Firstwave Cloud Technology Ltd

ASX:FCT

Earnings Call Transcript 2022-Q2

[John Grant, Non]

Well, I think we can start. Good morning, everyone, and welcome to FirstWave Cloud Technologies Second Quarter FY '22 Update. My name is John Grant, and I'm FirstWave's Chair and was Interim CEO during Q2. I'm joined this morning by Iain Bartram, FirstWave's CFO and Company Secretary; and the company's new Managing Director and CEO, Danny Maher, who joined us in January following our acquisition of Opmantek. Turning to the agenda for this morning. I'll talk about the highlights for Q2 before Iain talks in more detail about the company's financial performance for the quarter and the status of the transaction to acquire Opmantek, after which, Danny will provide an update on Opmantek's Q2 performance and his early observations and priorities for the FirstWave post acquisition. Shareholders will recall I reported at the FY '21 Q4 Update on the 27th of July that there was friction in FirstWave's product for both the service provider and end user preventing them from adopting at scale. And that as a priority, we had to enhance the product to remove this friction. On the 27th of October, we launched the CyberCision platform, delivering enhancements primarily in the first instance for our service provider partners to enable them to deliver offerings for their partners and end-user customers more easily and quickly. And also with enhanced levels of automation, integration into their internal transaction process and systems. We're now focused on delivering site decisions, frictionless e-mail and mobile reporting capabilities to make adoption a simple one-step process and to give second-to-second safety status for our partners and customers by the end of Q3. To be absolutely clear, shareholders should not think that the launch of CyberCision frictionless e-mail and mobile recording will generate an immediate and dramatic increase in revenue in Q4. We'll still need to work with our partners to build their offer to their partners and end customers, and this could take a bit of time. But we have a much more compelling offer. And based on early indications from key partners and our assessment of the benefit to the end user, we believe we will see CyberCision revenue scaling seriously in FY '23. Iain will provide more detail on the company's financial performance for the quarter. But in summary, the activities surrounding the acquisition transaction unsurprisingly absorbed much of the organization's capacity, and this impacted on day-to-day outcomes. As reported in our Q2 Appendix 4C, data revenue was up 2% quarter-on-quarter. Annualized revenue is in line with Q1, with domestic up and international down quarter-on-quarter. Operating expenses were down. And CapEx for software R&D was consistent with Q1. Importantly, the acquisition of Opmantek and the associated capital rise completing successfully early in Q3 was no -- a part of both the FirstWave and Opmantek teams. And I also speak to the advisers as well, it was a huge effort to get this transaction done in the time that we did. We also gained 100% support from Opmantek shareholders, and that demonstrates full support from the transaction rationale from their point of view. In January, you'll also have seen ASX notices on the appointment of Danny as CEO and Managing Director; and Ray Kiley as a Non-Executive Director. We are meeting as quickly as we can to combine the businesses, and Danny will provide more detail. Let me now hand over to Iain to talk to Q2 financial performance and the status of the acquisition. Thanks, Iain.

[Iain Bartram, CFO & Company Secretary]

