Nexalin Technology, Inc. Price & Performance (NXL)

We noted at the AGM at last month's update that our sales are not linear across the year My job as a CEO is to drive for exit executional excellence each year. Each half each quarter while also keeping the organization steadfast and focused on the longer term strategy to ensure sustainable growth. Today, I will share the results of the half year and also update on progress against our longer term strategy and share my confidence for the future of this Australian tech success story. [indiscernible] Before we begin on results, a quick reminder of who we are. Nuix develops AI powered advanced intelligent software solutions. With over twenty years of experience, Nu X delivers advanced data analysis solution for industries demanding precision and insight. Including e discovery, regulatory compliance, data governance, cybersecurity and forensic investigation. Operate on a global scale with more than 80% of our annual contract value ACV coming from outside Australia. With a team of over 400 employees worldwide, we cater to a high quality customer base. 85% of whom have been with us for over five years. Our robust technology foundation Paired with our extensive technology pipeline and global presence, positions us well for future growth.

Slide five, [indiscernible] key messages I wanted to highlight today are: one, Our ACV growth in line with market updates we provided last month. Two, further growth in cash EBITDA in line with our full year objective to grow revenue faster than operating costs, three, lifting R and D investments to drive future growth five, underlying cash flow positive for the half in line with our objective to be underlying cash flow positive for the full year. And six, lastly, we finished the year with $30,700,000 of cash In the back, Slide six. Turning now to our financial metrics dashboard. [indiscernible] ACV at the end of the year came in at $216,200,000 a rise of 8.3% on the same time last year. STAT revenue at $105,200,000 is up 6.9% on PCP. [indiscernible] Net dollar retention which is a key measure of the growth in spend from our existing customer base dipped during the half to 109.6% and we'll have more to say about that shortly. You'll notice that we have three measures of EBITDA on the page. Cash EBITDA is closest to the way that management thinks about running the business. Cash EBITDA incorporates the full R and D development spend both expense and capitalized.

Nuix excludes non operational legal costs and restructuring costs. [indiscernible] Cash EBITDA rose by 30.6% on a PCP basis to $13,400,000 Underlying EBITDA is identical to cash EBITDA except that only the expense proportion of R and D is included. Not the capitalized [indiscernible] You'll note the divergence between the performance of underlying EBITDA and cash EBITDA. Is driven by a big change in the expense component of research and development will come to you shortly. Incorporating the impacts of non operational legal costs and restructuring costs, you can see that statutory EBITDA is down 10.8% in the half to $15,300,000 I'll now hand over to Peter to talk through the financial results in more detail. Thanks, Jonathan, and good morning, everyone. As Jonathan mentioned in his opening comments, ACV is in line with the guidance we provided to the market last month. Coming in at $216,200,000 for the half. That represents an 8.3% growth on PCP and 2.2% in the six month period since June. There are a number of elements that make up ACV but particularly noteworthy is the further growth in the recurring component subscription ACV. Is up 13.3% on the PCP and now represents 97% of total ACV.

Partially offsetting this is the fall in other ACV. Other ACV includes one off perpetual licenses, which we have stated we're moving away from. Other components are short term projects and services which by their nature can fluctuate across periods. Slide nine shows the ACB walk over a twelve month period. Traditional component sales are higher on customer upsell as well as further growth in the rampiva and ADDvantage. [indiscernible] has been a significant growth contributor over the year. With an incremental $14,900,000 to ACV and Jonathan will discuss Neo further later in the presentation. Discover SaaS ACV is relatively flat year on year. With normal fluctuations in usage however, in the half, we have also seen growth partially offset by some churn in smaller customers and the conclusion of several finite projects. Lastly, you can see the impact of cycling some of those one off ACV items in the other column. As we've started away from perpetual licenses and one off services, favoring subscription models. You can see that's weighed on the ACV growth to the tune of about $8,000,000 Turning to Slide 10, Here we've highlighted the trends in net dollar retention and churn. [indiscernible] As mentioned, NDR reflects the list in ACE achieved from Nuance's existing customer base over a twelve month period.

