Nuveen New York Quality Municipal Income Fund Price & Performance (NAN)

Well, thank you very much and a very good morning, everybody, and thank you all for joining the call. I do know it's a busy day on the markets today. I am joined today by Jason Perris, our CFO, who will shortly take you through the details of the financial results. But a few comments before that. You will have seen the half year results released this morning confirm the numbers in the trading update that we released about four weeks ago towards the January. The first half revenue results of $93,600,000 it represents a good start to the year, up 18% compared to our prior corresponding period, but importantly also up 4% compared to the very strong second half that we did have in FY '20 '20 '4. And overall, I was very pleased with the overall operational performance across the business in the first half. And as a result of this positive start and a review of our internal forecast for the second half, you will have noticed that we have increased our range for revenue growth for the full year from eight percent to 12% up to 11% to 14%. And that assumes the same FX rate of 0.67% that was the original guidance was set at.

Of course, the FX is currently not at these levels. And if we were to translate this guidance at a lower FX rate of approximately $0.64 for the second half, Well, then that 11% to 14% revenue growth would translate into approximately 13% to 16% growth. So there are some tailwinds that we are getting from FX in the second half over the actual guidance as you would be aware. A couple of key points for me to take from the first half outcome before I hand it over to Jason. The first is that our North American business continues to perform very well with Tropon continuing to consolidate its position as standard of care. And but importantly, our growth strategy for North America remains on track and is very clear. For capital unit growth, it's very much about continuing to grow the installed base. And in the first half, this grew by nine forty units, where there are now over 31,000 units in operation across thousands of facilities in North America. And this new installed base growth, what we had in the first half as well as anticipated in the second half is coming from both the hospital and the private physician market where we do have specific strategies in place for both segments.

And we expect similar new IB numbers in the second half to the first half. So good cumulative growth on the overall installed base that's there in North America. And staying on capital growth, upgrades do continue to represent a significant opportunity for us with over 10,000 now aged first generation TROFON EPR units still in operation, and that's in North America. In the first half, there were six ten upgrades, so growth over PCP. And based on a strong pipeline, we expect pretty good growth on this number in the second half. Moving from capital to annuity revenue growth or recurring revenue. Well, a core component of our North American growth strategy is customer value expansion. And establishing Tropon as standard of care in North America means we now have a significant a significant installed base already in operation. As I mentioned earlier, 31,000 units across thousands of facilities. And this significant installed base certainly affords the opportunity to deliver expanded customer value and consequently an opportunity for strong annuity revenue growth for us. Now where this expanded customer value comes from, there's a number of elements. The first is continued education. We've got a great clinical applications team in North America and continued education from this team for our customers to ensure that there's an understanding of all the different types of ultrasound procedures that require high level disinfection.

Procedures that may require high level disinfection. And we did see growth in overall ultrasound procedures in North America. And I noticed from one of the large OEMs that reported overnight, they also comment on the growth in overall ultrasound procedures happening in North America. Then on top of the core disinfectant consumables and there's the ecosystem of consumables used in the reprocessing flow. And that includes cleaning and drying wipes, clean probe covers that are used after the probe has been decontaminated. And that's important. So it doesn't get recontaminated before it's used. So products like that, and we're seeing good growth in these offerings as well. We certainly expect and putting a bit of further emphasis on our digital traceability solutions and that did okay in the first half and we expect it to continue growth in the second half and beyond. But also a fast growing area of our business is our technical service through service contracts or pay as you go service. And that is a fast growing component of the annuity revenue together with the provision of service parts to GE Healthcare, who continue to provide service in North America for a lot of the original first generation units that they originally sold.