Thanks, John. As noted in the highlights, the total revenue recognized in Q2 is up 2% on Q1 at $1.77 million. However, the main metric we present being annualized recurring revenue was unchanged from Q1 to Q2 at $6.95 million. Of this, domestic annualized recurring revenue was up 4% to $6.26 million, and international revenue was down 23% to $0.69 million. As noted in our activity statement in Appendix 4C, the decline in international revenues resulted from there being no significant new international sales and some churn, including the return of a 5,000-seat e-mail license held by DWS as marketing inventory. Significant improvement in the FCT international revenues is not anticipated until the [ Telmex ] contract is restarted. And when the frictionless e-mail and mobile reporting project due for completion at the end of March is rolled out. The expense savings for the quarter have come through headcount reductions. Having removed almost 200,000 in monthly costs in Q1, headcount was reduced further in Q2 with another 9 people leaving the business at a combined monthly saving of approximately $125,000 in base salaries. There have been a couple of new junior hires to rebalance the teams. However, total staff expenses in Q2 were $725,000 lower than Q1 and annualized reductions over the 2 quarters amounted to almost $4 million. Even though ongoing costs have been reduced by more than $300,000 a month from the start of the financial year, one-off payments, accrued leaves, other redundancy costs, bad debt write-offs and $500,000 in transaction cost for the Opmantek acquisition temporarily pushed the actual Q2 costs higher. A continued focus on collections saw another quarter of over $2 million collected from customers, which is double the $1 million quarterly average in FY '21. We are making good progress towards our target for $500,000 a month cash burn by the 30th of June, and in turn, tracking to cash flow breakeven with our existing capital. The main focus, though, in Q2 was the Opmantek acquisition and associated capital raise. As John said, the acquisition received 100% support from the Opmantek shareholders. This had the effect of removing the need to compulsorily acquire outstanding shares, which would have delayed completion considerably and confirmed Opmantek's shareholders' view as to the strength of the rationale of the acquisition. If you sum the share issues on the slide, you can see just over 890 million shares have been issued to shareholders and the gross amount of $14 million received from the capital raise. Again, our sincere thanks go to the shareholders who participated. As you will have seen from the Appendix 4C, the cash balance at the 31st of December was $13.34 million. This was before most of the transaction costs. The cash balance at the end of January, the 31st of January, when combining the 2 businesses is $13.68 million, and this comes after all but $500,000 of the transaction costs. It is also before the R&D grants for both companies are lodged, which will result in approximately another $1.5 million in available working capital. It is also noted that the transaction costs were all in line with budget. As John said, Ray Kiley has been appointed as a Non-Executive Director and attended his first meeting on the 27th of January. And Danny was appointed as CEO on the 10th of January, and as an Executive Director on the 27th of January. So to summarize, during Q2, revenue was flat. Costs were significantly down. The business is now fully funded following a successful $14 million capital raise and the acquisition of Opmantek was successfully completed at the start of Q3 with the integration now underway. Let me hand over to FirstWave's new MD and CEO, Danny Maher.

[Danny Maher, MD & CEO]