While an NDR of 109.6% shows we're achieving growth with existing customers, It has dipped during the half due to lower degree of upsell from compared to previous halves. We saw an uptick in churn to 5.4% during the half with some uplift in North America corporate and also our singly large customer churn in EMEA on the completion of a project. That said, churn remains within longer term ranges. NDR is an important metric for us. We have more work to do in lifting this metric further. Some of the strategic initiatives that Jonathan will discuss shortly will help in driving higher NDR outcomes in future periods particularly as we chase higher value contracts. Turning to Slide 11, Here we highlight the regional ACV performances. North America has moderated from the very strong growth we saw last year. With good upsell achieved in advisory and government, partially offset by the roll off in perpetual sales that we've noted previously. The North American Team Continues To Achieve New Nuix Neo Growth In All Sectors. EMEA is essentially flat over the twelve months. While there's been some good upsell in government, this was offset by a loss in corporate with one large project completion in particular weighing on growth.

That said, EMEA saw good momentum in New Xneo sales with particular success in Neo investigation. Asia Pacific produced strong growth over the twelve month period to be up 17.4% driven by strong growth and upsell in both corporate and government. In terms of Nuix Neo, the APAC team was particularly successful in selling to corporate including securing a significant multi solution deal during the half. Turning to Nuix's revenue for the half, you can see that revenue grew by 6.9% on the PCP. Multiyear deals represent 22% of revenue down from 24% in the prior year. However, subscription component of revenue remains high at 94%. At the end of FY 'twenty four, we flagged an up tick in R and D investment during FY 'twenty five, and you can see that shown on Slide 13. R and D spend rose by 7.2% compared to PCP excluding some restructuring costs which were incurred during the period. What is worth noting for the half was the shift in the expense versus the capitalized components of R and D compared to the prior period. In this half, the expense proportion of R and D was higher due to the increased activity on customer and further research on new Horizon three development opportunities.

This mix will fluctuate based on product development cycle. As we've noted previously, management focuses very strongly on the entire R and D spend and the prioritization of this spend based on business needs and product development cycles. This entire spend is incorporated in the cash EBITDA measure. But this mix shift in expense versus capitalized R and D has weighed on our underlying and statutory EBITDA outcomes, which will come to shortly. Also, and importantly, consistent with prior periods, the entire R and D investment is funded from underlying cash flow. Turning to Slide 14. As we just noted, cash EBITDA incorporates the full research and and development investment spend including the capitalized component but excludes net non operating legal costs and restructuring costs. Cash EBITDA is the measure of that most closely represents the way management thinks about running the business. And here that you can see that in H1 FY '25, cash EBITDA rose by 30% to $13,400,000 with an associated margin of 12.7%. Importantly, as Jonathan alluded to earlier, this aligns with our full year objective of revenue growth to exceed operating cost growth. Turning to Slide 15. [indiscernible] are conscious that there are three measures of EBITDA in the pack.

In line with what was presented in the full year results. This slide shows the relationship between each measure of EBITDA On the left hand side, you can see the walk to achieve the 30% growth in cash EBITDA The only difference between the cash EBITDA and the underlying EBITDA is the capitalized component of R and D. Statutory EBITDA incorporates the impacts of non operating legal costs as well as the restructuring costs we mentioned. Going forward, we'll probably simplify this a little, but the focus from a management perspective will remain on cash EBITDA as we've outlined today. On Slide 16, you can see the income statement.

Which again reflects the walk between these measures of EBITDA that I've noted. I won't go through all the individual components, but it is again worth calling out the revenue growth in excess of operating cost growth. Separate to that and a bit further down the table, you'll see that net non operating legal costs for the half were $9,600,000 You'll also notice that the restructuring cost of $2,200,000 are slightly higher than the R and D amount we mentioned earlier. That is because there's some elements of the restructure that have impact on areas not accounted for in R and D. Here, you can see the full impact of this restructuring program on Turning to Slide 17, you can see the growth in underlying cash flow for the half of $7,000,000 from $6,600,000 in the prior period This is important because it means we're well placed on Astra strategic objective of delivering positive underlying cash flow for the year. Naturally, non operating legal payment continue to weigh on our cash flow as well as some of the early payment associated with the restructuring program we've talked about. As Jonathan mentioned, we closed the half with a cash balance of $30,700,000 compared to $24,000,000 in the PCP.

