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Edited Transcript of CL1.AX earnings conference call or presentation 15-Feb-21 10:00pm GMT

·27 min read

Half Year 2021 Class Ltd Earnings Call SYDNEY Feb 16, 2021 (Thomson StreetEvents) -- Edited Transcript of Class Ltd earnings conference call or presentation Monday, February 15, 2021 at 10:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Andrew J. Russell Class Limited - MD, CEO & Director * Glenn Day Class Limited - CFO & Company Secretary ================================================================================ Conference Call Participants ================================================================================ * Jules Cooper Shaw and Partners Limited, Research Division - Senior Analyst * Mason Willoughby-Thomas Ausbil Investment Management Limited - Portfolio Manager * Phillip Chippindale Ord Minnett Limited, Research Division - Senior Research Analyst * Ross Barrows Wilsons Advisory and Stockbroking Limited, Research Division - Research Analyst * Shuo Yang Microequities Asset Management Pty Limited - Senior Investment Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Thank you for standing by, and welcome to the Class Limited 1H '21 Results Briefing Conference Call. (Operator Instructions) There will be a presentation followed by a question-and-answer session. (Operator Instructions) I would now like to hand the conference over to Mr. Andrew Russell, Chief Executive Officer and Managing Director. Please go ahead. -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [2] -------------------------------------------------------------------------------- Good morning. Thank you for joining us for the presentation of the Class Limited First Half '21 Results. My name is Andrew Russell, and I'm the CEO of Class Limited. I'm joined today by CFO, Glenn Day; Chief Strategy Officer, Glenn Poynton; Jason Wilson, our Chief Customer Officer; and our Investor Relations Assistant, – Zoe Wise. Today, I will present to the following agenda: company overview and business highlights, first half '21 insights, strategy and outlook and then finish up with some Q&A. I would like to take the opportunity to frame who Class Limited is for those who are new to our business. Class is a multi-award winning technology business. We create technology solutions to automate and simplify complex administration, at scale, in the financial services and related professional services sectors. Our customers are accountants, SMSF administrators and auditors, investment advisors, financial planners and lawyers. The Class software solutions assist our customers to automate key processes, reduce operating costs for their back office, improving data efficiency and reduce compliance risk. Class' revenue is derived from our suite of products offered via a monthly software fee and pay-as-you-go fees. Over a year ago, we commenced our Reimagination strategy, which is focused on rapidly transforming Class to a multiproduct Software-as-a-Service provider, with the ambition to become a world-class technology solutions business. Today's presentation will outline our first half performance and our progress in executing that strategy. We will show that Class/CL1 continues to generate double-digit top line growth. Class is growing market share in its materially expanded addressable market, and doing so in a short period of time. Class is growing profitability while continuing to invest prudently back into the business. Class continues to pay a dividend. Class has resilience and predictable earnings, and Class is successfully navigating the business challenges and the ongoing social and economic headwinds resulting from COVID-19. The key messages to our shareholders and the market today are simply these. We continue to execute well to our Reimagination strategy with both financial and operational results on target. We now have a successful track record with acquisitions, in both identifying the right businesses and integrating them successfully, as evidenced by NowInfinity and Smartcorp. The ReckonDocs acquisition announced today provides Class with another good margin and customer acquisition business to further scale and grow revenues. And finally, we reconfirm our full year financial targets. The transformation of Class is clearly underway at speed as we grow. Our acquisitions and product development results over the past 18 months are building the leading integrated technology platform that ensures our customers can provide efficient and accurate business services at scale in establishing, managing and at administrating wealth accounting. In the current environment, the Class cloud based technology solutions have never been more important for our customers, to help them improve back office efficiency, reduce costs and mitigate operational risk. Turning to our first half financial results. The business set out our key financial targets in FY '21 when we last reported in August 2020. It is pleasing to announce that business is tracking well to those financial targets, and we are proving our capability to execute to our targets. Our first half highlights are revenue of $25.9 million, growth of 27% on PCP. Roll Forward revenue of $52.9 million, growth of 29.7% PCP. Earnings before interest, tax, depreciation and amortization of $10.4 million, growth of 29% PCP. The Board has declared a fully franked dividend of 0.025 for the first half. Our