking at our giving in more detail the next slide, the 23% in volume increase in operating revenue was driven by growth and product [inaudible 00:24:58] and customer members from both Pushpay’s existing product offering, and from the Resi Media acquisition. It’s [inaudible 00:25:07] 12.3 million revenue [inaudible 00:25:09] by Resi Media which would put the seven [inaudible 00:25:12] Pushpay increased operating revenue by 11.6 million, or 6%. Gross profit increased by 14% to $138.4 million.

(25:28)
Our next slide, we look at a further breakdown of operating revenue. You can see here, the [inaudible 00:25:39] increases in revenue. [inaudible 00:25:39] revenue is the biggest [inaudible 00:25:40] here, increased 7% year-on-year, from having 68% of our total operating revenue. The 24% increase in subscription revenue is primarily given by the acquisition of Resi Media, of [inaudible 00:25:56] customer subscriptions, including in the FY22 [inaudible 00:26:01] The other operating revenues are mainly hybrid sales from Resi Media.

(26:09)
You can see on the next slide, the post [inaudible 00:26:12] the percentage of operating revenue [inaudible 00:26:12] at 68%, which we view as a sustainable level going forward. [inaudible 00:26:23] shows the operating expenses increased by $18.5 million over the year, and keep primarily [inaudible 00:26:34] increasing by 13.7 million in the Resi Media operating expenses that were seven months of ownership, and include the impact to the [inaudible 00:26:42] as well as the additional transaction cost of $3.3 million. Excluding these, operating expenses increased by $3.5 million, a 4% increase on the FY21 financial year. During the year, a deliberate decision was made to invest in our people with a remuneration review and reset, as well as an increased headcount. While the employment cost did increase as a result of this, the full-year employment cost was slightly below [inaudible 00:27:17] due to a slightly lower number of headcount in [inaudible 00:27:22] to determine [inaudible 00:27:23] turnover. We also had several strategic leadership appointments in FY22, [inaudible 00:27:28] would be, is [inaudible 00:27:34] will be seen in the FY23 year in [inaudible 00:27:39]

(27:39)
On slide 36, you can see the underlying EBITDA increase by 8%, to 62.4 million, reflecting investment into both the capital growth strategy and the Resi Media acquisition. Excluding [inaudible 00:28:00] of these growth initiatives, underlying EBITDA as a percentage of operating revenue increased to 34% in FY22, compared to 38% in FY21.

(28:14)
On the next slide is the only one with a careful consideration. A [inaudible 00:28:18] underlying EBITDA, which is EBITDA excluding one-off changes as well as costs [inaudible 00:28:25] with accounting adjustments that are [inaudible 00:28:28] for transactions. This includes cash and non-cash expenses, such as transaction costs, expecting of the [inaudible 00:28:37] vendors is part of the transaction, the [inaudible 00:28:40] on acquisition.

(28:45)
We believe the underlying [inaudible 00:28:47] which provides a more appropriate representation of the growth performance. Underlying [inaudible 00:28:54] increased 8% to 62.4 million during the year, including the [inaudible 00:29:00] items is it that it’s increased by 7% when compared to the prior year.

(29:09)
Next [inaudible 00:29:10] contain something of our financial position. The company generated a long and positive cashflow journey FY22, for $61.5 million. The acquisition of Resi Media in August, 2021 resulted in an increase in goodwill and an increase in good funding, with a $19 million [inaudible 00:29:30] of the acquisition price funded by [inaudible 00:29:35] What the strong cashflow did was reduce from the [inaudible 00:29:39] to 54 million as a [inaudible 00:29:42] 2022. As [inaudible 00:29:46] on the same thing, $47.2 million.

