Q2 2026 Microlise Group PLC Earnings Call

September 23, 2026

Speaker #2: Good afternoon, everyone. This is the Microlise Group PLC Investor Presentation. Throughout this recorded presentation, investors will be in a listen-only mode. Questions are encouraged.

Operator 2: Good afternoon and welcome to the Microlise Group PLC investor presentation. Throughout this recorded presentation, investors will be in a listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions and press send. Before we begin, I would like to submit the following poll. I would like to hand you over to Nadeem Raza, CEO. Good afternoon, sir.

Operator: Good afternoon and welcome to the Microlise Group PLC investor presentation. Throughout this recorded presentation, investors will be in a listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions and press send. Before we begin, I would like to submit the following poll. I would like to hand you over to Nadeem Raza, CEO. Good afternoon, sir.

Speaker #2: Questions can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions and press send.

Speaker #2: Before we begin, I'd like to submit the following poll. I'd like to hand you over to Nadeem Raza, CEO. Good afternoon, sir.

Speaker #3: Hi, thanks very much. And thank you, everybody, for attending this afternoon. So, just a quick introduction: my name is Nadeem Raza. I'm the CEO for Microlise Group, and joining me is Nick Whiteman, our CFO.

Nadeem Raza: Hi. Thanks very much. Thank you everybody for attending this afternoon. Just a quick introduction. My name is Nadeem Raza. I am CEO for Microlise Group, and joining me is Nick Wightman, our CFO.

Speaker #4: Good afternoon.

Nick Wightman: Good afternoon.

Speaker #3: We're going to cover just a quick introduction to the business. For those of you that are unfamiliar with Microlise, a recap on H1 FY 2026, our interim results. Nick will then do a deeper dive into the financial numbers, and then I'll end the session talking about marketing and strategy and some slides on outlook.

Nadeem Raza: We'll cover just a quick introduction to the business for those of you that aren't familiar with Microlise. A recap on H1 FY2026, our interim results. Nick Wightman will then do a deeper dive into the financial numbers. I'll end the session talking about marketing and strategy, and some slides on outlook. Microlise is a leading provider of Transport Management Solutions. We are fairly dominant in the UK, in the high end of the market. Those companies that have greater than 500 vehicles and trucks within their fleet, we have a 60% market share. Overall, we have about 2,500 customers, and that represents a GBP 300 million ARR opportunity, in terms of cross-selling, upselling into our existing customer base. You can see there just a small number of our logos. As you recognize, they're all pretty much household names.

Speaker #3: Microlise is a leading provider of transport management solutions. We are fairly dominant in the UK in the high end of the market. For companies with fleets of more than 500 vehicles and trucks, we have a 60% market share.

Speaker #3: And overall, we have about 2 and a half thousand customers. And that represents a 300 million ARR opportunity in just in terms of cross-selling and upselling into our existing customer base.

Speaker #3: You can see there just a small number of our logos. And as you recognize, they're all pretty much household names. Again, that represents roughly 60% market share that we have in the upper end of that market segment.

Nadeem Raza: Again, that represents 60% market share that we have in the upper end of that market segment. Our mission is to really unify fleet operations, so really bringing together transport management, telematics, and other operational management tools under one platform, which we're branding Microlise One. It really helps those organizations look after their entire operation, not just all of their assets, vehicles, drivers, et cetera, but all the inventory and the financial admin that's involved in all of that as well. Our H1 results, just some highlights. We had a solid performance in the H1 of 2026 through to the end of June. We had GBP 47.1 million direct ARR sales, up 12%. Our direct NRR was running at 106%, with an EBITDA margin of 13.2%. So a solid recovery from H2 in 2025. Just to illustrate in more detail the sort of thing that we do.

Speaker #3: Our mission is to truly unify fleet operations—bringing together transport management, telematics, and other operational management tools under one platform, which we're branding as Microlise One.

Speaker #3: And it really helps those organizations look after their entire operation—not just all of their assets, vehicles, drivers, etc.—but all the inventory and the financial admin that's involved in all of that as well.

Speaker #3: Our H1 results, just some highlights: we had a solid performance in the first half of 2026 through to the end of June. We had £47.1 million in direct ARR, with sales growth of 12%.

Speaker #3: Our direct NRR was running at 106%, with an EBITDA margin of 13.2%. So, a solid recovery from H2 in 2025. Just to illustrate in more detail the sort of thing that we do, starting from the left-hand side, you can see here the kinds of industry challenges and pain points that our customers have. The industry is under a lot of pressure to deliver more and to deliver it faster.

Nadeem Raza: Starting from the left-hand side, you can see here the kind of industry challenges and pain points that our customers have. The industry is under lots of pressure to deliver more and to deliver it faster and deliver it for less money, and also to do that in a very sustainable way. We provide tools and services to help our customers do that. So dealing with their cost pressures, dealing with some of their labor pressures. There's not enough drivers available. The average age of a driver is over 50 in the UK, and so helping them utilize and make best use of that labor force is an important aspect of what we do. Of course, you're driving 44-ton trucks, so there's a lot of safety issues and concerns, and we deal with those as well.

Speaker #3: And deliver it for less money, and also do that in a very sustainable way. We provide tools and services to help our customers do that.

Speaker #3: So, dealing with their cost pressures, dealing with some of their labor pressures—there's not enough drivers available. The average age of a driver is over 50.

Speaker #3: In the UK, helping them utilize and make the best use of that labor force is an important aspect of what we do. Of course, you're driving 44-ton trucks.

Speaker #3: So, there are a lot of safety issues and concerns. We deal with those as well, and it's a heavily regulated industry sector. So, there is a significant compliance burden and administration involved in ensuring that you are looking after vehicles and, of course, that you are looking after those drivers and making sure that they're adhering to the driving hours regulations.

Nadeem Raza: It's a heavily regulated industry sector, so there is a significant compliance burden and admin involved in ensuring that you are looking after vehicles and of course, that you are looking after those drivers and making sure that they're adhering to the driving hours regulations. Utilization of all of those assets creates a lot of uptime pressure. Of course, there is continued pressure from customers to ensure that you deliver on time, in a safe way, without having any damaged goods, et cetera. All of those are aspects and pain points that our customers have, and we solve those through two groups of modules. So we have our transport modules, and so these deal with the actual movement of goods, the inventory, the delivery notes. So we have a variety of modules under that banner.

Speaker #3: Utilization of all of those assets creates a lot of uptime pressure. And of course, there is continued pressure from customers to ensure that you deliver on time, in a safe way, without having any damaged goods, etc.

Speaker #3: So all of those are aspects and pain points that our customers have, and we solve those through two groups of modules. We have our transport modules.

Speaker #3: And so these deal with the actual movement of goods, the inventory, the delivery notes. We have a variety of modules under that banner.

Speaker #3: And then we have a set of fleet modules that look after the actual assets of vehicles, trailers, and drivers, making sure that they are being operated in a safe way, making sure they're being maintained, and making sure that they are being utilized to the maximum as well.

Nadeem Raza: And then we have a set of fleet modules that look after the actual assets, the vehicles, trailers, the drivers, making sure that they are being operated in a safe way, making sure they are being maintained, making sure that they are being utilized to the maximum as well. Underpinning all of that, those modules, is a shared data layer, because it is all about data that drives those large operations. If you have 5,000 vehicles, 10,000 drivers, you need to have a lot of information to understand what exactly is going on within your operation, and driving insights that allow you to make improvements across that operation.

Speaker #3: And underpinning all of that, those modules, is a shared data layer. Because it is all about data that drives those large operations. If you've got 5,000 vehicles, 10,000 drivers, you need to have a lot of information to understand what's exactly going on within your operation.

Speaker #3: And driving insights that allow you to make improvements across that operation. Some of the distinct value that we deliver, in terms of costs, is not unusual for us to save between 6% and sometimes even as high as 12% on fuel for our customers.

Nadeem Raza: Some of the distinct value that we deliver, in terms of costs, it is not unusual for us to save between 6% and sometimes even as high as 12% on fuel for our customers, through better driving, safer driving, and better utilization of assets. On the safety front, it is not unusual for customers to see a significant reduction in accidents, leading to, again, savings on insurance premiums. But overall, the biggest benefit the customers see is the ability to do more, deliver more goods with the same number of vehicles and the same numbers of drivers, and just making themselves far more efficient than they currently are. Of course, you have to do that while still remaining compliant. If you can do all of those things, then there is a real strategic advantage.

Speaker #3: Through better driving, safer driving, and better utilization of assets. On the safety front, it's not unusual for customers to see significant reductions in accidents, leading to savings on insurance premiums.

Speaker #3: But overall, the biggest benefit that customers see is the ability to do more, deliver more goods with the same number of vehicles and the same number of drivers, and just make themselves far more efficient than they currently are.