We retain our debt facility of $30,000,000 with only $750,000 utilized for property related guarantees. I'll now hand back to Jonathan. Thanks, Peter. Now turning to Slide 18.

Which is a strategy update. I'll talk you through our product, innovation and customer strategy. Those familiar with New York's will be aware that New York's Neo is a core element of our growth strategy and you've seen that as part of today's results. For those that are new to or revisiting the Nuix story, just a quick recap on what Nuix Neo actually is. At the start of FY twenty twenty four, we launched Nuix Neo as a key building block of our renewed strategy. Nu Xneo leverages the power of the patented Nuix engine in an AI enriched single platform offering. This represents a critical step change in our customer offering. Making the process of data collection, processing, enrichment analysis and review faster, easy and smarter. Now going to Slide 20. The New York Neo platform simplifies common uses of our software by using AI models tailored to specific challenges. Particularly around data privacy, forensic investigations and legal processing and review. It helps customers make smarter and clearer sense of their data with our unique AI technology combined with our unique automation and orchestration technology. Moving to Slide 21. [indiscernible] Peter touched on the growth in Nuix Neo early in the financial section.

And I thought I just wanted to spend a moment here talking about a little more. New Xneo growth continued in strong momentum in the half. Growing to $18,900,000 of ACV across 46 customers. As we saw previously, a significant driver of growth again in this half has been the take up of new incremental NEO solutions by customers who already had existing Nuix products. This is an important part of our growth strategy. Offering new products to existing customers alongside the ones they already have from us. During the half, we had particular success in selling new [indiscernible] As well as securing a significant customer wing incorporating several NEO [indiscernible] Importantly, New XNEAR was also the driver of securing new customers to New X in each region. Nuix Neo sales of good generators of A and revenue growth. The average New XNEO sale is two to three times the size of a non Neo sale. This difference highlights the substantial advantages Neo platform offers to customers and reflects our strategic shift towards targeting larger enterprise customers who can fully leverage our comprehensive solution. Turning to Slide 22, At our Investor Day at last year's Accelerate Conference, we highlighted highlighted the substantial R and D program underway for FY 2025.

During the first half, our technology team made very significant progress on key deliverables for the year.

And we remain on track for release of important new developments and updates for customers in this current half. We continue to invest in our Discover SaaS product very soon our DiscoverSAT customers will be able to access cognitive AI capabilities as part of our offering. Driving a step change in value for this customer cohort. This is just one element of our Discover roadmap. [indiscernible] remain very committed to our component customers who we know really value our offering. Also during the 10 to this important customer set. Will incorporate upgrades to engine, workstation and investigate. Turning to Nuix Xneo, the semantic search capabilities that we showcased at the Investor Day will be available to customers in this house. Semantic search is an advanced search technique that understands the meaning and context of words, rather than just simply matching keywords. Semantic search delivers more relevant search results by considering the intent behind the query. Alongside this important development, is a very broad ranging program of work to further upgrade and enhance the Nuix Xneo offering. This includes updated dashboards, incorporating further AI models including non English markets, and further automated workloads. Making New York Nuix even more attractive to our customers.

Lastly, our customers have different needs. We offer flexible deployment option. Customers can deploy our software behind their own firewall on a private cloud or in a public cloud. We are on track this half to launch [indiscernible] 23 Nuix. You heard Peter talk about restructuring costs earlier. I just wanted to provide a bit more color on the technology restructure program that we have in that In essence, this project is about concentrating our development hubs and technology spending globally. This means core technology hubs in Sydney, Washington DC, Pittsburgh and London, with additional work through our technology partner in India. The program will make our technology delivering more efficient by reducing cross region dependencies and co locating teams working on the same projects as well as enhancing our customer support by bringing customer facing teams together. Moving to Slide 24, We are taking the next steps in our AI journey with Nuex Neo soon incorporating a deep learning framework. This will allow it to create understand and use mathematical vectors unlocking significant power and value for our customers. The first feature of this framework is semantic search. I mentioned a moment ago. Providing more relevant search results by considering the intent behind the query.