(29:52)
On the next slide, we also announce today Pushpay’s intentions to do an internal restructuring transaction of the individual property [inaudible 00:30:00] to the initial years of Pushpay’s business. The majority of Pushpay’s operating business [inaudible 00:30:07] and over time, there’s been a shift in the group [inaudible 00:30:12] support functions through the years, [inaudible 00:30:14] Following review of the informational [inaudible 00:30:18] and pricing arrangements, Pushpay’s intention is to enter into an entry of a structured transaction to transfer the IP from the [inaudible 00:30:31] to a [inaudible 00:30:31]

(30:33)
This will be a long, [inaudible 00:30:34] transaction with consideration being by [inaudible 00:30:37] in a transaction for [inaudible 00:30:41] Cost of the transaction will be included in both FY22 and FY23, [inaudible 00:30:49] EBITDA. Financial consequences of the transaction [inaudible 00:30:55] and get to include [inaudible 00:30:57] reduction in the group’s income tax of [inaudible 00:31:00] $ 7 million annually [inaudible 00:31:04] financial year.

(31:06)
We’ve been proactively engaged with the New Zealand internal revenue department for an application [inaudible 00:31:13] on two aspects of the transaction. Subject to final [inaudible 00:31:18] approval, the expected transaction will be effective within the next two months. And with that, I’ll hand back over to Molly for the outlook.

Thank you, Richard, for that update. Now turning to slide 41 for an update on guidance. The unique opportunity ahead for Pushpay are really significant and leave P substantial room for growth. After many years consulting our business, and with the recent extension of Pushpay to two significant acquisitions, we are now focused on developing our business for the future, and are investing in targeted, strategic first initiatives.

(32:01)
This investment will continue through FY23 with escalating returns expected from FY24. Although uncertainties and impacts surrounding COVID-19 and the broader US economic environment remain, we are confident. We have a clear strategy and strong leadership in place to continue delivering value to our customers and our shareholders. Pushpay will continue to deliver [inaudible 00:32:27] revenue and customer number growth in FY23, while investing in the business to drive growth opportunities in the foreseeable future sales.

(32:38)
In particular, Pushpay is growing its talent pool and investing in resources and capabilities to drive the [inaudible 00:32:46], Resi Media and other growth initiatives. In FY23, the company is expecting to deliver double digits, annual operating revenue growth of between 10 and 15%, and underlying EBITDA of between 56 million and 61 million, reflecting continued investment that capture growth opportunities.

(33:10)
Turning to slide 42. As we look ahead, our strategy transitions us to deliver increasing shareholder value. In the short to medium term, we remain focused on integrating Resi Media into our portfolio of products, growing the number of products utilized to customers, and growing our share of customers within our target market. We expect strong growth from FY24 onwards, with significant revenue growth and increasing profitability, Pushpay is expecting greater than $10 million of total sustained volume, and more than 20,000 customers for the year ending 31 March, 2025.

(33:56)
We are focused on profitable growth and will continue to invest

… To build our market share in new and existing market diversity. We expect after FY22 and FY23 investment into talent, repurpose and capability now balanced for continued cost management discipline, to be seen from FY24, with underlying EBITDA expected to grow after revenue. A medium to longer term focus is to expand into the Catholic segment, which offers a significant and exciting opportunity for our group.

(34:36)
As previously stated, the Catholic initiative is our first step in investing to grow our customer base, outside of our core customer markets. We have set the goal of acquiring more than 25% of the total number of Catholic parishes as customers over the next five years. Push change’s success would not be possible without the expert direction from our board of directors, successful execution from management and the hard work of our dedicated colleagues. I would like to extend my thanks to all of the Push team for their efforts and support over the past year.

(35:15)
Thank you for your attention and with that, I’ll now hand back over to the operator to open the call for questions.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you’re on a speaker phone, please pick up the handset to ask your question. The first question comes from Stephen Ridgewell from Craigs Investment Partners, please go ahead.

Thank you. Good morning, good afternoon and congratulations on the results. Just a question from me on organic customer growth, which looks to affect the whole of it in the second half. You called out production and return of customers, are there any other drivers, Molly, that you could call out that look at middle customer growth rate in particular?