Speaker #3: Of course, you have to do that while still remaining compliant. And if you can do all of those things, then there is a real strategic advantage in having real-time visibility across the whole operation, which is usually very, very dynamic.

Nadeem Raza: Having real-time visibility across the whole operation, which is usually very dynamic, and understanding what is going on and dealing with issues very quickly, gives our customers an advantage that allows them to go out and win more business. We have a land and expand strategy, so we have a lot of modules, but nobody buys all of those things all on day one. The way that we work has always been that we have a team that is dedicated to onboarding new logos and new customers, and then we have another team whose job it is to help and grow those customers. So by upselling, cross-selling additional modules into those accounts. There are some examples of some of the work that we have done and how we have helped our customers grow and thereby increase our share of wallet and the revenue that we get from those accounts.

Speaker #3: And understanding what's going on and dealing with issues very, very quickly gives our customers an advantage that allows them to go out with more business.

Speaker #3: We have a land-and-expand strategy. So, we have a lot of modules, but nobody buys all of those things on day one.

Speaker #3: So, the way that we work has always been that we have a team that's dedicated to onboarding new logos and new customers. And then we have another team whose job is to help and grow those customers.

Speaker #3: So, by upselling, cross-selling, and adding additional modules into those accounts. There are some examples of the work we've done and how we've helped our customers grow, thereby increasing our share of wallet and the revenue that we get from those accounts.

Speaker #3: There are numerous case studies available if you follow that URL link at the bottom of the screen, but I'll just talk through one of those.

Nadeem Raza: There are numerous case studies available, if you follow that URL link at the bottom of the screen there. But I will just talk through one of those. LF&E is a temperature-controlled goods logistics provider. We contracted with them in 2023. At the point when they had 259 vehicles, they bought some of our compliance solutions initially. Over the last three years, we have grown with them by supplying them additional solutions. Recently, this year, they bought our TMS product, and that has enabled them to grow, but also for us to increase our revenue from that customer by 450% over the last three years. There are numerous examples where our land and expand strategy has enabled that growth of revenue from existing customers. We are going to come on to talking about the two aspects of the business, the OEM side and the direct side.

Speaker #3: So, LF&E is a temperature-controlled goods logistics provider. We contracted with them in 2023, at a point when they had 259 vehicles. They bought some of our compliance solutions initially.

Speaker #3: Over the last three years, we've grown with them by supplying additional solutions. Recently, this year, they bought our TMS product, and that's enabled them to grow. It's also allowed us to increase our revenue from that customer by 450% over the last three years.

Speaker #3: And there are numerous examples where our land-and-expand strategy has enabled that growth of revenue from existing customers. We're going to come on to talking about the OEM side and the direct side.

Speaker #3: And it's fair to say that the direct side is where we are focusing a lot of effort on growing and accelerating the growth that we're seeing in that side.

Nadeem Raza: And it is fair to say that the direct side is where we are focusing a lot of effort on growing and accelerating the growth that we are seeing in that side. We have generally had double-digit growth on the direct side, but our aim is to accelerate that and make it grow even faster. We have done that through several ways. One, at the end of 2025, we did some restructuring that enabled us to deliver GBP 5 million of annualized cost savings. We have done further savings in H1 this year, that has enabled us to then reinvest some of those things in more targeted aspects of the business that will drive that direct growth. Some of the things that we are investing in currently are our product, so our Microlise One product, and we will talk more about that on a later slide as well. We are investing in our TMS product.

Speaker #3: We've generally had double-digit growth on the direct side, but our aim is to accelerate that and make it grow even faster. And we've done that through several ways.

Speaker #3: First, at the end of 2025, we did some restructuring that enabled us to deliver £5 million of analyzed cost savings. We've achieved further savings in H1 this year.

Nadeem Raza: We have done further savings in H1 this year, that has enabled us to then reinvest some of those things in more targeted aspects of the business that will drive that direct growth. Some of the things that we are investing in currently are our product, so our Microlise One product, and we will talk more about that on a later slide as well. We are investing in our TMS product.

Speaker #3: That's enabled us to then reinvest some of those things in more targeted aspects of the business that will drive that direct growth. Some of the things that we are investing in currently are our product.

Speaker #3: So, our marketized one product. And we'll talk more about that on a later slide as well. We're investing in our TMS product, and our TMS product is our highest value, highest margin product.

Nadeem Raza: The TMS product is our highest value, highest margin product. It is also a very complicated product, and there are several things that we can do there that are going to drive a faster uptake of that product, allowing us to sell more and implement more, and again, really driving revenue and profitability. Then lastly, in the mid-market section, so those customers that have between 100 and 500 vehicles, where we are less penetrated. We are about 30% market share in that area. But we see lots of opportunity in the UK for us to grow that segment, and we are launching specific products aimed directly in that particular segment of the market. We are also investing in our architecture, which is going to help reduce costs.

Speaker #3: It's also a very complicated product, and there are several things that we can do there that are going to drive faster uptake of that product, allowing us to sell more and implement more.

Speaker #3: And again, really driving revenue and profitability. And then, lastly, in the mid-market section—so those customers that have between 100 and 500 vehicles, where we are less penetrated—we're at about 30% market share in that area.

Speaker #3: But we see lots of opportunity in the UK for us to grow that segment, and we are launching specific products aimed directly at that particular segment of the market.

Speaker #3: We're also investing in our architecture, which is going to help reduce costs. And, of course, we're continuing to invest in security and AI, both inside our products so they can provide AI tooling and analytics to our customers.

Nadeem Raza: And of course, we are continuing to invest in security and AI, both inside our products, so we can provide AI tooling and analytics to our customers, but also AI within our business that drives more efficiencies in our normal operations as well. Really our build phase, and we will see that growth, and increased margins coming through in 2027. We can see some of those signals already, and that is pretty pleasing for us because we know we are on the right track. Specifically talking about our FY26 and our direct customer strategy.

Speaker #3: But also, AI within our business drives more efficiencies in our normal operations as well. Really, we're in our build phase, and we'll see that growth and increased margins coming through in 2027.

Speaker #3: We can see some of those signals already, and that's pretty pleasing for us because we know we're on the right track—specifically, talking about our FY26 and our direct customer strategy.

Speaker #3: So, expanding on what I said on the previous slide and adding more color to that, we are integrating all of our products onto one platform.

Nadeem Raza: Expanding on what I said on the previous slide, and adding more color to that, we are integrating all of our products onto one platform, and that is really to allow that common data set to be available, that glues all of those things together, so customers can see the entirety of their operation if they are using all of our products, and really get insights that they just cannot do if they have bought products from different suppliers. We have already launched some data packs to provide that at the earlier part of this year. They have been really well-received, and we are continuing to launch more of those data packs throughout this year and into 2027. I also talked about expanding into the mid-market. There is a GBP 65 million ARR opportunity in the mid-market for us just in the UK.

Speaker #3: And that's really to allow that common data set to be available. That glues all of those things together, so customers can see the entirety of their operation if they're using all of our products.

Speaker #3: And really get insights that they just can't do if they've bought products from different suppliers. We've already launched some data packs to provide that earlier part of this year that have been really well received.

Speaker #3: And we're continuing to launch more of those data packs throughout this year and into 2027. I also talked about expanding into what is a £65 million ARR opportunity in the mid-market for us, just in the UK.

Speaker #3: We've been developing that market for some time and have had a lot of success in it. However, given our learnings, we believe that repackaging some of our products and refining our offer to the mid-market will drive accelerated growth in that space.

Nadeem Raza: We have been developing that market for some time and had a lot of success in it. Given the learnings that we have had, we believe that repackaging some of our products, and refining that offer to the mid-market, will drive accelerated growth in that space. We are launching a new offer next month, that we are taking specifically to target that mid-market section. Talking about TMS, our TMS software, we have been developing that and improving, reducing the sales cycle and looking at reducing the actual implementation cycle. It is a big, complicated product, which is why it demands a higher value and a higher margin. The more of that that we can sell, it will significantly shift the needle on both revenue and profitability. The focus on that is how do we go faster?

Speaker #3: And so we are launching a new offer next month that we're taking specifically to target that mid-market section. And then talking about TMS—so our TMS software—we have been developing that, improving and reducing the sales cycle, and looking at reducing the actual implementation cycle.

Speaker #3: It's a big, complicated product, which is why it demands a higher value and a higher margin. And the more of that we can sell, it will significantly shift the needle on both revenue and profitability.

Speaker #3: And the focus on that is, how do we go faster? We can see some of that activity bearing fruit already. We have delivered more TMS deals in the first half of this year than we have done in the last two years.

Nadeem Raza: We can see some of that activity bearing fruit already. We have delivered more TMS deals in H1 of this year than we have done in the last two years. We are seeing the pace of winning and delivering increasing, and our investment is all about accelerating that. We have been growing our go-to-market team, both in the UK, Australia, and also in the APAC region. It is a business-to-business operation, and people buy from people. To grow sales, we need to grow our GTM team, and we also need to grow our marketing spend, and that is the other area of investment that we are making. Underlying all of that, there is a focus on operational efficiency and margin expansion. You can see that coming through in the margin recovery in H1 compared to H2 FY25.

