Full Year 2026 Craneware PLC Earnings Call

September 22, 2026

Speaker #1: Good evening, ladies and gentlemen, and welcome to Craneware plc's full-year 2026 results presentation. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session.

Operator: Good evening, ladies and gentlemen, and welcome to Craneware plc's full year 2026 results presentation. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. If you wish to submit a written question, you may do so by using the Ask a Question button on the Spark Live page. I would like to remind all participants that this call is being recorded. I will now hand over to Keith Neilson, Chief Executive Officer, to open the presentation. Please go ahead.

Speaker #1: If you wish to submit a written question, you may do so by using the Ask a Question button on the Spark Live page. I would like to remind all participants that this call is being recorded.

Speaker #1: I will now hand over to Keith Nielsen, Chief Executive Officer, to open the presentation. Please go ahead.

Speaker #2: Thank you very much, Leela. And thank you very much, everyone, for joining us today on our fiscal 26 results. First slide, please. Thank you.

Keith Neilson: Thank you very much, Layla. Thank you very much, everyone, for joining us today on our fiscal 2026 results. First slide, please. Thank you. We are going to handle today's results by really doing it in three parts. First of all, a brief introduction and overview of the fiscal 2026 results, followed by an update of our cybersecurity instance that happened post balance sheet date in early July. I will then hand over to Craig, who will then continue with a bit more of a deep dive into the financial review itself for fiscal 2026. We will then come back to review some market opportunities and updates in both the 340B market and the Revenue Integrity market, as well as giving an indication of our beliefs on the growth strategy and the outlook as we go forward.

Speaker #2: So we're going to handle today's results by really doing it in three parts. First of all, a brief introduction and overview of the fiscal 26 results.

Speaker #2: Followed by an update of our cybersecurity incidents that happened post-balance sheet date in early July. I'll then hand over to Craig, who will then continue with a bit more of a deep dive into the financial review itself for fiscal 26, and then we'll come back to review some market opportunities and updates in both the 340(b) market and the revenue integrity market, as well as giving an indication of our beliefs on the growth strategy and the outlook as we go forward.

Speaker #2: It is worth starting off by saying we are obviously deeply disappointed by the fiscal 26 results. However, what we would like to remind people is not to throw the baby out with the bathwater, and we will go through some of the positives that we have for building blocks and foundations for the future as we go through into fiscal 27 and fiscal 28.

Keith Neilson: It is worth starting off by saying we are obviously deeply disappointed by the fiscal 2026 results. However, what we would like to remind people is not to throw the baby out with the bath water, and we will go through some of the positives that we have for building blocks and foundations for the future as we go through into fiscal 2027 and fiscal 2028. Next slide, please. We do want to remind everyone that we operate in one of the largest, if not the largest, B2B software verticals in the world of US healthcare. US healthcare is greater than 60% of the global healthcare spend, and as such, it is an incredibly dynamic marketplace and a very exciting marketplace to be part of.

Speaker #2: Next slide, please. We do want to remind everyone that we operate in one of the largest, if not the largest, B2B software verticals in the world of US healthcare.

Speaker #2: US healthcare is greater than 60% of the global healthcare spend, and as such, it is incredibly dynamic marketplace and a very exciting marketplace to be part of.

Keith Neilson: Our role within that is non-clinical, thus we are not impacting on the clinical side, but we are working on the operational side of the hospital to make sure that it runs effectively. Our role is really in helping hospitals take forward and transform the business side of those hospitals and transforming the business of healthcare. Our business and our business models are very financially resilient and have proven to be that. We continue with long-term relationships, long-term software operations and tech-enabled services for our customers, with a view to be able to complete that transformation for them. The underlying financials of the business are strong, with strong ARR, long-term relationships, as I say, and very high consistency of customers over that period. Next slide, please.

Speaker #2: Our role within that is non-clinical, though, so we are not impacting on the clinical side, but we are working on the operational side of the hospital to make sure that it runs effectively.

Speaker #2: And our role is really in helping hospitals take forward and transform the business side of those hospitals and transforming the business of healthcare. Our business and our business models are very financially resilient and have proven to be that.

Speaker #2: We continue with long-term relationships and long-term software operations and tech-enabled services. For our ur customers, with a view to be able to complete that transformation for them.

Speaker #2: The underlying financials of the business are strong, with strong ARR, long-term relationships, as I say, and very high consistency of customers over that period.

Speaker #2: Next slide, please. Through the fiscal 26 performance and itself, we did see a disappointing slowdown in our 340(b) transactional revenue toward the end of the second half of the period, very much due to manufacturers' unilateral restrictions on honoring 340(b) pricing and supplying drugs at 340(b) pricing to the hospitals themselves.

Keith Neilson: Through the fiscal 2026 performance itself, we did see a disappointing slowdown in our 340B transactional revenue towards the end of the H2 of the period. Very much due to manufacturers' unilateral restrictions on honoring 340B pricing and supplying drugs at 340B pricing to the hospitals themselves. Having said that, though, we did have a very resilient ARR through the period. The recurring revenue was GBP 185 million, and our NRR was sitting comfortably at 100%. We saw healthy customer retention of greater than 90% by all of our measures, and a strong EBITDA performance and cash generation through that period. As I mentioned earlier, we did have a cybersecurity incident very early on into the new year, which was July, coming in.

Speaker #2: Having said that, though, we did have a very resilient ARR through the period, the recurring revenue was 185 million, and then our NRR was sitting comfortably at the 100%.

Speaker #2: We saw a healthy customer retention of greater than 90% by all of our measures, and a strong EBITDA performance and cash generation through that period.

Speaker #2: As I mentioned earlier, we did have a cybersecurity incident very early on into the new year, which was July coming in. I'm pleased to say that this is moving into the remediation phase, and I've got more details of what happened in that instance and where we're at today.

Keith Neilson: I'm pleased to say that that is moving into the remediation phase, and I've got more details of what both happened in that incident and where we're at today. That, though, combined with some of the uncertainty that we saw towards the end of last period in 340B, which is still working its way through the system, has brought us to the difficult decision of rebasing our fiscal 2027 numbers backwards to our ARR level to allow us to have time to be able to see how some of these changes pan out, and to take away some of this uncertainty and base our numbers on some certainty. Not only can we as a business make investment decisions, but also our stakeholders can make decisions about the business as well.

Speaker #2: That, though, combined with some of the uncertainty that we saw toward the end of last period in 340(b), which is still working its way through the system, has brought us to the difficult decision of rebasing 2027 numbers backwards to our ARR level to allow us to have time to be able to see how some of these changes pan out and some to take away some of this uncertainty and base our numbers on some certainty.

Speaker #2: So not only can we, as a business, make investment decisions, but also our stakeholders can make decisions about the business as well. As such, we'll also be undertaking a comprehensive review of our cost base, so that we are cutting our cloth accordingly across the business to reflect those changes in our revenue line as it's expected.