Okay. Thanks, Iain. And hi, everyone, it's great to be with you all on my first quarterly update. I'll touch on the final quarter of Opmantek as a stand-alone company. Obviously, this has no impact on FirstWave's Q2 results, but I understand it will be of interest to shareholders given the acquisition of Opmantek was completed in January. In summary, Opmantek had a strong quarter and in particular, December. And we've finished December with annual recurring revenues of AUD 3.75 million. Like any business with occurring revenues, renewals of those revenues are very important. And Opmantek was pleased to renew major clients such as Telmex and Claro Dominican Republic. Importantly, for the merged business, I'll note that there are 5 new contracts that were signed in December, which actually commenced in Q3, and that's going to add more than $500,000 of annual recurring revenue to FirstWave's Q3 results. So I'm still quite new in the hot seat as a CEO, 4 weeks in total, but I'd like to give you some initial observations. I came in as CEO together with our whole company, together with Opmantek after a fairly intense period of due diligence. So it's not like a regular CEO joining. I feel like through the due diligence, I came in with my eyes very open. And I guess I could say that like any due diligence, through the due diligence, I was looking for problems and found some. And I expected to find a bunch more when I joined as CEO like any new CEO would. But I did join very upbeat. And since joining, I've only become even more upbeat. And generally, what I'm finding is that things were quite in line with what we discovered in due diligence. And I'm finding more positives than I was expecting. And I'll talk a little bit more about that later. But each day I've been here, I'm more and more excited, and I keep uncovering little nuggets of gold, I guess, I'd say. The transformation nature of the transaction, which we talked about prior to completing is evident to me as the CEO in the role. We've already got diversified international revenues, and that's creating the ability to make lots of different decisions. We've got new products from Opmantek with 100% owned IP with new revenue streams. Telstra is an interesting account and it can be given an increased focus now as a key account. And if we think about what FirstWave had to do previously and what previously executives have to drive at, it was about diversifying international revenues. And effectively diversifying revenues away from Telstra because we are too reliant on one account. That's completely changed through this acquisition, and we're now able to look at Telstra as a key account and put some more resources into it and treat it like a key account and get some growth happening there. The cost synergies are already being realized with overall expenses reduced by over $300,000 per month. And cross-selling has commenced. It's going to take a while for cross-selling to produce revenues. But over this next quarter, the cross-selling activities are going to give us a lot of information to give us insight into what we expect that cross-selling activity to produce. On the next slide. So I wanted to outline some near-term priorities just in 3 areas. The first -- and a couple of these areas are going to be quite obvious, right? The first is that the company needs to spend less. There's already been restructuring decisions made. And these are expected to deliver further cost savings of $2 million annualized. There's the merging of the sales functions under one leader, and we welcome Craig Nelson as Chief Revenue Officer in San Francisco. And Craig was previously Opmantek's CEO. We've removed the offshoring of software development for FirstWave, and that's quite significant. So we haven't removed offshoring and hired resources onshore in Australia. We've actually removed that contracting in total as a cost saving. And we're aligning product management and marketing functions. So the Opmantek transaction brings together with it a digital marketing function, and we're finding some good synergies there to streamline product management and marketing together. And we continue to rationalize the number of platforms deployed globally. And again, this diversification of revenues that exist through this acquisition enables us to make some better decisions and rationalize some of these platforms globally. The near-term priorities, number two, grow faster. I mentioned the annual recurring revenues of $500,000 of new contracts signed in December. That's just from the Opmantek side. So that's going to flow into FirstWave into the next quarter. So Opmantek is going to help the growth. We signed a contract with Microsoft for a secure management of their Internet of Things environment, starting with 25,000 devices, which is a lot and with the ability to expand further. This is very, very exciting, and we'll be onboarding Microsoft during this quarter at FirstWave. And so a very significant agreement. It's the first secure management of Internet of Things that FirstWave has had or Opmantek has had. This is a newly launched service for FirstWave with Opmantek IP. It's really cool, and what a client to kickstart it with. We will deliver this quarter the CyberCision frictionless e-mail and the mobile reporting. And I'll note that the mobile reporting is not just about mobile devices, it's about giving customers information about how we have protected them, so they know the benefits they're getting from the service. We'll be implementing digital marketing for CyberCision. So we'll be taking that digital marketing capability from Opmantek and expanding its reach to grow the uptake of the CyberCision services. We're going to do that with partners. So we'll be reenergizing and co-marketing with partners. We'll be launching new services, which leverage the Opmantek IP. Some of these are going to be really fast to launch and some of them are going to take a long time. Like any tech company, we'll be developing and evolving tech for many years to come. But there is some low-hanging fruit there, and we're prioritizing those and we will be launching some new services quite quickly. We'll be identifying further opportunities for cross-selling. Okay? So we're going through all the -- Opmantek has 26 service providers, all of which are potential clients for CyberCision and vice versa. There's opportunities to sell Opmantek IP to FirstWave service providers. So we're going through all of those things and looking for the cross-selling opportunities. We're looking to progress the culture and the strategy. In particular, of course, the first priority under this category is to complete the operational integration of FirstWave and Opmantek. I'm really, really happy with how that's going. It's going exactly as we planned in DD. And I guess I have to pass credit to the FirstWave board, the Opmantek board, and both exec teams for having conducted the DD in such a collaborative manner that we came out with plans to integrate these 2 companies, and everything is going to plan. As we're doing this integration, we do identify some longer-term strategic items, and that will be fed into a strategic plan for the combined company with refined budgets. And that's another plan that we're developing in parallel with this transition. We've been transitioning the organization to a sales-led mindset of a high-growth global tech company, okay? So FirstWave has invested a lot of money in the tech, and this is about everybody in the company understanding that they're all part of generating growth. So if you're in development and you're developing a feature, you'll be asking questions such as if I develop this feature, how much more are we going to sell or how is it going to increase our customer retention or how is it going to allow us to get more money from our existing clients, okay? And that's got to flow throughout the whole organization. We've all got to be behind sales and growth, and that's a mindset shift that we're all going to make together. So in summary, I'm all in as a CEO, as an invested CEO. We -- the transaction with Opmantek was done in all script, and I'm a very large investor, so I'm a very large believer in the future of what's going to happen, and that belief has strengthened since I've been here. I'm also very straightforward and open as all the existing Opmantek shareholders would know. And I say right now, I'm quite happy that the rationale for the acquisition is proving true. The integration of the businesses is going well. And I'm looking forward to giving you all the Q3 update. Because from my perspective, it's full steam ahead. So that's kind of my initial views. I've only been here 4 weeks. And on that, I'll hand back to John to wrap up.