Speaker #3: So, we are seeing the pace of winning and delivering increasing, and our investment is all about accelerating that. We've been growing our go-to-market team in the UK, Australia, and also in the APAC region.

Speaker #3: This is a business-to-business operation. People buy from people. To grow sales, we need to expand our GTM team, and we also need to increase our marketing spend.

Speaker #3: And that's the other area of investment that we're making. Underlying all of that, there is a focus on operational efficiency and margin expansion.

Speaker #3: So you can see that coming through in the margin recovery in H1 compared to H2, FY25. Our aim is to continue that into H2 and through to 2027.

Nadeem Raza: Our aim is to continue that into H2 through to 2027. I am going to hand across to Nick now to take a more of a deeper dive into the financial numbers.

Speaker #3: I'm going to hand across to Nick now to take more of a deeper dive into the financial numbers.

Speaker #2: Thank you, Nadine. And I think the first thing really to call out is that H1 was delivered in line with management expectations. And the numbers are now showing the actions that we took at the back end of FY25.

Nick Wightman: Thank you, Nadeem. I think the first thing really to call out is that H1 was delivered in line with management expectations, and the numbers are now showing the actions that we took at the back end of FY25. The headline to keep in mind through this section, and reiterating what Nadeem has already said, is that direct customer ARR has grown, and margin has recovered materially, and we remain in a very strong cash position. Key numbers really to call out here, direct customer ARR has grown 12% to GBP 47.1 million. EBITDA margin has increased to GBP 13.2 million from GBP 5.2 million in H2 2025. Direct customer NRR is 106%. Churn remains very low at 1.1%, and our cash balance has increased 13.8% from where we were at the end of June 2025. If you just move on to the next slide, please, Nadeem. This is our ARR bridge.

Speaker #2: The headline to keep in mind through this section, and reiterating what Nadine has already said, is that customer direct customer ARR has grown, and margin has recovered materially.

Speaker #2: And we remain in a very strong cash position. Key numbers really to call out here: direct customer ARR has grown 12% to £47.1 million.

Nick Wightman: Key numbers really to call out here, direct customer ARR has grown 12% to GBP 47.1 million. EBITDA margin has increased to GBP 13.2 million from GBP 5.2 million in H2 2025. Direct customer NRR is 106%. Churn remains very low at 1.1%, and our cash balance has increased 13.8% from where we were at the end of June 2025. If you just move on to the next slide, please, Nadeem. This is our ARR bridge.

Speaker #2: EBITDA margin has increased to £13.2 million from £5.2 million in H2 2025. Direct customer NRR is 106%. Churn remains very low at 1.1%. Our cash balance has increased 13.8% from where we were at the end of June 2025.

Speaker #2: If you just move on to the next slide, please, Nadine. This is our ARR bridge. So what this is telling you is it effectively bridges the two separate halves of our business.

Nick Wightman: What this is telling you is that it effectively bridges the two separate halves of our business, which is direct customer business and OEM business. Direct recurring ARR is compounding. OEM is reducing as we anticipated. ARR still grew 2% to 4% overall. I think the important thing to call out here as well is that our direct ARR has roughly doubled since IPO back in 2021. In terms of the specifics on this, what we can see on the direct side, that has increased from GBP 42 million to GBP 47.1 million. We have GBP 5.7 million of combined existing and new growth, which more than absorbs the drag that we have seen on OEM that I will come to in a moment. The growth that we have seen is existing customer-led, so that is GBP 4.1 million of the GBP 5.7 million from the installed base against GBP 1.6 million of new logos.

Speaker #2: There is direct customer business and OEM business. Direct recurring ARR is compounding; OEM ARR is reducing. As we anticipated, ARR still grew—overall, up 4%.

Speaker #2: I think the important thing to kind of call out here as well is that our direct ARR has roughly doubled since IPO, back in 2021.

Speaker #2: In terms of the specifics on this, what we can see on the direct side is that it has increased from £42 million to £47.1 million. We've got £5.7 million of combined existing and new growth, which more than absorbs the drag that we've seen on OEM, which I'll come to in a moment.

Nick Wightman: We have GBP 5.7 million of combined existing and new growth, which more than absorbs the drag that we have seen on OEM that I will come to in a moment. The growth that we have seen is existing customer-led, so that is GBP 4.1 million of the GBP 5.7 million from the installed base against GBP 1.6 million of new logos.

Speaker #2: The growth that we've seen is existing-customer led. So that's 4.1 million out of the 5.7 million from the installed base, compared with 1.6 million from new logos.

Speaker #2: We do expect both of those to increase. As we go through the deck, you will see more around the mid-market opportunity and how this can enhance our direct customer growth, both within our existing customer base and with new logos.

Nick Wightman: We do expect those both to increase. As we go through the deck, you will see more around the mid-market opportunity and how this can enhance our direct customer growth, both in the existing customer base and within new logos. Just touching on and addressing the OEM side of things, that is at GBP 3.1 million reduction compared to the 12 months ending June 2025 the end of December. There are a few factors that are driving that ARR down. The main factor is relating to the number of renewals that we have received. This is second life contracts that the end user paid for. The way in which the relationship with the OEM works, is that we will ship hardware to the OEM. They will determine where that vehicle or the unit is going to be shipped to geographically.

Speaker #2: Can I just touch on and address the OEM side of things? That is at £3.1 million, which is a reduction compared to the twelve months ending in June 2020.

Speaker #2: There are a few factors that are driving that ARR down. The main factor relates to the number of renewals we've received. So, these are second-life contracts that the end user paid for.

Speaker #2: The way in which the relationship with the OEM works is that we will ship hardware to the OEM. They will determine where that vehicle unit is going to be shipped to, geographically.

Speaker #2: They will provide us with a purchase order, which will indicate the kind of commercial rate that they pay for that, and also the duration of that contract.

Nick Wightman: They will provide us a purchase order, which will indicate the kind of commercial rate that they pay for that, and also the duration of that contract. That contract is paid in full upfront, and that revenue is deferred and sits in the balance sheet and is recognized over the period of the service period. What we saw last year is, we saw a reduction in the rate of the contracts being renewed. The initial term expired. We had seen a relatively consistent and stable level of the number of renewals that effectively the second life contract was giving us. That reduced, and that is what we are seeing in these numbers here. We are expecting FY26 to be lower than FY25. We are expecting a further reduction, albeit lower and slowing down in 2027. Then we are expecting that to plateau in back end of 2027.

Speaker #2: That contract is paid in full upfront, and that revenue is deferred, sitting on the balance sheet and being recognized over the period of the service.

Speaker #2: What we saw last year is, we saw a reduction in the rate of new contracts being renewed. So, there was the initial term expired.

Speaker #2: We'd seen a relatively consistent and stable level of renewals, that is, the number of second-life contracts being given to us. That reduced.

Speaker #2: And that is what we're seeing in these numbers here. So, we are expecting FY26 to be lower than FY25. We're expecting a further reduction, albeit lower and slowing down in 2027.

Speaker #2: And then we are expecting that to plateau in the back end of 2027. So we expect that to then flatline moving forward. So I think the key thing really to point out here is that we do have good line of sight over the movement in those and the expiry of those first-term contracts.

Nick Wightman: We expect that then to flatline moving forwards. I think the key thing really to point out here is that we do have good line of sight over the movement in those and the expiry of those first-term contracts. Then we are applying very prudent assumptions around the level of renewal rates that we will get. We are trading in line with our forecast and our budgets at the moment, which gives us confidence that we will see that working its way through. Then ultimately, as we continue to see our direct customer ARR grow, that will obviously stimulate group wide growth from an ARR and recurring revenue perspective. Thank you, Nadeem. If you just move on to the next slide, please.

Speaker #2: And then we are applying very, very prudent assumptions around the level of renewal rates that we will get. We’re trading in line with our forecast and our budgets at the moment.

Speaker #2: Which gives us confidence that we'll see that working its way through. And then, ultimately, as we continue to see our direct customer ARR grow, that will obviously stimulate group-wide growth from an ARR and recurring revenue perspective.

Speaker #2: Thank you, Nadine. If you could just move on to the next slide, please. This is an illustration of our different revenue streams. The graph on the right-hand side shows the four main revenue streams that we have.

Nick Wightman: This is an illustration of our different revenue streams. The graph on the right-hand side shows the four main revenue streams that we have. The bottom two bars represent our recurring revenues. The dark blue one is direct customer, the lighter blue is OEM. The top two chunks of the stack is effectively our non-recurring revenue. The line going across the top is our direct customer ARR which obviously shows continued upwards trajectory, which as we have said, that is where we see the growth in the business moving forwards. Specifics, recurring revenue stable at GBP 30 million, so grown slightly overall from where we were in the comparative period. That now represents 76% of overall revenue against a comparative period of 67%. That has naturally increased our gross margin, so that is up to 67.1% from 65.6%.

