Operator: Thank you for standing by, and welcome to the Appen Limited Half Year Results Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-session. [Operator Instructions] I would now like to hand the conference over to Mark Brayan, Chief Executive Officer. Please go ahead.

Mark Brayan: Thanks, Amanda and hello everybody. Welcome to Appen's first half 2020 results conference call. Thanks to your continued interest in support of Appen and I trust you all keeping well in the pandemic. My name is Mark Brayan. I'm the company's Chief Executive Officer, and I'm joined today by our CFO, Kevin Levine.

The step through the presentation that was provided to the ASX this morning, and we will allow some time for questions later in the call. So, to the presentation into slide three. We'll start there with a brief overview of Appen for those of you that may be new to the company. And we provide training data for artificial intelligence or AI. Training data is an essential building block of AI.

It's how the AI learns to do things like humans learns how to understand speech, how to see things, such as texts and signs. An autonomous vehicle, for example, can read road signs, provided same with thousands of pictures that have been identified or labeled as road signs. [Technical Difficulty] AI products for sale are to improve their business. We collect and label vast data sets of image, video, text, and audio data to help them build those products. AI and the market for training data is rapidly growing and AI has tipped to become more important after the pandemic, as companies accelerate their plans to digitize and respond to the new normals of more online shopping and contact us everything.

We are a strong performance market. We've grown consistently since our foundation in 1996, and we're very well-positioned with our million plus multi-language crowd, our technology platform and our uninterruptible at-home business model. And we've had another terrific half. Slide four, to look at the results highlights for the first half of 2020. We're very pleased to announce that we've maintained high growth in the first half of 2020.

Revenue is up 25% on the first half of last year -- last year to $306.2 million. This is comprised of $273.9 million in relevance revenue, up a commendable 34% and $31.9 million of Speech & Image revenue. This is down 20% on the prior periods Levine will explain shortly. Underlying EBITDA of $49.1 million was at a margin of 16.0%, which was per our guidance to the market of margins in the mid-teens. And that was up 6% on the first half of last year and included substantial investments in our growth initiatives.

I will discuss these initiatives in more detail later in the presentation. Without investments, underlying EBITDA would have been up 35% to $62.5 million. This highlights the increasing operating leverage of the business. In addition to the strong financial performance, we delivered on a number of important strategic initiatives. We've successfully cross sold our annotation platform.

And this is the platform that we acquired Figure Eight and four out of our top five major customers are using the platform for mix of pilot and production projects. This is extremely impactful. It means that we can serve our customers in many more ways that the platform enables us to work in multiple data times. It also means, have greater control over the delivery of the data, which enables us to improve the quality of the delivery of the data and of course, the margins. Now we've also signed an enterprise wide platform agreement with one of our major customers that includes an US$80 million annual commitment.

And this improves the quality of earnings and give us our annual contracted value or ACV to US$103 million at the end of the half. Our business continues to be in robust health. We are holding the costs on our growth strategy, with no material change to our investments. We had $126 million in cash in the bank at the end of the half. And we're pleased to announce a dividend of four and a half cents per share.

And that's 50% franked and up 12.5% on last year. Slide five and an update on relevance. For those that may be new to us, relevance data helps train search and social media platforms to ensure the relevance and currency of search results, online ads, product recommendations, and other services that we all rely upon every day. Relevance revenue was up strongly this half by 34% with $273.9 million. Relevance EBITDA $57.2 million was up 19% and that was impacted by the inclusion of the growth investments.

The relevance result has benefited from the strength of our customers. They include the world's largest online platforms that have become essential services during the pandemic to mention socializing and shopping. The result also benefited from the resilience of our at-home crowd delivery model. The chart on the right page shows consistent high growth, now at 64% compound annual growth since we listed in 2015. This is due to the ongoing demand for data from our major customers, but also due to new projects with existing and new customers.

The slide six out there on Speech & Image. Speech & Image revenue of $31.9 million for the half was down on very high first off result in 2019. And this is due to the cyclical nature, but also due to the pandemic of which more later. And despite being down on the first half last year, it was our second strongest half of Speech & Image in the history of the company. EBITDA was down to the revenue result and because we've not reduced expenses more than we plan to, as we have high conviction on the future of Speech & Image, and we need our expert resources to deliver that to future.

Our confidence is bolstered by the fact that four for our five major customers are using our annotation platform now, opening more Speech & Image opportunities amongst those customers. Also our sales and marketing investments are yielding fruit, with a new customer wins in the half, more on these later in the presentation. And the chat on the right hand side shows a positive long-term growth trend. Also it illustrate cyclically [ph] of the projects. The page seven and our cohort chart shows revenue by customer cohort a year of origination and for each successive year thereafter.