[John Grant, Non]

Thanks, Danny. I sincerely believe Q2 will go down as a defining quarter for this company. As we said during the acquisition briefings that the Opmantek acquisition will be transformative for FirstWave. I believe that then, and I believe now, and I believe that over time, it will be true to be the case. And I believe you as shareholders should think that you are now invested in a new company, one with the broader product portfolio, one with new channels to market, with the U.S. and Latin America now open for business for FirstWave, one that brings synergies in revenue and expense and the opportunity to make decisions about our future we were not able to make as the old company, one with a stronger and there are I suggest more independent Board that can now look to add to its quality and capability in an environment of much greater certainty. But more importantly, one with a refreshed and committed executive team. One, as Danny has said, with an invested CEO who shares the aspirations of all shareholders in this new partner, but also entirely believes in leading a highly successful company in all aspects. And of course, one with a shared and renewed enthusiasm for the opportunity ahead. You've heard from Danny as your new MD and CEO, you'll make your mind up about him in coming months. But I personally have been working with him for some time and listening to what's important to him and how he goes about things. I'm delighted to handle the leadership role over to Danny. I believe we're all in very good hands. Thanks for listening. Let me now hand over to you for your questions.

[Unknown Attendee]

Anybody got any questions, you can either type these in the Q&A or request to speak, actually verbalize your question.

[John Grant, Non]

There are a couple of questions coming through the Q&A.

[Unknown Attendee]

Yes. So [ Max Koziak ], "Are the recent staff churn planned or business churn? The planned reductions, are there more staff reductions?"

[John Grant, Non]

Danny, you might comment on that.

[Danny Maher, MD & CEO]

Look, there's immediate cost savings from combining 2 businesses and they come from 2 areas. One is obviously structural reform, which involves the removing of some people from the business. But the other is just the fact that in each of the 2 companies' plans, we actually don't have to go and hire certain people. And we kind of outlined this in the acquisition briefing. But for example, John was Interim CEO, so there's a vacancy there. Opmantek was looking for a CFO. Opmantek's CTO was moving towards a more customer-facing role. So there's actually quite a lot of natural cost-saving initiatives in combining the 2 organizations. But yes, there's structural reform in removing costs from the business. I saw the [ Altran ] -- removing the [ Altran ] contract is significant, and there have been other people removed from the business.

[Iain Bartram, CFO & Company Secretary]

But if I could just add to that, Danny, in terms of where I think the question is coming from. The savings in Q1 and Q2 and the savings Danny has mentioned in Q3, they're actual headcount reductions, they're not a crossover synergy of John being Interim CEO and now being a Non-Exec Director, or Neil leaving and Danny now being CEO, they're actually cost savings in the business. So those other synergies are obviously important to us going forward, but they've been rolled into the cost of the ongoing business.

[John Grant, Non]

I think only to add as well is that I think the question is also getting at what is the key sort of challenge for all companies such as FirstWave, and that is -- and getting -- well, recruiting and retaining a very good talent. There's an absolute war for talent going on, there's no question about that. And globally, the big, big companies, the Googles, the Microsofts, et cetera, they're recruiting aggressively, and they're very attractive propositions. So we are in a fight to recruit and retain our talent. We have certainly lost a couple of people we preferred not to have lost. They're not necessarily accounting these numbers because they're replaced, but we are in that fight. And if I look at it, fact true, I think we're winning that fight from the FirstWave point of view. We've got a lot to offer people. We're working on really, really -- it appears in Danny expression not many years before, but it seems to work. And we've got some really cool stuff. We're doing stuff that's really, really inventive and really creative and really innovative. So there's a great opportunity for people to be -- to really advance their own CV and their own knowledge and experience to working at FirstWave, and that's the proposition we put to people. So summarizing all of that, it's certainly been a very small number of people who have left the business in their own decision. But in very, very large part, it's been a decision of the company. And through the restructuring and the merging process, that's what we're able to do. And it's very unfortunate. It's not something that we desire, but it's fact true, you can't have multiple people doing one role, which is exactly what integration -- happens during integration and merger. So that's sort of what -- you've got the answer from the 3 of us, I hope that answers the question.

[Unknown Attendee]

[ Nick Harris ] has a question. Thanks for the call. Q 1 for John, "FirstWave domestic ARR grew for the first time in many quarters. Can you elaborate on what has changed?" Q 2 for Danny, "What was...