And it is worth noting on that point that growth in upgrades, which we are anticipating, is also an important driver of new service contract growth for Nanasonics Direct because the majority of the upgrades come from those older machines that were originally sold by GE Healthcare, but only Panasonic sells the upgrades. And when we do, well then we also sell the service contracts as well for the upgrades. So we think there's great opportunity for continued growth and strong growth in customer value expansion. And indeed, in the first half, we did see some strong growth in our annuity revenue across all dimensions there that I mentioned. And with consumable service revenue growing in North America by 19% in the half. And just briefly staying in North America, we are also expanding our infrastructure over there to commence consumables manufacturing at our consumables for both Tropon as well as Corus. And that should be up and running by the end of this financial year. And this does bring a number of benefits. There will be some margin improvements on these consumables over time. Importantly, there are sustainability benefits with lower transport requirements being closer to the customer. And but also I think reduced exposure to the potential introduction of any tariffs.

And overall, our exposure is quite limited, but this then does improve our posture there as well in reducing that exposure. So overall, North America certainly continues to perform well with great opportunity for ongoing growth, and we expect to see some of that growth coming through in the second half. Moving over to our European region. We remain confident in the overall growth opportunity in this region. Revenue in the half grew 37% compared to PCP, so that was up $5,900,000 Our new installed base was slower than anticipated in H1 with 70 units installed. However, we believe some of this was phasing. And based on the active pipeline, we do have expectations of stronger performance in H2. And as you know, this region is complex with different markets at different stages in terms of fundamentals of adoption. And our immediate focus is to prioritize the markets with the strongest fundamentals, namely The UK, Ireland and a number of distributor markets. And similar to North America, our goal is also to expand customer value amongst the 2,300 or so installed base already in place. So that's where we continue to drive annuity revenue growth. And we saw that good annuity revenue growth in the first half versus PCP up from $700,000 to $1,200,000 this year.

Another aspect that we've added to our European strategy, and I mentioned this at the end of the last year's financial year, is we want to, with the infrastructure that we do have and the sales infrastructure that we do have, is to leverage our direct infrastructure also with third party products that make sense for us. And we now have an exclusive distribution agreement for Ecolab's TEE disinfection system for cardiac ultrasound. And that's highly complementary to Trova. And these cardiac ultrasound, in one sense, are a little bit like endoscopes, but without looms in that they're long flexible and inserted into the body, in this case down the esophagus for cardiac imaging. But they do require a different approach to high level disinfection, a bit more like washer disinfector, which the Ecolab product provides. So similar to TrowFon, it does have capital and APAC, which as you know today is primarily ANZ, as you know this market is quite penetrated with Trowfon as the standard of care. Revenue for the half was in line with PCP. However, capital revenue was down, but that was offset by a 14% increase in our recurring annuity revenue. There certainly was some phasing associated with the capital growth in the first half and we do expect and have forecasted half on half growth in new installed base and total units in general, as well as for the growth in annuity revenue from existing IB in H2.

In Japan, which is our focus outside of ANZ for APAC, we continue our market development and we are seeing early adopter sales increasing in H1 as awareness continues to grow. The guidelines are still not in place, still working towards those. And importantly, we just completed a further study in Japan, which not only confirms and demonstrates us the high degree of contamination on probes, in this particular case in emergency care, but also demonstrated that current practice of wiping with ethanol wipes or alcohol wipes is ineffective, while TrowFone was 100% effective. So again, we continue to build on all the clinical evidence and then have that clinical evidence leveraged with the various societies and opinion leaders in Japan. But pleasingly, we are seeing beginning to see some traction in sales up in Japan now as awareness grows. So with these strategies in place across the regions, our expectation for the second half is growth across all three regions, supporting the upgrade of our revenue guidance. So a few other quick points and I'll hand to Jason. Similarly to the last number of reports, you will find a P and L of the TROPON only business in the release this morning.