Speaker #2: The bottom two bars represent our recurring revenues. The dark blue one is direct customer, and the lighter blue is OEM. The top two chunks of the stack are effectively our non-recurring revenue.

Speaker #2: The line going across the top is our direct customer ARR, which obviously shows a continued upward trajectory. As we've said, that is where we see the growth in the business moving forward.

Speaker #2: Specifically, recurring revenue remains stable at $30 million, growing slightly overall from where we were in the comparative period. That now represents 76% of overall revenue, compared to 67% in the comparative period.

Speaker #2: That has naturally increased our gross margin, so that's up to 67.1% from 65.6%. You'll see that theme as we go through—how the growth in our direct customer software revenue will help increase gross margins and will also drive through into EBITDA levels.

Nick Wightman: You will see that theme as we go through, how the growth in our direct customer software revenue will help increase gross margins and will also drive through into EBITDA levels. With respect to the non-recurring revenue, you will note that that has dropped. The key thing to point out here is that there was a completion of a large contract in the comparative period, so that was a rollout of an Australian project in back end of 2024 and into 2025, which makes that comparative period very high. What we have seen in this year is timing of project rollouts. We are pleased with the level of order intake that we have seen overall, and there is more on that in a subsequent slide. It is really down to the timing of some wider market conditions that we have seen within the customer base and the wider macro environment.

Speaker #2: With respect to the non-recurring revenue, you will note that it has dropped. The key thing to point out here is that there was a completion of a large contract in the comparative period.

Speaker #2: So that was a rollout of an Australian project in the back end of '24 and into 2025, which makes that comparative period very high. What we've seen in this year is the timing of project rollouts.

Speaker #2: So we're still pleased with the level of order intake that we're seeing overall, and there's more on that in a subsequent slide. But it's really down to the timing and some wider market conditions that we've seen.

Speaker #2: Within the customer base and the wider macro environment. If you can just move to the next slide, please, Nadine. So, this is our income statement, or profit and loss account.

Nick Wightman: If you can just move to the next slide, please, Nadeem. This is our income statement, our profit and loss account. Obviously, this is more detailed in the specific line items. I will not go through this in detail because we have touched on a number of the parts already, but there are some specific call-outs that I would like to highlight. You will note that OpEx has reduced. That is as a result of the restructuring that we did, and completed at the back end of 2025. I am also pleased to say that we have also managed to achieve an additional half a million pounds worth of cost savings in H1 through various initiatives. We are expecting that to continue into H2 and beyond. As a business, we are very focused on margin enhancement. We have multiple initiatives across various different functions in the business to make us more streamlined and to take cost out.

Speaker #2: Obviously, this is kind of more detail in the specific line items. I won't go through this in detail because we've touched on a number of the parts already.

Speaker #2: But there are some specific call-outs that I'd like to highlight. You'll note that OPEX has reduced, and that's as a result of the restructuring that we did and completed at the back end of 2025.

Speaker #2: I'm also pleased to say that we have managed to achieve half a million pounds' worth of cost savings in H1 through various initiatives.

Nick Wightman: I am also pleased to say that we have also managed to achieve an additional half a million pounds worth of cost savings in H1 through various initiatives. We are expecting that to continue into H2 and beyond. As a business, we are very focused on margin enhancement. We have multiple initiatives across various different functions in the business to make us more streamlined and to take cost out.

Speaker #2: We're expecting that to continue into H2 and beyond as a business. We are very, very focused on margin enhancement. We have multiple initiatives across various different functions in the business to make us more streamlined.

Speaker #2: And to take cost out. So this will capture functions such as procurement to drive out commercial savings, but also in our hardware engineering to design cost out of the hardware that we supply.

Nick Wightman: This will capture functions such as procurement to drive out commercial savings, but also in our hardware engineering to design cost out of the hardware that we supply, but also infrastructure as well. We host our own cloud-hosted solutions, and we are working hard to rationalize the estate. That will give us effectively savings in terms of man time and people time in terms of managing and maintaining the estate, but also in terms of licenses and utility costs. There are a number of programs that are going on that will start delivering more results at the back end of 2026 and into 2027 and beyond. If you could just move on to the next slide, please, Nadeem. This is our cash bridge. I will not go through every single box. There are quite a few of them, I appreciate that.

Speaker #2: But also infrastructure as well. So we host our own cloud-hosted solutions, and we are working hard to rationalize the estate. That will give us, effectively, savings in terms of man time.

Speaker #2: And people time in terms of managing and maintaining the estate, but also in terms of licenses and utility costs. So, there are a number of programs that are going on that will start delivering more results at the back end of 2026 and into 2027 and beyond.

Speaker #2: If you could just move on to the next slide, please, Nadine. So, this is our cash bridge. I won't go through every single bar because there are quite a few of them.

Speaker #2: I appreciate that. I think the key things to really call out are the left-hand bar showing the 11.1—that is where we ended at June 2025.

Nick Wightman: I think the key things to really call out are the left-hand bar showing the 11.1 is where we ended at June 2025. The middle light blue bar, the 16.7, is where we ended at the end of June 2026. The key things really to call out here are we had a very strong H2 performance in 2025. If you look to the left-hand side of the graph, you will notice that there is a blue bar with six points. Sorry, I think it is quite small. I cannot see. It is around GBP 6 million of working capital inflow. That was a result of improved credit management processes and performance, but it has also reflected the pull forward of a number of collectibles that would have been forecast in 2026. That is why we have got a cash outflow in the first half of this year.

Speaker #2: The middle light blue bar, the 16.7, is where we ended at the end. That's where we ended at the end of June 2026.

Speaker #2: The key things really to call out here are: we had a very, very strong H2 performance in 2025. If you look at the left-hand side of the graph, you'll notice there's a blue bar with 6 points. Sorry, I think it's quite small.

Speaker #2: I can't see it. It's around £6 million of working capital inflow. That was a result of improved credit management processes and performance. But it also reflects the pull forward of a number of collectibles that would have been forecast in 2026.

Speaker #2: So that is why we've had a cash outflow in the first half of this year. That was anticipated, and we are expecting there to be a net free cash flow outflow this year.

Nick Wightman: That was anticipated. We are expecting there to be a net free cash flow outflow this year. We also expect that to be moderated, but it will be an outflow in 2027 as well. Then towards the end of 2027, that will become positive as we start realizing the incremental revenue and margin from the investment programs. The other point to call out from a cash utilization perspective is that there was a GBP 2 million outflow in relation to the restructuring that we completed in 2025. Those severance payments were made in January and February 2026. I think really the other key thing to call out is that, obviously, we are cash generative. We have a facility with HSBC that is unutilized.

Speaker #2: And we also expect that to be moderated, but it will be an outflow in 2027 as well. Then, towards the end of '27, that will become positive as we start realizing the increment for revenue and margin from the investment programs.

Speaker #2: The other point to call out from a cash utilization perspective is that there was a $2 million outflow in relation to the restructuring that we completed in ’25.

Speaker #2: So, those severance payments were made in January and February 2026. And I think really the other key thing to call out is that, obviously, we are cash generative.

Speaker #2: We have a facility with HSBC that is unutilized. That consists of a committed RCF and an additional £10 million, and an additional £20 million accordion should we need it for further investment, whether that's organic growth or M&A or whatever that might be.

Nick Wightman: That consists of a committed RCF of GBP 10 million and an additional GBP 20 million accordion, should we need it for further investment, whether that is organic growth or M&A or whatever that might be. If you can just move on to the final slide please, Nadeem. What we are keen to illustrate here is our ambition as an organization is to get to 20% adjusted EBITDA initially. That is not the ultimate ambition. We want to get to 25% and 30% and above. What we are really trying to show you here is that last year, we achieved an overall margin of 9.9% EBITDA margin. That was 5.2% in H2. H1 shows 13.2%. So material change in the level of EBITDA that we are achieving. What we have tried to illustrate here is some of the building blocks to get us to the initial milestone of 20% EBITDA.

Speaker #2: If you can just move on to the final slide, please, Nadine. So what we're keen to illustrate here is our ambition as an organization is to get to £20 million adjusted EBITDA initially.

Speaker #2: That is not the ultimate ambition. We want to get to 25% and 30%, and above. What we're really trying to show you here is that last year, we achieved an overall EBITDA margin of 9.9%.

Speaker #2: That was 5.2% in H2. H1 shows 13.2%. So, a material change in the level of EBITDA that we're achieving. What we've tried to illustrate here are some of the building blocks to get us to the initial milestone of 20% EBITDA.

Speaker #2: And where we see those coming from is revenue mix. So that means selling more to our direct customers and selling more software to our direct customers.