Additionally, this framework will enable the integration of public language models, allowing customers to use services like translation and advanced image and text analysis. New XNEA will also support customers' proprietary AI models and public GenII providers, allowing them to integrate their own AI models with our solutions. Earlier this month, we successfully achieved a patent for the deep learning technology for training AI, which demonstrates the leading edge nature of our innovation in this area. This technology underpins Nuix NEO and will unlock further material value for our customers and growth opportunities. For our company. It's important to add here that as a technology company with significant AI capabilities, Nuix carries a responsibility to to use those capabilities thoughtfully and transparently. We remain fully committed to delivering responsible AI. That is AI that is explainable, and defensible. Moving to Slide 25. We know that Nuix's existing technology stack is incredibly powerful and the investment that we are making will make our software an even more valuable tool in solving very complex data problems in a responsible way.

As part of our strategy, we are deliberately targeting larger more enterprise style content. These customers can take better advantage of the power of our offering [indiscernible] as we continue to invest in the technology advances associated with Nuix Neo and the deep learning framework. As we've noted in the short term, that increasing focus on higher value contracts has meant the lengthening of the procurement cycle for some of our customers. In the medium and longer term, focusing on larger and more complex contracts will enable New York to better leverage and realize full further value from its powerful This approach will help the company take full advantage of the rapid growth in data volumes and the evolving methods of extracting further meaning from complex datasets. As we pivot to focus more on these larger more complex contracts, continue to invest in programs associated with training, and upskilling our sales force as well as simplifying migration mechanisms for customers who want to move further up our technology We're not shy about chasing some of these larger contracts The potential for Nuix more enterprise style customers, And importantly, we have the technology foundations to compete in these spaces. Moving to Slide 27. [indiscernible] Turning to our strategic targets for FY 2025.

Last month, we updated the market that based on the first half outcome, expectation is for 11% to 16% ACV growth in constant currency over the full year. That expectation has not changed. You might recall previously that we articulated a target of 15% ACV growth in constant currency for the full year. We While we still aim to achieve that within the band of expectations, Based on what we've talked about with the variability of the procurement cycles, the 11% to 16% range we provided last month more accurately reflects our current expectations around the potential full year outcome. Our core target is the successful rollout of New York's Neo.

And as you've heard today, we have significant momentum in that rollout. The enhancements that we are making to Nuix Xneo will continue to underpin the attractiveness of our offering. We are on track to deliver revenue growth in excess of our operating cost You saw in Peter's section a relatively subdued top line environment for the half we still delivered further growth in cash EBITDA. Remain on track for this strategic target for the full year. Similarly, we are on track to deliver an underlying cash flow positive out the first half experience leaving us well placed to deliver on this target. In closing, I want to reiterate the advance we are making in our technology offering. While positioning the organization for further growth.

We have a lot to execute on in the current half but the team is energized and the strategy is being executed to plan which makes us very excited about what we can achieve over the rest of the financial year.

I'll now hand back to the operator for Q and A. Thank you. [indiscernible] The first question today comes from Jules Cooper from Shaw and Partners. Hi, Jonathan. And team. Can everyone hear me? Yes.

All right. Fantastic. The guidance, Jonathan, implies a stronger second half. I guess, particularly with respect to Neo, would you just be able to talk a little bit more about the pipeline, the sales cycles you're seeing and what drives your confidence on achieving that stronger second half?

That would be helpful. And maybe just framing the upper and and lower bounds Of that guidance range in terms of those growth markers would be helpful as well? Thanks, Jules.

So as mentioned, what we have seen is in terms of existing customers migrating to Neo, It is it has taken slightly slower than we expected. Kind of makes sense. It's quite logic logical that from a component sell to a more sophisticated and more complex [indiscernible] there is There is more kind of work to be done in moving our customers over. However, we really have now moved in and started to simplify that journey in the pricing and the commercials. So that's how we've been kind of driving that. The other reality also is that we've been chasing some some of the larger enterprise type opportunities. And so we do have a strong pipe in that area, both of the larger enterprise style Neo opportunities, And so again, one or two of those landing has so you asked the range, The reality is one or two of those larger style enterprise deals by them closing or not closing in the full year can make the difference between two or three ACV points, which is significant. Again, as you can see though, we are pretty confident about H2. Just simply given the pipe and the momentum that we have.