EBITDA margin of 40% continues to track to target as we invest in the business. Our investment in technology, innovation and product development is ongoing, and it is rapidly transforming the business. We invested $7.1 million in the first half of FY '21 with further investment continuing in platform rejuvenation, acquisition integration, super product compliance and new product features for all our products in the second half of FY '21. Class is significantly growing customer numbers as we have expanded our product set, and acquired new businesses to scale the NowInfinity platform. Our customer growth is tracking over 180% PCP. As I mentioned, the Board has declared a fully franked dividend and our dividend remains unchanged at $0.025 per share for the first half '21. In summary, the financial results are solid, and, equally importantly, we are executing well to our 3-year plan. Further detail on our financial performance including operating results, product investment, cash flow, balance sheet and key operating metrics can be reviewed in the Appendix of the results presentation deck. Turning to our summary of our key achievements for the first half. The transformation of Class is accelerating in FY '21. Some of our key achievements in the past 6 months are, well, firstly, we're building an impressive integration track record. To briefly recap, NowInfinity was acquired in January 2020 and was Class' first ever acquisition. It allowed us to grow our total addressable market by over $100 million to $365 million by revenue. The NowInfinity business was our beachhead investment in the legal document and corporate compliance vertical. And we acquired NowInfinity because we believe it is the best technology platform in the legal documentation and corporate compliance marketplace. To fast track the scaling is NowInfinity. We announced the acquisition of Smartcorp in August 2020. We are very pleased to announce that we have successfully integrated the Smartcorp business and migrated over 1,400 customers onto the NowInfinity platform. We completed the integration in December 2020, on schedule to our bold plans. The business and revenues are tracking to our expectations. The Class team is building a credible track record in buying and integrating our acquisitions plan, and it is pleasing to announce our third acquisition, ReckonDocs, which I'll give detail on shortly. A second big achievement for the half is the launch of Class Trust. It was a significant achievement and milestone for our Reimagination strategy. We launched Class Trust 3 months ahead of schedule in October 2020. We have now grown our Class Trust customer numbers impressively since the product launch. As of today, there are over 175 customers using the software and Trusts loaded exceeds 2,700. We are pleased with the product launch results to date. We are continuing to receive positive feedback from our Class customers. The following are key themes advocated by our key customers. The product drives material, time and cost-saving in the administration of Trusts, the intuitive technology of the product results in lower cost resources being employed to administer using the software so that more experienced resources can be refocused on customer and business development activities. And thirdly, the product efficiency provides the catalyst for firms to explore combining their administrative functions of Trusts and Super, which provides further margin improvements in their operations. We are pleased to see that we continue to grow our market share in our expanded addressable market. Class has maintained or grown market share in all our products in the past 6 months PCP. The essence of the Reimagination strategy is to deliver a multi-product and diversify the revenue capability for Class. Undoubtedly, the self-managed super fund market has matured and the account growth and customer switching opportunities are solid. The SMSF market outlook is subdued to FY '21 with the ongoing challenges of the overhang of the Royal Commission and the uncertainty of further regulation increasing costs and the lack of direct support of the SMSF product from the ASIC and the Productivity Commission. Without question, the perception of uncertainty has impacted the confidence of our wealth accounting customers in recommending SMSF to their clients, which is impeding the organic growth of the market. I know the SMSF industry body is working diligently with all key government bodies to communicate the concerns and supplying for reference data-supported facts of the SMSF product success over the years. We welcome and hope to see further productive dialogue with the government and their regulating agencies in 2021, with the aim of increasing confidence to the SMSF industry, and as importantly, of existing and potentially new SMSF product users. The SMSF Association and Rice Warner's recent publication of "Cost of operating SMSF 2020" and was a comprehensive analysis of superannuation and SMSF. The findings clearly reinforce the benefits and importance of the SMSF offering in the competitive landscape. It furthermore highlights the relative and compelling cost metrics of SMSF. The balance is more than $500,000 relative to other industry and retail superannuation product offerings. Notwithstanding the current SMSF market dynamics, the fact remains that the Class software suite is more than ever strategically important to our wealth accounting