Q4 2026 Hansen Technologies Ltd Earnings Call

August 19, 2026

Speaker #1: Thank you for standing by, and welcome to the Hansen Technologies Ltd. FY26 results briefing. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.

Operator: Thank you for standing by, and welcome to the Hansen Technologies Limited FY26 results briefing. 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 press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Hansen, Managing Director and CEO. Please go ahead.

Speaker #1: If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Andrew Hansen, Managing Director.

Speaker #1: And CEO. Please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining our call today on the 2026 financial year. It's Andrew Hansen here. I've got Richard English, our CFO, along with me, and also Peter Beamsley in the background, Head of Investor Relations.

Andrew Hansen: Good morning, everyone, and thank you for joining our call today on the 2026 financial year. It is Andrew Hansen here. I have Richard English, our CFO, along with me, and also Peter Beamsley in the background, Head of Investor Relations. If we have any difficulties today, we will take a short break and we will recommence then. The last number of years it has all worked perfectly, so I hope it all works well today. Just a little bit on Hansen before we kick off. We have software in some 80 countries around the world. More interesting, 80 million end customers energy we serve and 360 million in the communication sector.

Speaker #2: If we have any difficulties today, we will take a short break and then recommence. But over the last number of years, it has all worked perfectly, so I hope it all works well today.

Speaker #2: Just a little bit on Hansen before we kick off. We have software in some 80 countries around the world. More interestingly, we reach 80 million end-customers in energy.

Speaker #2: We serve around 360 million in the communications sector. I think we've spoken many times about it, but for those new to it, we're actually involved in everything from customer acquisition, the building of a product-based system, the billing, the rating, and the collection of the money.

Andrew Hansen: I think as we have spoken many times about it, but for those new to it, we are actually involved in everything from the customer acquisition, the building of a product they sell them, the billing, the rating, and the collection of the money. We have done this as the Hansen's life of what we have actually done. Very critical to all of our customers that we are the lifeblood of their business and very proud of what we have done to date. Certainly now with AI, and we have spoken a lot about AI, but I am very excited to talk more about AI today and what it is actually meaning to our organization whilst we go through those changes. It would probably be best, we thought we would touch on the leadership changes since that is going to be new to everyone, including a lot of people inside Hansen.

Speaker #2: And so we've done this. This is the Hansen's life of what we've actually done. Very critical to all of our customers because we're the lifeblood of their business, and very, very proud of what we've done to date.

Speaker #2: And certainly now with AI—and we've spoken a lot about AI—but I'm very excited to talk more about AI today and what it's actually meaning to our organization as we go through these changes.

Andrew Hansen: Certainly now with AI, and we have spoken a lot about AI, but I am very excited to talk more about AI today and what it is actually meaning to our organization whilst we go through those changes. It would probably be best, we thought we would touch on the leadership changes since that is going to be new to everyone, including a lot of people inside Hansen.

Speaker #2: It'd probably be best—we thought we'd touch on the leadership changes, since that's going to be new to everyone, including a lot of the people inside Hansen.

Speaker #2: So, first and foremost, succession planning is a big part of the Hansen business and always is a big part of the business.

Andrew Hansen: First and foremost, succession planning is a big part of the Hansen business and always is a big part of the business. In the last couple of years, we are looking to my own succession, how it actually runs inside the organization. That aligned with not only finding a Chief Executive Officer, but also dealing with David Trude, who is our retiring Chair of the Board. Firstly, probably getting in just slightly the wrong order, I would like to thank David Trude, who will be retiring at the AGM, for 15-plus years of service. I know as public companies, we have this view of governance, you have to change your board and chairs over on a regular basis.

Speaker #2: In the last couple of years, when we're looking at my own succession and how it actually runs inside the organization, that aligned with not only finding a chief executive officer, but also dealing with David Trude, who's a retiring Chair of the Board.

Speaker #2: So, firstly—probably getting things slightly out of order—I'd like to thank David Trude, who will be retiring at the AGM, for 50-plus years of service.

Speaker #2: I know it's public companies, we have this view of governance—you've got to change your board and chairs over on a regular basis. The fact that people like Hansen are now ongoing success, and the money we keep on making all the time has come from the leadership, the governance, the advice, the camaraderie we have with the board.

Andrew Hansen: The fact that people like Hansen, our ongoing success and the money we keep on making all the time has come from the leadership, the governance, the advice, the camaraderie we have with the board. David has been an absolute champion of mine. I really enjoy having a chair in a non-exec position who we've been able to put in front of customers, deal with acquisitions, and help our business go overseas. We will talk more about David at the AGM, but we thank all of his leadership leading up to it. The view was that would actually move me to executive chair, an operational role inside the business. But what we have actually spent over the last couple of years is not only trying to see what do we actually want in a CEO, what was the changes we wanted in the business, and have spent considerable time interviewing people.

Speaker #2: David has been an absolute champion of mine. I really enjoy having a chair in a non-exec position who has been able to put us in front of customers, deal with acquisitions, and help our business go overseas.

Speaker #2: So, we'll talk more about David at the AGM, but we thank him for all of his leadership leading up to it. The view was that this would actually move me to executive chair and an operational role inside the business.

Andrew Hansen: We will talk more about David at the AGM, but we thank all of his leadership leading up to it. The view was that would actually move me to executive chair, an operational role inside the business. But what we have actually spent over the last couple of years is not only trying to see what do we actually want in a CEO, what was the changes we wanted in the business, and have spent considerable time interviewing people.

Speaker #2: But what we've actually spent over the last couple of years is not only trying to see what do we actually want in a CEO, what were the changes we wanted in the business, and have spent considerable time interviewing people.

Speaker #2: I'm very proud to announce Jim McDonald. A number of you on the call will be aware of Stu's role in TechnologyOne. The role he actually led, not only from probably under originally Adrian's guidance, of what he actually did to the organization, but as we know, Stuart was across everything from development of the software, delivering, sales, marketing, and end-to-end.

Andrew Hansen: I am very proud to announce Stuart MacDonald. A number of you on the call will be aware of Stuart's role in TechnologyOne. The role he actually led not only from probably under originally Adrian's guidance of what he actually did to the organization. As we know, Stuart was across everything from the development of the software, delivering sales, marketing, and end-to-end. We couldn't have found. It was a very high benchmark when we actually interviewed. But part of the process we went through when looking was what is Hansen looking for. Our business has grown over the years on a very low spend in sales and marketing. We are talking about probably 1% of revenue, which is a fraction of what any other company spends. We have always relied strongly on our reputation, our know-how, and our customer loyalty into the business place.

Speaker #2: And we couldn't have found it—it was a very high benchmark when we actually interviewed. But part of the process we went through when looking for is, what does Hansen look for?

Speaker #2: Our business has grown over the years on a very low spend in sales and marketing. We're talking about probably 1% of revenue, which is a fraction of what any other company spends.

Andrew Hansen: Our business has grown over the years on a very low spend in sales and marketing. We are talking about probably 1% of revenue, which is a fraction of what any other company spends. We have always relied strongly on our reputation, our know-how, and our customer loyalty into the business place. One of the things we wanted to do is actually in bringing a new lens to the organization from the outside is actually growing out that sale. We can only imagine because once upon a time, low single digits, we were happy with that, but we are not happy with that anymore.

Speaker #2: We've always relied strongly on our reputation, our know-how, and our customer loyalty in the business place. But one of the things we wanted to do in bringing a new lens to the organization from the outside is actually growing out what we can only imagine, because once upon a time, low single digits—we were happy with that.

Andrew Hansen: One of the things we wanted to do is actually in bringing a new lens to the organization from the outside is actually growing out that sale. We can only imagine because once upon a time, low single digits, we were happy with that, but we are not happy with that anymore. One of the things in talking to Stuart, and in fact all the candidates, is what could Hansen be with a true focus on global ambition and expanding our business through sales and marketing. I think as I move to executive chair, I am still involved inside the business, but I will be more on the strategic side and the M&A side, and Stuart will come in and be running the operations of the business. Stuart is now. He doesn't join until November, but a truly welcomed individual coming to the organization.

Speaker #2: But we're not happy with that anymore. And one of the things, in talking to Stuart and, in fact, all the candidates, is what could Hansen be with a true focus on global ambition and expanding our business through sales and marketing.

Andrew Hansen: One of the things in talking to Stuart, and in fact all the candidates, is what could Hansen be with a true focus on global ambition and expanding our business through sales and marketing. I think as I move to executive chair, I am still involved inside the business, but I will be more on the strategic side and the M&A side, and Stuart will come in and be running the operations of the business. Stuart is now. He doesn't join until November, but a truly welcomed individual coming to the organization.

Speaker #2: So I think as I move to Executive Chair, I'll still be involved in the business, but I'll be more focused on the strategic side and the M&A side.

Speaker #2: And Stuart will come in and be running the operations of the business. Stuart—now, he doesn't join until November—but a truly welcomed individual coming to the organization. I'm extremely excited by what Stuart will bring to the mix inside the business.

Andrew Hansen: I am extremely excited by what Stuart will bring to the mix inside the business, and we know between myself and Stuart, the business is in very, very good hands. Welcome, Stuart, and thank you, David, for your time. Looking at the financial highlights of the business. A relatively flat year, but I suppose most people would understand, geez, there has been some real turmoil going on at the moment now. Everything from technology turmoil to wars, conflict, some countries' administration, which we won't go into. But we are focused very much on our business, on what we have always done in underlying profitability and generating cash out the business. Also moving as we are going to be moving. I will talk a little bit more about that when I talk about AI. Certainly moving our support and revenues up, whilst controlling costs inside the business. Underlying EBITDA up by 7%, cash EBITDA 106.

Speaker #2: And we know, between myself and Stuart, the business is in very, very good hands. So, welcome Stuart, and thank you, David, for your time. Looking at the financial highlights of the business, it's been a relatively flat year, but I suppose most people understand—geez, there's been some real turmoil going on at the moment now.

Speaker #2: Everything from technology turmoil to wars, conflict, and some countries' administration—which we won't go into. But we're focused very much on our business, on what we've always done in underlying profitability, and generating cash out of the business.

Andrew Hansen: But we are focused very much on our business, on what we have always done in underlying profitability and generating cash out the business. Also moving as we are going to be moving. I will talk a little bit more about that when I talk about AI. Certainly moving our support and revenues up, whilst controlling costs inside the business. Underlying EBITDA up by 7%, cash EBITDA 106.

Speaker #2: And also, moving as we're going to be moving—I'll talk a little bit more about that when I talk about AI. Certainly, moving our sales, support, and revenue—revenues up.

Speaker #2: Whilst controlling costs inside the business, underlying EBITDA was up by 7%. Cash EBITDA was $106 million, but the operational cash flow—$110 million—coming out of a business our size actually describes that.