Keith Neilson: As such, we'll also be undertaking a comprehensive review of our cost base so that we are cutting our cloth accordingly across the business to reflect those changes in our revenue line as it's expected. Also to set out a plan of investments at the time when we then start to see that revenue growth come back again and step up as we go forward. Pleasingly, the business continues to work strongly with Microsoft as a very good partner that has brought both technology, AI resources, and people resources to us, as well as helping us accelerate new customer wins through the period and continuing through into this year. That gives us a great deal of confidence in being able to return to growth at least into the period of fiscal 2028, through a number of different angles.

Speaker #2: And then also, to set out a plan of investments at the time when we then start to see that revenue growth come back again and step up as we go forward.

Speaker #2: Pleasingly, the business continues to work strongly with Microsoft. As a very good partner, that has brought both technology AI resources and people resources to us, as well as helping us accelerate new customer wins through the period and continuing through into this year.

Speaker #2: And that gives us a great deal of confidence in being able to return to growth, at least into the period of fiscal '28, through a number of different angles.

Keith Neilson: One, by that stage, we are expecting to see a lot more certainty, through the 340B program at both a state and at a federal level. We're also expecting that our earlier investments that we've made in our products across both 340B and Revenue Integrity will result in further sales coming through. That, combined with our cost initiatives and our cost base review, will result in us returning back to far more positive margins by fiscal 2028 as well as we see going forward. Next slide, please. I've mentioned the cybersecurity incident, and this has created certainly some short-term and potentially medium-term uncertainty for the business. What happened was we became aware in early July that some threat actors had accessed our system and had excavated some files from our system, with the threat that they would publish the details of those files onto the dark web.

Speaker #2: One, by that stage, we are expecting to see a lot more certainty through the 340B program, at both state and federal levels.

Speaker #2: We're also expecting that our earlier investments that we've made in our products across both 340(b) and revenue integrity will result in further sales coming through.

Speaker #2: And that, combined with our cost initiatives and our cost-base review, will result in us returning to much more positive margins by fiscal 2028 as well, as we see going forward.

Speaker #2: Next slide, please. So I've mentioned a cybersecurity incident, and this has created certainly some short-term and potentially medium-term uncertainty for the business. What happened was we became aware in early July that some threat actors had access to our system and had exploited some files from our system, with the threat that we would publish the details of those files onto the dark web.

Keith Neilson: As it turns out, the vast majority of files that were taken from our systems were from or all of the files that were taken from our system were from non-operational servers. They were from non-work servers and non-production servers. But they did include some working servers that were used by members of our team to be able to do day-to-day work. Some of those servers and some of those files did include elements of both internal staff details, within there, and some of our employees' details, but also included some of our customer details and some of our customers' patient details within there. We are currently in the process of working with our customers to notify them of exactly what information was leaked and working with our staff on those just now.

Speaker #2: As it turns out, the vast majority of the files that were taken from our systems—or all of the files that were taken from our systems—were from non-operational servers.

Speaker #2: They were from non-work servers and non-production servers, but they did include some working servers that were used by members of our team to do day-to-day work.

Speaker #2: Some of those servers and some of those files did include elements of both internal staff details within there and some of our employees' details, but also included some of our customer details and some of our customers' patient details within there.

Speaker #2: And we're currently in the process of working with our customers to notify them of exactly what information was leaked, and working with our staff on those just now.

Speaker #2: What I am pleased to be able to say is our teams were able to very quickly verify and with the and then have third-party verification that the threat actors were no longer in our system, within a matter of within a number of hours, and within the first certainly well within 24 hours of us of the threat actors gaining access to our systems.

Keith Neilson: What I am pleased to be able to say is our teams were able to very quickly verify and then have third-party verification that the threat actors were no longer in our system within a number of hours, certainly well within 24 hours of the threat actors gaining access to our systems, and that there was no ongoing effect from the threat actors on our systems otherwise. As such, operations have continued through the period in between. The data that was taken was a very small subset of our overall data that we have on behalf of our customers, and that data was not breached in any way.

Speaker #2: And that there were no ongoing effects from the threat actors on our systems, either way. So, as such, operations have continued through the period in between.

Speaker #2: And the data that was taken was a very small subset of our overall data that we have on behalf of our customers, and that data was not breached in any way.

Speaker #2: We have moved into the remediation phase, as I say. So we are now in the process of working with both third parties and through our own data teams to analyze, down to the detail of the patient level, exactly what data was taken and what data has been published onto the dark web.

Keith Neilson: We have moved into the remediation phase, as I say, so we are now in the process of working with both third parties and through our own data teams to analyze down to the detail at the patient level, exactly what data was taken and what data has been published onto the dark web. We will equally be moving into understanding what the financial impacts will be of the business. We are cautioning that although we will get better clarity through the course of this year, through fiscal 2027, with regards to some of the impact of this, it may be a number of periods, so maybe going into future financial years, where the full impact of this will be seen. I am very pleased and thank our customers and our staff for their understanding in the meantime.

Speaker #2: And we'll equally be moving into understanding what the financial impacts will be for the business. We are cautioning that although we will get better clarity through the course of this year, through fiscal '27, with regards to some of the impact of this, it may be a number of periods—so maybe going into future financial years—where the full impact of this will be seen.

Speaker #2: I am very pleased and thank our customers and our staff for their understanding in the meantime. I know that they have been very supportive and very appreciative of the efforts that we've taken so far with regards to this incident.

Keith Neilson: I know that they have been very supportive and have been very appreciative of the efforts that we have taken so far with regards to this incident, and we do treat this incident with the utmost seriousness in terms of both remediation and also making sure that we are as protected as any organization can be going forward on this. Next slide, please. Looking at fiscal 2026 overall, I want to just highlight some of the positives from our sales performance. In the performance, although our sales were comparable to the prior year of fiscal 2026, and as Craig will go into, our revenue numbers were very comparable with that as well. One of the benefits we did see was an increase in the number of new customers, net new wins that came to us through the period.

Speaker #2: And we do treat this incident with the utmost seriousness in terms of both remediation, but also making sure that we're as protected as any organization can be going forward on this.

Speaker #2: Next slide, please. So, looking at fiscal '26 overall, I want to just highlight some of the positives from our sales performance. In the performance, although our sales were comparable to the prior year of fiscal '26—and as Craig will go into—our revenue numbers were very comparable with that as well.

Speaker #2: One of the benefits we did see was an increase in the number of new customers—net new wins—that came to us through the period.

Speaker #2: And those net new wins pleasingly came through a mix of competitive takeouts and competitive displacements, as well as a significant number of expansion sales within our existing customer base.

Keith Neilson: And those net new wins, pleasingly, came through a mix of competitive takeouts and competitive displacements, as well as a significant number of expansion sales within our existing customer base. And pleasingly, some of those competitive wins and expansion sales have continued through into this first quarter of the new year, and we will be hopefully reporting on this as we come through to our interims into the new calendar year as it comes. With that and that overview, I will hand over to Craig for the financial details of fiscal 2026.

Speaker #2: And pleasingly, some of those competitive wins and expansion sales have continued through into this first quarter of the new year. And we will be hopefully reporting or we will be reporting on this as we come through to our interims into the new calendar year as it goes.

Speaker #2: And with that, and that overview, I'll hand over to Craig for the financial details of fiscal 26.

Speaker #1: I could move to the next slide, please. So, thank you, Keith. In the next few slides, I will step you through the financial results for fiscal 2026.