Nick Wightman: Where we see those coming from is revenue mix. That means selling more to our direct customers and selling more software to our direct customers. That will naturally drop through into EBITDA margins, because our margins to our direct customers are significantly higher than those to our OEM customers. We have indicated here that in the medium term, we expect OEM revenues to be flat, and that will flatten out at the end of 2027, as previously indicated. We are also, as mentioned before, working on a number of cost savings initiatives. We have flagged here that we will be seeing increased margins from engineering changes to our proprietary hardware that will be launched in 2027. To help fund that growth, we expect that we will continue to invest in our go-to-market teams. That will mean both in the marketing team, in personnel, in terms of lead generation.

Speaker #2: So that will naturally drop through into EBITDA margins, because our margins to our direct customers are significantly higher than those to our OEM customers.

Speaker #2: We've indicated here that, in the medium term, we expect OEM revenues to be flat. That will flatten out at the end of 2027, as previously indicated.

Speaker #2: As mentioned before, we're working on a number of cost savings initiatives. We've flagged here that we will be seeing increased margins from engineering changes to our proprietary hardware, which will be launched in 2027.

Speaker #2: To help fund that growth, we expect that we will continue to grow our investment in our go-to-market teams. That will mean both in the marketing team, in personnel in terms of lead generation, and it will also mean further investment in other marketing costs in relation to tooling, advertising, and exhibitions.

Nick Wightman: It will also mean further investment in other marketing costs in relation to tooling, advertising, exhibitions, but it will also mean an increase in quota-carrying staff. We think that there is significant market share that we can gain in various areas. We have a big opportunity in the mid-market space. We have a big opportunity in the TMS space where we think that we can drive further sales and margin into the business. We will continue to invest in and increase our quota-carrying teams. That is planned in 2026, 2027, and we will continue to do that in 2027 and beyond. The other piece, the final bridging item here is around efficiency and operational leverage. I have mentioned the various different cost savings and margin enhancement initiatives that we have. That will continue to drop through into the P&L in the back end of 2026 and into 2027 and beyond.

Speaker #2: But it will also mean an increase in quota-carrying staff. We think that there is significant market share we can gain in various areas.

Speaker #2: We've got a big opportunity in the mid-market space. We've got a big opportunity in the TMS space, where we think that we can drive further sales and margin into the business.

Speaker #2: So, we will continue to invest and increase our quota-carrying teams. That is planned for '26 and '27, and we'll continue to do that in '27 and beyond.

Speaker #2: The other piece, the final bridging item here, is around efficiency and operational leverage. I've mentioned the various cost savings and margin enhancement initiatives that we've got.

Speaker #2: That will continue to drop through into the P&L in the back end of 2026 and into '27 and beyond. It is now routine and business as usual for us to have margin enhancement as a key building block in our financial forecasting and budgeting processes.

Nick Wightman: It is now routine and business as usual for us to have margin enhancement as a key building block in our financial forecasting and budgeting processes. The final step really is around operational leverage. This really comes in the form of being able to do more with less. This is relating to optimization of processes, utilizing the tooling that we have, business systems, automation, taking out waste, but also really utilizing AI technologies. We have rolled out AI capabilities across most of the business, and we are utilizing that in our development teams, both hardware and software. As Nadeem pointed out, our teams are becoming more efficient and more effective as a result of these tools, but we are also using it in the back office as well. That is helping us speed up a number of processes.

Speaker #2: And the final step really is around operational leverage. So, this really comes in the form of being able to do more with less. So, this is relating to optimization of processes.

Speaker #2: So, utilizing the tooling that we have—business systems, automation, taking out waste—but also really utilizing AI technologies. We've rolled out AI capabilities across most of the business.

Speaker #2: And we're utilizing that in our development teams—both hardware and software. As Nadine pointed out, our teams are becoming more efficient and more effective as a result of these tools.

Speaker #2: But we're also using it in the back office as well, so that is helping us speed up a number of processes. It's enabled us to add more value and do more things in the back office, and do it more efficiently.

Nick Wightman: It is enabling us to add more value and do more things in the back office and do it more efficiently. But it is also facilitating us to be able to do things that we did not have the capability to do before. We are seeing benefits of this already. We do expect this to continue. We are relatively early on in this journey, but we are very optimistic. The business is very enthusiastic about this new tooling, so we expect productivity improvements to increase and continue. Thank you, Nadeem.

Speaker #2: But it's also enabling us to do things that we didn't have the capability to do before. So, we are already seeing benefits from this.

Speaker #2: We do expect this to continue. We're relatively early on in this journey, but we're very optimistic. The business is very enthusiastic about this new tooling.

Speaker #2: So, we expect productivity improvements to increase and continue. Thank you, Nadine.

Speaker #1: Thanks, Nick. I'm just going to spend a few slides talking about the market and strategy. This slide illustrates both the commonalities and the differences across our various sales operations and geographies.

Nadeem Raza: Thanks, Nick. I am just going to spend a few slides on talking about market and strategy. This slide illustrates the commonality and also the differences across our different sales operations and different geographies. Some of the common things that we see that driving customer demand are regulation compliance. It is a heavily regulated industry. We are obviously seeing customers looking for greater efficiencies and helping to improve their margins. Of course, logistics is getting more complicated. People do want faster deliveries, smaller orders, bigger volumes, and to do that at a lower cost and in a more sustainable way. That adds more and more complexity to global supply chains in the way that even down to last mile deliveries occur. All that is underpinned by data and automation.

Speaker #1: Some of the common things that we see driving customer demand are regulation compliance—it's a heavily regulated industry. We are obviously seeing customers looking for greater efficiencies and helping to improve their margins.

Speaker #1: And of course, logistics is getting more complicated. People do want faster deliveries, smaller orders, bigger volumes. And to do that, that's at a lower cost.

Speaker #1: And in a more sustainable way. That adds more and more complexity to global supply chains, and to the way that even last-minute, last-mile deliveries occur.

Speaker #1: And all that is underpinned by data and automation. The more we can automate, the more efficient we can make organizations, and it really helps them increase their margins.

Nadeem Raza: The more we can automate, the more efficient we can make organizations, and it really help them increase their margins. Some of the key drivers that we are seeing across the different regions are in the UK. We already have a really big market share in the high-end, large enterprise customers. But the mid-market still offers us another GBP 65 million of ARR opportunity, and that is where we are focusing our efforts as previously described. Particularly TMS in that space, it is an area that is more greenfield than replacing competitors. We see that this is a big opportunity in that segment of the market. France is mainly driven by safety agenda, and of course, we have got the whole market to go at. We do not have significant penetration in France as yet, so there is lots more for us to do there.

Speaker #1: Some of the key drivers we're seeing across different regions are as follows: In the UK, we already have a significant market share among high-end, large enterprise customers.

Speaker #1: But the mid-market still offers us another $65 million of ARR opportunity, and that's where we are focusing our efforts as previously described. In particular, TMS in that space is an area that is more greenfield than replacing competitors.

Speaker #1: So, we see that this is a big opportunity in that segment of the market. France is mainly driven by safety agenda. And, of course, we've got the whole market to go after.

Speaker #1: We don't have significant penetration in France as yet, so there's lots more for us to do there. Australia and New Zealand are mainly being driven currently by new regulations that are coming in this year and next year regarding taxation on roads, driving hours regulations, vehicle maintenance, etc.

Nadeem Raza: Australia and New Zealand are mainly being driven currently by new regulations that are coming in this year and next year regarding taxation on roads and also driving hours regulations and vehicle maintenance, et cetera. So that is the key driver for winning new business in that area. You can see the relative fleet size in terms of heavy goods vehicles in those regions, and the TAMs relative to those as well. France has 20% more heavy goods vehicles than the UK, and Australia, New Zealand combined, nearly double the number of vehicles than the UK, and the TAMs obviously increasing accordingly. Some of the things that we are driving in our GTM area, again, some of the investments that we are making there, we can already see some of the benefits occurring. Our pipeline has grown.

Speaker #1: So that's the key driver for winning new business in that area. And you can see the relative fleet size in terms of heavy goods vehicles in those regions.

Speaker #1: And the TAMs are relative to those as well. So, France has 20% more heavy goods vehicles than the UK. Australia and New Zealand combined have nearly double the number of vehicles as the UK.

Speaker #1: And the TAMs obviously increase accordingly. Some of the things that we're driving in our GTM area—again, some of the investments that we're making there—we can already see some of the benefits occurring.

Speaker #1: So our pipeline has grown. Year on year, it's up 18%. So we have some confidence that that will flow through the funnel and lead to higher order intake.