And this continues to show a healthy long-term growth trend and repeat revenue. The contribution to committed revenue this half and the increase in committed revenue at the time was strengthen the quality of our revenue and earnings as well the addition of new customers through investments in sales and marketing. We've made substantial progress in deriving value from the acquisition of Figure Eight. If you turn to slide, you'll see the premise behind the acquisition on the left hand side of the page. It evolution combined Figure Eight's market-leading platform and Appen's 1 million plus multi-country crowd to offer a full suite solution in all data types and over 190 languages.

No competitor has an offering this complete and at this scale as well knowledge. The breadth of the offer offering opens markets. We can now work in image, video, speech and text data, and that can be used to build potentially any AI product. The platform and since the acquisition streamlined an increasingly automates the processes of data collection and labeling that unable scale and margins. We've seen productivity gains, for example, over a hundred percent, with improved quality when we use speech recognition, pre-transcribed data, private sending into our crowds complete the work and to check the quality.

The platform also enables a deeper connection with our customers. It can integrate with their systems and workflows to become a critical part of the AI infrastructure. And this connection is valuable. Customers that can be spent with us accordingly and this improves the quality of our earnings. We delivered specifically on this thesis this half.

We now have four of our five major customers using the platform [indiscernible]. We can work with them on more projects and more data types. It also drives committed revenue. We signed an enterprise wide platform deal with one of our major customers that include an US$80 million commitment to the platform and crowd services distressed a substantial increase in committed revenue. Our ACV, annual contract value, was up 405% to US$103 million at the end of the half.

We're using ACV now in place of IRR because we're including platform and service revenue in ACV. Revenue from committed contracts is up to 75% and it's now 12% of our total revenue. We also win a number of new customers in the period across the old data modalities. None of these achievements would have been possible without platform and without acquisition of Figure Eight. The integration of Figure Eight is now substantially complete.

We had a single infrastructure, unified teams, unified branding and visual identity and single integrated back office and a unified go to market offering. There's a few outstanding costs to fully combine it and proud to expect that to be completed soon. We finalized the transaction of Figure Eight during the period with no down payment of $39 million for total investment $296.5 million. We want to report [technical difficulty] just as we don’t report separately on Leapforce anymore. Slide nine provides more details on our committed revenue.

The chart on the left shows the substantial increase in annual contracted value, or ACV, to US$130 million, up 405%. The increases on the US$$80 million commitment from one of our largest customers. The chat on the right shows the increase in committed revenue. We derived $36.3 million or 12% of that total revenue from committed contracts in the half, up from $20.8 million or 7% of total revenue last half. Note that the US$$80 million deal was done towards the end of the half and fully represented in the revenue chart.

Note also that ACV includes platform and crowd services. We're winning more deals that bundle them together rather than the platform only stick it right in these and services only to Appen. The first half of 2020 included substantial investments in our growth initiatives. Slide 10 shows a breakdown of these investments. In sales of new customers and improved customer diversification, in China to open the second biggest AI market in the world, in technology drive capabilities for opportunities, automation, and scalability, and opening the government sector.

Most of these investments are sitting for these areas [technical difficulty] the money we spend on our regular investment, such as additional project managers and recruiters to support our growing business. The chart that out of the page provides a bridge from last year's first half underlying EBITDA to this year's. Not only you can see the size of the investments this half, but you can also see without these investments, EBITDA would have been up 35% to $62.5 million at margin of 20.4%. This illustrates our strategy of using the scale and technology to improve operations, expand margins and reinvest those margins into the growth of the business. Also the 35% growth to $62.5 million outpaces revenue growth and shows the operating leverage and the online business.

Strength in the underlying business and a high growth rate of that market gives us opportunity to fund our growth and principal would be down investments to build further strength into the business. Let's look at each of these in turn starting in China on slide 11. We are very pleased with our progress in China. We are making genuinely inroads into the market. The chart on the left shows monthly revenue to July in Australian dollars.

You can see that is growing quite a click. Revenue in July, for example, was six times revenue in January. The growth is coming mainly from the tech sector and the Chinese tech in particular. Unsurprisingly, we're building a strong position providing international data. We're also very pleased to be winning projects in domestic data against local players.