Craig Preston: If I could move to the next slide, please. So thank you, Keith. In the next few slides, I will step you through the financial results of fiscal 2026. The fiscal 2026 year was a year of some really good positive operational progress, but ultimately, we do recognize and are very, very aware of the fact that the financial outcome was below our expectations. A significant factor in that was the headwinds we experienced in the 340B marketplace. A good example of that is our shelter program. Here we were able to identify significant opportunities for our customers. We saw high levels of customer engagement, but due to the restrictions that were being placed on them, they were unable to take advantage of these opportunities. That had the knock-on effect that the expected transactions we expected to see did not materialize at the rate we anticipated.

Speaker #1: The fiscal 26 year was a year of some really good positive operational progress, but ultimately we do recognize and are very, very aware of the fact that the financial outcome was below our expectations.

Speaker #1: A significant factor in that was the headwinds we experienced in the 340B marketplace. A good example of that is our Shelter program. Here, we were able to identify significant opportunities for our customers.

Speaker #1: We saw high levels of customer engagement, but due to the restrictions that were being placed on them, they were unable to take advantage of these opportunities.

Speaker #1: And that had the knock-on effect that the expected transactions we expected to see did not materialize at the rate we anticipated. Clearly, this is disappointing.

Craig Preston: Clearly, this is disappointing, but I think it is worth us reminding ourselves the underlying financial characteristics of the group remain strong. We retain a substantial recurring revenue base, long-standing customer relationships, healthy margins, strong cash generation, and significant financial flexibility. I will demonstrate that in the next few slides. If I could move to the next slide, please. Looking first at our headline financial measures. Revenue was broadly unchanged at $206 million. That generated an adjusted EBITDA of $67.1 million, with a corresponding 33% EBITDA margin. Ultimately, we delivered adjusted basic earnings per share of 116.8 cents. Our ARR, as Keith mentioned, our annual recurring revenue remained steady at $185 million, and our operating cash conversion was 98%. Looking at our bank debt. Our bank debt did increase in the period from $27.7 million to $43.5 million, and that was a deliberate capital allocation decision we made.

Speaker #1: But I think it is worth us reminding ourselves that the underlying financial characteristics of the group remain strong. We retain a substantial recurring revenue base, longstanding customer relationships, healthy margins, strong cash generation, and significant financial flexibility.

Speaker #1: And I will demonstrate that in the next few slides. If I could move to the next slide, please. Looking first at our headline financial measures, revenue was broadly unchanged at $206 million.

Speaker #1: That generated an adjusted EBITDA of $67.1 million, with a corresponding 33% EBITDA margin. Ultimately, we delivered adjusted basic earnings per share of 116.8 cents.

Speaker #1: Our ARR, as Keith mentioned, our annual recurring revenue, remained steady at $185 million, and our operating cash conversion was 98%. Looking at our bank debt, our bank debt did increase in the period from $27.7 million to $43.5 million.

Speaker #1: And that was a deliberate capital allocation decision we made. We decided to draw some debt down alongside our own cash resources to fund the $25 million share buyback we performed in the year.

Craig Preston: We decided to draw some debt down alongside our own cash resources to fund the $25 million share buyback we performed in the year. Overall, though, we do acknowledge, and we are very cognizant that these results were below our expectations, especially for revenue. But they also do demonstrate the resilience of this business during this more challenging year. A good example of the underlying resilience of our business is our annual recurring revenue. So let's have a look at the base of that. If I could move to the next slide, please. I have already covered the headline metrics, so on this chart, I think it is the graphs on the right-hand side, the five-year charts, they really provide a useful context for the underlying strength of the business. They demonstrate the continued progress we have been making across revenue and adjusted EBITDA.

Speaker #1: Overall, though, we do acknowledge and we are very cognizant that these results were below our expectations, especially for revenue growth. But they also do demonstrate the resilience of this business during this more challenging year.

Speaker #1: A good example of the underlying resilience of our business is our annual recurring revenue. So let's have a look at that base that forms its risk.

Speaker #1: It's really important as we go forward. Within our ARR, no individual customer represents more than 8%. Our 10 largest customers account for less than 30%, and their average contracting relationship with us is over 21 years.

Speaker #1: So that annual recurring revenue foundation gives us meaningful visibility, diversification, and a dependable foundation against which we can plan the future of the business.

Speaker #1: As we enter fiscal 27, and in light of the post-year-end cyber incident that Keith has talked you through, we have adopted a prudent planning basis.

Speaker #1: We've reset our revenue expectations to approximately the level of our current ARR, and that's to provide certainty to all our stakeholders and allow us to make sensible planning decisions as we wait for various factors to work their way through the system.

Speaker #1: Against that, we've talked to a comprehensive review of our cost base. Here again, the objective is to align the organization with that revenue framework we've set ourselves.

Speaker #1: While we'll do this whilst protecting customer service, cybersecurity, regulatory compliance, and the product investments that will be the foundation for our future growth. Our approach to capital allocation remains disciplined and unchanged in principle.

Speaker #1: If I could move to the next slide, please. I've already covered the headline metrics, so on this chart, I think it's the graphs on the right-hand side, the five-year charts, that really provide a useful context for the underlying strength of the business.

Speaker #1: They demonstrate the continued progress we've been making across revenue and adjusted EBITDA. And actually, if we took those graphs back, you'd see that continued progress all the way back to our IPO back in 2007.

Craig Preston: If we took those graphs back, you would see that continued progress all the way back to our IPO back in 2007. A strong business has to be able to adapt to difficult market conditions and unexpected events such as the cyber incident. Acting to preserve margins without curtailing investment will be what ultimately drives our future growth. We honestly believe that the actions we continue to take, we are going to meet those objectives, which will cause short-term pain, we understand that, but will ultimately benefit all our stakeholders. If I could move to the next slide, please. Turning to cash is obviously really important as you navigate this period in the company's history. Five-year charts again give appropriate perspective. Whilst cash holdings have varied as we have made various investment decisions, we have reduced debt, we have returned capital to shareholders, we have always maintained substantial liquidity.

Speaker #1: A strong business has to be able to adapt to difficult market conditions and unexpected events, such as the cyber incident. Acting to preserve margins without curtailing investment will be what ultimately drives our future growth.

Speaker #1: We honestly believe that the actions we continue to take we are going to meet those objectives, which will cause short-term pain, we understand that, but will ultimately benefit all our stakeholders.

Speaker #1: If I could move to the next slide, please. Turning to cash—and cash is obviously really important as you navigate this period in the company's history.

Speaker #1: Five-year charts, again, gave appropriate perspective. Whilst cash holdings have varied, as we've made various investment decisions, we've reduced debt, we've returned capital to shareholders, we have always maintained substantial liquidity.

Speaker #1: And that really reflects the cash generative nature of our annuity SaaS model. Operating cash conversion, 98% of adjusted EBITDA. Again, confirms the quality of our underlying earnings that we delivered in the year.