customers. For our customers, the learnings from COVID where businesses need to ensure they have cloud based software, and the ever pressing need for revenue growth and operating margin improvements. Our suite of cloud based products are well placed to help customers achieve their strategic goals by reducing costs and improving efficiency by solving the key pain points in wealth accounting through technology automation at scale. Our fourth achievement I'd like to talk to you this morning. We are very proud to announce our first social responsibility partner, Solar Buddy. Solar Buddy's purpose is to solve the important global issue of energy poverty. The team and I look forward to working closely with our charity partner to support this excellent cause in FY '21 and beyond. Another significant achievement in the past 6 months and in line with our fast-paced transformation is the announcement of an additional high margin and customer growth acquisition, ReckonDocs. ReckonDocs is part of the ASX listed Reckon business and is a well-regarded player in the legal documentation and corporate compliance market. ReckonDocs services over 2,000 businesses, primarily in the accounting space, including many APS customers. ReckonDocs enjoy long-term partnerships with its clients. We have announced today the execution of an agreement where Class will buy ReckonDocs for an enterprise value of $13 million adjusted for working capital. The consideration for the transaction is funded with $9.1 million from our Westpac facility and cash at bank. ReckonDocs will integrate with NowInfinity. And ReckonDocs similarly to the Smartcorp acquisition is a key building block in scaling the NowInfinity platform and will help fast track Class to a market leadership position in the legal document and corporate compliance vertical. We believe this will be beneficial for the ReckonDocs customers given they will now utilize a newer technology platform and an expanded set of products. The business is forecast to generate $1 million of revenue in FY '21. We estimate the FY '22 revenue to be $4 million. The business will produce good cash flow going forward as its EBITDA margin is 60% in FY '22. Our M&A and integration costs for the full year across all transactions will be $900,000, with $600,000 expected in the second half. The transaction is expected to complete on March 1 and will be earnings accretive in FY '22. So recapping on our Reimagination strategy, we are on track. The essence of the Reimagination strategy is to bring a laser focus to our key priorities, which includes re-energize the business in terms of culture and innovation, bring new talent into the organization and build momentum for accelerated growth in FY '21 and '22 and beyond. Our progress so far has been positive and fast paced. You can see by this slide that we are already on track to achieving the target for our accelerate year of the strategy. This slide illustrates our aspirations as we transform Class. We have set ourselves aspirational revenue market share and revenue targets in our expanded TAM. We believe these will be within our reach as we continue to execute successfully. I'd like to turn to some first half insights. Our customer numbers have grown materially from our NowInfinity, Smartcorp and now ReckonDocs acquisitions. Following the ReckonDocs acquisition, Class now has over 6,000 unique customers. Our customer growth is impressive by any measure with over 300% growth since embarking on the Reimagination strategy in 2020. Our strategy now is to continue to develop our relationships with our new customers as well as research and analyze customer needs so that we can over time increase our revenue per customer with targeted technology solutions. Turning briefly now to give some detail on our revenue insights. Class revenues are a combination of recurring and pay as you go revenue from the NowInfinity business. Our recurring and pay as you go revenue profile is tracking to our growth targets. ARR increased by 24.6% and our roll forward revenue increased by 29.7% Our new acquisitions do result in more transactional pay as you go customers. However, this provides Class with an attractive opportunity to slowly transition these customers to subscription offerings. Turning now to strategy update and outlook. Firstly, product and technology development. We will continue to make investment for future growth in our technology and product development in the second half. The ongoing investment is critical to ensure delivery in the rejuvenation and upgrading of our core technology platforms, as well as the ongoing build of competitive product features that widen our competitive moat. Our key areas of focus for FY '21 have been the continued rejuvenation of the technology stacks, Class and NowInfinity, building new product features, including digital signatures and trust tax voucher, a focus on regulatory compliance, such as the super stream rollover and business enablement to importantly support the business to scale. We estimate our full year technology and product investment will be $18.1 million for FY '21. The ongoing product and technology investment is bringing to life our technology vision. Our accelerated spend in FH2 is to fast track the transformation and delivery of new features in FY '21. Further detail of our product roadmap can be found in the appendix of the presentation deck. The NowInfinity business was launched