Andrew Hansen: But the operational cash flow, AUD 110 million coming out of a business our size is, I am not sure how many companies can actually describe it. Just not making profit, but it is the cash which comes out of it in the year. Certainly, EBITDA at 31% demonstrating the discipline on our cost management has probably been all those things which Hansen has always done, as everyone has been listening to this call for many, many years of what we do as an organization. There is no doubt the strength in our business is our business model has been proven once again to be successful. Even when there is turmoil in both industry, economics, and also technology that we stay on board. I just want to touch a little bit on AI. I know this time last year, AI was still relatively new.

Speaker #2: It's not just about making a profit, but it's the cash that comes out of it in the year. Certainly, our EBITDA at 31%, demonstrating the discipline in our cost management, has probably always been something that Hansen has always done.

Speaker #2: As everyone’s been listening to this call for many, many years, of what we do as an organization, there’s no doubt the strength in our business is our business model, which has been proven once again to be successful.

Speaker #2: So even when there's turmoil in the industry, economics, and also technology, we stay on board. I just want to touch a little bit on AI.

Andrew Hansen: Even when there is turmoil in both industry, economics, and also technology that we stay on board. I just want to touch a little bit on AI. I know this time last year, AI was still relatively new.

Speaker #2: I know that this time last year, AI was still relatively new. I know that someone talked about how many times I mentioned AI, but they were probably not listening to what we were saying.

Andrew Hansen: I know that someone talked about how many times I mentioned AI, but probably not listening to what we are saying. I think the important thing is exploring the opportunity of AI. AI is new. It is something which we couldn't even envisage three years ago and how quickly it has actually gone. We continued to really explore the AI tools. We have looked at a lot of tools to go out there, the technologies. Then we started to have what was AI enablement teams, so we could actually have people teach the teachers, so to begin. Also commercializations because it does introduce a lot of ideas of how we will price this new technology into our business. Then we have to start by building the capability. Therefore, it is an AI culture, a lot of training with people, a lot of proof of concepts, et cetera, which started to happen.

Speaker #2: But I think the important thing is exploring the opportunity of AI. AI is new—it's something which we couldn't even envision three years ago, and it's amazing how quickly it has actually progressed.

Speaker #2: So, we continue to really explore the AI tools. We have looked at a lot of tools out there—the technologies—and then we started to have what was AI enablement teams.

Speaker #2: So we could actually have people teach the teachers to begin. Also, commercialization, because it does introduce a lot of ideas about how we will price this new technology into our business.

Andrew Hansen: Also commercializations because it does introduce a lot of ideas of how we will price this new technology into our business. Then we have to start by building the capability. Therefore, it is an AI culture, a lot of training with people, a lot of proof of concepts, et cetera, which started to happen.

Speaker #2: Then we have to start by building the capability. So, therefore, as an AI culture, a lot of training with people, a lot of proof of concepts, etc., started to happen.

Speaker #2: And the deployment across the AI, across the whole organization. Then it was the modernization of our own products. So this is the first time we could actually say, well, what does it make to our own products?

Andrew Hansen: The deployment across the AI, across the whole organization. Then it was the modernization of our own products. This is the first time we could actually say, "Well, what does it make to our own products?" Remembering we have a large degree of customization by customer and by countries as we go around the world. Then we developed a thing called NOVA RAG. In simple terms, what Hansen has is some 50 years of knowledge base built into technology and know-how. NOVA RAG allows you to actually capture that whole journey. Rather than going to 10 people or 20 people of how things operate or how industries work, NOVA RAG goes into each of those products and deeply goes in and understands how it actually works.

Speaker #2: Remember, we have a large degree of customization by customer and by country as we go around the world. So then we did develop something called Nova RAG.

Speaker #2: In simple terms, what Hansen has is some 50 years of knowledge-based build into technology and know-how. And Nova RAG allows you to actually capture that whole journey.

Speaker #2: So rather than going to 10 people or 20 people on how things operate or how industries work, Nova RAG goes into each of those products and deeply goes in and understands how it actually works.

Speaker #2: So then, all of a sudden, for the first time, that whole IP of what we've actually got has been able to be crystallized, customized, and brought together.

Andrew Hansen: All of a sudden, some of the first time that whole IP of what we have actually got has able to be crystallized, customized, and brought together. You move on that. Now you have done that. Now we know we can actually go looking for that data, which our customers' data and our data. Because our customers don't always own all the data. Some of the data is from other disparate systems, which we bring together. Then we started to look at what were some of the productivity gains, and certainly some of our increased margin has come from some of the productivity. Certainly, our staff being more productive in the use of technology has come on board. We have since started to test this even further out with some embedded data-driven improvements inside our business, which has been coming.

Speaker #2: Then you move on to that. So now you've done that. So now we know we can actually go looking for that data, which is our customers' data and our data, because our customers don't always own all the data.

Speaker #2: Some of the data is from other disparate systems which we bring together. So then we started to look at what were some of the productivity gains, and certainly some of our increased margin has come from some of the productivity.

Speaker #2: Certainly, our staff being more productive in the use of technology has come on board. We then started to test this even further out with some embedded data-driven improvements inside our business, which have been coming.

Speaker #2: But then, we're able, for the first time, to turn this into the next five years. What do the next five years look like? How do we commercialize AI? How do we leverage this knowledge bank, which has never been done before?

Andrew Hansen: But then we are able to, the first time, turn this into the next five years. What does the next five years look like? How we commercialize AI, how we leverage this knowledge bank, which has never been able to be done before, drive efficiency and lead it. So turning that 50 years of intellectual property into a scalable asset has probably been one of the most exciting revelations we have had of how Hansen can actually take subject matter knowledge and look now to commercialize it going forward. So what does it actually mean for us? I know there has been many questions from our shareholders, our customers, et cetera. We have always had multiple products. We have had products which deal with certain jurisdictions, we have had customization from products, et cetera.

Speaker #2: Drive efficiency and lead it. So turning that 50 years of intellectual property into a scalable asset has probably been one of the most exciting revelations we've had about how Hansen can actually take subject matter knowledge and look now to commercialize it going forward.

Speaker #2: So, what does it actually mean for us? I know there have been many questions from our shareholders, our customers, etc. We've always had multiple products.

Speaker #2: We've had products which deal with certain jurisdictions. We've had customization for products, etc. But now with Nova RAG, what we can actually do—for the first time ever—we'll be able to unify those applications.

Andrew Hansen: Now with NOVA RAG, what we can actually do, we, for the first time ever, will be able to now unify those applications. We are able to innovate by embedding AI into all of our products. So you can now start to see, we will now be able to have less products, and we will be able to now start to upgrade our customers with AI functionality and technology while still doing what we are doing at the moment. The benefits are endless. If you think of R&D, we can now run R&D from less products. Our bang for buck is so much further. We can now take the same knowledge when we have actually acquired business in the past. The idea of integrating their technology with our technology as something which has been difficult and costly, those same is not cost-prohibitive in our business anymore.

Speaker #2: We're able to integrate AI into all of our products, so you can now start to see that we will be able to have fewer products.

Speaker #2: And we'll now be able to start upgrading our customers with AI functionality and technology, while still doing what we're doing at the moment.

Speaker #2: The benefits are endless. If you think of R&D, we can now run R&D from less products—our bang for buck is so much further.

Speaker #2: We can now take the same knowledge when we've actually acquired businesses in the past. The idea of integrating their technology with our technology is something which has been difficult and costly.

Andrew Hansen: We can now take the same knowledge when we have actually acquired business in the past. The idea of integrating their technology with our technology as something which has been difficult and costly, those same is not cost-prohibitive in our business anymore.

Speaker #2: Those same is not cost prohibitive in our business anymore. Our ability to scale into new markets is much, much quicker now. And you put that on top of Stewart joining the company with a clear mandate and a presentation to myself and the board of how we're going to be now building out a true sales opportunity in the organization, and taking what we've done with the existing teams and accelerating it.

Andrew Hansen: The ability to scale into new markets is much, much quicker now. And you put that on top of Stuart joining the company with a clear mandate and the presentation to myself and the board of how we are going to be now building out a true sales opportunity in the organization and taking what we have done with the existing teams and accelerating it. We see the whole strategic side of AI being a demonstrable change to our business going forward. Guys, I am extremely excited, not only with what we are doing with AI, the health of our industry, how we are using the technology and the changes we make. I am extremely optimistic about our future. We probably should drill into some of the details. Rich, if I could get you to look at the financial meetings, please.

Speaker #2: We see the whole strategic side of AI bringing demonstrable change to our business going forward. So, guys, I'm extremely excited—not only with what we're doing with AI and the health of our industry, but also with how we're using the technology. I'm extremely optimistic about our future.

Andrew Hansen: Guys, I am extremely excited, not only with what we are doing with AI, the health of our industry, how we are using the technology and the changes we make. I am extremely optimistic about our future. We probably should drill into some of the details. Rich, if I could get you to look at the financial meetings, please.

Speaker #2: We probably should drill into some of the details. Rich, if I could get you to look at the financial metrics, please.

Speaker #1: Yeah, sure, Andrew. And thank you, everybody, for joining. I can see there's been a bit of a reaction in the market, so we can spend a bit of time this morning walking through that.

Richard English: Yeah, sure, Andrew, and thank you everybody for joining. I can see there has been a bit of a reaction in the market, so we can spend a bit of time this morning walking through that. And of course, welcome to Stuart joining the business on 19 November. I think a lot in the industry will know what Stuart has done at TechnologyOne, so we are equally as excited that he is now part of Hansen and driving the next stage of growth after Andrew moves to executive chair. Now for those who have listened to a few of these calls, I do like to talk through some of the key themes. And I think what is really important, first up, let us just talk through some of the key strengths of FY26, and then I can address some of the questions that will be inevitably coming for FY27.

Speaker #1: And, of course, welcome to Stewart, joining the business on the 19th of November. I think a lot in the industry will know what Stewart's done at TechnologyOne.

Speaker #1: So we are equally as excited that he's now part of Hansen and driving the next stage of growth after Andrew moves to executive chair.

Speaker #1: Now, for those who've listened to a few of these calls, I do like to talk through some of the key themes. And I think what's really important—first up, let's just talk through some of the key strengths of FY26.

Richard English: And I think what is really important, first up, let us just talk through some of the key strengths of FY26, and then I can address some of the questions that will be inevitably coming for FY27.

Speaker #1: And then I can address some of the questions that will inevitably be coming for FY27. This has been a very strong year; the revenue has been largely flat year on year.

Richard English: This has been a very strong year. The revenue has been largely flat year-on-year. There are some headwinds, which I will talk through. The idea that we have generated AUD 120 million of EBITDA, increasing our margins from 28.5% to 31%, I think is a real achievement considering what is going on out there in the market. More importantly, and this might get lost in some of the numbers, we have taken out AUD 20 million of cost in the year, and that is no small feat. That is a lot of effort. That is the proven work from AI efficiencies, AI enablement, and other initiatives that we talked about 12 months ago. Removing AUD 20 million or 7% of our operating cost base in one year is quite significant.