Craig Preston: That really reflects the cash generative nature of our annuity SaaS model. Operating cash conversion, 98% of adjusted EBITDA, again confirms the quality of our underlying earnings that we delivered in the year. We did see a $10.4 million movement in the funds held on behalf of customers. Those funds fluctuate as part of normal customer operations. What we do, and consistent with prior years, is we always exclude these from our operating cash conversion measure, that being a true measure of the cash generated by the business itself, rather than how we deal with our customer cash. After investments, dividends, and share buyback, year-end cash remains strong at $54.8 million. We have a further $56 million available to us under the RCF, then we have a further $100 million revolving facility pre-agreed.

Speaker #1: We did see a $10.4 million movement in the funds held on behalf of customers. Those funds fluctuate as part of normal customer operations.

Speaker #1: What we do, and consistent with prior years, is we always exclude these from our operating cash conversion measure, that being a true measure of the cash generated by the business itself, rather than how we deal with our customer cash.

Speaker #1: After investments, dividends, and share buyback, year-end cash remains strong at $54.8 million. We have a further $56 million available to us under the RCF.

Speaker #1: And then we have a further $100 million accordion facility pre-agreed. I've talked to the VAT increase in the bank debt, and it is part-funding the $25 million share buyback.

Craig Preston: I have talked about increasing the bank debt and it part funding the $25 million share buyback. After all these factors, the board is proposing to maintain the total dividend for the year of 32p, resulting in a final dividend of 17p per share. We believe that balances an appropriate return to our shareholders against the importance of retaining liquidity and investing capacity as we reset our medium-term objectives and assumptions. If I could move to the next slide, please. I have mentioned our annuity SaaS model, it really is the foundation of our financial resilience. It is underpinned by multi-year contracts with software subscription revenue recognized over the contractual term. Contract and recurring revenue was $175.1 million, approximately 85% of our total revenue. SaaS software revenue was $130.4 million. Transactional revenue, which is billed on a monthly basis but is supported by long-term underlying contracts, was $38.9 million.

Speaker #1: After considering all these factors, the board is proposing to maintain the total dividend for the year at 32 pence, resulting in a final dividend of 17 pence per share.

Speaker #1: We believe that balances an appropriate return to our shareholders against the importance of retaining liquidity and investment capacity, as we reset our medium-term objectives and assumptions.

Speaker #1: If I could move to the next slide, please. I've mentioned our annuity SaaS model—it really is the foundation of our financial resilience. It's underpinned by multi-year contracts, with software subscription revenue recognized over the contractual term.

Speaker #1: Contracting recurring revenue was $175.1 million, approximately 85% of our total revenue. SaaS software revenue was $130.4 million. Transactional revenue, which is billed on a monthly basis and supported by long-term underlying contracts, was $38.9 million.

Speaker #1: And finally, our recurring professional services contributed $5.9 million. Software license revenue did reduce in the year, but that primarily reflects an ongoing trend we've seen again in the 340B market, where hospitals are preferring to move from a license to recurring transaction revenues.

Craig Preston: Finally, our recurring professional services contributed $5.9 million. Software license revenue did reduce in the year, but that primarily reflects an ongoing trend we have seen, again in the 340B market, where hospitals are preferring to move from a license to recurring transaction revenues, that allows for more transparency, tying the actual benefit and the transaction cost to the individual patient encounter and the appearance of the pharmacy. Both our transaction offer and platform revenues grew in the period, however, both were impacted. We have previously explained that platform revenues are excluded from our ARR until we have sufficient evidence that they are recurring and reliably predictable. At that point, we can then record them as, or think of them as recurring. The headwinds we have outlined actually had a double impact.

Speaker #1: And that allows for more transparency, tying the actual benefit and the transaction cost to the individual patient encounter and their appearance at the pharmacy.

Speaker #1: Both our transaction offer and platform revenues grew in the period; however, both were impacted. We previously explained that platform revenues are excluded from our ARR until we have sufficient evidence that they're recurring and reliably predictable.

Speaker #1: At that point, we can then record them, or think of them as recurring. The headwinds we've outlined actually had a double impact. The growth in our platform revenues did not occur as we expected it to, but nor could we assess any of these revenues to be recurring in the current year.

Craig Preston: The growth in our platform revenues did not occur as we expected it to, but nor could we assess any of these revenues to be recurring in the current year. So that impacted both the growth of our transactional revenues and our ARR. If I could move to the next slide, please. I've covered the key metrics, so let's dig into the margins themselves. Gross margin came at 84% compared to 87%. However, overall, our total cost base didn't significantly change. It really was just an allocation from our OpEx costs to our cost of sales, reflecting a slightly different revenue mix more geared towards the technology-enabled services we delivered in the period. Through this period, we've remained disciplined on pricing, cost to serve, and contractual risk. Net operating expenses, as I've mentioned, to adjusted EBITDA reduced to $105.7 million.

Speaker #1: So that impacted both the growth of our transactional revenues and our ARR. If I could move to the next slide, please. I've covered the key metrics, so let's dig into the margin themselves.

Speaker #1: Gross margin came at 84% compared to 87%. However, overall, our total cost base didn't significantly change. It really was just an allocation from our opex costs to our cost of sales.

Speaker #1: Reflecting a slightly different revenue mix, more geared towards the technology-enabled services we delivered in the period. Through this period, we've remained disciplined on pricing, cost of serving, and contractual risk.

Speaker #1: Net operating expenses, as I've mentioned, to adjusted EBITDA, reduced to $105.7 million. A big factor in that is the movement into cost of sales.

Craig Preston: Big factor of that being the movement into cost of sales. We've continued to invest with total development expenditure increasing 4% to $59.6 million, of which we capitalized $16.9 million. That small increase in the capitalization just reflects the stage of the qualifying work we've been doing in our development departments. So focused on data integration, AI-enabled applications, and the expanded pharmacy offering that Keith will talk to inside of his time. Our capitalization criteria remains rigorous. Expenditure is only capitalized where projects are technically feasible, commercially supportable, and expected to deliver future economic benefits. All this resulted in the 33% EBITDA margin I've mentioned, statutory profit before tax of 7%, increased 7%, and a broadly stable adjusted and basic earnings per share number. If I can have the next slide, please. Our balance sheet remains strong and provides us the real basis of our financial resilience.

Speaker #1: We've continued to invest, with total development expenditure increasing 4% to $59.6 million, of which we capitalized $16.9 million. That small increase in the capitalization just reflects the stage of the qualifying work we've been doing in our development departments.

Speaker #1: So focus on data integration, AI-enabled applications, and the expanded pharmacy offering that Keith will talk to in a slide of two's time. Our capitalization criteria remains rigorous.

Speaker #1: Expenditure is only capitalized where projects are technically feasible, commercially supportable, and expected to deliver future economic benefits. All this results in the 33% EBITDA margin I've mentioned, statutory profit before tax increased 7%, and a broadly stable adjusted and basic earnings per share number.

Speaker #1: If I go to the next slide, please. Our balance sheet remains strong and provides us a real basis of our financial resilience. Talk to cash at 54.8 million dollars.