We are working own managing data, take speech, image and video, and also on a number of relevance projects. And we maintain strict separation between our global and China operations and technology to ensure integrity of our IP and data. We're also in the middle of an internal audit to check that our systems and controls are working as planned. Overall, we're very pleased with our team in China and made terrific progress. Slide 12 provides an update on our technology.

Diagram on the left is from our Tech Day in May lays out our technology strategy. I'll talk inclusive crowd management, client workspace, and annotation tool functionality, accelerate scalability through product [technical difficulty] and crowd and internal productivity. We believe three important commercial outcomes, including revenue growth and quality, more platform capability than [technical difficulty] broader set of projects, which increases revenue and diversifies our customer base. It also leads to productivity gains due to scale and margin expansion we get from the automation capabilities. And finally, it builds a strong competitive mode.

Some recent updates on technology included our wide ops functionality that enables us to work in three dimensions is critical for applications we put in robotics manufacturing, and of course, autonomous vehicles. We've got certainly pixel level image annotation, highly accurate data for computer driven applications. We're making great progress using AI to accelerate our crowd and internal operations. We now have a purpose built speech recognizer that's improved our transcription productivity by over a 100%, including lifting quality. This means we can produce more frat customers off the same cost base and improve our scalability and margins in the process.

We have also AI automate parts of our crowd worker onboarding process to reduce the process that used to be hours per worker to a matter of minutes. Finally, very importantly, we've implemented SAP functionality into that system to ensure that all of that crowd workers has been paid fairly for the work they do for us. Slide 13 and sales and marketing. It's early days without significantly enhanced sales and marketing capability and we've seen some very pleasing results. We now have a truly global sales same with multiple teams in our biggest U.S.

market. And they are organized by mix of sector and company size. We also have a growing team of technical experts that support the team and bring the best about things every customer and opportunity. We won quite a few new customers in the half across a mix of speech and image data. Some of them are represented on the left hand side of the page and they stand in Europe and the U.S.

as well as some in Asia-Pacific. At least one of them has come out of the pandemic. The one on the top right hand side, for example, is the contact plus ordering and delivery for global fast food chain. All of our new customer wins are underpinned by annotation. We wouldn't have had them without it dive into the importance of the platform and the Figure Right acquisition.

These customers are new and small, but given the ongoing data requirements of AI, we expect them all to grow over time. Our final growth initiative is the government market on slide 14. We're pleased to report that we're now fully set up for this market. We can participate as a prime or sub contractor. Our setup includes an experience team and fully to get technology and operational setup.

Even early days for us in this market, but we believe there's substantial potential given [technical difficulty] on AI by governments around the world. I'll now hand it over to Kevin, our CFO, to take you through the numbers in more detail.

Kevin Levine: Thank you, Mark and hi everyone. Our group revenue is up 25% in the corresponding period driven by continued strong growth in relevance, which is up 54%. This growth was driven by increasing demand for [indiscernible] mainly for the existing projects within existing customers.

Our ongoing needs for daily refresh with a new project and existing and new customers. Making customers have been a source of strength and robustness over the last few months. Speech & Image revenue was down 20%. Speech & Image projects are cyclical in nature, heavily depending on customer timing, investment and product life cycles, and apply list ongoing data refresh and relevance projects. As a result, we can significantly fulfill performance on a half-on-half, year-on-year basis as evident in this half, as a very large transcription project with significant volumes in the corresponding period.

In addition, new business sales and embedded collection projects have been delayed impacted by COVID-19. Lots of project related activities will continues to be a key characteristic for this division. The long-term growth trend for Speech & Image volume is positive. Underlying EBITDA was $49.1 million with 6.0% increase over the prior corresponding period. As Mark mentioned, this was also impacted by the plan investment in sales and marketing engineering in China and government verticals in order to drive the long-term sustainable growth potential and performance.

Looking down resulted an underlying EBITDA margin of 16.0%, down from 18.9% in the prior corresponding period. Excluding impact of these investments of $18.4 million [ph] in the first half results and resulted underlying EBITDA of $62.5 million is up 35% on the prior results. In other words, if there is non-incremental increase in spend going forward and everything else stayed the same and underlying EBITDA would be $30.4 million. Underlying NPAT of $28.9 million represents a 2.0% decrease from the prior corresponding period. This was overall impacted by the planned investment as discussed and excluding off the impact of these business of $10.3 million.