Thank you for the question, Stephen. I’ll actually start the answer and then I’m going to pass it across to Jason to talk a little bit about how we’ve been leaning into customer growth in the past quarter, as well as how we’re going to approach it in the next coming year.

(36:34)
I mentioned in the presentation one of the key changes that we’ve made is insuring that we have experienced sales and marketing leaders in place, to ensure that we’re winning in a few areas but three just to call out and Jason will dive into more detail is demand generation. The second is ensuring that we’re updating skills, processes and training to drive more consistent outcomes. Then the third is really enhancing our sales enablement and cooling. With that, I’ll pass over to Jason, our new [inaudible 00:37:06] Officer to share a little bit about his stance.

Thanks, Molly. Since joining the team in February, I’ve been really focused on driving and refreshing our go-to market strategy. This includes a very comprehensive review of our strategy, then of all of our middle market initiatives with that market strategy and really to align that with our sales, marketing organization.

(37:36)
One of the things we did, this includes the addition of experience on the market executives including [inaudible 00:37:43] who Molly touched on earlier. She’s been driving brand awareness and product marketing innovation [inaudible 00:37:49], which was the largest [inaudible 00:37:51] in the world. We have a couple of our senior leaders in the world class industry experience driving software go-to-market team. As we look to drive customer [satisfaction upward, with medium and enterprise customers, we developed new leadership with professionals in our enterprise. 75 years of driving [inaudible 00:38:12] bills of large complex enterprise in the companies, which is what we’re seeing in the [inaudible 00:38:17] still.

(38:17)
What are we doing? Again, Molly touched on these a little bit. We’ve updated our sales processes to be more effective, to drive discipline and rigor around pipeline management so we can be a much more predictable road plus sales organization. Second one, we’ve rebuilt our generation strategy approach, to align with our growth strategies from our core market with Rezi and our Catholic segment. Third, investment in our sales and marketing teams through strong skills enablement, deploying to take advantage of our product enhancement. It’s critical that we continue to invest in our sales and processes.

(38:52)
If you buckle up those items that we just mentioned, it’s really to tie back to our pre-growth initiatives, which is drive growth in our core markets, medium and enterprise and we’re really seeing the value proposition resonate there. Growth in the capital segment and growth in revenue.

Okay thanks. If you’re still looking at the small, medium, large segments of the core process market, did you say you’re coming up to seeing them?

I would definitely say in this past year, we did see an increase in the small segment customer. We define that as customers that are 0 to 200, we did see an increase there, more than we had planned and then, in the upcoming year, one of the things that we’re hyper-focused on is increasing our share in the mid-market space.

Okay, thanks, Molly. Maybe one question on EBITDA margins. To be honest, for 2023, it was a little bit more than I was expecting, 25.6% in the mid point, down from 30.8%. Just guidance that things are improving year-on-year, we do have growth in them. Just wondering if you could in a little bit more detailed, just the drivers of the margin decrease year-on-year and perhaps gearing up for it in ’24 and beyond.

Sure. Thanks for that. Look, there’s a couple of things. As you mentioned, in mid and medium, we expected revenue growth of 28% but for the current year, we saw the growth being the underlying EBITDA. That does not have the margin but getting those business with Rezi. When you look at Catholic, the same situation, there is smaller in revenue but we will breakeven in EBITDA. Both those two are pressing the margin for the coming year. On top of that, as Molly mentioned and I think I mentioned it as well, we have the annualized cost of the employment as well as the annual review last year, which is being annualized into the current year.

(41:32)
If we annualized the number of people we’ve got at 31 March and you annualize your employee benefits at 31 March, it’s $71 million of employee benefits. Visibly annualizing it, that includes about 15 million for Rezi. All of those things combined, the EBITDA margin will soften a little bit in the next 12 months, but we do expect it to be, as I’ve said, [inaudible 00:42:04].

All right. That’s helpful. Thanks, Richard. And just to build that point, product design has been up 25%, what run rate, in terms of headcount, in FY23?