Craig Preston: Total cash of $54.8 million. Cash less bank debt is a net positive of $11.3 million. Our RCF, $56 million undrawn and a further $100 million accordion. All banking covenants were met throughout the period, and in our ongoing concern and viability work we performed as part of the audit to clear the audit sign-off this year, all banking covenants continue to be met as we navigate our way through the cybersecurity incident. We performed a capital reduction exercise in November that created additional distributable reserves that gives us even greater flexibility in the future in our capital allocation decisions. However, that flexibility doesn't change our discipline. We'll continue to assess liquidity, covenant headroom, investment requirements, and the interests of all our stakeholders before making capital allocation decisions. Next slide. That brings me neatly to the capital allocation.

Speaker #1: Cashless bank debt is a net positive of $11.3 million. Our RCF is $56 million undrawn, with a further $100 million accordion. All banking covenants were met throughout the period.

Speaker #1: And in all our going concern and viability work performed as part of the audit to clear the audit sign-off this year, all banking covenants continued to be met as we navigate our way through the cyber security incident.

Speaker #1: We performed the capital reduction exercise in November. That created additional distributable reserves, which gives us even greater flexibility in the future with our capital allocation decisions.

Speaker #1: However, that flexibility doesn't change our discipline. We'll continue to assess liquidity, covenant headroom, investment requirements, and the interest of all our stakeholders before making capital allocation decisions.

Speaker #1: Next slide. That brings me neatly to the capital allocation. As you know, capital allocation is ultimately about balancing current returns with future investments, delivering value for all our stakeholders.

Craig Preston: As you know, capital allocation is ultimately about balancing current returns with future investments, delivering value for all our stakeholders. If I break them down in our different stakeholders, over the last five years, we've returned nearly $100 million to our shareholders through dividends and share buybacks. At the same time, we have substantially reduced the debt we took on apart from the Sentry acquisition back in 2021, and we retained the extra capacity of $150 million to the accordion and undrawn facilities. We've continued to invest in ourselves. We're investing approximately 25% to 30% of revenue in research and development, and that investment is not indiscriminate. We've talked to the cost review. Expenditure will be prioritized according to customer impact, demonstrable customer demand, future economic benefit, and our ability to support future sustainable profit growth.

Speaker #1: I've break them down in our different stakeholders over the last five years. We've returned nearly 100 million dollars to our shareholders through dividends and share buybacks.

Speaker #1: At the same time, we have substantially reduced the debt we took on to part from the Century acquisition back in 2021. And we've retained the extra capacity of 150 million dollars to the accordion and undrawn facilities.

Speaker #1: We've continued to invest in ourselves. We're investing approximately 25% to 30% of revenue in research and development. And that investment is not indiscriminate. We've talked through the cost review; expenditures are prioritized according to customer impact, demonstrable customer demand, future economic benefit, and our ability to support future sustainable profit growth.

Speaker #1: Our objective is to protect the recurring revenue foundation, preserve strong cash generation, and continue investing selectively in the opportunities to support our return to future growth.

Craig Preston: Our objective is to protect the recurring revenue foundation, preserve strong cash generation, and continue investing selectively in the opportunities to support our return to future growth. In summary from me, we are very conscious we didn't deliver the revenue growth we expected. We've responded with a prudent reset and a setting around our recurring revenue and launched a comprehensive review of our cost base. Again, though, the group remains profitable, cash generative, and financially well-positioned, supported by $118.5 million of ARR, high customer retention, long-standing customer relationships, and substantial liquidity. With that, I'll hand back to Keith, and he'll take you through the 340B market, our response, and the outlook.

Speaker #1: So, in summary from me, we are very conscious we didn't deliver the revenue growth we expected. We've responded with a prudent reset, centering around our recurring revenue and launched a comprehensive review of our cost base.

Speaker #1: Again, though, the Group remains profitable, cash generative, and financially well positioned; supported by $118.5 million of ARR, high customer retention, longstanding customer relationships, and substantial liquidity.

Speaker #1: With that, I'll hand back to Keith, and he'll take you through the 340B market. I'll respond to some of the outlook.

Speaker #2: Thank you, Craig. Next slide, please. And next slide again, please. So as we consider the 340B market, its growth is pointing out that it's coming into its 34th year.

Keith Neilson: Thank you, Craig. Next slide, please. Next slide again, please. As we consider the 340B market, it's worth pointing out that it's coming into its 34th year and is approximately $100 billion program now. As such, it's not unsurprising that it's going through an evolution, and it comes under much regulatory, operational, and financial scrutiny, to see whether that is appropriate or not. The 340B market and the 340B benefits that our customers receive from 340B pricing helps them fund healthcare across their communities, helps keep hospitals open, and is absolutely critical to a large swathe of hospitals across the US' survival and operational effectiveness. As such, we believe that it will stay around into the future, even if some of the underlying structures may change or evolve as we go forward. As such, we are committed to supporting this marketplace for the future.

Speaker #2: And it is approximately a $100 billion program now. So, as such, it's not unsurprising that it's going through an evolution, and it comes under much regulatory, operational, and financial scrutiny.

Speaker #2: To see whether that is appropriate or not. The 340B market and the 340B benefits that our customers receive from 340B pricing help them fund healthcare across their communities.

Speaker #2: Helps keep hospitals open and is absolutely critical to a large swathe of hospitals across the US survival and operational effectiveness. As such, we believe that it will stay around into the future, even if some of the underlying change some of the underlying structures may change or evolve as we go forward.

Speaker #2: And as such, we are committed to supporting this marketplace for the future. Interestingly, through the course of this year, we've seen a number of different changes and proposals with regards to the market.

Keith Neilson: Interestingly, through the course of this year, we've seen a number of different changes and proposals with regards to the market. First of all, we have seen new proposals for the rebate model coming in with a proposed start of a new pilot starting on 1 January for next year. On top of that, we've seen different legislation proposed and moving into draft form in both the Senate and in the House in the form of the SUSTAIN 340B Act, SECURE 340B Act, and ACCESS 340B Act. It's worthwhile noting that SUSTAIN, which is in the Senate currently, and SECURE, which is in the House, have got bipartisan support, and on top of that, have got a lot of commonality, which helps the pendulum swing back towards healthcare providers because of that benefit and the importance of healthcare providers to each of their communities.

Speaker #2: First of all, we have seen new proposals for the rebate model coming in with a proposed start of a new pilot beginning on January 1st of next year.

Speaker #2: And on top of that, we've seen different legislation proposed and moving into draft form in both the Senate and the House, in the form of the Sustain 340B Act, Secure 340B Act, and Access 340B Act.

Speaker #2: It's worthwhile noting that Sustain, which is in the Senate currently, and Secure, which is in the House, have got bipartisan support. And on top of that, have got a lot of commonality which helps the pendulum swing back towards healthcare providers because of that benefit and the importance of healthcare providers to each of their communities.

Speaker #2: But at the same time, it does hold healthcare providers accountable for transparency and for reporting fairly and accurately on the 340B program—something which we both advocate for and support in our software and in our offerings with our customer base.

Keith Neilson: But at the same time, does hold healthcare providers accountable for transparency and reporting fairly and accurately on the 340B program, something which we both advocate for and support in our software and in our offerings with our customer base. On top of these pieces of legislation that have been proposed going through the year, we've also seen the drug manufacturers themselves propose and enact unilateral restrictions on the 340B program. This has formed the fact of closing down the opportunities for hospitals to use contract pharmacies and insisting that hospitals provide data and patient-identifiable data to those drugs manufacturers, despite the fact the drugs manufacturers do not need these for their regular operations going forward.

