One of the few legitimately 'mission critical' enterprise software companies.

I liked the detail about how AI is actually being implemented. I don't want to take anything away from Hansen, I'm glad its something they feel they're doing competently, I just think a lot of people who heard the call would of been thinking that none of it is special to Hansen. This is what a lot of businesses must be doing, rather than some kind of advantage. But then again, no doubt if they didn't spell it out, there would have been 50 more questions about 'what are you doing with AI'.

For anyone who heard the call, the second to last or very last questioner was SO PAINFUL. Asking Andrew to get into the weeds about what type of RAG they're using.

Not wanting to hijack this thread but I think I have to because no one cares about Origin Energy in Strawman (no offence intended) which had underwhelming results last week.

Anyway Origin had to spice things up a bit by relaying the same message Hansen is saying about AI through Kraken, but 2 weeks before Hansen.

"Enterprise grade AI native platform benefiting from coding technologies ...." and "... AI talent..." literally the same thing Hansen is saying about their software too ;)

Despite the sombre results and falling gas prices, Origin share price has held up pretty well ..hmmm...

I do hold ORG so I have a biased view.

Discl: Held 3.62% IRL and in SM

@Clio, agree with your comments on the HSN AI update. It was (1) clear (2) detailed (3) reassuring. HSN actually started detailed AI updates from the 2HFY25 update, so this was a more detailed update and more time was spent chatting about it. But also agree with @ApplePark that it wasn't earth shattering news. Having said that though, low risk, safe deployment of AI capabilities, but which makes a positive impact, is really not a bad thing at all. So very comfortable overall on this front.

Adding some notes and charts on the results.

SUMMARY

1. Good robust 1HFY26 result in what is sesonally, the weaker of the 2 half's.

2. Good upfront focus on AI (1) it is embedded in HSN’s operations and it has boosted productivity (2) no threat of AI eating into HSN’s pie - deeply embedded in the “mission critical lifeblood” of customer operations with decades of core system of record, data records which is closed, and not accessible by public LLM’s (3) highly regulated businesses (4) switching is very high risk

3. Both verticals are firing, despite the normalising of licensing costs which distorted FY25 results somewhat, operating leverage kicking in

4. Underlying EBITDA margins 29.2%, staying close to the long term 30% target/record

5. Continue to generate substantial cash - $56m cash on hand, repaid $29.5m of debt, debt leverage ratio is 0.4x post Digitalk acquisition, in a good place for M&A, given falling price multiples in the market following recent tech AI-mageddon.

6. Outlook mostly unchanged. Commentary "expects revenue to be higher in 2H26 vs 1H26" is a bit of a nothing statement as that has been seasonal in the past 3 FY's.

HSN AND AI

• AI is well entrenched and embedded in the business - have moved well beyond experimentation, clear ROI in customer solving problems, put more products to deliver to customers
• Getting boost in productivity from AI - more done for less, Dev has been quicker depsite headcount falling
• HSN is deeply embedded and entrenched in the “mission critical lifeblood” of customer operations, with decades of core system of record data records - no public LLM can access this data
• Customers are complex and are subject to heavy regulation
• Switching is high risk for the customer - HSN focus is to continue to add value to customers 
• Customers do not want data out in the open - the industry does not have a mindset of open data but rather wants its own moat of closed, protected data

REVENUE, EXPENSES

• 1H has been seasonally weaker than both previous and future 2H’s - 1HFY26 continues that trend - revenue was 7.3% higher YoY, but was down (10.9%) HoH
• FX - modest tailwind in 1HFY26, but expected to be a headwind in 2HFY26 - not a material issue as cost base is mostly local and hence will benefit in AUD

• Good material step up of Support & Maintenance revenue - good predictable revenue stream, accelerating on historical run rates
• Licence revenue has normalised to BAU levels following the sharp spike in 2HFY25 with the VM02 deal

Revenue from both verticals were below the long term trend, but contributing positively - seasonality at play

Both verticals - revenue up HoH, cost base fell

PROFITABILITY

All measures of profitability jumped significantly HoH and continue to trend upwards

Stronger operating leverage and tighter cost control

FY25 numbers were messy given the abnormal movement of licensing revenue which skewed to 2HFY25.

Underlying EBITDA margins staying close to the 30% target, marked improvement from 1HFY2025