For [inaudible 00:42:35], it’s definitely something I know that we are still increasing carefully and carefully in some of the other areas, including Rezi but Catholic is outside of that. We do still expect it in some headcount in FY23 but it won’t be the same level as we’ve had in ’22.

Okay. Thank you, I’ll let someone else have a turn and jump behind the queue. Thank you.

Thanks Steve.

Thank you. Next question from Phil Campbell with UBS. Please go ahead.

Yeah, morning everyone. Again, just focusing on margins, just in terms of the revenue growth that seems to stay the same. When I’m back at Rezi, I look up to the church business model, 12% revenue growth, I suppose I’d just be interested in some of the drivers behind that, in terms of what you forecasts are for transaction growth or what you think in terms of overall donations and possibly takeovers. That was the first question.

(43:38)
And then, the second one, obviously there’s a few comments just in terms of FY25 numbers. Just be interested in comments around this conviction you have in terms of getting customers up 20,000 and obviously, that revenue number above 10 billion, just how… Obviously, it’s a number of years away, so just interested in how you’re forecasting that or how much visibility you think you have on those numbers?

Hello, thank you so much for that question, Phil. I’m going to actually pass that over to Richard.

Thanks for that question, the question in regards to ’25, what we’ve done is we’ve forecasted out several years in advance, including with some of these projects such as Rezi and Catholic, these are multi year initiatives of growth. And if you look at what we’re doing with Catholic, which has grown from standing still six to 12 months ago, to now having 173 churches on board. We expect over the next 5 years to gain 20, 25% of the number of parishes in that tan market. That’s pretty much the growth that we are expecting. On top of that, in regards to initiatives, what we’re looking to do in the period of the time, which is to help church increase their penetration, help people with regards to what they can expect, also what will have an impact over the next period of time.

(45:20)
And then last year, as Molly said, the process of growth, we still had growth in the 12 months, in medium and large growth with Catholic and presbyterian and with the other churches, you’ll see that growth effectively in the future years, as well as new customers.

Just on the catholic side of things, I’ve just noticed the tan have gone up since the last presentation, back from $330 million up to six or 700 million. I know you’ve employed a third party consultant, I noticed, curious as to obviously double the size of that catholic opportunities. Just trying to understand what’s behind there.

Sure. I think that from the market, they weren’t quite sure on that tan. Eventually, the third party consultants are going to do some research into ut in London. We think they are realistic. Just to be clear, they do 100% of the market, not that’s what we will do, we will have a portion of that but certainly [inaudible 00:46:46].

Great. Awesome. Thanks.

Pleasure.

Thank you, Phil.

Thank you, the next question comes from Guy Cooper from [inaudible 00:46:58]. Please go ahead.

Yeah, thanks for taking my questions, just on that Catholic line, Phil, what was the difference between the third party consultants, who are the planned angles. Where does the data actually come from?

Yeah, great question, Guy. Thank you for asking. The original tan data that we were looking at is well-published across public websites, IBISWorld and several others here in the United States. It was a little bit older data so from 2016 and actually before that even, I think some of the data was information from 2012. One of the things that we wanted to do and some of the feedback actually that we’ve received from the market in the past was just wanting to refresh and take a new look at the data.

(47:50)
We did engage a third party, who went out and took a new needle above the tan for Catholics. Again, Richard has pointed this, they want to make very clear that those metrics are about 100% of the total addressable market, not the portion of the market we believe we will have the ability to win.

Okay. Thank you. Just on the catholic spend, you highlighted that there’s $8 million catholic investment in FY23 but is that inclusive of development fee? I know I should comment also on capitalizing the remaining year-on-year, what happens to the expense portion of it?

[inaudible 00:48:41].

(48:40)
Sorry, Richard, go ahead.

Sorry Molly. The development, what we’re saying is that the investment next year will be between five and $7 million and of that, three to four of that, will be capitalized. We expect similar in ’24 and by then, the development side will be tapering off on this and that’s probably something Molly will want to comment on.

Jason, why don’t you comment on that?