And this gives a good insight into the business performance and profitability of the Trowfon only business by excluding all investments that are not generating revenue today outside of Trowfon, such as Corus and its non Trowfon RMD. We have, however, it's worth noting, assigned a number of one off investments to this Trowfon P and L such as our investments in our new ERP system. And you will see that the Troughon only business delivered strong profitability in the first half, profit before tax of $25,600,000 But importantly, we saw positive growth in operating leverage, where PBT as a percentage of revenue grew from 23% to 27%. And indeed, if I exclude the one off expenses associated with ERP, which is in the order of $1,800,000 maybe $2,000,000 dollars then its operating leverage would have been closer to 30%. So we are good profitability in the Tropon business and good leverage happening in the Tropon business. Then finally, we do remain confident in our opportunity with Corus to transform endoscope reprocessing. It continues to proceed through the FDA's de novo review process. The last time we spoke, I mentioned that we had a lot of questions in from the FDA.

The answers to the FDA questions received to date have been submitted. And as stated in the release this morning, we continue our preparations with supply chain and manufacturing readiness. And we continue to target the commencement for the first stage of commercialization in Q1 of FY 'twenty six, subject of course to the requisite regulatory approvals. Now assuming a successful FDA turnover clearance of the core system, but then marketing of the device would commence in The U. S. And in parallel, it's expected that the first five ten for expanded scope indications will be submitted shortly thereafter. As I mentioned, over time, we'll be submitting on the back of a de novo approval expanded indications, so we can cover the broad range of endoscopes being used in the market. But outside of The U. S, the first commercial launch will likely take place in Europe, again Q1 FY twenty six, and that is not contingent on the FDA de novo clearance. So with that, I'll hand over to Jason to go through some of the details of the financials.

Thanks, Michael, and good morning, everybody. As Michael said earlier, total revenue for the half was $93,600,000 up 80% over the prior corresponding period. With revenue growth in capital, consumables and service. Firstly, to capital revenue, which grew 11% to $22,700,000 in the first half. There was a total of seventeen thirty units sold in the half, which was similar to the prior corresponding period, and the revenue growth was primarily driven by unit volume mix between regions with more units sold through our direct operation in North America and more units sold as a capital sale versus MES in Europe. You will remember we don't receive revenue upfront for MES product in Europe. We received higher consumables revenue over time. Pricing on capital units remained relatively steady for the half. So switching to consumables and service revenue. Growth in consumable and service revenue was 20% for the first half to $62,000,000 dollars This was driven by a few things. Firstly, a higher installed base year on year, increasing and secondly, increasing ultrasound procedures, which were up about 7% over the first half of 'twenty four. This held consumables volume and also the customer value expansion activities that Michael mentioned earlier, including technical service and the sale of our ecosystem products also grew contributing to that 20% growth in consumables and service revenue for the half.

Technical service continues to be a fast growth area of our business with growth in technical service contract adoption as installed base and upgrade volumes grow. You'll see in the balance sheet that contract liabilities increased about 11% to approximately $30,000,000 with a great majority of this relating to prepaid multi year service contracts, which also obviously contributes positively to our cash position. Moving across to margin. Gross profit for the margin for the half was 78.5%, within the range that we expect. Pleasingly, the margin improved from the 76.3% in the second half of 'twenty four, which you remember was primarily due to a slowing in manufacturing as we embarked on an inventory reduction program. The program was successful, reducing inventory levels by around $5,000,000 or 20%. We're now back to normal production volumes and aim to deliver a similar margin for the full year as in the half of around 78.5%. Onto the cost side, we have disciplined cost control measures in place across the business and we see this as operating expenses are growing slower than revenue. OpEx was up 10% versus revenue growth of 18%. The operating expenses for the half was $66,700,000 dollars which was, as I said, around 10% higher than the prior corresponding period and around 3% higher than the second half of last year.