in 2012 to help reduce pain in the back-office for accountants through technology automation for documents and corporate compliance. NowInfinity is arguably the market leader in the document and corporate compliance marketplace. The NowInfinity suite of products include documents, corporate messenger, trust register and super comply and those products fit well within the Class suite. These products allow Class to broaden and deepen our relationships with the accounting and legal professional services segments. Our acquisition approach has been disciplined and strategic, as well as meeting our internal investment hurdles. Our acquisition strategy is simply to enter the market with the NowInfinity investment beachhead, scale the business through targeted acquisitions that increase customers on the platform and improve functionality. We seek businesses that have good revenue, margin and cash flow. And thirdly, integrating well to leverage the investment. We will continue to monitor and evolve a prudent capital management strategy and approach in FY '21. In terms of the sell through opportunity to our customer base, we are pleased to announce today the signing of Findex to use the NowInfinity Documentation Suite for their extensive national accounting network. As an SMSF, portfolio NowInfinity Trust Register and Corporate Compliance customer, as well as our cornerstone pilot customer in Class Trust, Findex is an example of how the Class multi-product offerings are resonating with our customers. So turning to our FY '21 outlook. With the ongoing uncertainty right across Australia in regards to COVID, Class will continue to monitor the impacts on our customers in the coming months. Notwithstanding the unknowns of COVID-19, we wish to confirm our FY '21 financial targets we announced in August 2020. To Recap, the Class revenue for FY '21 is combination of our ongoing existing customer revenue, plus our Roll Forward revenue derived from growth in our new products, including our NowInfinity acquisition and our Smartcorp and ReckonDocs acquisitions' part year revenue. We would like to make it clear again, we are not forecasting any material contribution for revenue from Class Trust in FY '21. We have increased our revenue target to include ReckonDocs. We are targeting FY '21 revenue of $54 million, which is 22% growth from our FY '20 results. We will continue to target an underlying EBITDA margin of 40%. I'd like to conclude with several headlines. The first half '21 financial results are solid, and as importantly, we are executing well to our Reimagination strategy. We have launched Class Trust and we now have over 175 customers and 2,700 trusts generating subscription revenue for Class. We are showing a track record in successful acquisition and integration. Class will commence integration of ReckonDocs under the NowInfinity platform over the second half of '21. The acquisition will progress Class to a leadership position in the legal documents and corporate compliance vertical. Thank you for your ongoing support and interest in Class. The future is exciting as our vision comes alive, and as we deliver accelerated results in FY '21. I will now open for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from Jules Cooper of Shaw and Partners. -------------------------------------------------------------------------------- Jules Cooper, Shaw and Partners Limited, Research Division - Senior Analyst [2] -------------------------------------------------------------------------------- Great results. Andrew, look, just a couple from me, if I can. So firstly, just on the subscription revenue. Historically, you've sort of provided a little bit of a breakdown between SMSF, Trust and, I guess, NowInfinity subscription revenue in there. Just wondering if you can give us a bit of a flavor of how that breaks down from a product perspective. I'm really just trying to get to the NowInfinity contribution in that subscription revenue and just get a perspective on the revenue generation from Trust so far. -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [3] -------------------------------------------------------------------------------- Thanks, Jules. We're trying to step away from the individual product lines where we're picking Class as a full business. And as I said, from a superannuation perspective, we believe that we have held market share very well, if you look at the system growth. And then from NowInfinity, that's where most of our growth efforts are coming from. And as we've said, there's a mix of subscription and pay as you go revenue in that business. And the 2 recent acquisitions were moat of that pay as you go revenue contribution. -------------------------------------------------------------------------------- Jules Cooper, Shaw and Partners Limited, Research Division - Senior Analyst [4] -------------------------------------------------------------------------------- Okay. All right. And then if we could just pick up on ReckonDocs, that obviously it looks like a very good transaction. Can you maybe talk to just the synergies you see with that business? My understanding is that NowInfinity has probably benefited from ReckonDocs and the competitive landscape in the market, but just how you seeing how those 2 brands coming together and what it sort of can deliver in terms of synergies for Class? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [5] -------------------------------------------------------------------------------- Yes. Effectively, ReckonDocs is a leading player in the market. And we're talking about leadership positions in the market. This provides us with an opportunity to continue to scale the NowInfinity platform, and that provides a number of operational synergies for us just from the operational scaling benefits of that business. And then also it allows us with a larger customer base to really look at the product construct and pricing right across that marketplace. But we're very excited about it. We think it's a great thing also for the Reckon customers because they will be moving to a newer technology platform, as you know, Jules, and also with an expanded product set. -------------------------------------------------------------------------------- Jules Cooper, Shaw and Partners Limited, Research Division - Senior Analyst [6] -------------------------------------------------------------------------------- Yes, that's excellent. And look, just lastly, you made the comment there regarding the accelerated investment in the second half around the product development team. Can you just give us a sense, check for where sort of the headcount is in the business today and sort of where you see it closing the second half? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [7] -------------------------------------------------------------------------------- Yes. We haven't proposed any numbers on the headcount. But obviously, the spend is a function of both internal resources as well as using some external organizations that will help us to quickly scale up and then scale down to get the pieces of work done. And as we mentioned, and I think that it has been seen, and you'll be aware of this across the industry at the moment. There are some pressing compliance requirements for the super stream, and we need to get that done and meet our promise for both the regulator as well as for our customers. But at the same time to ensure that we are really focused on delivering our road map at speed, such as the product feature developments for Class Trust too as well as some core functionality, as we've mentioned in digital signatures. And then just our ongoing investment in our rejuvenation of our technology stacks, to ensure that we talk about being world-class, but that gives us a lot more flexibility in product development in the future. And then clearly, we're making some number of investments now in the NowInfinity business, and we want to ensure that, that technology stack is scalable and ready to go as we progress in our market leadership position in that business line. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from Ross Barrows of Wilsons Advisory. -------------------------------------------------------------------------------- Ross Barrows, Wilsons Advisory and Stockbroking Limited, Research Division - Research Analyst [9] -------------------------------------------------------------------------------- Thanks. Just one quick question on ReckonDocs or two actually. The first is just around the revenue line. The announcement by ReckonDocs this morning suggested that it did about $5 million revenue in FY '20. And I know that you're guiding to $4 million in '22 -- sorry, yes, $4 million in '22. So, could you just explain, I guess, the change there in terms of the historic revenue number as opposed to the forward-looking number? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [10] -------------------------------------------------------------------------------- Well, it's just our view on that business. I don't know how close you are to that, Ross, but we're just factoring in some possible churn, customer churn, that those customers are quite transactional. And we've got to ensure that we onboard them onto our new technology platform. At this point in time, as you know, with any transaction, we don't have really deep insight into that customer base, and that's how we're forecasting FY '22. -------------------------------------------------------------------------------- Ross Barrows, Wilsons Advisory and Stockbroking Limited, Research Division - Research Analyst [11] -------------------------------------------------------------------------------- And just the second is kind of just around the margin, since we have strong EBITDA margin compared to, I guess, some of the other businesses in the sector. Is there anything in particular is just the technology platform that allows that margin. Is that part of your deal? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [12] -------------------------------------------------------------------------------- Yes. So that business has been running efficiently. And obviously, it's a scaling opportunity onto the NowInfinity platform, and that's where we see the marginal benefit for us as a business as we bring NowInfinity through Smartcorp and now through ReckonDocs. And we think it's a really good purchasing decision for us. -------------------------------------------------------------------------------- Ross Barrows, Wilsons Advisory and Stockbroking Limited, Research Division - Research Analyst [13] -------------------------------------------------------------------------------- Just the last one, a broader question around competition. Could you just make any comments around how you're seeing the competitive landscape broadly across the business at the moment? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [14] -------------------------------------------------------------------------------- In terms of which area in terms of super or the corporate compliance space? -------------------------------------------------------------------------------- Ross Barrows, Wilsons Advisory and Stockbroking Limited, Research Division - Research Analyst [15] -------------------------------------------------------------------------------- Ideally, both would be great. -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [16] -------------------------------------------------------------------------------- Well, competition in the super space, as I said, we have our view. And basically, the view of the market is that it's looking subdued for FY 2021. We're continuing to invest in our super product. And as you can see from our results, we are growing our share above system growth. And so we are feeling good about that. But in terms of the NowInfinity business, we're certainly ended well in that marketplace. And as I mentioned in the results, we've been very pleased with the performances of all of those businesses that met our expectations to date. -------------------------------------------------------------------------------- Operator [17] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from Phil Chippindale of Ord Minnett. -------------------------------------------------------------------------------- Phillip Chippindale, Ord Minnett Limited, Research Division - Senior Research Analyst [18] -------------------------------------------------------------------------------- Just wanted to follow-on from a question that Jules was asking earlier about your development spend. You've highlighted the second half, we do see a jump there as a percentage of operating revenue. So can you just give us a little bit more meat around the bone about what that's going to look like in FY '22 and beyond? Is this really going to be a short-term impact before it sort of reverts to more normalized levels? Or should we expect maybe a slightly higher percentage going forward? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [19] -------------------------------------------------------------------------------- Yes. Well, really, the second half is that we're trying to accelerate the product development and technology development. And obviously, we mentioned before that we're using both internal and external resources to be able to do that. We're reviewing what our FY '22 spend is, but most importantly, we're buying well, and we're scaling NowInfinity. So we would say that there will be more investment going into that technology stack. But we will be bringing the business back to normalized levels of spend as a percentage of revenue as this business scales. And as we've discussed before, we're trying to drive Class Limited to scale. So we're going to start to see those improvements over the back years of the Reimagination strategy. -------------------------------------------------------------------------------- Operator [20] -------------------------------------------------------------------------------- (Operator Instructions) Our next question comes from [Behan Marker] from Ausbil. -------------------------------------------------------------------------------- Mason Willoughby-Thomas, Ausbil Investment Management Limited - Portfolio Manager [21] -------------------------------------------------------------------------------- Sorry, it's Mason not [Behan]. Just a quick around your EBITDA margins. Just wanted to get a sense for what upside potential there might be to your underlying guidance of 40% just taking into account the successful integration of NowInfinity and Smartcorp and with ReckonDocs now included in the fold? With cross-sell and potential integration synergies in there, are you sort of thinking there's upside potential to that 40%? Or are you planning to reinvest most of that upside in growing the top line? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [22] -------------------------------------------------------------------------------- There's a fair bit to unpack in that question. So I might just firstly get a couple of comments from Glenn Day, our CFO, and then I'll come back and make a final comment. -------------------------------------------------------------------------------- Glenn Day, Class Limited - CFO & Company Secretary [23] -------------------------------------------------------------------------------- Yes. So look, obviously, we're targeting the underlying 40% FY '22. As we pointed out, the ReckonDocs business, we expect that margin to improve. So we do think you will get that benefit of better free cash flow going forward. And as always, the level of the EBITDA margin will be based on the opportunities that are available to the business. So I think in the past, the business has under-invested in opportunities. So we'll be monitoring that as part of our FY '22 planning. -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [24] -------------------------------------------------------------------------------- And then obviously, we've got some integration and M&A costs as well that need to be factored in. So once again, all of these are mechanics of building the business to scale. And at this point in time, we're in that investment curve to drive accelerated results. And as you can see, from today for the first half, we are meeting those targets that we set out for ourselves in August. -------------------------------------------------------------------------------- Mason Willoughby-Thomas, Ausbil Investment Management Limited - Portfolio Manager [25] -------------------------------------------------------------------------------- Right. Okay. And maybe just sort of following on from Ross' question around the revenue expectations for ReckonDocs. So just to clarify, I'm assuming you are making an allowance for customer attrition in that number? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [26] -------------------------------------------------------------------------------- That's correct. We're making allowance based on what we've seen in historic profile within that business. -------------------------------------------------------------------------------- Mason Willoughby-Thomas, Ausbil Investment Management Limited - Portfolio Manager [27] -------------------------------------------------------------------------------- Right. Okay. Okay. So that's -- I'm assuming it's a reasonably conservative number to assume 20% of your customers sort of fall off the platform, given they are moving to a better product. -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [28] -------------------------------------------------------------------------------- Well, that's -- we're moving to a better product. But in this marketplace, when you're asking for a decision to move platforms, if you've been a long-term customer, there's a lot of unknowns, and we've basically got to manage back to sensibly to that event as you would appreciate. -------------------------------------------------------------------------------- Mason Willoughby-Thomas, Ausbil Investment Management Limited - Portfolio Manager [29] -------------------------------------------------------------------------------- Yes. So is there any valuable technology or other assets within that business other than the customer base? Or is that essentially just the customer base that you're targeting? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [30] -------------------------------------------------------------------------------- There's people and processes within the business that we think valuable. We think that ReckonDocs has been a leading player within the market, and there will be undoubtedly IP and experience and so forth that will be beneficial to Class and NowInfinity, and we look forward to working with the team and getting to know the ReckonDocs customers. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- (Operator Instructions) Your next question comes from Shuo Yang of Microequities. -------------------------------------------------------------------------------- Shuo Yang, Microequities Asset Management Pty Limited - Senior Investment Analyst [32] -------------------------------------------------------------------------------- Just a question on ReckonDocs. Is it correct to assume that the revenue is entirely transactional in nature? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [33] -------------------------------------------------------------------------------- Yes, primarily transactional in nature. -------------------------------------------------------------------------------- Shuo Yang, Microequities Asset Management Pty Limited - Senior Investment Analyst [34] -------------------------------------------------------------------------------- Okay. And just on other acquisition opportunities. Are there any others in the corporate document compliance area you would still look at to gain more scale? Or do you think that's pretty much it for now? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [35] -------------------------------------------------------------------------------- As we've said as part of the Reimagination strategy, we are acquisitive. But once again, we've got a considered and thought through approach, and we have a number of targets in our -- on our runway, and we'll just continue to assess those based on the internal hurdles and the other aspects that we outlined today in the presentation. -------------------------------------------------------------------------------- Shuo Yang, Microequities Asset Management Pty Limited - Senior Investment Analyst [36] -------------------------------------------------------------------------------- Okay. Great. Just last question, just on your sort of medium term thinking on pricing across Super and Trust, is there opportunity to take price increases on a more regular basis in the medium term across those 2 products? -------------------------------------------------------------------------------- Andrew J. Russell, Class Limited - MD, CEO & Director [37] -------------------------------------------------------------------------------- We flagged it at the last results that we had a CPI price increase across the Class suite of products, and that was based on the March CPI reported number. And we'll be doing that again on an annual basis. In terms of other pricing across the business, we will just continue to evolve that thinking as we would with any other operational strategy that we have within the business. -------------------------------------------------------------------------------- Operator [38] -------------------------------------------------------------------------------- (Operator Instructions) There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.