[John Grant, Non]

Maybe if I just jump in and answer that one, then to Danny. Thank you very much for observing that, [ Nick ]. And you are absolutely right. It did -- there is an uptick. We have -- Danny made the observation that, and it was absolutely correct that pre-Opmantek, what we've really been doing was growing international business. Because I've said to all of you before, the future value of this company rests in the growth of international revenues. And I think that's true. However, it's really important to have the -- just we'll try to walk a bit of a fine line there and not putting enough -- clearly not putting enough investment into the Telstra account because we needed to get more investment into our international activities. So that's just the nature of the business that we're in. But as Danny said, it's probably different with Opmantek. I know they bring $3.5 million with [ $3.75 million ] of annualized revenue, which is all international. So now we don't have to fight that fight and we can look back at Telstra. So we made a decision, I think, about 6 months ago that we needed to reinvest. And before the Opmantek transaction is completed, we needed to reinvest in Telstra. Oscar is one of our guys who heads up that team now that works with Telstra and works with domestic clients. And it's a long and hard battle to get an organization like Telstra to change, but we are winning that battle. And we've got a really good team now working on the Telstra account that it will be slow, but it will be certain. So your observation about -- and your question about what's changed, it has changed because we have put the resources and we are making it change. And that's a very, very critical thing. As Danny has mentioned, it's a very good thing to be very strong on the [indiscernible], and Telstra as a customer would have been very strong. Now that doesn't say we're not trying to diversify or broaden our access to market in Australia. We are. And we've got projects that we're now talking about to other organizations in Australia. So we expect the domestic revenues to grow. We see the Telstra change as being sort of a start of that process. Thanks, Nick.

[Unknown Attendee]

Okay. A question for Danny. "Please elaborate on your comments removing offshore software development for FirstWave. Are you now doing this with AU staff or something else?"

[Danny Maher, MD & CEO]

I think my camera's frozen, has it? I'll try and fix that up. Wait a second, I'll get my camera fixed.

[John Grant, Non]

We can hear you.

[Danny Maher, MD & CEO]

Can you hear me okay? Okay. So I'll just talk to it for a moment. So, no, so we've reduced the size of the development team, and we've reduced that by removing that offshore supplier in total. That was a nice clean and easy way to do it. This comes at the end -- at the back end of launching CyberCision. So it's about part of that transition of how now having developed a significant piece of technology and then moving the focus of the investment to generating growth from that intellectual property. That doesn't mean we're not investing in the IP. Of course, there's still a development team, and they're joined by the developers that come from Opmantek as well. So there's still lots of good R&D that's happening, but that offshore contract has been removed in total as a cost saving.

[Unknown Attendee]

Question for Iain on Q3. "Have all the cash costs on Opmantek being spent for Q2, or Q3, it should be clean?

[Iain Bartram, CFO & Company Secretary]

No, some of it will be in Q3. So as noted in this presentation, there was $500,000 of transaction costs that occurred in Q2. But if you look back to the deal costs, those brokerage which won't appear in the P&L in Q2, but would have been netted off in cash, we would have received a net receipt when we raised the $14 million. So that component has been paid, if you like, in Q2, but isn't in the P&L. So that leaves about $3.5 million in costs to be paid in Q3, which have been paid. There's about $0.5 million left of $4 million worth of costs. So in January, we paid the majority of those. But when we come to present the Q3 numbers, there will be cost from the Opmantek deal, and we will have to lay out in the Appendix 4C for Q3 how those costs flowed through. But that's why I gave you the balance at the end of January. The majority of those costs have been paid now and we're still sitting with a nice cash balance.

[Unknown Attendee]

There's a question from [ Wayne ]. "Can you please explain the Microsoft Internet of Things deal a little bit more?" A question for Danny.

[Danny Maher, MD & CEO]

Okay, happy to. So Microsoft is an account that Opmantek secured, might not get it exactly right, but let's say, July of this year. And we've been -- Opmantek has been trying to grow the account. One of the reasons we did -- we undertook the transaction was FirstWave was -- we were getting some pressure to move into more of the security area, and there's space for these 2 companies to be together, that's for sure. So what we signed with Opmantek with Microsoft is a deal starting with 20,000 IoT devices where they're going to use a nearly released cut-down version of what was Opmantek IP to manage in a very simple, highly scalable manner and a secure manner their Internet of Things devices. So one of the claims to fame of Opmantek technology is that it's claim to be able to manage anything at any scale. So if you were to invent something today and connect it to a network, the Opmantek Software Group would manage it today, which is now the FirstWave software. We are working with Microsoft to try and move some of these services into the cloud and effectively onto the CyberCision platform. So if we're able to do that, that's obviously going to be even more exciting. But we're already very excited to have them as the first client on this cut-down version of IoT management. And that is a technology that we see as sitting in the near term on the CyberCision platform.

[Unknown Attendee]

Another question from [ Wayne ]. "What is the global head count now, please? And how many in sales roles?"