The results of underlying NPAT is up 32.4% from the prior year result. The effective tax rate for the period has reduced to 22.3% from 28.2%. The effective tax rate is subject to saturation from the tax effects of movements from expensing and investment of employee performance share. It's really the performance share in its business and overall tax rate circa of 28%. On to the next slide 15 and to the balance sheet, through strong operating performance and effective [technical difficulty] capital management the balance sheet continues to strengthen.

This is always important and now more so than ever. And F&E [technical difficulty] increased cash balance of $126 million. The cumulative decrease as a result of [technical difficulty] positive impacts from the timing of the sheets our growth in the EBITDA and corporate cash flow in the next slide. Non-current assets comprised mainly [technical difficulty] intangible assets, mostly running through acquisition. With the high process MTV and productive EBITDA figures report significant decrease in current value intangibles.

[technical difficulty] given the strength and confidence in the business this data was retained in order to get the facility remains available to users still give confidence and interim dividend payments has increased to $4.50, up 12.5% from the prior corresponding dividend and expense to 50%. Moving up the next slide in cash flow, the cash balance have increased by $55 million from June 2019 and by $51 million from December ’19. So cash balance and cash conversion percentage has been positively impacted by timing of customer receipts. You will recall at yearend that we talked about some receipts accepted in December ’19 that we’ll receive in January ’20. In addition to that, some issues we expected to receive in July ’20, we actually received in June ’20.

Cash flow from operations is strong and has benefited from working capital management and has increased by 75%. Cash has been effectively deployed for payments relating to tax driven CapEx, operating expenses and growth investments. Cash conversion remains very strong at 154%. Coming to the next slide. We do have a currency impact when we report and that is because almost all revenue is generated offshore.

And as a result, we show the constant currency impact. So this half year the currency impact is meaningful; however, it is greatly impacted the prior corresponding period. The revenue impact in this period is 21.8 million or 8.9%. And the other lines EBITDA impact 3.6 million or 7.8% for the prior corresponding period as compared to revenue impact of margin 27 million with 12.9% and underlying EBITDA impact $4.7 million or 18.4% and the relative basis with the prior corresponding period. Moving to next slide, Appen continues to generate and accumulate cash from – we are very comfortable with the current level of cash reserves.

However, as provided some guidelines as to how we think about capital management into the future. We will continue to read the quote benefits of scaling automation into organic growth areas to support our growth strategy and maintain our competitive position. We will continue to pursue acquisitions, including minority investments, the sales by general criteria and willing to fund these with a combination of appropriate levels of increase base in cash. And our approach defining EBITDA the energy effectively, but at the same time, working with an established conservative average guideline upto 2x combined EBITDA. With the prior range [indiscernible] underlying intent started to boom discretion.

And I will now hand you back to Mark. Thank you.

Mark Brayan: Thanks, Kevin. So moving to slide 22, some highlights from our important ESG initiatives. As professional services business, we have small carbon footprint that we do have carbon credits to offset the impact of our travel.

Although travel is much reduced to present for us as it is. We do have a bigger role to play on social issues. So I will continue with the global impact sourcing coalition. This is a coalition with like minded firms that provide job opportunities to disadvantaged communities around the world. We have a large cohort of hearing disabled workers in the Philippines, for example, the work that we do with them is large and visual.

And many job opportunities in the Philippines are in call centers and they're unable to participate in that, so we're very pleased that we're able to provide opportunities. We recently joined the World Economic Forum's Global AI Council to contribute to their setting standards for Fair AI, including statements of data diversity. So AI responds to the real world and also for the treatment of crowned workers which is highly aligned with our own craft turbid craft code of ethics and initiative that we're very pleased to have tributary. We continue to work with translators without borders on a project with the texture to ensure the speech and natural language products are enabled for pandemic terms and words in adverse communities around the world. On governance, we welcome Vanessa we were volunteering behalf of Vanessa is the Vice President of SAP is venture arm and former McKinsey consultant with many years of experience in the U.S.

tech sector. She bring extensive knowledge of that market to our board and the company and welcome here. Slide 21 now [technical difficulty] some forward looking views and AI is a hot topic and a high growth market with strong demand talent. Training data is essential freight is a service [technical difficulty] where and will continue to provide us with growth for many years triumph. The pandemic is also a hot topic unfortunately.

And that does some damage to some sectors and disadvantage to others. E-commerce for example show cumulative growth in three months in the U.S., measured as a percentage of total retail as consumers shifted to online shopping and other contactless retail experiences. So clearly an advantage from everybody being for e-commerce, other advantages does technology of all sorts from video conferencing to social media to payment networks. Pharmaceuticals and rush to find a vaccine even for other health related items. Logistics and delivery services, everything including cardboard boxes and freight folders to ensure that all of these online get to us somehow.