Thank you. And by the just one follow-up. You've been specific in the commentary around Neo That You're Seeing Particular Strength In Investigations? Could You Maybe Comment On Legal? And Is It Still Just A Little Bit Early In The Gestation Of That To Be Making Specific Comments Or Is There A Reason Why It Was Left Out Yes. No, Look, In H1, We Had Strength In Our Investigation Solutions. I Think That's Partly Because We Have A Fairly Big Demographic Of Investigations In Europe. And EMEA, we had a fair amount of growth. I think we'll in terms of legal, again, it's the latest solution or the most recent solution that going into H2, we've got a bunch of the large third party data providers that process data on behalf of other people and we're expecting to see growth in our legal solution. But yes, I think it's just a function of [indiscernible] And certainly in terms of the legal solution, we're seeing a lot of interest in those larger data processes, if you want. Fantastic. Looks good to us. Thanks, mate. Thanks, Shills. Thank you. The next question comes from Andrew Johnston from Access. Please go ahead.

Good morning, gentlemen. First question, Jonathan, the extra expenditure. Can you talk about where that's going specifically?

And which products are you putting more of that more of that money into?

Andrew, I think as we flagged before, at the beginning of this year, we are leaning into our R and D spend. Our R and D spend still is is certainly within the range that we expected. In terms of focus area, first of all, there's been a big focus on, as you know, getting these three solutions out. So getting out of data privacy, forensic investigation and now the legal solution. So that's been the core focus And by the way, that is a start of that journey. So those platforms still that's kind of if you want the first version. So in terms of H1, there's been a lot of focus on building out and and driving those existing platforms as I really the one of those those solutions. And then secondly, we've also had a fairly big focus on some of our horizon three solutions. We've got in Horizon three, we are very excited about and you might have seen we achieved a patent on our deep learning framework. And so we're super excited about some solutions coming out of the Horizon three area.

And then finally, we've also invested in our version 10 which is giving our existing customers on components choice to stay on the components. And the reason why that's important is there is a shift from component to platform and sometimes you don't have the time to do the work or the reality of how you deploy those components are that you still want access to what are the best components. In the analog space, if you want. And so we've invested in in an upgrade to V10 again giving our customers the ability to a, stay on the component well and and upgrade to a version 10 of the components, or then move into one of the solutions that the new solutions that we built.

Okay. Great. Thanks. Just Two more questions if I could. So just quickly, so the first half $25,000,000 revenue growth was obviously lower than the ACV growth. Is this a function simply of the lower level of multiyear deals? And so if we see one or two of those large multiyear enterprise deals come through in the second half, will we see revenue or we likely to see revenue growth then exceed ACB growth with obvious implications, obvious for EBITDA obviously.

Yes. So it's Peter. The short answer to that is yes, that's correct. I mean, your revenue growth is a factor of your multiyear deals. And hence the sort of the timing of when those deals fell. We're not really giving guidance to the relativity between ACV growth and revenue growth in the second half. But it is fair to us assume that a couple of larger enterprise multiyear deals would have a significant impact not just on ACV, but clearly a much greater impact on Yustat revenue for that period. So that is one of the balancing acts. We're constantly looking at what is the right level of and stat revenue growth. [indiscernible] Okay, great. Thanks, Peter. And finally, Jonathan, you mentioned with Neo the take up has been slightly slower than expected, complexity etcetera and how you're driving the things you're driving to now are looking to reduce that complexity. You mentioned simplified pricing. Your answer to this may well be don't want to go into details, but I'm just wondering if you can give any more detail about how the reduction in the complexity of pricing is how you see that that playing out and affecting Neo growth?

Yes. So the take up hasn't been slower than my and I know that might sound semantic, but in reality, Just moving from components to platform, there is a broader technology stack. There is a degree of implementation process has been slightly slower. What we've tried to do is really just simplify the commercials around that and make it easier and reduce any friction if you want. In particular, figuring out how you can migrate. So we've actually deployed a local platform solution, which means that the deployment of Neo is literally if you take the old world of components where deploying components would take days, weeks or even months. We're getting our local local platform deployment in under an hour. So we're making technically the deployment simpler. And then also just a very simple migration paths, a commercial perspective. So there is a pathway to Neo and there's a full Neo We're just simplifying those to make it abundantly clear and and pricing the value appropriately. And I think that will make a big difference in H2.