Yeah, certainly. As the Chief Technology Officer, I’ll first just say that we’ve been coming out of a really excellent, optimistic year in terms of product development early this year. Those expenses that Richard mentioned is really focused on two things. Early in year one, was growing our customer knowledge and negotiating the market well together, building our staff with primarily half those milestones as well into product development.

(49:40)
I then identify two very keystone type capabilities, I’ll just link to one, is document tracking, which is a significant use case inside the Catholic church that differs from protestants churches that launched that earlier this year and believe that’s a market leading feature and has been introduced in the marketplace. The other is data recording as an example, a single data piece roll up information and understanding what’s happening in each of their individual parishes and respond accordingly and dwell into the product development of that feature. In addition to that, released a number of smaller features across the shared continuum into the following year, that continues to tune our product suite to a natural fit for catholic churches and parishes.

Thank you. I guess one last one, clearly the revenue retention rate and lower turnover could be positive signals but can you share any other information from customer satisfaction scores or just customer feedback in general?

Yeah, I’ll take that one. Thank you for bringing that up, Guy. We are quite proud of our customer retention progress. As Jared has said, the interim results

… is something that we’ve been very focused on for the last three to four years is just improving that turn metric. One of the things that’s a large initiative for us as we head into this year, as you know, we’ve acquired [inaudible 00:51:13] builder and [inaudible 00:51:15] media, so really had the opportunity to solidify around an NCS score that’s consistent across all of our products and all of our customer types. That will be going into the water in this upcoming year, so that we’ll have a published NCS score [inaudible 00:51:31], and anecdotally I actually had the opportunity last week to be on the road and visiting some of our customers, and it’s very, very impressive to hear how they’re uniquely leveraging our tools and technology to grow and enhance their impact in their community.

(51:50)
I actually had the chance to visit a larger customer last week who had founded a actual college, so, an accredited college for 400 kids, and they’re able to leverage, [inaudible 00:52:04] to raise funds in order to build plans and then grow that college community. So, definitely getting great feedback. From the Catholic side, we included in our annual report, you can see a really wonderful customer story from one of our Catholic parishes, just of the unique ways that they’re able to leverage technology to [inaudible 00:52:26] community, both on the donor side, but honestly on the community builder, the HMS side, really able to connect and grow their community in unique ways.

(52:36)
So, seeing and hearing [inaudible 00:52:39], and if you’ve been on any of the customer and the public safety kind of customer boards or reference boards for [inaudible 00:52:48], they just have absolute raving fans of their products. So, they have a great reference [inaudible 00:52:54] for their customers as well, but really have created the rating [inaudible 00:53:00] which is what everybody desires in their customer base.

Okay, thanks for that answer [inaudible 00:53:06].

All right, thanks guys.

Thank you. The next question comes from Tim Malone with [inaudible 00:53:18]. Please go ahead.

Yeah, morning guys, thanks for taking my question [inaudible 00:53:26] interests. So, first question, can you give us a [inaudible 00:53:32] on the [inaudible 00:53:34]?

[inaudible 00:53:40] thanks so much for the question. As we’ve previously disclosed, we have received unfortunate amount of [inaudible 00:53:53] initial expressions of interest. There are [inaudible 00:53:55] from third parties. The board has appointed Goldman Sachs to assist as our financial advisor, and as you know, there’s [inaudible 00:54:05] these expressions of interests for a purchase will result in a transaction, and we don’t have have anything for those that we’re able to disclose today. For our team that’s on the call, it is absolutely business as usual, and we are hyper focused on growing our company.

Okay [inaudible 00:54:29] questions [inaudible 00:54:29] the answers that you get. It’s fine, but my next question is, have you set the extension committee for the board, and if you can’t answer that, could you tell me who might be on that committee?

I’m unfortunately unable to answer that question today.

Okay, and third final, have you [inaudible 00:54:47].

Again, Tim, I’m unable to answer questions about [inaudible 00:54:54].

Yeah. No, I’m just [inaudible 00:54:56].