Speaker #2: On top of these pieces of legislation that have been proposed throughout the year, we've also seen the drug manufacturers themselves propose and enact unilateral restrictions on the 340B program.

Speaker #2: This has resulted in the closure of opportunities for hospitals to use contract pharmacies and has required hospitals to provide data, including patient-identifiable data, to those drug manufacturers—despite the fact that the drug manufacturers do not require this for their regular operations going forward.

Speaker #2: On top of that, we've seen the states work to protect their hospitals in those areas by providing protections to contract pharmacy, and then we've seen drug manufacturers challenge that legislation, and in many cases be unsuccessful in their appeals process against the findings of those challenges when they've been found to be wrong.

Keith Neilson: On top of that, we have seen the states work to protect their hospitals in those areas by providing protections to contract pharmacy. Then we have seen drugs manufacturers challenge that legislation, and in many cases be unsuccessful in their appeals process against the findings of those challenges when they have been found to be wrong. Lastly, we have seen proposals for centralized clearing houses for some of this data to get over the challenge of drugs manufacturers receiving data which really they should not be given access to, and that coming through a centralized clearing house and being the arbiter of that data to make sure that there is no fraud and abuse in the system as we have seen and we have witnessed that there currently does not seem to be a high degree of that in any shape or form.

Speaker #2: And lastly, we've seen proposals for centralized clearinghouses for some of this data, to get over the challenge of Drugs Manufacturers receiving data which really they shouldn't be given access to.

Speaker #2: And that coming through a centralized clearinghouse and being the arbiter of that data, to make sure that there is no fraud and abuse in the system—as we have seen and we have witnessed—that there currently doesn't seem to be a high degree of that in any shape or form.

Speaker #2: So, what are the implications for our customers with regards to this? Well, first of all, a rebate model would be a change to the cash flows and the operating model of the 340B program over the last 34 years.

Keith Neilson: What are the implications for our customers with regards to this? Well, first of all, a rebate model would be a change to the cash flows and the operating model of the 340B program over the last 34 years. Over the last 34 years, the 340B program has worked as a discount program where the hospital is able to purchase drugs for qualifying patients, being able to purchase those drugs, to be able to then see the benefit of the discount price being passed through to care into their community and care for those that cannot afford it otherwise. It has stretched scarce federal resources as it has been intended to do from the initial legislation back in 1992. On top of that, we have seen implications with regards to reporting, for tougher compliance, tougher data gathering requirements, and tougher audit requirements.

Speaker #2: Over the last 34 years, the 340B program has worked as a discount program where the hospital is able to purchase drugs for qualifying patients being able to purchase those drugs to be able to then see the benefit of the discount price being passed through to care into their community and care for those that can't afford it otherwise.

Speaker #2: It has stretched scarce federal resources as it has been intended to do from the initial legislation back in 1992. On top of that, we've seen implications with regards to reporting for tougher compliance, tougher data gathering requirements, and tougher audit requirements.

Speaker #2: We've seen tougher patient eligibility requirements being proposed and more complex processes for both approving patient eligibility and approving patient referrals through the system. Within specific programs, we've seen contract pharmacies both being protected under Sustain and the Secure proposals.

Keith Neilson: We have seen tougher patient eligibility requirements being proposed and more complex processes for both approving patient eligibility and approving patient referrals through the system. Within specific programs, we have seen contract pharmacies both being protected under SUSTAIN and the SECURE proposals, and we have seen them restricted under the ACCESS proposals. Equally, we have seen the rebate model being either delayed or removed under SUSTAIN and SECURE, and we have seen it maintained or extended under ACCESS. With all that uncertainty, what are we likely to see and what are we expecting to see over the course of next year and the following years? First of all, we are expecting multiple legal challenges to the 340B program itself from both hospitals seeking clarity and from drugs manufacturers looking for change within that program.

Speaker #2: And we've seen the most stricted under the Access proposals. And equally, we've seen the rebate model being either delayed or removed under Sustain and Secure.

Speaker #2: And we've seen it maintained or extended under Access. So with all that uncertainty, what are we likely to see and what are we expecting to see over the course of next year and the following years?

Speaker #2: So first of all, we are expecting multiple legal challenges to the 340B program itself from both hospitals seeking clarity and from Drugs Manufacturers looking for change within that program.

Speaker #2: We're also seeing challenges and legal challenges to the rebate model that's proposed to come in from the 1st of January. We're expecting, though, that those changes having analyzed and looked at both Access, Sustain, and Secure, the three pieces of legislation that have been proposed, will be more likely a gradual evolution rather than a big bang approach of changing everything.

Keith Neilson: We are also seeing challenges and legal challenges to the rebate model that is proposed to come in from 1 January. We are expecting, though, that those changes, having analyzed and looked at both ACCESS, SUSTAIN, and SECURE, the three pieces of legislation that have been proposed, will be more likely a gradual evolution rather than a big bang approach of changing everything. Part of the reason for that is we just do not believe US healthcare can afford to lose the strength and the importance of the 340B program and the benefits that it provides, not only to the hospitals, but to the patients in communities right across the whole of the US.

Speaker #2: And part of the reason for that is we just don't believe US healthcare can afford to lose the strength and the importance of the 340B program and the benefits that it provides not only to the hospitals but to the patients in communities right across the whole of the US.

Speaker #2: We do believe, though, that we would expect to see hospitals having to increase their evidence of valid claims and increase the complexity of the workflows so that they can withstand and be able to demonstrate auditability of their claims within 340B.

Keith Neilson: We do believe, though, that we would expect to see hospitals having to increase their evidence of valid claims and increase the complexity of the workflows so that they can withstand and be able to demonstrate auditability of their claims within 340B. We do see that there will be pressure on 340B traditional third-party administrator revenue, and that will morph as these new business models come through. However, we believe that we can address those concerns with our software, which would be our Trisus OneLink Medication software, which we have launched through the course of this year. Next slide, please. Just touching on Trisus OneLink Medication and those that are interested in finding out more of that, at the end of this presentation, if you go into the appendix, there are some links in there to some videos which will give you more information, more detailed information about OneLink Medication.

Speaker #2: And we do see that there will be pressure on 340B traditional third-party administrator revenue and that will morph as these new business models come through.

Speaker #2: However, we believe that we can address those concerns with our software, which would be our TriSys OneLink Medication software, which we've launched through the course of this year.

Speaker #2: Next slide, please. So just touching on TriSys OneLink Medication and those that are interested in finding out more of that, at the end of this presentation, if you go to the appendix, there's some links in there to some videos which will give you more information, more detailed information about OneLink Medication.

Speaker #2: But what OneLink Medication is, is us taking our technology, moving our 340B expertise, and utilizing our teams to move our 340B expertise into the TriSys platform to allow us to be flexible in both our reporting, auditability, and transparency for our hospitals and for the industry on behalf of our customers, so that they can demonstrate and show the strength and quality of their 340B claims that they make with regards to this.