Streaming and gaming services as we seek more anytime [technical difficulty] and pretty much anything that can be done on a contactless basis. Now the good news for us is that these sectors are also heavy users of AI. And commerce relies on search and recommendation engines, speech and natural language processing is enabling contactless customer experience, communications and logistics, manufacturing and retail using computer vision to automate processes, build scale and more with less human contact. So slide 22 is a great time to be a proven AI performer. And we believe we are very strongly positioned to win.

We have a market leading position we're unaware of the competitive with our capabilities customer base and scale. We're investing in AI enabled technology to open markets, automate the work we do and build more scalability and margin expansion into our business. We have appeals on-demand crowd of over a million workers covering 190 languages in 70,000 locations and 130 countries. We have a highly skilled very resilient staff their ability and grit to deliver customer service pandemic is commendable and to be employed. And we have a proven, scalable and uninterrupted at-home business model.

We have to learn how to work from home. [Technical Difficulty] 24 years old operations. Our growth investments yielding benefits $126 million cash in the bank, net debt positive and cash version of 154%. We are in terrific shape, but we're not fully mean to the pandemic, no businesses. Slide 23 laying down the impacts of pandemic on the business.

It's important to note that the world will need to master their impact has been very low. Smaller customers are doing a tough. We have customers that travel in different. We are helping them as much as we can [technical difficulty]. They are fighting the pandemic hard enough.

Our new customer -- sorry -- going well. Not as fast as we planned due to the pandemic. Our customers prospects had to adjust to some of the projects were understandably reprioritized at the onset of the pandemic. I heard this morning that even simple things like customers that provide us with desk phone numbers that are forwarded to cell phones, slowdown the sales growth for us. Combined these -- they didn't have to amount into low single digit percentage points of revenue in the first half.

Now those even follow us will know that some of our largest customers rely on online ad spend for their revenue. And it has been slowed down in that state and globally and although it is forecast to rebound strongly next year. And we've recently seen that impact of the slowdown on our ad related programs, we expect to have a small impact on the second half revenue based on what we know and see at the current time. Slide 24 for summary and our outlook statement, continues on its long-term growth trajectory. We're very pleased with the half and the progress with our growth initiatives.

We're strongly positioned to win in the high growth market and we expect the market to accelerate post pandemic. As such, there are no material changes to our growth investments. We're taking a long term view and isn't the time to put our foot down. As stated we do see a small impact from the pandemic on second half revenue due to the slowdown in that space. Slide down there, it forecast and aspect in 2021.

So the impact will be [indiscernible]. Consequently, we are maintaining our guidance based on current information. As always [technical difficulty] and orders in hand to deliver this year. Our full year underlying EBITDA for the year ending December 31, 2020 is expected to be in the range $125 million to $130 million. And that said, AUD1 to US$0.70 for the months to December 2020.

And this is part of our practice to maintain the right construct in the beginning of the year, throughout the year. Finally, we expect full year underlying EBITDA margins to be in the high-teens percentages. That concludes the presentation. Before I hand it back to the moderator for questions, I would love to recognize and thank our hardworking global team for their performance and the grid that demonstrated as always, but especially during the pandemic. This is the end result I have the privilege of presenting it to you, but I thank them for their hard work.

Thank you all once again for your interest in and supportive Appen [technical difficulty] pandemic. I'll now hand it back to the moderator to take questions. Back to you, Amanda.

Operator: Thank you. [Operator Instructions] Your first question comes from Quinn Pierson from Crédit Suisse.

Please go ahead.

Quinn Pierson: Hi. Good morning. Thanks for time for the questions. Maybe just firstly, on your guidance of $125 million to $130 million EBITDA.

I guess it's kind of firstly, it's a pretty sizable second half SKU compared to the first half to achieve that. I guess kind of firstly, is that SKU, the split when 1H to 2H as budgeted back in February or has this SKU changed at all? And then secondly, if you could just maybe help talk us through some of the bigger bridging components to get us from the 1H to 2H whether it's the new contract kicking off, or it's more fixed cost leverage from the investment that's occurred this half, could just help us bridge that a little bit. That would be helpful, please.

Mark Brayan: Yeah. Hi, Quinn.

It's -- first of all, in terms of, the shape of business budgets in February, it's not a mile away. We always anticipated a big SKU towards the second half, and that's because we were spending disproportionately in the first half compared to the second half. And so, we'll see that cost base relatively consistent through the second half and the basis as those investments coming through to give us the revenue uplift. So -- yeah, so effectively just leveraging that first half investment through in the second half.