[John Grant, Non]

The total global headcount will be 100, taking into account everything we said in this presentation. But that does include, I think, it's 5 head count in Mexico, which are -- where we have a branch office, which are quite low-cost resources compared to an Australian headcount. And that also takes into account we've got a number of people that aren't working full time. So the FTE equivalent is 100. Sales will be just under 30, including presales. But we'd also look at the sort of marketing team and being very sales focused. So there's a number of resources in that team as well that you could classify as sales. So another 8 FTEs in that thing.

[Unknown Attendee]

A question from [ Max ]. "Who do you see as our main competitors? And what is FirstWave's unique offering outside the Opmantek acquisition?

[John Grant, Non]

Danny, if I would just make an observation on this first, and then over to you. So nothing's changed. So everything we've said before from a CyberCision point of view remains the case, and that is that there is no other offering like CyberCision in the world. Remembering that CyberCision offers integrated perimeter security for the small and medium business, covering e-mail, web, firewall and endpoint and also providing advanced detection and response. So there is no other solution like that. So we don't have a direct head-on-head competitor. We do have competitors obviously across the different services. But our benefit is that we've got -- for our service provider, we've got a platform which allows them to manage all of those diverse services through one pane of glass. And that's a huge advantage for them because it means cost savings. It means operational management costs are much lower. We've built on that proposition much very significantly with releases of CyberCision on the 27th of -- whatever was the number, I think. And we've built on that enormously because we provided a whole sort of functionality to allow them to bundle much more easily than they have been in the past. And also, we provided a whole lot more APIs for completing the growth in their internal systems. So it becomes a sort of a transparent process for them to take onboard our platform, provide it to their end users and have all the billing and other sort of functioning that's required behind the scenes to do the accounting. So there is no competitor there. However, the reality of life is that e-mail is by far the largest of those services in terms of the threat vector and the organizations who are playing in that area are many endured. But if we looked at where we see opportunity for what's called co-opetition, which is a combination of cooperation and competition, is in the Microsoft and Google as you own the e-mail space. So Microsoft, as everyone would know, has put in enormous amount of money into their product. And one aspect of that is improving the security. Microsoft security continues to be very complex for small to medium businesses to implement. What we're doing with a frictionless e-mail is providing our Microsoft e-mail users with additional functionality at the flick of a switch that goes into all the things that we provide, particularly advanced detection response over e-mail, which gives them a whole bunch of opportunities to stop threats before they happen and also to take actions when new threats get through. So we build on the Microsoft platform for security, and we will build on the Google platform across Gmail. And that's in the release of our software in the end of Q3. We'll be addressing the Microsoft area for our frictionless e-mail. And that will be a huge opportunity for us to work with existing partners who are selling the Microsoft 365 suite to work with them to provide additional functionality not over e-mail from the security point of view, but also over the other vectors of web, firewall and endpoint. So we actually don't -- still don't see a competitor. The challenge that we've had is getting our partners to buy into the whole proposition. When you talk to the Telstras and the other telcos that we work with, the partners [indiscernible], inevitably, we're talking to product people who want to package parts of stuff because that's the way they think. We're trying to reeducate them to package the whole lot. Now we're all in that because we're going about it in the way that we're going about it. But I think it's one of the reasons why it's taken so much time. So we don't have -- we don't have direct competitors, but the market moves -- has moved clearly with Microsoft and Gmail and the securities they provide, and we're building on that. So we're very hopeful that that's a good answer for our service provider partners, and it's a great asset to our end-user customers. And I think that I've still -- I've said this before, but I'll repeat it. The mobile reporting that gives the small to medium business end user the second-to-second status of their -- of security over their devices is a critical differentiator. That's what we'll be delivering in Part 1 at the end of Q3. But that will be an ongoing development project because there are lots and lots of features that we can pack into that. And that's a winner. That's where, as everyone does these days, they look to their mobile phone to try to find out how things are going. So that's what we'll be offering in the release in the end of Q3.Danny, did you want to add to that from a competitive point of view? You've got the Opmantek...

[Danny Maher, MD & CEO]

I'll just add, I mean, it was asked specifically about FirstWave, not Opmantek. Opmantek has loads of competitors. But majority of Opmantek revenues come from service providers, which is why this is a good match. I agree with -- as John just outlined it, there's not really a competitor for this service provider platform that delivers these security services to their clients. For the clients that are purchasing it, yes, they'd have to go and get a whole bunch of different point systems and it will all be pretty painful. In the end, for both of these companies, the biggest competitor when you're trying to sell is to actually get the client to do something. So that's the competitor, the competitor is that they do nothing, that's the real competitor for CyberCision. So that's the challenge, getting them to take it up and want to do it. But with everyone working from home now and all this stuff that's happened, I mean, it's just perfect timing for these platforms to be in place.