Speaker #1: There are some headwinds, which I'll talk through. But the idea that we've generated $120 million of EBITDA, increasing our margins from 28.5% to 31%, I think, is a real achievement considering what's going on out there in the market.

Speaker #1: More importantly—and this might get lost in some of the numbers—we've taken out $20 million of cost in the year, and that's no small feat.

Speaker #1: That's a lot of effort, and that's the proven work from AI efficiencies, AI enablement, and other initiatives that we talked about 12 months ago.

Speaker #1: So, removing $20 million, or 7% of our operating cost base in one year, is quite significant. And off the back of that, we've generated our most successful year of cash generation in history—$110 million of operating cash flow, up 52% year on year.

Richard English: Off the back of that, we have generated our most successful year of cash generation in history, AUD 110 million of operating cash flow, up 52% year-on-year. That is the backdrop. We are starting FY27 off a very strong balance sheet position. We are going to be net cash positive in the next 90 days. Then rolling into FY27. I think what needs to be clearly outlined here is the focus on the business from transitioning from license and some services revenue to a consumption-based revenue model. When you look through the financials, the presentation, you will see our underlying recurring revenue growing substantially year-on-year, and it is continuing to grow substantially next year.

Speaker #1: So that's the backdrop. We're starting FY27 off in a very strong balance sheet position. We're going to be net cash positive in the next 90 days.

Speaker #1: And then, rolling into FY27. I think what needs to be clearly outlined here is the focus on the business transitioning from license and some services revenue to a consumption-based revenue model.

Speaker #1: When you look through the financials and the presentation, you will see our underlying recurring revenue growing substantially year on year, and it's continuing to grow substantially next year.

Speaker #1: But the reality is that, as we transition away from these license fees that we're not particularly fond of—and I know that the market's not particularly fond of—inevitably, there will be a transition.

Richard English: The reality is that, as we transition away from these license fees that we are not particularly fond of, and I know that the market is not particularly fond of, inevitably there will be a transition, and FY27 is that transition year as we roll off some of these license fees. To give you an indication right now, the license fees in FY25 are AUD 50 million. In FY26, they are AUD 35 million. We are expecting a similar level of decline in FY27 for license revenue to be approximately 5% of group turnover. That is a material change in the revenue mix for the FY27 year. The second thing we are doing is investing a substantial amount of money in AI that we are not capitalizing. We talk to margins in our outlook of 26% plus.

Speaker #1: And FY27 is that transition year, as we roll off some of these license fees. So to give you an indication, right now the license fees in FY25 are $50 million.

Speaker #1: In FY26, they're $35 million. We're expecting a similar level of decline in FY27 for license revenue. That will be approximately 5% of group turnover, so that's a material change.

Speaker #1: In the revenue mix for the FY27 year, the second thing we're doing is investing a substantial amount of money in AI that we are not capitalizing.

Speaker #1: So, we talked to margins in our outlook of 26% plus. What that includes is $8 to $10 million of AI enablement staff, vendor spend, token spend, etc., that we're not capitalizing.

Richard English: What that includes is AUD 8 to 10 million of AI enablement staff, vendor spend, token spend, et cetera, that we are not capitalizing. We are being conservative on that approach. We are also investing another AUD 6 to 8 million in sales and marketing. Between those three initiatives, the AI enablement functionality investment, the sales and marketing investment, and the transition to recurring revenue, I think that might partially explain why there is some concern around FY27. We are very optimistic about FY28 and Andrew, of course, will talk to the outlook shortly as we go through the presentation. Moving on to slide 11. Just let me walk you through some of the highlights, and then we can talk more about FY27. Operating revenue. We had some headwinds in the year. We had approximately AUD 5 million of FX headwinds in FY26. There will be more headwind in FY27.

Speaker #1: We're being conservative on that approach. And we're also investing another $6 to $8 million in sales and marketing. So, between those three initiatives—the AI enablement functionality investment, the sales and marketing investment, and the transition to recurring revenue—I think that might partially explain why there is some concern around FY27.

Speaker #1: We are very optimistic about FY28. And Andrew, of course, will talk to the outlook shortly as we go through the presentation. Moving on to slide 11, let me walk you through some of the highlights.

Richard English: We are very optimistic about FY28 and Andrew, of course, will talk to the outlook shortly as we go through the presentation. Moving on to slide 11. Just let me walk you through some of the highlights, and then we can talk more about FY27. Operating revenue. We had some headwinds in the year. We had approximately AUD 5 million of FX headwinds in FY26. There will be more headwind in FY27.

Speaker #1: And then we can talk more about FY27. Operating revenue—we had some headwinds in the year. So, we had approximately $5 million of FX headwinds in FY26.

Speaker #1: There will be more headwind in FY27. Most of the currencies are running against us. The USD, euro, sterling, and CAD are not working in our favor.

Richard English: Most of the currencies are running against us. The USD, euro, sterling, the CAD are not working in our favor. However, we do have a natural hedge in place that most of you are aware of with our cost base also in those same jurisdictions. I mentioned before the license revenue lowered by 15 million year on year as well. VM O2 was announced in February 2025. All in all, AUD 387 million off the back of AUD 20 million of headwinds from license and FX, we think is explainable. Then moving across to underlying EBITDA. There are two things here. At the start of FY26, we flagged that we thought we would get our margins back to 30%. We were at 28.5% for FY25. We actually exceeded it. We have come in at 31%.

Speaker #1: However, we do have a natural hedge in place, which most of you are aware of, with our cost base also in those same jurisdictions.

Speaker #1: I mentioned before the license revenue was lower by $15 million year on year as well. VMO2 was announced in February 2025. So all in all, $387 million off the back of $20 million of headwinds from license and FX, we think is explainable.

Speaker #1: And then, moving across to underlying EBITDA, there are two things here. At the start of FY26, we flagged that we thought we would get our margins back to 30%, right?

Speaker #1: We were at 28.5% for FY25. We've actually exceeded it; we're coming in at 31%. The second half of the year is coming in at 32.7%. So, we've had a particularly strong second half of the year.

Richard English: The second half of the year has come in at 32.7%. We have had a particularly strong H2 to the year. The cost-out initiatives that I referred to before, the AUD 20 million, have made a significant difference to the business. Our headcount has now reduced to 1,450 staff. We are not going to talk a lot about headcount on this call, but we see long-term opportunities for productivity gains throughout Hansen, and that is not dissimilar to a lot of what tech companies are talking about out there in the market. Cash EBITDA, naturally, that flows down from underlying EBITDA as well. Margin increasing from 23.8% to 27.5%.

Speaker #1: The cost-out initiatives that I referred to before—the $20 million—have made a significant difference to the business. We have now gone; headcount has now reduced to 1,450 staff.

Speaker #1: We're not going to talk a lot about headcount on this call, but we see long-term opportunities for productivity gains throughout Hansen. And that's not dissimilar to a lot of what tech companies are talking about out there in the market.

Speaker #1: Cash EBITDA, naturally, that flows down from underlying EBITDA as well. Margin increasing from 23.8% to 27.5%. I think, considering the cautious demand out there in the market, juggling FX headwinds, etc., we've just delivered $100.2 million of EBITDA.

Richard English: I think considering the cautious demand out there in the market, juggling FX headwinds, et cetera, we have just delivered AUD 100.2 million of EBITDA, of which AUD 110 million has dropped to operating cash flow. I think off the back of a bit of noise around what is in the future, I think this has been a particularly strong year. Underlying NPATA, growth of 15.9%. Obviously, that flows through the P&L. We also paid our fair share of taxes. The effective tax rate was 24% versus 19.7% last year. I think next year, just to guide, it will be 25% to 26% for the ETR for FY27. Move to slide 14. We talk a lot about diversity. Diversity has helped us this year. We have got some mixed pockets out there, some in growth, some in stability mode.

Speaker #1: Of which $110 million has dropped to operating cash flow. So, I think off the back of a bit of noise around what's in the future, this has been a particularly strong year.

Speaker #1: Underlying NPAT-A growth of 15.9%. Obviously, that flows through the P&L. We also paid our fair share of taxes. The effective tax rate was 24%, versus 19.7% last year.

Speaker #1: I think next year, just as a guide, it'll be 25 to 26 percent for the ETR for FY27. Move to slide 14. We talk a lot about diversity.

Speaker #1: Diversity has helped us this year. We've got some mixed pockets out there—some in growth, some in stability mode. But we now have both verticals, largely 50/50.

Richard English: We now have both verticals, largely 50/50. Comms is 48%, energy is 52%. EMEA continues to be our growth engine, 73% of our revenue in EMEA and a substantial amount of opportunities, not only with existing customers, but with M&A opportunities as well that Andrew will talk to shortly. I just wanted to draw your attention to the second table there, which is the real story for FY26, and it will be the same story for FY27. This is recurring revenue. This is better quality revenue. We have grown the business 14% CAGR since FY22. We are also guiding to a 6% to 8% growth rate next year, which gets us to AUD 245 million to AUD 250 million of recurring revenue next year. This is the revenue that is profitable, sticky, recurring in nature. It is locked in for the foreseeable future.

Speaker #1: Comms is 48%, energy is 52%. EMEA continues to be our growth engine—73% of our revenue is in EMEA, and there are substantial opportunities not only with existing customers, but also with M&A opportunities as well, which Andrew will talk to shortly.

Speaker #1: But I just wanted to draw your attention to the second table there, which is the real story for FY26. And it will be the same story for FY27, right?

Speaker #1: This is recurring revenue. This is better quality revenue. We're growing the business 14% CAGR since FY22. We're also guiding to a 6% to 8% growth rate next year, which gets us to $245 to $250 million.

Richard English: We are also guiding to a 6% to 8% growth rate next year, which gets us to AUD 245 million to AUD 250 million of recurring revenue next year. This is the revenue that is profitable, sticky, recurring in nature. It is locked in for the foreseeable future.

Speaker #1: ...of recurring revenue next year. So this is revenue that is profitable, sticky, and recurring in nature. It's locked in for the foreseeable future. And if you look at our contracted revenue in the annual report, you'll see it's jumped dramatically from $250 million to $325 million.

Richard English: If you look at our contracted revenue in the annual report, you will see it has jumped dramatically from AUD 250 million to AUD 325 million. So despite some noise in the numbers in FY27, this is where the real story lies. That then leads nicely into license revenue. So you can see the way it has bounced around. We spend a lot of time with analysts, shareholders, talking about license fees. We are, as best we can within our accounting standards and rev rec policy, migrating towards recurring consumption-based revenue streams. So I did say before, 9.1% for FY26. I think it might be around 4% to 6%. I am not going to bank it, but that is the sort of percentage for license fees in FY27, and that explains a large part of the margin impact for the FY27 guidance.