Okay. Now that's great. That clarifies it a bit. So Jonathan, is it fair to say that the slightly slower than expected growth in NEO is around the conversion of existing customers to Neo. How about the take up by completely new customers of Neo? Is that Is that sort of in line with where you were expecting, say Nuix and twelve months ago?

Yes. I don't think this is we are we're positive and excited about the take up in Neo. As you can see, we had 23 customers in H1. So I think it's just a function of the timing and when the deals fall, but we are very and then in terms of net new also, we are excited about those opportunities. And as I mentioned, also those opportunities are more of the enterprise type opportunities. So they are bigger than the the average kind of 2x, 3x deals in components that we spoke about.

Okay. No, that's great. Thanks for the clarification. That's it from me. Thank you.

Thanks, The next question comes from Wei Hsin from Jefferies.

Please go ahead.

Jonathan and Peter.

I've just got a few questions related to how we should think about balance sheet and cash flow going forward. So I'm just just rattle them off and see how you'd like to answer them. Just firstly, regards to the restructuring costs that we saw coming through in the first half, Is there more of that to come through in the second half and going out?

So just in terms of the R and D investment, how should we think about what's been budgeted over the next eighteen months and capitalization versus expensing of that. And appreciate we've got kind of like a bank facility, which is largely untapped, but how do we think how should we think about I guess, potential cash burn out into '26 Thanks.

Firstly, in terms of the restructuring costs, just want to really highlight that that's not a cost out program. That was around the reorganization of the tech the tech team to make sure that as we're sort of really looking at the contemporary or product sets that we've got the right teams in the right location. So that program was put in place to consolidate some of the regional regional offices to bring back into some central positions. In terms of the cash flow impact, a lot of that expense that's in the P and L hasn't yet been paid out. So we've recognized the obligations that have come out of those restructuring programs. So that is a cash flow that will largely flow into the second half of this financial year. In terms of your question around the R and D spend, I suppose the first point is management very much focuses on the spend in totality, not the mix between what gets capitalized and what gets expensed. So that spend that you saw in the first half, excluding the restructuring costs of about $28,600,000 is around the run rate. We did flag at the coming into this financial year that the spend would be higher.

And I think somebody asked in of Jonathan earlier on around that. We focused very much on the management's cash, EBITDA targets are all focused on managing the totality of the spend. That said, the mix between what gets capitalized and what gets expensed, we very much deliver delivered by or determined by we're at in the product life cycle in the first half We probably had a higher amount of expenses. We were focused on some of the cluster developments. And as Jonathan mentioned before, the increased spend in Horizon three development type activity. But I would anticipate as we move forward, somewhere the expense component will probably sit somewhere between 3230% to sort of 50% of the total R and D spend, but the spend level will remain in sort of totality will remain around where we are In terms of the bank facility, can you just go back over the question again? I wasn't quite sure what you're asking No, it wasn't really a question related to that Just understanding how, I guess, the cash balance should be looking over the next twelve to twelve to eighteen months is really what I'm trying to Obviously, we had, I guess, our cash balance go down about 8,000,000 Often.

Just how we should think about I guess, the risk of needing more capital or more cash going forward Yes. Now look, we're comfortable with the positions we've given guidance to or you indicated positive net operating cash delivered by the business over the half. I mean your bank balance, your cash at bank is [indiscernible] actually go back and have a look at the sort of the walk in terms of underlying cash for the half, you can see that the underlying cash is actually sorry, underlying cash delivered is positive for the half. What did weigh a little bit on that cash flow? In the half was the payments related to the ongoing legal issues. There was some timing around when expensed in the prior year to where the cash flows were were sort of impacted into the first half. So we're anticipating that we'll continue to deliver strong operating cash flows will then just be around the timing of those legal cases. But Effectively in the first half, a lot of the matters have sort of progressed through the through the first half And again, in terms of operating cash flow, it is definitely more weighted towards H2.