[Unknown Attendee]

There's another question regarding the commercial success of CyberCision. "What work is going on behind the scenes with customers and partners to ensure its adoption? Have you got any further comments on that?"

[John Grant, Non]

Yes. Maybe if I can speak to that in the first instance. When we launched CyberCision in Q2, we put together a program immediately thereafter to -- number one, we launched with partners. We put in a program to get back to get to all partners and start to build their knowledge and confidence in the offer, in the new offer, start to inform them and start then to start to get it into their planning. That work has been ongoing. It is hard work. It's the job, however. But we've been -- we started doing that shortly after the launch of CyberCision, and we've continued that. We've had -- I mentioned earlier that Q2, I mean, this whole due diligence process, all the things that go on, which engages a whole business, engages our sales leaders, engages us, the development leaders because that's how you do due diligence was a really significant distraction. And it has pulled away from making as much progress in that -- in this area and in other areas we have desired. But look, I can only say that that's understandable because that's the nature of things with these sorts of things, and we've got limited resources. But -- and the end result is not what should I really like to see. So we are doing what you asked us to do. So the question you asked, we are doing that. We have been doing that since the launch of CyberCision last quarter and we will continue to do it. And we will now, with Q3 coming on and with the release that come out at the end of Q3, we're starting the process of talking to our partners about that as well. But inevitably, you need to see the mobile reporting -- mobile come in, in order to be [ strategically ] compelling, and we won't be able to do that until the end of Q3. So long answer to a very short question. We've been doing a lot of -- the bottom line is we're doing as much work as we've been able to with the resources we've got in working with our partners to get them familiar with and get paid for service.

[Danny Maher, MD & CEO]

Yes, I would add that the new company has a variety of products. And as we outlined in the update, there's already $500,000 of annual recurring revenue growth that's in the bag because it was actually sold in December, and it's commencing in January. That's just from the Opmantek side. And as a new CEO, like any new CEO would do and with our new Head of Global Sales, Chief Revenue Officer in San Francisco, we're doing a full review of the whole pipeline for both companies. And we've been pretty happy with what we're finding. These are long-term projects and investments in some of these partners. And we look forward to monetizing them. There's been a lot of money going in before I arrived, and I feel like I've arrived at a very fortunate point.

[Unknown Attendee]

A question maybe for Danny. "What's happening with the several international offices, which on the service appears to contribute little to the business?"

[Danny Maher, MD & CEO]

Sorry. What's happening to the -- is that the existing FirstWave international offices?

[Unknown Attendee]

"What's happening with the several international offices?" This is a question from [ Kim ].

[Danny Maher, MD & CEO]

Yes, okay. So -- and this kind of gets back to that early area where the first question was asked, I guess. The transition plan is released internally on Friday. And so we're somewhat restricted right now at what we can run through on this call, especially with staff, shareholders and things like that as well. But we're looking at all of that. Some of those offices have long-term leases and things like that. But you've got to do a full review of the pipeline and everything where the prospects are. It's -- I think it was Kerry Packer that said, the hard party business is knowing what to keep investing in and when to pull out. It's -- when things are going well, you know to put more money into it. But -- so which of the things do we keep investing in and which of the things do we stop investing in, that transition plan is finalized on Friday, and a lot of that decision-making comes out of that. But some of those international activities will stop, but it's important for the company that we get to that point where everybody knows I'm safe, and this is continuing to be invested in and all of that, and that point is Friday.

[Unknown Attendee]

Great. A question from [ Max ]. "I'm very pleased to see the company will move to a sales-driven organization. What is the structure direct-channel combination Tier 1 partners?" And also -- he also has an additional question on sales skills.

[Danny Maher, MD & CEO]

Yes. For me, John?

[John Grant, Non]

Yes, Danny.