The largest single contributor to that growth was approximately 1,800,000 spent on the new ERP implementation and related costs in the half. The ERP is expected to be implemented in late fiscal year 'twenty five and the majority of these costs are well off and will not repeat in fiscal year 'twenty six. The next biggest contributor to operating expenses was inflationary related staffing costs and higher sales commissions associated with improved business performance in North America. It's worth calling out R and D, which you know we fully expense. We're committed to ongoing R and D and as previously communicated, we expect moving forward that while R and D investments will likely increase, as a percentage of revenue, they will decrease over time. We see this in the first half. R and D expense reduced from 20% of revenue in the prior corresponding period down to 17% in the first half results. This disciplined approach to operating expenses will continue with particular emphasis on ensuring the Troughton business further improves the positive operating leverage we have established. That brings us to operating profit. Pleasingly, operating profit before income tax was $10,900,000 up 124% compared with the prior period of $4,900,000 dollars While the primary driver was the 18% growth in revenue, the diligent approach to margins and cost management ensured that the benefits flowed to the bottom line, a positive operating result.

As we flagged earlier in our trading update, the half one result does include an unrealized foreign exchange gain of approximately $1,300,000 This is due to the exchange rate moving from around $0.66 on the June 30 to $0.62 on the 12/31/2024. We saw that sharp fall in December. This compared to a loss of around $400,000 in the first half of 'twenty four. Putting that FX component aside, PBT was still 81% higher than the first half of twenty twenty four. A brief comment on tax, income tax. With the business doubling its profit before tax, tax expense moved from a benefit position to an expense. The tax expense was $1,100,000 in the first half versus a benefit of $1,300,000 in the first half of 'twenty four. The effective income tax rate was 10.5% in the first half of 'twenty five. This net profit for the half was $9,800,000 50 8 percent higher than the first half of twenty twenty four of $6,200,000 And just lastly, before I hand back to Michael, a word on cash flow. The business generated $13,800,000 in cash flow for the half, leading to a cash balance of $144,500,000 And as a reminder, the company has no debt.

With that, I'll hand back to you, Michael.

Thanks, Jason. Well, overall, as I said at the beginning, a positive half all around and but importantly, expectations we would see further growth across all three regions in the second half. And so as already indicated, this has led to an uplift in our revenue guidance for the full year from 8% to 12% to 11% to 14%. We also narrow our gross margin guidance range from 77% to 79% and narrowing that to 78% to 79% as Jason said. We expect to see that in the middle there around 78.5% or so. And the OpEx range is also refined moving from 6% to 10% to about 8% to 10%. And the increase in the bottom level of that range is really due to the increased sales that we anticipate and consequently higher sales commissions, etcetera. So with that, thank you for listening and I'll hand over for any questions.

Thank We have the first question from the line of Josh Keay from Berenjos. Please go ahead.

Hi, Michael and Jason. Thanks very much for taking my questions. First one, I've got a couple. First one just on the consumables and service revenue. Obviously, that was pretty high. And I guess we've talked about installed base volumes up 7%, which is probably high. But I guess that service component is probably a big delta versus people's prior expectations. Can you just maybe give us a bit more color as to how we should break those out and how we should think about both the opportunity within that the service opportunity, but also just the runway of growth there in terms of the next couple of years?

Yes. The I was sort of saying with this whole area of customer value expansion, there are a number of dimensions to that and it is across just the core consumables for disinfectant. So we did see growth there. There is the ecosystem, our wipes and CleanPro covers, and we're seeing strong growth there on the basis and actually a good opportunity there because less than probably it's in the order of 30%, I would say, of existing installed base or customers currently using that ecosystem. And as they become more aware of its availability, strong opportunity for growth there. But as you say, the service side of things also is a big opportunity. And overall service for the business, if I was to break it out, I think it was up over 20% as well. Overall, the Sonic, CI, the core would have been up maybe 12% to 14% and ecosystem up a lower base up maybe about 25% to 30%. The service the drivers for service obviously are twofold. One is the for all new installed base coming. Now, we're quite the new installed base there last in North America in particular was about nine forty and expecting similar sort of numbers in the second half.