Keith Neilson: What OneLink Medication is us taking our technology, moving our 340B expertise and utilizing our teams to move our 340B expertise into the Trisus platform to allow us to be flexible in both the reporting, auditability, and transparency for our hospitals and for the industry on the behalf of our customers, so that they can demonstrate and show the strength of the quality of their 340B claims that they make with regards to this. It centralizes this onto the Trisus platform. It brings all of those workflows into one place, regardless of the business models and the legislation which is successful going through the coming years. With regards to that, it is adaptable to be able to deal with these changes, and it becomes a one-stop shop for our customers to be able to process all of their 340B claims coming through from there. Next slide, please.

Speaker #2: It centralizes this onto the TriSys platform. It brings all of those workflows into one place, regardless of the business models and the legislation, which is successfully going through in the coming years.

Speaker #2: With regards to that, it's adaptable to be able to deal with these changes, and it becomes a one-stop shop for our customers to be able to process all of their 340B claims coming through from there.

Speaker #2: Next slide, please. On top of that, we continue to enhance and improve our revenue integrity offerings. We have built across all of our offerings a range of AI assistance and improvements to the software.

Keith Neilson: On top of that, we continue to enhance and improve our Revenue Integrity offerings. We have built across all of our offerings a range of AI assistance and improvements to the software, and we continue to use AI both internally to allow us to develop software quicker and more effectively and more efficiently, but also at a higher quality and in a greater depth with more performance than we have seen previously. We continue to see this build through our product ranges with both launches that were made through fiscal 2026 and ongoing development and launches that go into this new year as well. If we then go on to the next slide, please. All of this is done by focusing on our strengths.

Speaker #2: And we continue to use AI both internally to allow us to develop software quicker and more effectively and more efficiently. But also at a higher quality depth with more performance than we've seen previously.

Speaker #2: And we continue to see this build throughout our product ranges, with both launches that were made during fiscal '26 and ongoing development and launches that will go into the new year as well.

Speaker #2: If we then go to the next slide, please. All of this is done by focusing on our strengths. And our strengths are leveraging the power of the data that we contain within our systems, and working with our customers on those long relationships and those supportive relationships for as benefiting and doing everything to the benefit of our customers.

Keith Neilson: Our strengths are leveraging the power of the data that we contain within our systems and working with our customers on those long relationships and those supportive relationships for us benefiting and doing everything to the benefit of our customers. Lastly, by playing to the strength to being able to be dynamic in this marketplace and address the real-world concerns of the uncertainty that our customers face by giving them certainty in both product offerings and the strength of our products and in the strength of our teams that have the knowledge to be able to back those products up and take that forward. Next slide, please.

Speaker #2: And lastly, by playing to the strengths of being able to be dynamic in this marketplace and address the real-world concerns of the uncertainty that our customers face, by giving them certainty in both product offerings and the strength of our products, and in the strength of our teams that have the knowledge to be able to back those products up and take that forward.

Speaker #2: Next slide, please. And so drawing that all together, we believe that this indicates although we have had this reset back to our ARR number just now, we're giving a number of different areas where we can layer on top improvement and growth opportunity for the future built on our strength, driven by the fact that there is a real market need from our customers who are under pressure from these changes in the rules and regulations.

Keith Neilson: In drawing that all together, we believe that this indicates, although we have had this reset back to our ARR number just now, we are giving a number of different areas where we can layer on top improvement and growth opportunity for the future built on our strengths, driven by the fact that there is a real market need from our customers who are under pressure from these changes in the rules and regulations, from the complexity that comes through from the US healthcare systems that are there, from having best-in-class products and having quality products that can address those workflows to make not only every member of our team more productive but every member of the customer's teams more productive so that they can address the needs of their patients.

Speaker #2: From the complexity that comes through from the US healthcare systems that are there, from having best-in-class products and having quality products that can address those workflows to make not only every member of our team more productive, but every member of the customer's teams more productive, so that they can address the needs of their patients.

Speaker #2: By continuing to innovate at pace and at quality to be able to provide real offerings which are game changers out there in the marketplace, this financial reset allows us to ensure that we will have growth in the future and that we can then have sustainable growth for the medium and the long term going forward with that.

Keith Neilson: By continuing to innovate at pace and at quality to be able to provide real offerings which are game changers out there in the marketplace, this financial reset allows us to ensure that we will have growth in the future and that we can then have sustainable growth for the medium and the long term going forward with that. With that, I will ask if we can take the first of the questions, please, and move to the next slide. Thank you.

Speaker #2: And with that, I'll ask if we can take the first of the questions, please, and move to the next slide. Thank you.

Speaker #1: Ladies and gentlemen, we will now begin our question and answer session. As a reminder, if you wish to submit a written question, please use the Ask a Question button on the Spark Live page.

Operator: Ladies and gentlemen, we will now begin our question-and-answer session. As a reminder, if you wish to submit a written question, please use the Ask a Question button on the Spark Live page. Here is our first question. Have any customer renewals been delayed or lost because of the cyber breach? What level of EBITDA should shareholders expect if fiscal year 2027 revenue really is only around $185 million?

Speaker #1: Here's our first question. Have any customer renewals been delayed or lost because of the cyber breach? And what level of EBITDA should shareholders expect if fiscal year 2027 revenue really is only around $185 million?

Speaker #2: Okay. So, first of all, with regards to the cyber breach—no, our customers have been very, very supportive throughout. The vast majority, almost all of them, have been hugely supportive of us in going through this.

Keith Neilson: Okay. First of all, with regards to cyber breach, our customers have been very, very supportive through there. The vast majority, almost all of them have been hugely supportive with us in going through there. Many of them themselves have already suffered breaches and understand the pain and the anguish that goes on and the responsibility that comes with having this data in the first place, and to understand what we are going through from there. The majority of them, if not all of them, have had multiple vendors almost on a monthly basis that have also been breached as well, so are very familiar with the processes that go through from that.

Speaker #2: Many of them themselves have already suffered breaches and understand the pain and the anguish that goes on. And the responsibility that comes with having this data in the first place and so understand what we're going through from there.

Speaker #2: And the majority of them, if not all of them, have had multiple vendors almost on a monthly basis that have also been breached as well.

Speaker #2: So our very familiar with the processes that go through from that. It is worth saying as well as when we discuss the breach and we worked with breach with Microsoft, they actually really.

Keith Neilson: It is worth saying as well as when we discussed the breach and we worked with breach with Microsoft, they actually really backed us that we were one of their few, if not their last of their global solutions healthcare providers in the UK that hadn't had a breach at that point. All of our interactions with third party agencies that have been helping us with the breach as well, have pointed to the team's performance and the ability of the team's performance through the course of this breach, as being top-notch from there. So no, at this stage, we haven't. We are not resting on our laurels, though, and we are working with each of our customers to make sure that we are addressing all of their concerns as quickly and as fast as we possibly can with regards to that.

Speaker #2: Back to us that we were one of their few, if not their last of their global solutions healthcare providers in the UK that hadn't had a breach at that point.

Speaker #2: And so all of our interactions with third-party agencies that have been helping us with the breach as well have pointed to the team's performance and the ability of the teams performance through the course of this breach as being top-notch from there.