Speaker #1: So there is, despite some noise in the numbers in FY27, this is where the real story lies. And that then leads nicely into license revenue.

Speaker #1: So, you can see the way it's bounced around. We spend a lot of time with analysts and shareholders talking about license fees. We are, as best we can within our accounting standards and RevRec policy.

Speaker #1: Migrating towards recurring, consumption-based revenue streams. So, I did say before, 9.1% for FY26. I think it might be around the 4 to 6 percent range.

Richard English: So I did say before, 9.1% for FY26. I think it might be around 4% to 6%. I am not going to bank it, but that is the sort of percentage for license fees in FY27, and that explains a large part of the margin impact for the FY27 guidance.

Speaker #1: I'm not going to bank it, but that's the sort of percentage for license fees in FY27. And that explains a large part of the margin impact for the FY27 guidance.

Speaker #1: Moving to slide 15. Communications and Media. There are a couple of really good stories here. The first one is around DigiTalk. Andrew will talk about the acquisition.

Richard English: Moving to slide 15, Communications and Media. There are a couple of really good stories here. The first one is around Digitalk. Andrew will talk about the acquisition. We have now owned the business for just on 8 months. It is going ahead of plan. It is a smaller business, but it is growing well. It is extremely profitable. That has obviously contributed 6 months' worth of information here. But we have also taken out AUD 8 million of cost from the business, and you can see the margin increasing from 53.8% to 57.6%. For those on the journey, you will remember Telefónica 5 years ago. We signed a large deal in FY21. Everybody was hoping that there would be a renewal, and we were really pleased to announce recently that we did renew for a further term. We are a strong partner of Telefónica. We only represent Telefónica in Germany.

Speaker #1: We've now owned the business for just over eight months. It's going ahead of plan. It is a smaller business, but it's growing well. It's extremely profitable.

Speaker #1: That's obviously contributed six months' worth of information here. But we've also taken out $8 million of cost from the business, and you can see the margin increasing from 53.8% to 57.6%.

Speaker #1: For those on the journey, you will remember Telefónica. Five years ago, we signed a large deal in FY21. Everybody was hoping that there would be a renewal.

Richard English: For those on the journey, you will remember Telefónica 5 years ago. We signed a large deal in FY21. Everybody was hoping that there would be a renewal, and we were really pleased to announce recently that we did renew for a further term. We are a strong partner of Telefónica. We only represent Telefónica in Germany.

Speaker #1: And we were really pleased to announce recently that we did renew for a further term. We are a strong partner of Telefónica. We only represent Telefónica in Germany.

Speaker #1: They are a global outfit, but we are entrenched in that business. It's a fantastic partnership that we announced again in FY26, and there are a strong number of opportunities in the pipeline.

Richard English: They are a global outfit, but we are entrenched in that business, and it is a fantastic partnership that we announced again in FY26. There are a strong number of opportunities in the pipeline. We talk a lot for the size of these opportunities. Nothing has changed dramatically. Obviously, there is some cautious demand all around the world in all markets, but we feel particularly strong about Communications and Media. Slide 16, Energy and Utilities. A slightly different story here. So we have got some large implementations that finished in FY26. So you will see the application services revenue reducing in the FY26 year. The underlying support and maintenance revenue is the key. Aside from some reduction in Germany, the business is very resilient. We have taken out AUD 10 million of costs from the business and protected our margin.

Speaker #1: We talk a lot about the size of these opportunities. Nothing's changed dramatically. Obviously, there's some cautious demand all around the world, in all markets, but we feel particularly strong about communications and media.

Speaker #1: Slide 16. Energy and utilities. Slightly different story here. We've got some large implementations that finished in FY26, so you'll see the application services revenue reducing in the FY26 year.

Richard English: So you will see the application services revenue reducing in the FY26 year. The underlying support and maintenance revenue is the key. Aside from some reduction in Germany, the business is very resilient. We have taken out AUD 10 million of costs from the business and protected our margin.

Speaker #1: The underlying support and maintenance revenue is the key. Aside from some reduction in Germany, the business is very resilient. We've taken out $10 million of cost from the business and protected our margin.

Speaker #1: You can see the underlying margin of 35.8 going to 34.9, so largely protected on a reduced revenue. Andrew and I don't ever talk a lot to one product or one specific country, but it's worthwhile touching on Germany just for a moment.

Richard English: You can see the underlying margin of 35.8% going to 34.9%, so largely protected on a reduced revenue. Andrew and I do not ever talk a lot to one product or one specific country, but it is worthwhile touching on Germany just for a moment. It is fair to say that the smart meter rollout in Germany is well behind schedule. One of the reasons we bought the business was the acceleration of smart meters rolling out across Germany. They are well behind. They have pushed out their estimated completion to 2032. So that has obviously had a drag on opportunities for us to pick up customers from legacy software suppliers. There has been some customer rationalization. There have been some customers actually exiting the market, and there has been some modest customer churn as well.

Speaker #1: It's fair to say that the smart meter rollout in Germany is well behind schedule. One of the reasons we bought the business was the acceleration of smart meter rollouts across Germany.

Speaker #1: They are well behind. They have pushed out their estimated completion to 2032, so that's obviously had a drag on opportunities for us to pick up customers from legacy software suppliers.

Speaker #1: There's been some customer rationalization. There's been some customers actually exiting the market, and there's been some modest customer churn as well. So, for a business that's turning over circa $400 million, this is a very small component of Hansen, but it is worthwhile pointing out that it's been a drag on the business in FY26, in particular, this vertical.

Richard English: For a business that is turning over circa AUD 400 million, this is a very small component of Hansen, but it is worthwhile pointing out that it has been a drag on the business in FY26, in particular, this vertical. It is a long game, and this is a 10-year window we have for opportunity in Germany. It is not about the last two years. We feel in time that this will obviously be a very good acquisition. But in the short term, it has been a drag on our overall numbers. Slide 17, cash generation. There has been some feedback on the last couple of years. When is Hansen returning to the strong cash that it is known for? Well, this is the year. We generated AUD 110 million of cash flow, 52% up on last year.

Speaker #1: But it's a long game, and this is the 10-year window we have for opportunity in Germany. It's not about the last two years. We feel, in time, that this will obviously be a very good acquisition.

Speaker #1: But in the short term, it has been a drag on our overall numbers. Slide 17: Cash generation. There’s been some feedback over the last couple of years on Hansen returning to the strong cash generation that it’s known for.

Speaker #1: Well, this is the year we generate $110 million of cash flow, which is up 52% on last year. We will be net cash positive in the next 60 days.

Richard English: We will be net cash positive in the next 60 days, and I will talk about capital management in a moment. But we are in a very strong position from a cash generation standpoint. We paid back AUD 19 million to our shareholders. We paid back AUD 64 million to the banks. Combining AUD 84 million back to shareholders and the banks in the last 12 months, which is particularly strong. Of course, we bought Digitalk for AUD 67 million. So overall, a very strong cash generation year. If I was to talk to next year, I think it will be around the 70% to 80% conversion rate. Slightly down on this year, but off the back of a very strong year, I think that is understandable. Then finally, slide 18. I just want to spend a bit of time on capital management and the way that the board and management talk about this.

Speaker #1: And I'll talk about capital management in a moment. But we are in a very strong position from a cash generation standpoint. We paid back $19 million to our shareholders.

Speaker #1: We paid back $64 million to the banks. Combining $84 million paid back to shareholders and the banks in the last 12 months, which is particularly strong.

Speaker #1: And of course, we bought DigiTalk for $67 million. So, overall, a very strong cash generation year. If I was to talk to next year, I think it'll be around the 70% to 80% conversion rate.

Richard English: If I was to talk to next year, I think it will be around the 70% to 80% conversion rate. Slightly down on this year, but off the back of a very strong year, I think that is understandable. Then finally, slide 18. I just want to spend a bit of time on capital management and the way that the board and management talk about this.

Speaker #1: Slightly down on this year, but off the back of a very strong year, I think that's understandable. And then, finally, slide 18. I just want to spend a bit of time on capital management and the way that the Board and management talk about this.

Speaker #1: And it's fair to say this has now become a monthly topic. When we're in a position where we will be net cash positive in 60 days, there is a view in the market that there are other opportunities and other ways to spend our money, as opposed to M&A.

Richard English: It is fair to say this has now become a monthly topic. When we are in a position where we will be net cash positive in 60 days, there is a view in the market that there are other opportunities and other ways to spend our money as opposed to M&A. I think the first one for us is always M&A, right? We have a long track record of generating substantial shareholder value from M&A over the journey. We have a lot of opportunities coming up off the back of the European summer. We feel that we are well placed on some of those opportunities. Some of them may not progress, but the point is we have a strong balance sheet and we think M&A is priority number one. However, we have talked about a special dividend.

Speaker #1: So, I think the first one for us is always M&A, right? We've had a long track record of generating substantial shareholder value from M&A over the journey.

Speaker #1: We have a lot of opportunities coming up off the back of the European summer. We feel that we are well placed for some of those opportunities.

Speaker #1: Some of them may not progress, but the point is we have a strong balance sheet, and we think M&A is priority number one. However, we have talked about a special dividend.

Speaker #1: We don't think that it's in the best interest of shareholders to return a partially franked special dividend. We have talked at length about a buyback.

Richard English: We do not think that is in the best interest of shareholders to return a partially franked special dividend. We have talked at length around a buyback, and at the share price of wherever it is trading, it can certainly be attractive and accretive to look at a share buyback. All I can say is that it has now become a focal point each month. We are not committing to anything today, but the board and management are actively looking at the best way to deploy our capital to make sure it is generating a return for our shareholders, and we will keep you posted over the coming months. We have an AGM fast approaching. Between now and then, we will continue to consider both the M&A and the buyback as well.

Speaker #1: And at the share price, wherever it's trading, it can certainly be attractive and accretive to look at a share buyback. All I can say is that it's now become a focal point each month.

Speaker #1: We're not committing to anything today, but the Board and management are actively looking at the best way to deploy our capital to make sure it's generating a return for our shareholders.

Speaker #1: And we will keep you posted over the coming months. We have an AGM fast approaching, and between now and then, we'll continue to consider both the M&A and the buyback as well.

Speaker #1: Finally, we paid out a 5-cent dividend, partially franked to 80%, as I said. And we head into FY27 in a very strong position from a balance sheet standpoint. I think the underlying revenue base—we talk a lot about revenue mix—the underlying revenue base is very, very strong.