Thank you. The next question comes from [inaudible 00:55:03] with RBC. Go ahead.

Good morning. My name is actually Gary [inaudible 00:55:10]. The next that I’ve [inaudible 00:55:14]. I guess the first one [inaudible 00:55:15] in the [inaudible 00:55:16]. I mean, if you [inaudible 00:55:17]. He did have more there [inaudible 00:55:24] increased competition with the customer [inaudible 00:55:27] changed from some of the types of churches [inaudible 00:55:29]. I love the [inaudible 00:55:32] and we try to check if there’s anything done on our side of it, and what we’ve decided from a competitive standpoint [inaudible 00:55:43] standpoint [inaudible 00:55:44] information on?

[inaudible 00:55:49] Hey, Gary. I think we can answer the question [inaudible 00:55:51] if you wanted to have any [inaudible 00:55:53] commentary, go for it. So, as you can imagine, the last two years have been very, very destructive for our core market and customers. So, it’s the medium and large customer, and the thought of changing providers through that very small [inaudible 00:56:10] time [inaudible 00:56:11] and so, we do we do see these buying behaviors flow [inaudible 00:56:16] across our core market, and we’ve seen an increase in competitive landscape for the last three to four years. So, that has not changed, because it can’t [inaudible 00:56:28]. We have seen some consolidation in our space, which I’m sure you guys are all aware of [inaudible 00:56:34] very grateful to welcome Redgate Media church community builders from that consolidation.

(56:40)
The one thing that I will kind of point to is, we are seeing some behavior change [inaudible 00:56:47] coming out of the Easter season. So, we’re seeing larger [inaudible 00:56:53] market and large churches taking more meeting, taking more calls, returning back to some pre-covid behavior, pending conferences. The summer is quite busy for our sales team. We just looked at the calendar today of all of the events that we’ll be attending. So, I would just say, I don’t think there’s been an increase in competitive landscape. That has been in existence for us for the last three years. We did see [inaudible 00:57:19] flowing and buying behavior over the last two years. So, we are beginning to see things kind of come back to [inaudible 00:57:27] I think normal behaviors [inaudible 00:57:29] today, but back to a little bit more of a consistent kind of buying behavior out of our customers.

(57:36)
Jason, anything you want to add?

Yeah. No. First of all, through the covid situation, you saw some churches had made quick decisions. So, the solution to get them through, not having their members in church, and so, [inaudible 00:57:53] made some decisions on how to handle [inaudible 00:57:54] and other solutions, and the kind of things we’re seeing is [inaudible 00:57:59]. We’re starting to really see the price line grow, which is super important for [inaudible 00:58:02]. The other thing we are seeing [inaudible 00:58:05] we’re seeing more and more face to face, more and more meetings with customers [inaudible 00:58:10] discovery phase. I think some of the improvements we’ve made from a product standpoint is really resonating with customers, that they’re coming out of a little bit of a covid sickness.

(58:21)
And so, we’re really seeing, I think, an uptick in customers starting to look at what is their long term solution, and the [inaudible 00:58:27] thing is we’re starting to see customers have made a decision over the last three years. They’ve educated enough to realize [inaudible 00:58:34] solution they need to really kind of meet their strategy. They’re looking [inaudible 00:58:39] really see that we’re solving the [inaudible 00:58:41] point that the church has to drive engagement. That’s really opened up a lot of opportunities for us. So, [inaudible 00:58:47] growing, we’re really looking at also, those churches that have made decisions over the last two to three years. So, we can kind of go in and tell the next church about our solution.

Thank you, and the follow up for the [inaudible 00:59:00] percent revenue [inaudible 00:59:05] 25 million dollars in provincial revenue [inaudible 00:59:09]. Can you pull that apart into the three point [inaudible 00:59:12]. I guess, if we look at [inaudible 00:59:14] Reggie and Catholic. Just trying to get a sense, I mean, I know previous analysts have mentioned [inaudible 00:59:23] maybe about 12%, but yeah, if you could just give a bit more guidance around that [inaudible 00:59:29] price point, where it’s coming from [inaudible 00:59:32] core perspective [inaudible 00:59:35] and the Catholic perspective, the 25 million [inaudible 00:59:39].