Nadeem Raza: Year on year, it is up 18%, so we have some confidence that that will fall through the funnel and lead to higher order intake, and I will talk about that in a second. There is much better execution in our GTM team. We are introducing better processes, more stricter frameworks, and we have also strengthened the leadership across all of those regions with new hires, to really help embed those processes within the function. We can already see signs of that coming through with higher quality margin coming through. Our annualized margin value is up 14% year on year, and our direct NRR growth is up 11% year on year. I am going to talk a bit more deeply about Microlise ONE analytics, because the data aspect is what we see as our moat. We have enormous amounts of data about our customers across all sorts of different parts of their operations.

Speaker #1: And I'll talk about that in a second. There's much better execution in our GTM team. We're introducing better processes and more stringent frameworks. We've also strengthened the leadership across all of those regions with new hires.

Speaker #1: To really help embed those processes within the function. And we can already see signs of that coming through, with higher quality margin coming through—analyzed margin values are up 14% year-on-year.

Nadeem Raza: We can already see signs of that coming through with higher quality margin coming through. Our annualized margin value is up 14% year on year, and our direct NRR growth is up 11% year on year. I am going to talk a bit more deeply about Microlise ONE analytics, because the data aspect is what we see as our moat. We have enormous amounts of data about our customers across all sorts of different parts of their operations.

Speaker #1: And our direct MV growth is up 11% year on year. I'm going to talk a bit more deeply about monetizing One Analytics, because the data aspects are what we see as our moat.

Speaker #1: We have enormous amounts of data about our customers across all sorts of different parts of their operations. This is really helping us drive more value to them by providing other products that can help them analyze, automate, and forecast better, enabling them to really run their operations more efficiently.

Nadeem Raza: This is really helping us drive more value to them by providing other products that can help them analyze, automate, forecast better, and enabling them to really run their operations more efficiently. Early part of this year, we launched our Driver Excellence Data Pack, which was all about how can we help drivers to drive better, more efficiently, more safely, et cetera. It was very well received, but it did lead us to understand that some of our customers have very low data quality. What I mean by that is we get a lot of data coming in from other customer systems, and the consistency of that data can sometimes be quite poor. That is things like drivers' names, vehicle information, address details, for deliveries, et cetera.

Speaker #1: Earlier this year, we launched our Driver Excellence Data Pack, which is all about helping drivers to drive better, more efficiently, more safely, and so on.

Speaker #1: It was very well received, but it did lead us to understand that some of our customers have very low data quality. What I mean by that is we get a lot of data coming in from other customer systems.

Speaker #1: And the consistency of that data can sometimes be quite poor. So that's things like drivers' names, vehicle information, address details for deliveries, etc. And so we also introduced another data pack, which helps customers understand their data quality and what they need to improve upon in readiness for our AI tooling that's coming towards the end of this year.

Nadeem Raza: We also introduced another data pack, which helps customers understand their data quality and what they needed to improve upon, in readiness for our AI tooling that is coming towards the end of this year. So really to help customers get ready for AI capabilities on top of those data packs. We have launched several more data packs, some to do with fuel efficiency, some to do with actually showing customers pounds and pence of value that they have gained by using our products. We have also got Video Telematics and utilization data packs coming through. Next year, we are also producing data packs for our temperature-controlled customers as well. They are provided in two forms. So there is a standard form which people get as part of their upgrade package. Then there is a premium version that they can pay for and onboard.

Speaker #1: So really, to help customers get ready for AI capabilities on top of those data packs. And then we've launched several more data packs, some to do with fuel efficiency, some to do with actually showing customers pounds and pence, and value that they've gained by using our products.

Speaker #1: And then we've also got video telematics and utilization data packs coming through. Next year, we're also producing data packs for temperature-controlled customers as well.

Speaker #1: They are provided in two forms. So, there is a standard form, which people get as part of their upgrade package, and then there is a premium version that they can pay for and onboard.

Speaker #1: And that's how those data packs and AI tooling are being delivered. So we've got good line of sight through to the end of the year.

Nadeem Raza: That is how those data packs and AI tooling is being delivered. So we have got good line of sight through to the end of the year. Revenues will be broadly in line, and adjusted EBITDA will be in line with current market expectations. We are not really seeing any margin erosion. The main thing that we have not talked about so far is what is going on with supply chain and hardware. That remains challenging. We have good line of sight of that through to the end of 2026. We are already placing orders for tail end of 2027 because lead times are that long, and through to 2028. We appreciate that there are challenges in 2027 where we currently can see issues with component availability. We have mitigating actions put in place already. Alternative suppliers, alternative components, design resource available for designing out particular components, et cetera.

Speaker #1: And so revenues will be broadly in line. And, as I just said, EBITDA will be in line with current market expectations. We aren't really seeing any margin erosion.

Speaker #1: The main thing that we haven't talked about so far is what's going on with supply chain and hardware. That remains challenging. We have good line of sight on that through to the end of 2026.

Speaker #1: We are already placing orders for the tail end of 2027 because lead times are that long. And through to 2028, we appreciate that there are challenges in 2027, where we currently can see issues with component availability.

Speaker #1: We have mitigating actions put in place already: alternative suppliers, alternative components, design resources available for designing out particular components, etc. And so we're looking to address those issues for 2027.

Nadeem Raza: We are looking to plug those issues for 2027. But overall, we remain confident and optimistic in terms of our future growth, particularly on our direct customer side. You can see customer growth on the graph on the right-hand side showing we have been pretty consistent in growing our direct customer ARR despite the volatility that we are seeing on the OEM ARR, and that is why we are really investing heavily in the direct side to accelerate that growth in 2027 and beyond. The last slide, just talking about the actual investment case. We have significant market share in the UK. We are looking to achieve the same kind of impact in some of our international regions. We are blue-chip and very sticky customers, especially if they have multiple products from us. Our typical contracts with our direct customers are five years.

Speaker #1: But overall, we remain confident and optimistic in terms of our future growth, particularly on our direct customer side. You can see customer growth on the graph on the right-hand side, showing we've been pretty consistent in growing our direct customer ARR, despite the volatility that we've seen on the OEM ARR.

Speaker #1: And that's why we're really investing heavily in the direct side to accelerate that growth in 2027 and beyond. The last slide just talks about the actual investment case—we have significant market share in the UK.

Speaker #1: We're looking to achieve the same kind of impact in some of our international regions. We are blue-chip, and we have very sticky customers, especially if they have multiple products from us.

Speaker #1: Our typical contracts with our direct customers are five years, so we have good line of sight going forward on future revenue. There is a significant $300 million TAM opportunity just within our existing customers.

Nadeem Raza: So we have good line of sight going forwards on future revenue. There is a significant GBP 300 million TAM opportunity just within our existing customers, and a GBP 65 million ARR opportunity just in that mid-market in the UK. We are growing consistently, double-digit direct customer growth over the last few years, and we expect to accelerate that with the investments that we are making. We have a well-funded balance sheet to be able to support that. We have cash available to us. We do not have any debt, and we have a further GBP 30 million facility available should we need it for further investment and inorganic growth through M&A. I will stop there and hand back.

Speaker #1: And a £65 million ARR opportunity just in that mid-market in the UK. We are growing consistently, with double-digit direct customer growth over the last few years, and we expect to accelerate that with the investments that we're making.

Speaker #1: And we have a well-funded balance sheet to be able to support that. We have cash available to us. We don't have any debt, and we have a further £30 million facility available should we need it for further investment and inorganic growth through M&A.

Speaker #1: And I will stop there and hand back.

Speaker #2: Perfect. Thank you, Dean and Nick, for updating those investors today. Can I please remind investors to submit your questions by using the Q&A section located on the right-hand corner of your screen.

Operator 2: Perfect. Thank you, Nadeem and Nick, for updating those investors today. Can I please remind investors to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen? A reference recording of today's presentation will be available in the Investor Meet Company platform shortly after the meeting's ended. Guys, as you can see, we have received a number of questions during today's presentation. Nadeem, if I could just hand back to you to read out the questions and give responses where appropriate to do so, and I will pick up from you at the end.

Operator: Perfect. Thank you, Nadeem and Nick, for updating those investors today. Can I please remind investors to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen? A reference recording of today's presentation will be available in the Investor Meet Company platform shortly after the meeting's ended. Guys, as you can see, we have received a number of questions during today's presentation. Nadeem, if I could just hand back to you to read out the questions and give responses where appropriate to do so, and I will pick up from you at the end.

Speaker #2: And for your reference, a recording of today's presentation will be available in the Investment Company platform shortly after the meeting has ended. Guys, as you can see, we have received a number of questions during today's presentation.

Speaker #2: Dean, if I could just hand back to you to read out the questions and give responses where appropriate to do so. And I'll pick up from you at the end.

Speaker #1: Thank you. So the first question was: What's driven the double-digit growth in direct customers, and what do we see as the biggest opportunities to accelerate that growth from here?