Richard English: Finally, we paid out a 5 cent dividend, partially franked to 80%, as I said, and we head into FY27 in a very strong position from a balance sheet standpoint. I think the underlying revenue base, we talk a lot about revenue mix. The underlying revenue base is very, very strong. With the cost efficiencies that we have already identified and further efficiencies to identify, I think we are certainly treating FY27 as a transition year. With Stuart also on board, we are excited about FY28. Andrew, I have just done a bit of a whip around the financials. Back to you on M&A.

Speaker #1: And with the cost efficiencies that we've already identified, and further efficiencies to identify, I think we're certainly treating FY27 as a transition year. And with Stuart also on board, we're excited about FY28.

Speaker #2: Andrew, I've just done a quick review of the financials. Back to you on M&A.

Speaker #1: Richard, thanks for that, mate. And well done on presenting the financials and managing your team during the year to certainly generate the cash which we have been—look, guys, it's always probably worthwhile touching on M&A.

Andrew Hansen: Richard, thanks for that mate. Well done on presenting the financials and managing your team during the year to certainly generate the cash which we have been. Guys, it is always probably worthwhile touching on M&A. We have got a couple of slides on M&A, but just to, Hansen's history has been very, very good at turning companies, increasing their profitability. We have done that for a long time. A long track record of doing it. We have always had very clear focus on what we are actually looking for around IP, where the margins are, et cetera, and we have loved it. I think we have been extremely disciplined.

Speaker #1: We've got a couple of slides on M&A, but just to Hansen's history—it's been very, very good at turning around companies and increasing their profitability. We've done that for a long time.

Speaker #1: A long track record of doing it. We've always had a very clear focus on what we're actually looking for around IP, where the margins are, etc.

Speaker #1: And we've loved it. And I think it's been extremely disciplined. I think over the last 12 months, I know a lot of my time has been probably more focused on what we think is the excitement opening up the market with AI and what we're doing, how quickly we'll be able to make sales, how quickly we can enter markets.

Andrew Hansen: I think the last 12 months, I know a lot of my time has been probably more focused on what we see as the excitement opening up the market with AI and what we are doing, how quick we will be able to make sales, how quick we can enter markets. It is very, very exciting. Part of my new role in discussions with the board and also with Stuart on roles is, with Stuart now operating the business. Myself, we give more time on M&A, going back to the M&A time and partnering with Stuart to bring those. For us also using an AI lens to some of the businesses we would be looking to buy is, how we can actually bring that to market. Something we have never done before and how we leverage some of the intellectual property they have in their history with NOVA RAG coming in over the top.

Speaker #1: It's very, very exciting. Part of my new role in discussions with the board—and also with Stuart on roles—is Stuart now operating the business.

Speaker #1: But myself, we give more time on M&A, going back to the M&A time, and partnering with Stuart to bring those for us. Also, using an AI lens to some of the businesses we'd be looking to buy is how we can actually bring that to market with something we've never done before.

Andrew Hansen: Myself, we give more time on M&A, going back to the M&A time and partnering with Stuart to bring those. For us also using an AI lens to some of the businesses we would be looking to buy is, how we can actually bring that to market. Something we have never done before and how we leverage some of the intellectual property they have in their history with NOVA RAG coming in over the top.

Speaker #1: And how we leverage some of the intellectual property they have in their history, with a Nova RAG coming in over the top. I think our pipeline has never been bigger in M&A.

Andrew Hansen: I think our pipeline has never been bigger in M&A. It does come to question at the moment, valuations of businesses. Everyone is a bit confused with valuation of all businesses at the moment now. The heady days from a number of years ago when silly valuations were doing it. Hansen's is probably one of the strongest companies out there. We make strong cash. We have ability to fund. Our balance sheet is unbelievable. We will not leave what we actually do. I know the boys have worked very hard to build out. I know once Stuart comes on board, I will be able to devote a lot of my time into what we think is a very interesting opportunity. Changing to the recap on that, Richard, you stole some of my thunder on Digitalk. Great acquisition, great bunch of people come on board, strong revenue, ahead of our expectations.

Speaker #1: It does call into question, at the moment, valuations of businesses. Everyone's a bit confused with the valuation of all businesses at the moment. The heady days from a number of years ago, when silly valuations were happening, are gone.

Speaker #1: But Hansen's probably one of the strongest companies out there. We make strong cash. We have the ability to fund. Our balance sheet is unbelievable. But we won't leave what we actually do.

Speaker #1: But I know the boys have worked very, very hard to build out. I know once Stuart comes on board, I'll be able to devote a lot of my time.

Andrew Hansen: I know once Stuart comes on board, I will be able to devote a lot of my time into what we think is a very interesting opportunity. Changing to the recap on that, Richard, you stole some of my thunder on Digitalk. Great acquisition, great bunch of people come on board, strong revenue, ahead of our expectations.

Speaker #1: Into what we think is a very interesting opportunity. Changing to the recap on actions, Richard, you stole some of my thunder on DigiTalk. Great acquisition, great bunch of people have come on board, strong revenue, ahead of our expectations.

Speaker #1: And so it's straight from the Hansen playbook, which has been fantastic. We could talk about Dial AI, which is one of the first AI enablement tools for call centers, etc., in which we have a shareholding and have put into our product.

Andrew Hansen: It is straight from the Hansen playbook, which has been fantastic. We can talk about DialerAI, which is one of the first AI enablement for call centers, et cetera, which we have a shareholding and have put into our product. The sales we are now making on the back of that now, that has gone very well for the company as well, and certainly expanding the pipeline and also the growth of that business. powercloud certainly is below expectations. A number of reasons why. Whilst Hansen has operated in Germany for such a long period of time, buying a big established business there with dealing with some bureaucracy in Germany, their transition is slower than what they originally published and the migration, the market contraction, customer churn has not played out probably the way which we would have liked.

Speaker #1: But the sales we're now making on the back of that—now, that's gone very, very well for the company as well, and certainly expanding the pipeline.

Speaker #1: And also the growth of that business. PowerCloud certainly is below expectations—a number of reasons why. Whilst Hansen has operated in Germany for such a long period of time, buying a big established business there and dealing with some bureaucracy in Germany, their transition is slower than what they originally published.

Speaker #1: And the migration, the market contraction, customer churn has not played out probably the way which we would have liked. But the third largest economy in the world, 1,000 retailers, meters everywhere, and it’s probably one of the most—all needs to be upgraded to new meter technology.

Andrew Hansen: The third largest economy in the world, a thousand retailers, meters everywhere, and it is probably one of the most. It all needs to be upgraded to new meter technology. So our outlook is, the smart meter rollout is still going to drive a lot of demand. There are lots of regulatory changes. So it is the medium term. As I said, it is a bit of a mixed bag there. We would not change our way on powercloud. It is great to see Digitalk talk, and deliver on everything they said has been fantastic for us. DialerAI and powercloud, just a little bit below our expectations, which probably moves it all to outlook. Guys, I have probably never been more excited in my 30 odd years of running Hansen for the first time of seeing how we can. We have always been subject matter and doing a great job.

Speaker #1: So our outlook is that the smart meter rollout is still going to drive a lot of demand. There are lots of regulatory changes, so it's the medium term.

Speaker #1: As I said, it's a bit of a mixed bag there. We wouldn't change our way on PowerCloud, but it's great to see DigiTalk talk — the delivery on everything they said has been fantastic for us.

Andrew Hansen: It is great to see Digitalk talk, and deliver on everything they said has been fantastic for us. DialerAI and powercloud, just a little bit below our expectations, which probably moves it all to outlook. Guys, I have probably never been more excited in my 30 odd years of running Hansen for the first time of seeing how we can. We have always been subject matter and doing a great job.

Speaker #1: Dial AI and PowerCloud are just a little bit below our expectations, which probably moves it all to Outlook. Guys, I've probably never been more excited in my 30-odd years of running Hansen, for the first time, to see how we can— we've always been subject matter experts and doing a great job.

Speaker #1: We've always made sales because people know who we are. But to unlock what we're doing with them is technology now and into the future. We will spend this next 12 months.

Andrew Hansen: We have always made sales because people know who we are. To unlock what we are doing with technology now into the future, we will spend this next 12 months. The next three years, when we look to converge our products into and upgrading our customers, we have a very clear path of the journey we are going. I think we talked about Stuart coming on board to drive those sales. Stuart has bought into not only what we are doing, but his own experience from TechnologyOne of what is taking place. We do know there is a change of pricing. Not many companies are talking about it now. The days of charging by seat or by meter or by event has changed. It is going to be consumption-based, and we are in the forefront of that.

Speaker #1: Over the next three years, as we look to converge our products and upgrade our customers, we have a very, very clear path for the journey we're going on.

Speaker #1: I think we're talking about Stuart coming on board to drive those sales. And Stuart has bought into not only what we're doing, but also brings his own experience from TechnologyOne of what's taking place.

Speaker #1: We do know there's a change in pricing. I don't know how many companies are talking about it now. The days of charging by seat, by meter, or by event have changed.

Speaker #1: It's going to be consumption-based, and we're at the forefront of that. Some of the work we're doing, which we don't talk about on these calls—and won't—because some of our lighthouse customers, which we're now working with on some of these new technologies and partnering with them, is exciting. It's an exciting time.

Andrew Hansen: Some of the work we are doing, which we do not talk on these calls and won't because some of our lighthouse customers, which we are now working with some of these new technologies with them and partnering with them, is exciting times. So I think our outlook is fantastic. Our outlook is great. The fundamentals of Hansen about generating cash and profitable growth is not going to change. We are just excited by the future with technology, by Stuart, and by our industry as it moves forward. So, next year, yes, we will be investing a lot. As we have said, we have decided not to capitalize a lot of the investment we are doing in bringing the products together, but still making a very healthy return and cash inside the organization. So, the future looks great for Hansen. I thank you all for listening in. I thank you all for the journey.

Speaker #1: So I think our outlook is fantastic. Our outlook is great. The fundamentals of Hansen, about generating cash and profitable growth, are not going to change.

Speaker #1: We're just excited about the future with technology, by Stuart, and by our industry as it moves forward. So next year, yes, we'll be investing a lot because we've said we've decided not to capitalize a lot of the investment we're doing in bringing the products together.

Andrew Hansen: As we have said, we have decided not to capitalize a lot of the investment we are doing in bringing the products together, but still making a very healthy return and cash inside the organization. So, the future looks great for Hansen. I thank you all for listening in. I thank you all for the journey.

Speaker #1: But still making a very healthy return and generating cash inside the organization. So the future looks great for Hansen. I thank you all for listening in.

Speaker #1: I thank you all for the journey, and we look forward to taking any questions, if there are any.

Andrew Hansen: We look forward to taking any questions if there are any questions.

Speaker #2: 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.

Operator: 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 are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Josh Kanterakis with Barrenjoey. Please go ahead.

Speaker #2: If you’re on speakerphone, please pick up the handset to ask your question. Your first question comes from Josh Cannerackers with Baron Joey. Please go ahead.