[Danny Maher, MD & CEO]

Yes. So the initial structure is that neither of the structures that either of the organizations were selling by changes. Nothing changes by virtue of the transaction straight away. But the transition plan does drive some of those changes. What happens -- what does happen overnight is that there's immediately an international sales structure with paying customers, with referenceable customers. Opmantek's 26 service providers are now prospects, but CyberCision, and they're not new clients. They're clients that are already giving -- already paying us, already profitable, already generating revenue, already have relationships. So that changes things quite significantly. The main change in the sales structure is that it's now led from North America from San Francisco by Craig. And obviously, there's more salespeople and diversified revenues. The path to market for both organizations, for Opmantek, the majority of revenues comes from service providers. For FirstWave, all revenues come from service providers. So that's still the focus. All these technologies get sold to service providers who then go and leverage it to sell it, often bundled with other things to their clients. So that continues to be the focus on service providers. For the portion of the Opmantek intellectual property, that is sold direct to -- mostly to large enterprises like Microsoft. That's something we'll continue with. And we're going to start looking at, especially commencing in North America, offering CyberCision services direct to large organizations and enterprises as well. We haven't made a decision on that yet, but it looks highly likely that we'll head that direction in North America to start with.

[John Grant, Non]

Yes. So if I can just add to everything that Danny said, we are predominantly -- we have been and will continue to be predominantly a channel organization working with our partners in the channel. Those partners will be service providers, they will be telecommunications companies, and they will be ISPs as they are today into the Opmantek channel. They'll also be managed service providers. So we are primarily a channel company. However, we have a direct-to-market sales capability with the larger organizations ala Microsoft that, as Danny said, there's an opportunity to put with that direct need the CyberCision portfolio. So the CyberCision gets to go to market through a direct channel. And Danny was a bit coy about when and if, but most likely, but that's an opportunity, which is an extension of what we've already got on CyberCision yet to go through the managed service provider channel, particularly in the U.S. and Latin America, which it hasn't had before as well. So the bottom line is it channel predominantly, some direct, but a much broader engagement with the opportunity.

[Unknown Attendee]

We've got a question now for probably John. This is from [ Justin Buck ], one of our new shareholders. "Can the new shareholders please get a commentary around the last 6 months share fluctuation? Is this expected to continue?"

[Iain Bartram, CFO & Company Secretary]

To answer -- that's a tough question. I should go and ask our brokers. It's really -- I think in the -- through this period until we can demonstrably deliver revenue growth, and we say this internally all the time, but until we can deliver demonstrable revenue growth and then sustainably do that, I think there will be volatility in the share price. Many of our shareholders remained with FirstWave through the whole ride from 2016. That's been a really hellish of a ride at most times. And now I've committed to -- recommended to them today that we've got a new opportunity to look at this business, and I absolutely believe that. So that's a good thing. So -- but I can't guarantee anything in relation to share price fluctuations other than unless things change, why would the sort of share price trend change. So it's expected to continue until such time as we deliver on what our shareholders are expecting at which time, and we would expect there to be some sort of trend for. So I don't know that I can answer any more than that. What you will see is low transaction volumes. So that's what causes a lot -- to do with what causes the ups and downs of the share price.

[Danny Maher, MD & CEO]

What we all want -- we're all in it together. We want the share price moving north and then...

[Iain Bartram, CFO & Company Secretary]

[indiscernible] to deliver and the share price -- share price will follow. Yes, our focus is on performing.

[Danny Maher, MD & CEO]

Yes, so my focus is on performing and then also getting the news of that performance out there, absolutely. So...

[Unknown Attendee]

Are there any further questions? [ Kim's ] got a question. "Any updates on Board renewal?"

[John Grant, Non]

Yes. What I did say, [ Kim ], doing that, was that we're now in a different situation. Number one, we've got a Board that's already got more of this diversification and got more capability sitting around the table. I know at least 1 and perhaps 2 of those directors. Should there be people or other people wanting to come up, we could attract to the Board, then they would be prepared to step down. Is the Board big enough for 5? Probably. Probably, I'm not sure we want to be for our sort of company much bigger than that. But we're now in a much more certain environment from a cash point of view and an opportunity and all the things we've spoken about in this presentation with a very significantly different position. And we will be looking to bring other talent, other capability onto the Board, where we look at making sure that's diversified -- there's diversity in that. So the bottom line is, yes, we will be doing that. That's a job really for the -- for this current half by the end of June.

[Unknown Attendee]

There's no further questions, John.

[John Grant, Non]

Okay. Well, thank you, everyone. And thank you for your questions. That's been quite a robust conversation. I'm sorry, it's only one way. It's one of the legacies we've got, I guess, in this sort of environment. But if you've got any follow-up questions, please don't hesitate to send them through to us. We'll answer them straight away, and we'll make sure shareholders see the answers to those. Thanks very much for this. We're going to get back to work. So good morning to you all, and hope you have a great day. Cheers.