[inaudible 00:59:40] I’m going to actually ask Richard to hop in, and just talk through what he’s comfortable sharing, or maybe [inaudible 00:59:49] a couple of questions about [inaudible 00:59:51] products in the grow period.

Sure, [inaudible 00:59:55] I think if we see that in the roadmap for Catholics, we do see [inaudible 01:00:02] break even [inaudible 01:00:04] I guess you can [inaudible 01:00:05]. So, what they told you what these things are, a gross margin. So, you can see that we do think Catholic [inaudible 01:00:10] quite [inaudible 01:00:10] growth, but we’re talking small numbers from that point of view, and the [inaudible 01:00:19] of course, [inaudible 01:00:21] full year of revenue [inaudible 01:00:22] 23. We’ve indicated the revenue of seven and a half months is about 12 million in 22, and so, [inaudible 01:00:26] and there have been [inaudible 01:00:37] the presentations, which we’ve done. We’ve indicated that [inaudible 01:00:42] will actually hit 22 [inaudible 01:00:45] revenue. [inaudible 01:00:45] So, I [inaudible 01:00:49] get you the breakdowns of two growth ones.

(01:00:51)
So, you can then go to the core business. In regards to process [inaudible 01:00:57] we’ve seen growth in process in every single month for the last 12 months, and we do see that [inaudible 01:01:06].

Thank you, and the last question on the Catholic setting. I just wanted to clarify that the 25% are more than 25% [inaudible 01:01:19]. Just clarify it a little bit from your perspective. Does that imply that over 150 [inaudible 01:01:26] revenue? [inaudible 01:01:26] 10 minimum of six hundred mil [inaudible 01:01:26] 25% of that is 150 mil revenue. So, is that the way we should be thinking about the Catholic revenue contribution [inaudible 01:01:40]?

I’ll start, and then Richard, if you want to pick it up. So, I just want to be clear that we are targeting 20 to 25% of the Catholic parishes in five years. So, winning their [inaudible 01:01:56] with one of our products, one thing that we know to be true from our experience in the products markets, is growth in digital [inaudible 01:02:05] processing volumes takes time. So, that will not come right on the back of winning a deal, but takes some time for that processing volume to grow, and for us to gain [inaudible 01:02:17] out of those Catholic customers. Richard, did you want to add anything from a processing volumes standpoint?

No, I think that sums it up. We don’t get a [inaudible 01:02:27] processes in the [inaudible 01:02:30], and I think with Catholics, it might be a bit of a smaller increase [inaudible 01:02:35]. There’s a little bit more [inaudible 01:02:39] than anything [inaudible 01:02:40]. So, I would not be going through the 25% of the revenue in five years [inaudible 01:02:49] parishes. That’s if I did [inaudible 01:02:51] revenue follow after that.

Understood. That’s clear. Thank you very much.

Thank you. That does conclude our question and answer session today. I’m now [inaudible 01:03:02] back to the [inaudible 01:03:04] for closing remarks.

Thank you so much, Noah, and thank you again for your time and questions today. I particularly liked to see our shareholders for your team [inaudible 01:03:23] our team in the US and New Zealand for their hard work, and all of our customers around the world for their loyalty. As these results are ultimately [inaudible 01:03:33] to their support. I’ll now hand it back over to Gabrielle.

Thank you, Molly. If there are any additional questions or [inaudible 01:03:41] please contact [inaudible 01:03:42] email at investors [inaudible 01:03:44] investor briefing will be available within the next 24 for 30 days [inaudible 01:03:51] 800-386-078 in New Zealand, and for all other international locations, please dial 649-1029- 3905. [inaudible 01:04:05] number is 100-20-635. I would like to thank you again for your time. Have a great day.

That does conclude our conference for today. Thank you for participating [inaudible 01:04:19].