And all in all, in general in the industry, maybe between 55%, sixty % of customers take up service contracts and the rest are on pay as you go. But the bigger driver for service is the tremendous opportunity that are in upgrades. And so there's over 10,000 upgrade opportunity in terms of aged units over there. And the absolute majority of those units that are viable for an upgrade currently get their service from GE Healthcare. And as we upgrade, GE don't sell the upgrades, we actually sell them direct. And our experience so far with all our upgrades is even if people had been service prior with GE, they switch over to Nanosonics. So there's a great runway for ongoing service growth for a number of years to come.

Got it. And so is the way to look at that, Michael, I think from memory, service used to add about $1,000 generally per annum was sort of I think from a while ago that was. Is that sort of the way we look at it? And when you sign those multi service contract agreements, is the understanding from what Jason said before, you get a cash component upfront and then that the revenue amortizes over the life of the contract or maybe just give us a bit of detail on those couple of things?

No, spot on. Round numbers, maybe around $1,000 per annum. And that covers all PMs, if any break fix, etcetera, parts for the customer. There are customers I would say there are customers then on pay as you go. So if they do have a problem, well then they pay and they may pay they'll pay higher. But in terms of the what Jason mentioned on contract liabilities, because we offer service contracts up to six years And some customers will actually pay upfront for the six year term of the service contract. So that's why you see in our contract liabilities of about $30,000,000 up about 11%. So that's money to come in over time. We amortize it over the term of the actual contract. Yes, got it.

And second question just quickly for Jason around the cost base into the second half. Obviously, a bit of a step up from the first half based on the guidance as you ramp up for Chorus and other things. But you also mentioned the ERP will obviously unwind. Can you give us a bit of a feel, Jason, if we look at that second half? I think it implied around about 70 or 71 depending on which guidance you look at the midpoint for the second half. Is that a reasonable base to look at into FY 'twenty six as we're sort of sitting here today? Or is there maybe just to give an idea of that plus the ERP, how we should think about the step up or movement into 'twenty six on the cost base? Thank you.

Yes. Thanks for the question, Josh. Yes. So, certainly, for the first half, as we said, around $1,800,000 2 million dollars we've spent on the ERP implementation. We expect to finish that at the end of the second half of this year. So, we'll incur some more OpEx on that in the second half. And what we expect going into 'twenty six is that will not repeat because it will be implemented. Sure, we'll still incur some costs, I guess, as we learn about the new ERP and system. But the majority of that $1,800,000 that we talked about that we've spent in this half, we do not expect to spend in the first half of 'twenty six.

Got it. And then just sorry for the implied sort of second half though, that sort of run rate into the second half ex maybe the ERP stuff, is that is there is it too early to sort of give some context around that? I mean, I assume we're still obviously it's dependent on some of the timing around that Chorus release and commercialization, but just trying to understand a little bit of what we're baking in and just any sort of directional color on that would be super helpful.

Yes. Look, we certainly from a trophon only business, our goal is to continue to build operating leverage there and Jason is doing a doubling all the cost controls on that part of the business. But we will, of course, be moving into a launch period of with Corus. So there will be incremental costs associated with that. So it's a good base, but I would be certainly, I think there will be nothing massive increase or jump in OpEx, but there will be incremental growth on that in the New Year that will be allocated. It will be primarily Chorus related.

Chorus related. Yes, no, that's perfect. I'll give someone else a go.

Thank you very much, guys. Appreciate it. Thanks very much, Josh.

We have the next question from the line of James Storey from Wilson Advisory.

Just a couple of starters on capital sales and pricing. Jason, you called out the higher direct rather than MES capital sales in the EMEA. Are you able to describe that in a bit more detail? I'm just wondering whether that's a one off that we can sort of book and move on or whether there's something structural there that happened in any of those markets that we need to think about? Thanks.