Nadeem Raza: Thank you. The first question was, what has driven the double-digit growth in direct customers, and where do we see the biggest opportunities to accelerating that growth from here? I think we have got great products, and that is part of the reason why our direct customer growth has developed so much. We have a great range of products that help customers really use and understand their operations, understand all of the entirety of their operations. I think the key thing that is going to drive future growth is our TMS solution. It is big, it is complicated, it takes time to sell, it takes time to implement. But the more we can do to accelerate that sales cycle and accelerate the implementation cycle, the more of those projects we can do and deliver.

Speaker #1: So I think we have got great products, and that's part of the reason why our direct customer growth has developed so much. We have a great range of products that help customers really use and understand their operations—understand all of the entirety of their operations.

Speaker #1: I think the key thing that's going to drive future growth is our TMS solution. It is big, it's complicated, and it takes time to sell.

Speaker #1: It takes time to implement. But the more we can do to accelerate that sales cycle and accelerate the implementation cycle, the more of those projects we can do and deliver. And because it's our highest value and highest margin product, it will shift the needle more than selling any other product that we have.

Nadeem Raza: Because it is our highest value and highest margin product, it will shift the needle more than selling any other product that we have. We can already see the signs of that in H1, and we are investing to accelerate that going forwards. Next question was, your direct customer NRR remains high. To what extent is direct customer ARR growth being driven by upselling and cross-selling existing customers versus winning new business? Nick, I do not know if there is any details you want to provide in terms of how much of that 106% is through upselling and cross-selling.

Speaker #1: And we can already see the signs of that in H1, and we are investing to accelerate that going forward. The next question was: Your direct customer NRR remains high.

Speaker #1: To what extent is direct customer ARR growth being driven by upselling and cross-selling to existing customers versus winning new business? Nick, I don't know if there's any details you want to provide in terms of how much of that 106% is through upselling and cross-selling.

Speaker #3: Sorry, just get myself off mute. Yeah. What we tend to see is it's around kind of 70 to 80 percent that we see in growth is attributed to the existing customers.

Nick Wightman: Sorry, just get myself off mute. Yeah. What we tend to see is it is around 70% to 80% that we see in growth is attributed to the existing customers.

Speaker #1: Yeah. So the next question was, what gives management confidence in delivering accelerated growth from FY27? Well, I think if you project forwards, the fact that we have a pretty low churn rate of 1%, and most of our contracts are five years.

Nadeem Raza: Well, I think if you project forwards the fact that we have a pretty low churn rate of 1%, most of our contracts are 5 years. We can already see contracted revenue going forwards over the next few years through the growth that we are seeing on the mid-market and in our TMS products, and also some of our other products. That should come through despite the volatility that we are seeing on the OEM side, particularly with the OEM flatlining will allow more of that direct growth to come through and fall through to the bottom line. We are confident that we will see that accelerating in 2027 based on the investments that we are making and certainly the positive signs that we are already seeing from those investments in the early part of 2027.

Nadeem Raza: Yeah so the next question was [inaudible] management confidence in delivering so [inaudible] accelerated growth from FY27. Well, I think if you project forwards the fact that we have a pretty low churn rate of 1%, most of our contracts are 5 years. We can already see contracted revenue going forwards over the next few years through the growth that we are seeing on the mid-market and in our TMS products, and also some of our other products.

Speaker #1: We can already see contracted revenue going forward over the next few years. Through the growth that we are seeing in the mid-market and in our TMS products, and also some of our other products, that should come through despite the volatility that we are seeing on the OEM side, particularly with the OEM flatlining. This will allow more of that direct growth to come through and fall through to the bottom line.

Nadeem Raza: That should come through despite the volatility that we are seeing on the OEM side, particularly with the OEM flatlining will allow more of that direct growth to come through and fall through to the bottom line. We are confident that we will see that accelerating in 2027 based on the investments that we are making and certainly the positive signs that we are already seeing from those investments in the early part of 2027.

Speaker #1: And we are confident that we will see that accelerating in 2027, based on the investments that we're making and certainly the positive signs that we're already seeing from those investments in the early part of 2027.

Speaker #1: The next question was: what gives management—sorry, how are you thinking about the economics of AI features? We have had AI capabilities in some of our products for about the last five years.

Nadeem Raza: The next question was, what gives management. Sorry. How are you thinking about the economics of AI features? We have had AI capabilities in some of our products for about the last 5 years. AI is not necessarily something new to us within our products. What is also making a difference is some of the analytical tools that are now available to sit on top of all of that vast quantities of data that we have been managing for the last 20 or so years. It is really the process of monetizing that is, as I said earlier, we are offering some of those capabilities for free as part of the standard upgrades that we do. But there are premium options there as well, and that is how we are monetizing those AI capabilities. Do you have visibility on the end contracts through the OEMs?

Speaker #1: So, AI isn't necessarily something new to us within our products. What's also making a difference is some of the analytical tools that are now available to sit on top of all of that vast quantity of data that we've been managing for the last 20 or so years.

Speaker #1: And it's really the process of monetizing that is, as I said earlier, we are offering some of those capabilities for free. That's part of the standard upgrades.

Speaker #1: That we do. But there are premium options there as well, and that's how we are monetizing those AI capabilities. Do you have visibility on the end contracts through the OEMs?

Speaker #1: Yes, but we don't transact directly with the end customer. We only transact through the OEM. So, the end customer buys extensions via dealers. The dealers then buy those through the OEM.

Nadeem Raza: Yes, but we do not transact directly with the end customer. We only transact through the OEM. So the end customer buys extensions via dealers. The dealers then buy those through the OEM, and the OEM then buys that from us. So we are quite an arm's length away from the end customer, and therefore, those renewals on the OEM side is the thing that we probably have the least visibility on, and which is why it caught us by surprise in 2025. But obviously, we have taken a very prudent view of that going forwards, and really taken a hard ax to those numbers. That is what you are seeing when we talk about it reducing further in 2027 and flatlining towards the end of 2027. Can you please comment about the churn in your recurring direct ARR, upsells, and downsells? Any insights on NRR and GRR?

Speaker #1: And the OEM then buys that from us. So we are quite an arm's length away from the end customer, and therefore those renewals on the AOM side are the things that we probably have the least visibility on, which is why it caught us by surprise in 2025.

Speaker #1: But obviously, we've taken a very prudent view of that going forward, and really taken a hard axe to those numbers. That's what you're seeing when we talk about it reducing further in 2027.

Speaker #1: And flatlining towards the end of 2027. Can you please comment about the churn in your recurring direct ARR upsells and downsells? Any insights on NRR and GRR?

Speaker #1: Nick, I don't know if you want to answer that particular question.

Nadeem Raza: Nick, I do not know if you want to answer that particular question.

Speaker #3: Yeah. I mean, GRR isn't something that we've quoted at this point in time. As we said, NRR is at 106% in our direct customer base.

Nick Wightman: GRR isn't something that we've quoted at this point in time. As we said, NRR is at 106% in our direct customer base. That has reduced slightly, but we know why that is. We did have some contraction in a couple of large customers that they basically grew quite significantly through acquisition in 2024, and then that subsequently contracted as they rationalized those fleets in 2025 and beyond. In terms of specifically the churn, so 1.1%, so circa GBP 600K. There was some known churn in there, so there were some legacy hosting contracts that we inherited when we acquired ESS, the TMS provider, in 2024. That was a low margin, effectively a pass-through cost, charging model that we had with that particular customer that we exited for various different reasons.

Speaker #3: So, that has reduced slightly, but we know why that is. We did have some contraction in a couple of large customers that basically grew quite significantly through acquisition in 2024.

Speaker #3: And then that subsequently contracted as they rationalized those fleets in 2025 and beyond. In terms of specifically the churn, so 1.1%, so circa 600K.

Speaker #3: There was some known churn in there. So, there were some legacy hosting contracts that we inherited when we acquired ESS, the TMS provider, in 2024.

Speaker #3: So, that was a low-margin, effectively pass-through cost sort of charging model that we had with that particular customer, whom we exited for various different reasons.

Speaker #3: So what we're seeing in terms of the churn, it's not really a reflection of customer sentiment or anything. It's really kind of managed and understood.

Nick Wightman: What we're seeing in terms of the churn is not really a reflection of customer sentiment or anything. It's really kind of managed and understood.

Speaker #1: Okay, next question is: What’s the renewal rate of the OEM revenue at the end of the first term contract for those customers not renewing?

Nadeem Raza: Okay. Next question is to do with what's the renewal rate of the OEM revenue at the end of the first term contract for those customers not renewing? What's the reason for it? I think it varies. We sell through OEMs globally. We are in 197 countries, and the renewal rates vary significantly. Some regions we can see 80% renewal rate. In some regions, we can see 10% renewal rate. I think it's fair to say that what we're seeing is more a drop-off in what we call the high-priced regions. So South America, Africa, some of the Eastern Asia Pacific regions, and so on. They're high priced because the airtime in those areas is more costly.

Speaker #1: What's the reason for it? So, I think it varies. We sell through OEMs globally. We are in 197 countries, and the renewal rates vary significantly.