Speaker #3: Hi, Andrew and Richard. Can you hear me okay?

Josh Kanterakis: Hi, Andrew and Richard. Can you hear me okay?

Josh Kannourakis: Hi, Andrew and Richard. Can you hear me okay?

Speaker #1: Yeah, perfect. How are you, mate?

Richard English: Yep.

Richard English: Perfectly. How are you, mate?

Andrew Hansen: Yep.

Richard English: Perfectly. How are you, mate?

Speaker #3: Yeah, good, mate. First question, just on the transition away from the license fee. So, obviously, you mentioned that that's happening. Just wanted to clear up—is that partially customer driven as well, or is it also Hansen driven in terms of when you are signing new contracts, you're insisting on the recurring basis?

Josh Kanterakis: Yeah, good, mate. First question, just on the transition away from the license fee. Obviously, you mentioned that that is happening. Just wanted to clear up, is that partially customer driven as well, or is it also Hansen driven in terms of when you are signing your contracts, you are insisting on the recurring basis? Maybe you mentioned the sort of trajectory that it drops down again. Is that expected to sort of come down to a much more nominal amount in, say, 2028 and 2029, et cetera?

Josh Kannourakis: Yeah, good, mate. First question, just on the transition away from the license fee. Obviously, you mentioned that that is happening. Just wanted to clear up, is that partially customer driven as well, or is it also Hansen driven in terms of when you are signing your contracts, you are insisting on the recurring basis? Maybe you mentioned the sort of trajectory that it drops down again. Is that expected to sort of come down to a much more nominal amount in, say, 2028 and 2029, et cetera?

Speaker #3: And maybe, you mentioned the sort of trajectory, that it drops down again. Is that expected to sort of come down to a much more, say, '28 and '29, etc.?

Speaker #1: Yeah, Josh, good question. I think Richard's answered it a little bit. So, number one, we've got contracts going another 10 years on the old format.

Andrew Hansen: Yeah. Josh, good question. I think that Richard has answered a little bit. Number one, we have got contracts going another ten years on the old format. But the traditional days of licensing has been changing. We have been seeing that in the marketplace. The problem is it is a new market, mate. You have got the cost of tokens, you have got the cost of housing. We have already started to move to consumption-based. So where is the drive coming from? We are probably leading those conversations at the moment now, consumption-based. We see the value in being able to use what we have called our Cortex, which sits over top of all our products, which interrogates the data and brings information back up into the hands of our customers and the way which we are actually pricing. We know it is, from our point of view, going to move to consumption-based.

Speaker #1: But the traditional days of licensing have been changing. We've been seeing that in the marketplace. The problem is, it's a new market, mate. You've got the cost of tokens.

Speaker #1: You've got the cost of housing. We've already started to move to a consumption base. So, where's the drive coming from? We're probably leading those conversations at the moment now.

Speaker #1: Consumption-based. We see the value in being able to use what we've called our Cortex, which sits over top of all our products, which interrogates the data and brings information back up into the hands of our customers.

Andrew Hansen: We see the value in being able to use what we have called our Cortex, which sits over top of all our products, which interrogates the data and brings information back up into the hands of our customers and the way which we are actually pricing. We know it is, from our point of view, going to move to consumption-based.

Speaker #1: And the way in which we're actually pricing, we know it is, from our point of view, going to move to consumption-based. So, I think we're on the forefront of actually doing it.

Andrew Hansen: I think we are on the forefront of actually doing it, trying to work out the pricing exactly. I think what Richard was trying to highlight before, the traditional days of licensing is not the way people wish to see it. I think our customers also like the idea of consumption because they can monetize consumption. They can look at their own costs running their own business and see this is the cost, how they pass it on to their customers as well. But it is a bit of a journey, Josh, at the moment now, and I would probably at this stage, because competitors listen to this, probably hold back a little bit of what I can say is some of our competitive edge we have over people at the moment now going forward.

Speaker #1: Trying to work out the pricing exactly. I think we're trying what Richard was trying to highlight before. The traditional days of licensing are not the way people wish to see it.

Speaker #1: I think our customers also like the idea of consumption because they can monetize consumption. They can look at their own cost of running their own business and see that this is the cost, and how they pass it on to their customers as well.

Speaker #1: But it's a bit of a journey, Josh, at the moment now. And I'd probably, at this stage—because competitors are listening—hold back a little bit. What I can say is, some of our competitive edge we have over people at the moment now, going forward.

Speaker #3: Okay, that's great. And just on the leadership changes—obviously, well done on your tenure, and I know Stu well; he's a great operator. So that's an excellent hire for the business.

Josh Kanterakis: Okay, that is great. Just on the leadership changes, obviously well done on your tenure and, I know Stu well, he is a great operator, so that is an excellent hire for the business. But I imagine him coming in as well, I am just trying to link, you sort of mentioned on the call that he has obviously talked a little bit about his strategy in coming on board, the investment in AI, the investment in sales and this transition. How much of that was sort of in train before the leadership changes versus maybe partially influenced by that as well?

Josh Kannourakis: Okay, that is great. Just on the leadership changes, obviously well done on your tenure and, I know Stu well, he is a great operator, so that is an excellent hire for the business. But I imagine him coming in as well, I am just trying to link, you sort of mentioned on the call that he has obviously talked a little bit about his strategy in coming on board, the investment in AI, the investment in sales and this transition. How much of that was sort of in train before the leadership changes versus maybe partially influenced by that as well?

Speaker #3: But I imagine him coming in as well. I'm just trying to link—you sort of mentioned on the call that he's obviously talked a little bit about his strategy and coming on board.

Speaker #3: The investment in AI and investment in sales, and this transition—how much of that was already underway before the leadership changes versus maybe partially influenced by those changes as well?

Speaker #1: Well, remember, Stuart hasn't started yet. He doesn't start until November. So, to be honest, this is already happening now. But in all fairness, there was a bit of DD on both sides.

Andrew Hansen: Well, remember Stuart hasn't started yet. He doesn't start till November.

Josh Kanterakis: Of course.

Josh Kannourakis: Of course.

Andrew Hansen: To be honest, this is already happening now. But in all fairness, there was a bit of DD on both sides. There's a conversation. I've had many, many conversations with Stuart over the journey at the moment with many, many candidates. I think the board had a very clear focus along with myself of what we wanted from inside the organization. Hansen's a predictable sort of business. I think when we started to feel that what we could unlock in the industry and with AI and how we best take advantage, Josh, it was why I think that Stuart, some of his experience, which you would know from Stuart, what he's done at TechnologyOne, you can understand the great alignment of the conversations between Stuart and myself and what we were doing and where we were going.

Speaker #1: I've had many, many conversations with Stuart over the journey at the moment, with many, many candidates. And I think the Board had a very clear focus, along with myself, on what we wanted.

Speaker #1: From inside the organization, Hansen's a predictable sort of business. I think when we started to feel that what we could unlock in the industry with AI, and how we best take advantage—Josh, it was why I think that Stuart, some of his experience, which you would know from Stuart, what he’s done at TechnologyOne—you’re going to understand the great alignment of the conversations between Stuart and myself, and what we were doing and where we were going.

Speaker #1: The fact of having a new lens over the top—I think we're well on the journey at the moment, and thank God we are on the journey.

Andrew Hansen: The fact having a new lens over the top, I think we're well on the journey at the moment, and thank God we are on the journey, and we've been on it now for a couple of years. But I think that Stuart and I will work very closely together. I think we talk about being a partnership inside our business. Him looking after day-to-day, me on the strategy side and the M&A, is just going to harmonize the business going forward. So back to your words, a great acquisition. He's had a brief introduction to the executives, but we can't wait until November when we will give him the keys to the car.

Speaker #1: And we've been on it now for a couple of years. But I think that, mate, I think that Stuart and I will work very, very closely together.

Speaker #1: I think we talk about being a partnership inside our business—him looking after day-to-day, me on the strategy side—and the M&A is just going to harmonize the business going forward.

Speaker #1: So, to your words, a great acquisition. He's had a brief introduction to the executives, but we can't wait until November when we will give him the keys to the car.

Speaker #3: Okay, I'll let some others ask questions. Thanks, Andrew. Thanks.

Josh Kanterakis: Okay. I will let some others ask some questions. Thanks, Andrew.

Josh Kannourakis: Okay. I will let some others ask some questions. Thanks, Andrew.

Speaker #1: Thanks, mate.

Andrew Hansen: No, thanks, Josh. Bye.

Speaker #2: Thank you. Your next question comes from Sinclair Curry with MA Australia. Please go ahead.

Josh Kanterakis: Thanks.

Josh Kannourakis: Thanks.

Operator: Thank you. Your next question comes from Sinclair Currie with MA Australia. Please go ahead.

Speaker #4: Hi, good day. I hope you can hear me okay, and thanks for taking my question. Can you hear me? Cool, thanks. I was just interested maybe in drilling a bit more into the license impact, specifically to Telefonica.

Sinclair Currie: Hi. Good day. I hope you can hear me okay. Thanks for taking my question. Can you hear me?

Andrew Hansen: Yes.

Sinclair Currie: Cool. Thanks. I was just interested, maybe drilling a bit more into the license impact specifically to Telefónica. I think you renewed that in late May or June. Can I just confirm that would have been an impact for license fee revenue for FY26 or, was it something which would have fallen into FY27?

Speaker #4: I think you renewed that in late May or June. So can I just confirm that would have been an impact for license fee revenue for FY26 or was it something which would have fallen into FY27?

Speaker #1: Oh, no, Sinclair, it's definitely not an FY27. It's an FY26 impact. It's nowhere near as material as the license fee in FY21, which, if you remember, was about $21 million.

Richard English: Oh, no, Sinclair, it is definitely not an FY27. It is an FY26 impact.

Sinclair Currie: Yeah.

Richard English: It is nowhere near as material as the license fee in FY21, which if you remember, was about AUD 21 million. So it is significantly lower than that.

Speaker #1: So it's significantly lower than that. And as part of the reason, they were also looking to shift towards this recurring model that I'm talking about, which we are now actively pursuing.

Sinclair Currie: Yeah.

Richard English: It is part of the reason, they were also looking to shift towards this recurring model that I am talking about, that we are now actively pursuing.

Speaker #4: Okay, okay. No, that makes sense. That makes sense. So the reduction for FY27—that comes from negotiations that you might have had during the year.

Sinclair Currie: Okay. No, that makes sense. The reduction for FY27, that comes to negotiations that you might have had during the year, you are going to be preferencing or you feel as though your customers themselves combined were going to be preferencing, a different engagement model.

Speaker #4: You're going to be preferencing, or you feel as though your customers themselves combined were going to be preferencing, a different engagement model.

Speaker #1: Well, Sinclair, it's been happening for the last two years that there's more and more conversation around putting less on the balance sheet from our customer standpoint, and more towards sort of an operating expense.