Yes. Thanks for the question, Shane. Look, it depends on the preference of the customer and depending on capital budgets or if there is a restraint will depend on the way they go. But, yes, we wouldn't expect it to continue as high levels. It will bump around a little bit. But the main driver of the revenue increase was North America and the fact that we sold more through that direct channel, the North American units increasing 100 units over the prior corresponding period. So, the great majority of it was that, offset by the lower units in APAC where we use a distributor. So, as APAC goes down and North American goes up, you get that differentiation. So, it's not price price is relatively stable for the period.

Okay. So, yes, because I thought I detected a small pricing change, positive change in The U. S. In constant currency. And that was surprising because upgrades are stronger in the mix. I mean, I'm fully aware that there was a bit more pressure on pricing the PCP. Is that what also has happened there?

Well, pricing on upgrades, I mean, we do there are tradings that happen with upgrades as well. So there's normally and the volume discounts that happen with upgrades. But overall, generally, the overall pricing was very, very similar.

Final question from me. Just a clarification on the breadth of this first de novo clearance for Chorus. Would I be correct in thinking that that first clearance will concentrate on one category of scope and it doesn't really matter which category of scope, let's say, your Dendoscope. Would then I be right in thinking that that would cover that class of scope generally and then for Nanosonics to work with all the different OEMs for that class of scope? And then the five ten that you referenced, I'm assuming that that's relating to other categories of scope, say for bronchoscopy or urology? Again, just sort of trying to get those just how to think about those approvals? Thanks.

It is category related, but it can also be brand related. Now the thing with the brand is that Olympus make up 80% of the market, but it is category related. Related. But even within category, there are quite a number of different scopes. So the FDA guidance to us was to narrow, but very quickly, like within the sort of twelve month period, we imagine we'd be covering close to 70% of the volume, the endoscope procedural volumes across the different categories.

Okay. That's really clear. Thank you. We have the next question from the line of Els Schapiro from Canaccord. Please go ahead.

Hi, guys. Thanks for taking the questions. Just on The U. S. Manufacturing piece, can you talk to the extent of the margin improvement there and any CapEx needed to build out that facility or the inventory build?

Yes. Over time, as you know, Elyse, the margins on consumables are already pretty high. I imagine over time, we would expand that even if another percentage or so based on the volume that can be actually quite meaningful. CapEx for that we're putting in, obviously we depreciate this over time, is probably in the order of three plus million.

And then you kind of talked to some of the progress that you've seen in Japan, but at one point you were talking to a potential distribution model in China as well. Any updates there? Have you kind of had a big offer selected any distributors for that region?

No. And we continue with the regulatory approval up in China. But we're going a bit slow on China at the moment and focusing the majority of our efforts into Japan.

Got it. Thank you.

Thanks, Philippe.

Thank you. We have the next question from the line of John Hester from Bell Potter. Please go ahead.

Good morning, Michael. Just beyond 2025, when you complete your approval of the forest device, what should we expect for your ongoing R and D expense? And on what projects will that focus?

I think the comments we're making at the moment is, we expect R and D as an expense to continue to grow in absolute terms, but as a percentage of revenue to decrease. Now, we saw a decrease from 20% of revenue in PCP down to 17% and we would expect that to continue to come down a bit. On the where it will be allocated to, I mean, obviously, we're not stopping our innovations in the ultrasound reprocessing space. So little bit like your iPhone, they're up to iPhone I don't know, I probably still have the first one, but they're up to about iPhone 16. You'll start seeing Tropon three, fours, fives over time as well in that franchise. In Corus, we'll have our first generation. There'll be more coming out there. There's work to be done on expanded indications, etcetera. And we're putting a bid into our digital traceability components as well both for Chorus as well as ultrasound, but that market is actually beginning to evolve in importance. So, most of it will be across those three streams. And at the moment, we're also just looking at from an organic perspective outside of ultrasound and endoscopy, there's great opportunities remain within both those categories.