Speaker #2: So, no, at this stage we haven't, and we are not resting on our laurels, though. We are working with each of our customers to make sure that we are addressing all of their concerns as quickly and as fast as we possibly can, with regards to that.

Speaker #2: As regards to costs, we are undergoing a review just now. Our expectation is that that review will be ongoing through the course of this year.

Keith Neilson: As regards to cost, we are undergoing a review just now. Our expectation is that review will be ongoing through the course of this year. The impact of that will mean that we won't get back to our 30% plus margins by the end of this calendar year, but we will be somewhere on track to do that, somewhere in the mid to high 20% margins. But our exit run rate by the end of fiscal 2027 will be aligned to take us into a 30% plus margin for fiscal 2028. Next question, please.

Speaker #2: The impact of that will mean that we won't get back to our 30% plus margins by the end of this calendar year, but we will be somewhere on track to do that, somewhere in the mid to high 20% margins, but our exit run rate by the end of fiscal 27 will be aligned to take us into that 30% plus margin for fiscal 28.

Speaker #2: Next question, please.

Speaker #1: What's the expected level of ARR for fiscal year 27?

Operator: What's the expected level of ARR for fiscal year 2027?

Speaker #2: $185 million as we've been as it's been ruled has been said will be the starting ARR.

Keith Neilson: GBP 185 million as has been-

Craig Preston: Started by, yeah.

Keith Neilson: As had been said, will be the starting ARR.

Speaker #1: How much is the cyber attack likely to cost?

Operator: How much is the cyber attack likely to cost?

Speaker #2: We just don't know. It's too hard to quantify that at this stage. And I don't think it's in anyone's interest to speculate this on this until we get a little bit further through the process.

Keith Neilson: We just don't know. It's too hard to quantify that at this stage, and I don't think it's in anyone's interest to speculate on this until we get a little bit further through the process. It's still very raw in many ways for us.

Speaker #2: It's still very, very raw in many ways for us.

Speaker #1: Does the $185 million full fiscal year 27 revenue guidance assume core subscription ARR stays flat with zero transactional revenue, or are you budgeting for a net drop in ARR?

Operator: Does the GBP 185 million full fiscal year 2027 revenue guidance assume core subscription ARR stays flat with zero transactional revenue, or are you budgeting for a net drop in ARR?

Speaker #2: No, so our transactional revenues, because they are supported by underlying annual contracts, are part of our ARR balance. We've modeled from a number of different angles and keep coming back to ARR being the solid foundation that we can point to at this time.

Craig Preston: No. Our transactional revenues, because they are supported by underlying annual contracts, are part of our ARR balance. We have modeled from a number of different angles and keep coming back to the ARR being the solid foundation that we can point to at this time. As we see the uncertainties that Keith described start to work their way through during the course of the year, we will be able to provide updated guidance, excuse me, at that point. But for now, we are not expecting a drop in our ARR. We are still modeling approximately 100% NRR. We are just giving ourselves a balance of risk as we look at our different revenue streams.

Speaker #2: And as we see the uncertainties that Keith described start to work their way through during the course of the year, we'll be able to provide updated guidance—excuse me—at that point.

Speaker #2: But for now, we're not expecting a drop in our ARR. We're still modeling approximately 100% NRR, which gives ourselves a balance of risk as we look at our different revenue streams.

Speaker #1: I presume you and your advisors have examined prior security issues in other companies and the impact such as penalties and timescales, and as such, what is the insight you have drawn from that specific to Craneware?

Operator: I presume you and your advisors have examined prior security issues in other companies and the impact, such as penalties and timescales. As such, what is the insight you have drawn from that specific to Craneware?

Keith Neilson: We have drawn the insight that companies that have not been negligent, as so far we have been found not to be, and that have been proactive in their security, tend to do better than other companies, and all the evidence shows that we have been in that way.

Speaker #2: We've drawn the insight that companies that have not been negligent, as so far we have been planning not to be, and that have been proactive in their security tend to do better than other companies. All the evidence shows that we have been in that way.

Speaker #1: What are the steps Craneware would take to rationalize cost? Is there any potential bid for takeover from any investor?

Operator: What are the steps Craneware would take to rationalize cost? Is there any potential bid for takeover from any investor?

Speaker #2: So, for the first part of that question, it's just too early — the review is ongoing with regards to cost. But we are looking right across the whole of the company with regards to that.

Keith Neilson: So for the first part of that question, it is just too early. That review is ongoing with regards to cost. But we are looking right across the whole of the company with regards to that. And the second part of the question then, I did not quite. Sorry, could you say that again?

Speaker #2: And the second part of the question—I didn't quite catch it, sorry. Could you say that again?

Speaker #1: Is there any potential bid for takeover from any investor?

Operator: Is there any potential bid for takeover from any investor?

Speaker #2: Any potential bid? No, nothing we're aware of.

Keith Neilson: Any potential bid? No.

Craig Preston: No.

Keith Neilson: Nothing we are aware of.

Speaker #1: And there are no further questions. I'll now hand over to Keith Nielsen for closing remarks.

Operator: There are no further questions. I will now hand over to Keith Neilson for closing remarks.

Speaker #2: Thank you very much, everyone, for your time today. I mean, it is disappointing that we are having the reset, but we do believe that what this does is give us a strong, solid foundation to get back to growth again.

Keith Neilson: Thank you very much, everyone, for your time today. It is disappointing that we are having the reset, but we do believe that what this does is this gives us a strong, solid foundation to get back to growth again. We have said the phrase a few times over the last a lot of times over the last few days, is not throwing the baby out with the bath water. Let us not forget that the company has a significant amount of ARR, is cash flow positive, does have a good balance sheet to be able to do this, has strong resilience, and very good supportive customers with long-term relationships and best-in-class products to be able to meet the needs of our customers. We are working hard to get through what we believe and what we feel will be relatively short-term in the big scheme of things, issues.

Speaker #2: We definitely we've said the phrase a few times over the last a lot of times over the last few days. It's not throwing the baby out with the bathwater.

Speaker #2: Let's not forget that the company has a significant amount of ARR. Is cash flow positive? Does have a good balance sheet to be able to do this.

Speaker #2: It has strong resilience and very good supportive customers with long-term relationships and best-in-class products to be able to meet the needs of our customers.

Speaker #2: We are working hard to get through what we believe, and what we feel will be, relatively short-term—in the big scheme of things—issues. We have had 26 years of growth to this point.

Keith Neilson: We have had 26 years of growth to this point. We are deeply disappointed that we are flagging that that may not continue on into this year. But we are doing everything both operationally, throughout the business and personally throughout the business to make sure that that is not the case and that we continue on with that growth record that we have. Thank you very much for your time as it goes, and I appreciate everything from there and your support from there. Thank you.

Speaker #2: We are deeply disappointed that we're flagging that that may not continue on into this year, but we are doing everything both operationally throughout the business and personally throughout the business to make sure that that is not the case and that we continue on with that growth record that we have.

Speaker #2: So thank you very much for your time. As it goes, and I appreciate everything from there and your support from there. Thank you.

Operator: That concludes today's call. Have a nice day.

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Full Year 2026 Craneware PLC Earnings Call

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