Richard English: Well, look, Sinclair, it has been happening for the last two years, that there is more and more conversations around putting less on the balance sheet from a customer standpoint and more towards an operating expense.

Speaker #1: The word 'staff' has been used a lot, and now it's considered a bit of a dirty word. It might be back in fashion, but we have actually always preferred recurring revenue.

Sinclair Currie: Yeah.

Richard English: The word SaaS has been used a lot and now it is considered a bit of a dirty word. It might be back in fashion, but we actually have always preferred recurring revenue. In some cases, we just have not had the opportunity to take it.

Speaker #1: And in some cases, we just have not had the opportunity to take it. The way the business—we've always done, if you go historically, it's always been recurring revenues, et cetera.

Andrew Hansen: I think the point is that the way the business we have always done, if you go historically, it has always been recurring revenues, et cetera. I think the accounting standards, Richard, did change. Also the way people want to give us money, but it is not the way which we would like to do it. I think it is going to go back more now to that recurring revenue model.

Speaker #1: I think the accounting standards, Richard, did change, and also the way people want to give us money, but it's not the way we'd like to do it.

Speaker #1: And I think it's going to go back more now to that recurring revenue model. And the thing is, Sinclair, I don't want to sort of open up a can of worms, but if you try and unwind the license fees that we've been doing and try to smooth them out over time, the business has had a particularly strong year in FY26.

Richard English: Sinclair, I don't want to open up a can of worms, but if you try and unwind the license fees that we've been doing and sort of smooth them out over time, the business setup is particularly strong here in FY26, and FY27 is not materially different other than the investment we are making in AI and sales and marketing. I know it is going to get lost in the wash. These licenses have been around for a long time. AUD 50 million in FY25 is a big number.

Speaker #1: And FY27 is not materially different, other than the investment we're making in AI and sales and marketing. So I know it's going to get lost in the wash.

Speaker #1: These licenses have been around for a long time. $50 million in FY25 is a big number. Last year, $35 million is sort of historically where we've been.

Sinclair Currie: Yeah.

Richard English: Last year, AUD 35 million, but historically where we have been, I am just saying that is not going to be the case going forward. I think that should be viewed as a positive.

Speaker #1: And I'm just saying that that's not going to be the case going forward, and I think that should be viewed as a positive. Obviously, it's not viewed as a positive for FY27, but long term, that's where we're going.

Sinclair Currie: Yeah.

Richard English: Obviously, it is not viewed as a positive for FY27, but long term, that is where we are going.

Speaker #4: No, that makes sense. And then in terms of FX, you highlighted—I think it was about a $5 million FX impact. And most of that, presumably, was in the latter quarter of the year, I think.

Sinclair Currie: No, that makes sense. Then in terms of FX, you highlight, I think it was about a AUD 5 million FX impact, and most of that presumably was in the latter quarter of the year, I think. If I look into FY27, I think you have already said it is going to be higher than AUD 5 million, but if I was to guess and say AUD 10 million, would that be a silly number? I apologize if I am just pulling numbers out of the air and expecting you to answer them.

Speaker #4: So, if I look into FY27, I think you've already said it's going to be higher than 5 million, but if I were to guess and say 10 million, would that be a silly number?

Speaker #4: And I apologize if I'm just pulling numbers out of the air and expecting you to answer them.

Speaker #1: So it actually started in sort of January, February. It wasn't just the US dollar that impacted us; it was the GBP, CAD, euro, et cetera.

Richard English: Yeah. It actually started in January, February. It was not just the USD that impacted us. It is the GBP, CAD, EUR, et cetera. That is when it kicked off. I am not going to try and predict it, but I do not think 10 million. 10 million sounds like quite a lot, to be honest.

Speaker #1: So that's when it kicked off. I don't look, I'm not going to try and predict it, but I don't think $10 million sounds like quite a lot, to be honest.

Speaker #1: But it's going to be—it's going to be an impact, for sure. We can manage as best we can on the cost base, but even in that scenario, you're still carrying a lot of costs in these jurisdictions as well that can offset it.

Sinclair Currie: Yeah. Okay.

Richard English: It is going to be an impact for sure. We can manage this best again on the cost base. Even in that scenario, you are still carrying a lot of cost in these jurisdictions as well that can offset it, but not to the full extent.

Speaker #1: But not to the full extent.

Speaker #4: Okay, that's great. And then, finally—sorry, the last question, I promise—just on Germany. I think, from what I can understand, and you've highlighted those sorts of deferrals, you've always spoken to '27 as a year where the rubber hits the road in terms of smart metering.

Sinclair Currie: Okay. That is great. Finally, the last question I promise just on Germany. I think from what I can understand, you have highlighted those deferrals. You have always spoke to 2027 as a year where the rubber hits the road in terms of smart metering. Does it sound like there is almost a halfway solution the regulators have come up with, which means that uplift is off the table for a number of years now? Is it 12 months, 6 months at the moment?

Speaker #4: But what, it sounds like there's almost a halfway solution the regulators have come up with, which means that sort of uplift is off the table for a number of years now?

Speaker #4: Or is it 12 months, 6 months?

Speaker #1: I think what's happening, Sinclair, is they've actually given their retailers a bit of a free kick and moved down the road a touch.

Richard English: Yeah. I think what's happening, Sinclair. They've actually given their retailers a bit of a free kick and moved down the road a touch. They've also reduced the bar to get over to achieve the smart meter rollout percentages. If you look at it now, they're running at about 20% rollout of the meters that they are now considering as mandatory. That's a long way away from getting to 100%, which they've now kicked down the road to 2032. I think what you'll see, and it's what has happened in other countries, it's a slow start now, but it'll start to accelerate pretty quickly from 2028, 2029 onwards. That's, by the way, that's about 2 years behind where we thought we would be. I think if you read about Germany, it's going through some challenging times economically.

Speaker #1: They've also reduced the bar to get over to achieve the smart meter rollout percentages. So, if you look at it now, they're running at about 20% rollout of the meters that they are now considering as mandatory.

Speaker #1: That's a long way away from getting to 100%, which they've now kicked down the road to 2032. I think what you'll see—and it's what has happened in other countries—is it's a slow start now, but it will start to accelerate.

Speaker #1: Pretty quickly, from sort of '28, '29 onwards. But that's—by the way, that's about two years behind where we thought we would be. And I think if you read about Germany, it's going through some challenging times economically.

Speaker #1: So, pushing this onto all the retailers, and ultimately the end consumers, is a challenging area.

Richard English: Pushing this onto all the retailers and ultimately the end consumers is a challenging.

Andrew Hansen: Yeah. I think 1,000 retailers over there, and this is such a change to their business model. There's been a lot of pushback, a lot of politics behind the scenes, which we've got no control over. It's unusual. Normally, the regulator sets the agenda and they get to follow. But in this particular case, pushback. Look, it's still going to be there. Germany still wants to be able to share power with the rest of Europe and all, and they need smart meters to actually start to do it. There's a lot behind this. We're just a bit disappointed, but that's outside of our control. The end goal is exactly the same. I think it's a slower burn, but the acceleration will actually be kicking off.

Speaker #3: I think there are 1,000 retailers over there. And this is such a change to their business model. There's been a lot of pushback, a lot of politics behind the scenes, which we've got no control over.

Speaker #3: It's unusual. Normally, the regulator sets the agenda and they get to follow. But in this particular case, there's pushback. Look, it's still going to be there.

Speaker #3: It's Germany still wants to be able to share power with the rest of Europe and all, and they need smart meters to actually start to do it.

Speaker #3: There's a lot behind this. We're just a bit disappointed, but that's outside of our control. The end goal is exactly the same. I think it's a slower burn, but the acceleration will actually be kicking off.

Sinclair Currie: Brilliant. Thanks, sir. That's my questions. Really appreciate it.

Speaker #4: Brilliant. Thanks for answering my questions. I really appreciate it.

Speaker #3: Thank you very much.

Andrew Hansen: Thank you very much.

Speaker #2: Thank you. Your next question comes from Michael James Trott with MST Financial. Please go ahead.

Operator: Thank you. Your next question comes from Michael Trott with MST Financial. Please go ahead.

Speaker #5: Hi, Andrew. And Richard, can you guys hear me?

Michael James Trott: Hi, Andrew and Richard. Can you guys hear me?

Speaker #1: Yeah, perfectly.

Andrew Hansen: Yeah.

Richard English: Yep, perfectly.

Speaker #5: Great, thanks, guys. I just wanted to start off with the churn in Germany. Are you able to give an exact percentage, or what’s actually been the trend going on here?

Michael James Trott: Great. Thanks, guys. I just wanted to start off with the churn in Germany. Are you guys able to give an exact percentage or what has actually been the trend going on here? Just because we have been kind of seeing something going on in EMEA and that part of Germany for quite some time. Just wanting to understand whether it has been more of a sudden drop recently or whether it has been, I guess, something that is going on from a competitive standpoint with some of the peers that have been entering the space there.

Speaker #5: Just because we've been kind of seeing something going on in EMEA and that part of Germany for quite some time, I just wanted to understand whether it's been more of a sudden drop recently, or whether it's been, I guess, something that's going on from a competitive standpoint with some of the peers that have been entering the space there.

Speaker #1: Yeah, look, we probably wouldn't ever want to disclose that. It's not likely the numbers you're thinking about; it's the uptake that's been slower.

Andrew Hansen: Yeah, look, we would not probably want to over-disclose it. It is not probably those numbers you are thinking of. It is the uptake which has been slower. From a churn point of view, it is a bit like mainland Europe. There has been some consolidation where some people have been coming together in businesses over there, which is probably not good for us. But we always knew in Germany, there is not going to be 1,000 retailers in 15 years' time. It has to consolidate because it is not a very efficient way. It is no different to in Australia, like in the state here of Victoria, electricity used to be sold by local councils. Consolidation did have to come on board. But it is not probably to that level.

Speaker #1: From a churn point of view, it's a bit like there's been some consolidation, where some people have been coming together in businesses over there, which is probably not good for us.

Speaker #1: But we always knew in Germany there weren't going to be 1,000 retailers in 15 years' time. It has to consolidate because it's not a very efficient way.

Speaker #1: It's no different to in Australia. Like in the state here of Victoria, electricity used to be sold by local councils. Consolidation did have to come on board.

Speaker #1: But it's probably not to that level. It's probably our ability that our own customers—some of the work they would do with us to move forward—hasn't materialized because they don't need it yet, because it's slowed down.

Andrew Hansen: It is probably our ability that our own customers, some of the works they would do with us to move forward have not materialized because they do not need it yet, because it has slowed down, and some of the new customer wins is probably the issue more for us about Germany.

Speaker #1: And some of the new customer wins is probably the issue, more for us, about Germany.