Where else and what makes sense where we can apply our expertise in terms of automating current manual processes for the reprocessing of reusable medical devices. So once we identify something there that we believe could have a good return on investment, I imagine some of that R and D will go into that bucket as well.

Let me ask the question this way then as a follow-up. How much of that R and D expense is internal or fixed costs? And B, why do you continue to disclose the profitability of the TROFON business separately if clearly the R and D expense is an ongoing piece of the organization?

First, I'm not sure I understand the second part of your question. But in the Tropon only business, that only business also includes all the research and development we're doing in the ultrasound reprocessing. And in the last half that was about $6,000,000 versus total R and D in the first half in the order about $16,000,000 So of that $16,000,000 imagine $10,000,000 of it was associated, primarily associated with cars related or some digital related, many cars related. So I think it's important to for people to understand when we look at the Tropon only business from a profitability perspective is it gives an indication of what is possible in terms of profitability when you can become standard of care. And as we demonstrated, you can see that the Tropon only business is a quite profitable business. And And from an operating margin getting up to 27%, closer to 30%, I think that's industry from medical device industry, that's a pretty good operating margin. So that's why we provide that delta. But I may have misunderstood your question, John.

No, we'll discuss it offline. But thank you, Michael. That's helpful. That's all. Thanks, John.

We have the next question from the line of Richard Hemming from Dorea Report.

And I've been very impressed over the years with the resilience and increased resilience of Nanosonics, especially how you've changed the business model slightly. And now that you've got positive cash flow and you have a pretty hefty cash balance, I've always wondered why you don't pay dividends. Look, a quick question. What's a great dividend policy?

It's just a mean choice to me.

Yes. A good question and I can assure you our boards regularly look at capital management strategy.

I think as a dividend, there's one thing at the moment, I mean from a franking perspective, there's no real benefit for dividends at the moment. And I think building that cash balance over the last number of years has certainly made the organization more resilient, gives us optionality with respect to the investments that we can make on ongoing growth initiatives without having to go back to the market. Product expansion, we're certainly interested in that product expansion as a strategy, but that doesn't always have to come organically. So we do and I know we've been talking about this for quite some time, but we've just not been successful in identifying yes, I would say yes to an acquisition target to our portfolio. And of course, there will be some of that cash that will be required for overall CapEx requirements for our working capital requirements, I should say, when we're launching our Cora. So it gives us that sort of resilience. But we would like to get in future years to a position of being able to pay dividends. I just think at the moment, it's probably a little bit too early. Okay. Well, if not, when is the question.

Thank you. I think we've got just looking at the time, we've got time for one more question. Thank you.

Sure. We have the next question from the line of Rees Frith from Absek Fund Management. Please go ahead.

Hi, guys. Can you hear me okay? Yes. Good morning.

Good morning. Look, just a quick one on the M and A stuff. So you've just touched on the cash flow, the cash balance. I mean, you've hired a dedicated resource in Europe, as you said, disclosed last half.

So I want to understand around the timing. I mean, you've got Chorus. You're going to launch hopefully in the second half of 'twenty six. And that's going to take a lot of the focus of the business in the next few years. So I guess the question the timing of why you're looking to sort of buy something now, just trying to help reconcile that against your sort of chorus efforts and what that's going to take in the next few years?

No, no, great question. And certainly we don't consider and that plays into the type of M and A that we would do, especially initially. And we're not we can't take our eye off the ball, as you're saying, with respect to the core growth drivers that we have, we're faced with today, and that's ongoing with Tropon and bringing in KARUS. But if we can identify something that you're not just purchasing a product and putting it into the existing fold, you're bringing in new capabilities also to the organization and the people along with that, that's something that we would certainly consider.

Okay. Thank you. Cheers.

Okay. Well, look, thank you all for joining on what I know is a very busy day out on results announcements today. And I look forward to catching up with many of you, with Jason over the coming weeks. Thank you very much.

Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.