Just as a function of kind of different payments of things like SDIs and other things like that, that make quite a big cash out of growth and then also insurance payments also that are impacted. So in reality, the H2 is more from an operating cash flow perspective. To more cash flow generative. Okay, got it. Thanks, John. Sorry, Peter, before you mentioned a lot of the restructuring costs being expensed, but not having actually paid out. So what's that delta that we're looking at in in H2? And just coming back to that question on restructuring, is there more to come through or that's kind of one and done?

No. That's I mean, in terms of the restructuring program, that's done. So that you won't see that flowing into you won't see any more of those programs underway. There was only a small component in the first half that was actually paid out in cash. So a larger amount of that $2,200,000 will flow into cash flows in the second half. [indiscernible] how much came out in the first half, it was $400,000 of cash flow. Relative to the expense that went through the P and L. And I will just The one thing is that this restructuring is strategic. So the intent is how do we build a more efficient engineering organization and what we had was a bunch of people scattered around the world in different offices that just made a very different difficult both from a time zone and a collaborative perspective. So what we've done is we've actually taken 40 people move them [indiscernible] primarily from different regions into the Australian engineering area and into some offshoring areas to give us really scale and efficiency and get them together. So I think the outcome should be very positive, but this is a one off without a doubt, this is a one off restructuring and that's why we've pulled it out as well.

Okay, got it. If I can just entertain one more question. Regarding the customers upsell taking longer Totally understand that. I'm just wondering like how it works with customers in the sense that if they are an existing [indiscernible] a bit longer. How long can they ultimately stay on the existing contract before I guess it lapses or something needs to be done in order to essentially force them to upgrade or come to a conclusion?

So look at the good question The intent is not to force our customers to do anything. And hence, we've actually created version 10 But what can happen is you're not you're looking at the component world and thinking, is a bit of engineering, there's a bit of work I've got to do internally and hence I might still upgrade, but I'll stay on components. And sorry, I might renew, but stay on components. And I might upgrade in the next year or the year after whenever that contract is due. So it's less around me kind of forcing the customers to to upgrade, but it's more around giving choice and also managing the NEO move. And really that so our key learnings there is engage early with our existing customers because it does take a while And then the second one, which I mentioned earlier, was really just try and simplify the commercials that the move from a component to platform is easier to digest and move forward.

Okay, perfect. [indiscernible] Thank you. The next question comes from Sinclair Currie from Moelis Australia. Please go ahead. [indiscernible] [indiscernible] you doing? Good day. Good. Thanks. Thanks for taking my question.

Look, I was just interested in some of the I guess dynamics of moving the larger customers over to Neo. And I was just trying to understand within that sort of framework, are those customers are you looking to displace established either third party or those customers own proprietary I guess, tools as part of that process? And does that elongate to an extent some of those discussions you need to have to get them over one.

So I would suggest that almost all the customers have something that they're solving the problem with. And often that something is actually a a combination of components. So So they have a bunch of components that they have put together that kind of aggregated and created a a workflow of some sort. And so therefore, we are often trying to replace is a set of components, sometimes our own components or sometimes a collection of our components and other components into a platform where we are trying to say, here's an integrated platform, single sign on, one dataset, a simpler end to end user interface, enterprise automation across all of those components. And our AI built into that platform but that's what we typically replacing versus our XYZ. But inevitably, they are solving the they have a set of technology components and our value proposition and what we're saying is we believe that our platform is up to 10x better in terms of simplicity, in terms of ease of use and in terms of speed and accurate. Sure.

Okay. That's cool. Thank you. And just you mentioned I think insurance and second half. Just to clarify, that's payments of claims you've made under your policies for some of these legal expenses. Am I interpreting that correctly?

No, this is just kind of the timing of when outgoings happen. So we're just talking about when cash [indiscernible] insurance is one and the other one is, as I said, our STL is up to our team gets paid up thinking August or September In terms of half and half cash outgoings, those are kind of some quite big deltas between H1 and H2. And from an operating Perfect. Thank you.

Thank you. At this time, we're showing no further questions.

I'll hand the conference back to Jonathan for any closing remarks.

Look, I'd like to thank everyone. I know it's a busy day for everyone. Really appreciate your your time and look forward to catching up with some of you later and some of the one on ones that we have later. Thank you very much.

Thank you.

Thank you. That does conclude our conference for today. You for participating.