Speaker #5: Okay. So you don't actually so in terms of churn, it's more of an uptake. Story rather than them say leaving Hansen and going to a competitor.

Michael James Trott: Okay. So in terms of churn, it is more of an uptake story rather than them, say, leaving Hansen and going to a competitor.

Speaker #1: Correct.

Andrew Hansen: Correct.

Speaker #5: Okay. I guess then, moving on to the declines in revenue, E&U revenue in the Americas and APAC. I just wanted to understand what this consists of, just because you don't split it out from a license, support and maintenance, and application aspect for each of the geographic regions.

Michael James Trott: Okay. I guess then moving on to the declines in E&U revenue in Americas and APAC. Just wanting to understand what this consists of, just because you do not split it out from, like, a license and support and maintenance and application aspect for each of the geographic regions. If you can just talk to, I guess, what is driving those declines year on year.

Speaker #5: So, if you could just talk to, I guess, what's driving those declines year-on-year.

Speaker #1: Yeah, I mean, so two of them—there's some license revenue in FY25 that's not going to be replicated in FY26 or beyond. That was a one-off settlement there with some existing customers.

Richard English: Yeah. Two of them, there is some license revenue in FY25 that is not going to be replicated in FY26 or beyond. That was a one-off settlement there with some existing customers. That is the main driver in the Americas.

Speaker #1: So, that's the main driver in the Americas.

Speaker #5: Which—oh, that's the Americas. Okay.

Michael James Trott: Which, oh, that is the Americas. Okay.

Speaker #1: And then in Asia-Pac, the implementations that we have talked about—and some of them have been particularly sizable—are now finished. So those now roll onto a lucrative recurring revenue stream, being support and maintenance.

Richard English: In Asia Pac, the implementations that we have talked about, and some of them have been particularly sizable, are now finished. Those now roll onto a lucrative recurring revenue stream, being support and maintenance.

Speaker #5: Yeah, cool. Well, let's clarify those things. I guess then next, on to this Nova RAG technology that you guys have been building out. It looks very promising from what I can see.

Michael James Trott: Well, that's clarified those things. I guess next on to this NOVA RAG technology that you guys have been building out. It looks very promising from what I can see. Just wanting to understand, have you benchmarked it against, let's say, some of your competitors to see how it stacks up against theirs? Could you, I guess, describe what this technology is from a RAG capability in terms of, is it just your standard RAG, which has been around for the past four or five years? Or is it moving towards more the agentic capability that some of your AI native peers have been moving towards?

Speaker #5: Just wanting to understand: have you benchmarked it against, say, some of your competitors to see how it kind of stacks up against theirs? Could you, I guess, describe what this technology is from a RAG capability standpoint? Is it just your standard RAG, which has been around for the past four or five years, or is it moving towards something more like the agentic capability that some of your AI-native peers have been moving towards?

Speaker #1: Look, we were doing a disservice in actually answering that question. Technology basically is a religious debate. Nearly every new technology which comes into Hansen, we have an innovation group of people.

Andrew Hansen: Look, we were doing a disservice in actually answering that question. Technology basically is a religious debate. Nearly every new technology which comes into Hansen, we have an innovation group of people. We actually benchmark all products out there. We can go with any product which we wish for. The technology chosen by our people normally has been benchmarked against its peers, et cetera, to get to where we want. We had a very clear focus of what we were wanting from those newer technologies from NOVA RAG, and one was to reach into all of our products and all of our history to bring it forward. As I said, I couldn't specifically answer the benefits of one technology over another, other than it goes through a benchmark process to actually get the best outcome.

Speaker #1: We actually benchmark all products out there. We can go with any product we wish. The technology chosen by our people has normally been benchmarked against its peers, etc., to get to where we want.

Speaker #1: We had a very clear focus on what we wanted from those newer technologies from Nova RAG. One was to reach into all of our products and all of our history to bring it forward.

Speaker #1: So I said, I couldn't specifically answer the benefits of one technology over another, other than it goes through a benchmark process to actually get the best outcome.

Speaker #1: We know what we want from it, and it was very clear at the start what we were trying to achieve. We chose what we thought was a technology stack that proved itself. The value proposition, the end game plan, is what we went with.

Andrew Hansen: We know what do we want from it, and it was very clear at the start what we were trying to achieve, and we chose what we thought was a technology stack which proved itself the value proposition, the end game plan is what we went with.

Speaker #5: Cool. And then finally, just wanting to understand, I guess, the change in approach to capitalizing the development costs. So, I guess, moving AI now and not actually doing capitalized development on the AI aspect of it.

Michael James Trott: Cool. Finally, just wanting to understand, I guess, the change in approach to capitalizing the development costs. I guess moving AI now and not actually doing capitalized development on the AI aspect of it. What was the driver behind that shift in strategy or the change in approach there?

Speaker #5: What was the driver behind that shift in strategy, or the change in approach?

Speaker #1: Yeah, I mean, it's a combination. So, we are capitalizing substantial amounts of the investment, right? Just without boring people on the call with accounting standards, the technology is moving so fast.

Richard English: Yeah. There is a combination. So we are capitalizing substantial amounts of the investment, right? Without boring people on the call with accounting standards, the technology is moving so fast, we need to make sure that we are not capitalizing too much, right? So if anything, we are taking a far more conservative approach to expensing it through the P&L as opposed to capitalizing like other companies.

Speaker #1: We need to make sure that we're not capitalizing too much, right? So, if anything, we're taking a far more conservative approach to expensing it through the P&L, as opposed to capitalizing like other companies.

Speaker #1: And it's an underlying technology, as opposed to the end-customer technology. So, with an end customer, we can actually do the consumption-based pricing over the life of the contract.

Andrew Hansen: And it is an underlying technology as opposed to the end customer technology. So the end customer, we can actually do the consumption-based pricing over the life of contract, but underlying technology is probably also one of our views, is not it, Richard?

Speaker #1: But underlying technology is probably also one of our views, isn't it, Richard? Yeah, I mean, a lot of the work we're doing is on AI enablement as well.

Richard English: Yeah. A lot of the work we are doing is on AI enablement as well, so not necessarily customer facing, but also internally facing, and that drives other benefits. And I would not feel comfortable capitalizing that on the balance sheet.

Speaker #1: They're not necessarily customer-facing, but also internally facing. And that drives other benefits. I wouldn't feel comfortable capitalizing that on the balance sheet.

Speaker #5: Is that also a large contributor to, I guess, the softer FY27 EBITDA guidance?

Michael James Trott: Is also that a large contributor to, I guess, the softer FY27 EBITDA guidance?

Speaker #1: Yeah, correct. So, up front on the call, I'm not sure if you picked up on that—I said we're investing $8 to $10 million in AI, and nearly all of that will not be capitalized, right?

Richard English: Yeah, correct. Up front on the call, I am not sure if you picked up on that. I said we are investing AUD 8 to 10 million in AI, and nearly all of that will not be capitalized.

Speaker #1: So, there's a far bigger amount that's been allocated to product AI, but in terms of AI enablement and the like, it's a substantial amount of investment that we will get a return on—not particularly in FY27, but you will see that into FY27 and FY28.

Michael James Trott: Okay.

Richard English: There is a far bigger amount that has been allocated to product AI. In terms of AI enablement and the like, it is a substantial amount of investment that we will get a return on, not particularly in FY27, but you will see that into FY27 and FY28.

Speaker #5: Okay, cool. Thanks, guys.

Michael James Trott: Okay, cool. Thanks, guys.

Speaker #1: Thank you very much.

Richard English: Thank you very much.

Speaker #2: Thank you. Your next question is from Josh Kanerakis with Baron Joey. Please go ahead.

Operator: Thank you. Your next question is from Josh Kanterakis with Barrenjoey. Please go ahead.

Speaker #6: Hey, guys. Just a quick follow-up from the prior question. Can you give us any context, just in FY27, around how we should look at the capitalized development costs versus 2026?

Josh Kanterakis: Hey, guys. Just a quick follow-up from the prior question. Can you give us any context just in FY27 around how we should look at the capitalized development costs versus FY26?

Josh Kannourakis: Hey, guys. Just a quick follow-up from the prior question. Can you give us any context just in FY27 around how we should look at the capitalized development costs versus FY26?

Speaker #1: Yeah, I mean, I think it's going to go up a touch. Josh, not materially, but I think we're running at about three and a half, four percent capitalized.

Richard English: Yeah, I think it is going to go up a touch, Josh, not materially, but I think we are running at about 3.5%, 4% capitalized. It will go to probably 5%, 5.5%, depending on where the work is done. The actual spend, the AUD 27 million that has gone through the books in FY26, it will not be significantly different to that. It is more a matter of where it is actually capitalized. I think probably 5.5% is fair.

Speaker #1: It'll go to probably five, five and a half, depending on where the work is done. The actual spend, the $27 million that's gone through the books in FY26, it won't be significantly different to that.

Speaker #1: It's more a matter of where it's actually capitalized. And I think probably 5.5% is fair.

Speaker #6: Okay, got it. But the investment in the AI and that sort of incremental is above that.

Josh Kanterakis: Okay, got it. But the investment in the AI and that sort of incremental above that

Josh Kannourakis: Okay, got it. But the investment in the AI and that sort of incremental above that

Speaker #1: That's over and above going through the balance sheet.

Richard English: That is over and above.

Josh Kanterakis: Yeah.

Josh Kannourakis: Yeah.

Richard English: Go through the traditional.

Speaker #6: Yeah, over and above the traditional. Yep. No, I just wanted to clarify that. Thanks, guys. Appreciate it.

Josh Kanterakis: Over and above the traditional. Yep. No, I just wanted to clarify that. Thanks, guys. Appreciate it.

Josh Kannourakis: Over and above the traditional. Yep. No, I just wanted to clarify that. Thanks, guys. Appreciate it.

Speaker #1: Thanks, Josh.

Richard English: Thanks, Josh.

Andrew Hansen: Thanks, Josh.

Speaker #2: Thank you. There are no further phone questions at this time. I'll now hand back for any online questions.

Operator: Thank you. There are no further phone questions at this time. I will now hand back for any online questions.

Speaker #1: I don't think we have any online questions. So, at this point, I'd like to thank everyone for listening in. I hope you join me in welcoming the changes to our business, not only from a technology point of view but also from a leadership point of view.

Andrew Hansen: I do not think we have any online questions. So at this point, I would like to thank everyone for listening in. I hope you join me in welcoming the changes to our business, not only just from a technology point, but also from a leadership point of view. We remain very enthusiastic about the future of our business. I know it is a busy day, everyone, so thank you for your time and listening in. Goodbye.

Speaker #1: We remain very enthusiastic about the future of our business. I know it's a busy day for everyone, so thank you for your time and for listening in.

Speaker #1: Goodbye.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

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Q4 2026 Hansen Technologies Ltd Earnings Call

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