Speaker #1: Some regions, we can see 80% renewal rates. In some regions, we can see a 10% renewal rate. And I think it's fair to say that what we're seeing is more of a drop-off in what we call the high-priced regions.

Speaker #1: So, South America, Africa, some of the Eastern Asia, Pacific regions, and so on. And the high price is because the airtime in those areas is more costly.

Speaker #1: And our view is that the reason why those users, who are often second or third-life users, is because they're not the people that bought the equipment in the first place.

Nadeem Raza: Our view is that the reasons why those users, who are often second or third life users, because they're not the people that bought the equipment in the first place, they're probably the people that have bought it second or third owner down the track. Their view of the value of the service that we offer and the service that JCB or MAN offer, it's not something that they consider of significant value in those regions at that age of product, and therefore they're spending their money on something else. So we believe that's a macroeconomic impact that's causing that drop-off on renewals. I don't think that it means that the OEM isn't going to install our tech at the beginning of the production line.

Speaker #1: They're probably the people that have bought it second or third owner, down the track. Their view of the value of the service that we offer, and the service that JCB or MAN offer, is not something that they consider of significant value in those regions at that age of product.

Speaker #1: And therefore, they're spending their money on something else. So we believe that's a macroeconomic impact that's causing that drop-off in renewals. I don't think that means the OEM isn't going to install our tech at the beginning of the production line.

Speaker #1: I think that it has a negative impact on the OEM themselves. It's not something that they like to see, because it also means that they're not covering the cost of getting that data back and providing additional services on those vehicles and machines after that first five-year term.

Nadeem Raza: I think that it has a negative impact on the OEM themselves, that it is not something that they like to see, because it also means that they are not covering the cost of getting that data back and providing additional services on those vehicles and machines after that first five-year term. So it has a negative impact on the OEM as well. So there are various discussions going on how do we increase the level of renewals all the way from actually, do we just increase the initial term from five years to eight years? Therefore everyone effectively gets it for eight years, or do we bundle it in with other service contracts, again, to make it more attractive to end users? So there is lots of conversations going on. Nothing has been decided as of yet. There are no conclusions on that.

Speaker #1: So it has a negative impact on the OEM as well. There are various discussions going on about how we can increase the level of renewals—all the way from, actually, do we just increase the initial term from five years to eight years?

Speaker #1: And therefore, everyone effectively gets it for eight years. Or do we bundle it in with other service contracts? Again, to make it more attractive to end users.

Speaker #1: So there are lots of conversations going on. Nothing has been decided as of yet; there are no conclusions on that. But we don't think this is anything indicating an issue with not putting our tech on the product in the first place.

Nadeem Raza: We do not think this is anything indicating an issue with not putting our tech on the product in the first place. Next question was, when will Microlise generate meaningful free cash flow after development expenditure, and what level of annual free cash flow do you believe the current business can generate in the normalized year? So I think it is fair to say we are expecting free cash flow to be negative in 2026 and 2027, and then returning in 2028. 2026 is really a transition year to develop and accelerate our direct business. Nick, I do not know if you want to add any more on the free cash flow side.

Speaker #1: The next question was, when will my price generate meaningful free cash flow after development expenditure? And what level of annual free cash flow do you believe the current business can generate in a normalized year?

Speaker #1: So, I think we're expecting free cash flow to be negative in 2026 and 2027, and then returning in 2028. 2026 is really a transition year to develop and accelerate our direct business.

Speaker #1: Nick, I don't know if you want to add any more on the free cash flow side.

Speaker #3: Yeah, I think acknowledging that we are a few years out from doing that, but that's certainly where our management focus is.

Nick Wightman: Yeah. Acknowledging we are a few years out from doing that, but that is certainly where our management focus is.

Speaker #1: Okay, next question was: With £13.8 million cash and substantial undrawn facilities, what's the priority—acquisitions, investments, or shareholder returns? I think it's fair to say we look at all of those options.

Nadeem Raza: Okay. Next question was, with GBP 13.8 million cash and substantial undrawn facilities, what is the priority acquisitions, investments or shareholder returns? I think it is safe to say we look at all of those options based on what is going on and what we feel is in the best interest of shareholders. So we do pay a dividend already, and we have done acquisitions, and we have lots of cash and facilities available to do further acquisitions. So I think I would not necessarily want to sit here and say that we prioritize one over the other. It depends very much on what we think is in the best interest of shareholders. Next and final question. Historically, ROCE has been poor and recently negative. What do you think we should be capable of achieving, and what level of return are you targeting on current investment programs?

Speaker #1: Based on what's going on, and what we feel is in the best interests of shareholders. We do pay a dividend already, and we have done acquisitions. We also have lots of cash and facilities available to do further acquisitions.

Speaker #1: So I think I wouldn't necessarily want to sit here and say that we prioritize one over the other. It depends very much on what we think is in the best interest of shareholders.

Speaker #1: Next and final question: Historically, RSE has been poor and recently negative. What do you think it should be capable of? What do you think we should be capable of achieving?

Speaker #1: And what level of return are you targeting on current investment programs?

Speaker #3: So, I think the ROC—I assume you mean return on capital employed—and, yeah, I think your observations are valid. As an organization, again, we want to be getting those kind of significantly above, sort of 10, 15, up to 20 percent.

Nick Wightman: The ROCE bit, I assume you mean return on capital employed and yeah, I think your observations are valid. As an organization, again, we want to be getting those significantly above 10%, 15%, up to 20%. In terms of the decision around a development prospect is creating value. Obviously, there is a decision-making criteria that we go through in terms of what it is that we are going to develop. Clearly the return on that in terms of both from a cash perspective and from an accretive margin perspective is obviously key. Obviously, a big factor in this is what the customer values as well, what problems is it they are trying to decide, and that is a key factor in the decision-making process in terms of what we actually deliver.

Speaker #3: In terms of the decision around a development prospect, it is creating value. Obviously, there is a decision-making criteria that we go through in terms of what it is that we're going to develop.

Speaker #3: Clearly, the return on that, in terms of both a cash perspective and an accreted margin perspective, is obviously key. But, obviously, a big factor in this is what the customer values as well.

Speaker #3: What problems is it they're trying to decide? And that is a key factor in the decision-making process in terms of what we actually deliver.

Speaker #3: In terms of whether it is making whether it is making a return or not on creating shareholder value, is the way in which we manage projects is we have a clear line of sight around the actual investment.

Nick Wightman: In terms of whether it is making a return on creating shareholder value, is the way in which we manage projects is we have a clear line of sight around the actual investment, and that is going to be whether it is people, third party costs, and we also have clear line of sight around the revenue generation, whether that is actually recognized or forward-looking pipeline. This is how we are measuring the investment decisions and the development projects that we are embarking on.

Speaker #3: And that's going to be whether it's people, third-party costs. We also have clear line of sight around the revenue generation, whether that's actually recognized or forward-looking pipeline.

Speaker #3: So this is how we're measuring the investment decisions and the development projects that we're embarking on.

Speaker #1: I think that's the end of the questions.

Nadeem Raza: I think that is the end of the questions.

Speaker #2: Perfect. Thank you to you both for answering those questions from investors today. Before we ask investors to share their feedback—which I know is particularly important to the company—Nadeem, can I please just ask you for some closing comments?

Operator 2: Perfect. Thank you to you both for answering those questions from investors today. Before we ask investors to share their feedback, which I know is particularly important to the company, Nadeem, can I please just ask you for some closing comments?

Operator: Perfect. Thank you to you both for answering those questions from investors today. Before we ask investors to share their feedback, which I know is particularly important to the company, Nadeem, can I please just ask you for some closing comments?

Speaker #1: Thank you. So, thank you, everyone, for attending today. I hope you found it useful. I think I'll probably just leave you with this particular slide that shows what the investment case is.

Nadeem Raza: Thank you. So thank you everyone for attending today. I hope you found it useful. I think probably just leave you with this particular slide that shows what the investment case is and remind people on the fact that we have got a great track record of growing our direct customer ARR. Based on the slide that you saw earlier in terms of our shift from OEM to more direct business coming through that should be able to allow you to project forward and look at what we think we will be able to deliver both in terms of growth in revenue, but also sustainable EBITDA growth as well. Thank you.

Speaker #1: And remind people on the fact that we have got a great track record of growing our direct customer ARR. And based on the slide that you saw earlier in terms of our shift from OEM to more direct business coming through, that should be able to allow you to project forward and look at what we think we will be able to deliver both in terms of growth in revenue, but also sustainable EBITDA growth as well.

Speaker #1: Thank you.

Operator 2: Thank you. Could I please ask investors not to close this session as you will now be automatically redirected.

Operator: Thank you. Could I please ask investors not to close this session as you will now be automatically redirected.

Browse all earnings call transcripts

Q2 2026 Microlise Group PLC Earnings Call

Request TrialDemo

Microlise

Earnings