Quinn Pierson: That's helpful.

Thanks. And then maybe secondly, on the $80 million contract you announced. I guess a little bit more color on that would be of use. For instance, are we -- is that kind of already kicked off and at the run rate a phased or more of a delayed start? And just any kind of background you can provide in terms of what -- kind of have a little bit more color on what that contract is? For instance, how much of that contract is services versus a platform fee. Thanks.

Kevin Levine: Yeah. So, the contract has commenced and we see no reason that the customer not want to meet that commitment. So that's good news. It is a mix of platform and services, but it's the majority of it services. But it is a mix of both.

And we're very pleased that the customer is got that competence in their needs, the data and service we provide them to make that commitment.

Quinn Pierson: That's helpful. Just to kind of clarify, is the $80 million will be say since it's an existing large customer, is that $80 million incremental to what you had been doing, or as part of that $80 million previous work just now formalized in contract form.

Kevin Levine: It's the last.

Quinn Pierson: It's the latter.

So, is that correct?

Kevin Levine: Yeah.

Quinn Pierson: Yeah. Okay. Great. I'll leave it there.

Thanks for your time.

Kevin Levine: Thank you.

Operator: Thank you. Your next question comes from Lucy Huang from Bank of America. Please go ahead.

Lucy Huang: Hi, Mark. Hi, Kevin. Thanks for taking questions. I just have three. So, firstly, in Speech & Image, you guys mentioned that the first half was impacted by the pandemic and some cyclicality.

I'm just wondering based on your customer feedback that you're hearing today, when do you think new customer spend will come back into this part of the business? Are we likely to see it return in the second half, or do you think are likely to come back in FY 2021? And then secondly, just thoughts on your market share, how do you think Appen share through the first half and what builds sense around competitive dynamics? Are you seeing any changes to dynamics, particularly in the Speech & Image sector? And then just to dig deeper -- a bit deeper on $80 million contract, which you mentioned before, how much did the customer spend in the prior year? Just wondering if, they've spent a similar amount or whether the commitment is actually increased in terms of the customer spend, and just whether this annual commitment, how long has that locked for? Is it just for one year, or is it a multi-year agreement? Thank you.

Mark Brayan: Hey, Lucy. Okay. See if I can remember these in order. First of all, on the Speech & Image, we do expect spend to come back in the second half, but more definitely in 2021.

And the -- probably the main thing that impacted it was, it's just a massive shift in everybody working from home. It was relatively easy for business like ours to do, but it quite difficult for many other businesses and things were just interrupted and delayed. Other than small customers directly impacted by the pandemic, such as people in the travel sector, what we're hearing from customers is did projects and budgets are they just been deferred because they've got a more important things to get the company brought sales from an at home environment. And keep in mind also that the vast majority of our customers are in the U.S. and the U.S.

is not traveling as well as Australia when it comes to managing pandemic. That was the first question. Second question on, market share and competitive dynamic, there's no massive change to the competitive dynamic, which is to say that, we have existing major customer -- a major competitor is still in the market. And we’ve seen the smaller competitors from time to time in various deals, probably a little less than a ways from some of those smaller competitors. Some of them are -- most of them in the funded businesses and one would have the think that this is not the ideal environment for them.

I don't know anything, but I -- we get regular reports from now how marketing team, for example, sharing voice and we need to be at the top end of those reports on a consistent basis currently. So, it's hard to put a figure on a market share, that I think we are traveling pretty well, and I don't see any huge change in the competitive dynamic. To the large committed order, it's an annual to one year arrangement that there are -- there are ways that contact can be renewed and grown year-on-year, although that’s continued on the quality of the job we do for the client and the amount of data, and we're confident we meet at times. As we said to Quinn question, idioms within the spin that we expect from that customer, we got them into the individual customer to spend, so I can't answer the second part of your question that believes we do this thing from that customer. I hope that cover all questions.

Lucy Huang: That's great. Thank you so much.

Operator: Thank you. Your next question comes from Siraj Ahmed from Citi. Please go ahead.

Siraj Ahmed: Thanks. It's Siraj by the way. Mark and Kevin, just I have a few questions. Can I start with guidance? Just on the revenue side, typically you're working on at this stage would be 70% of your revenue I think full year last year. This year, given a slight, calling out a bit of week as an ad revenue and Speech & Image.

I think Mark you said Speech & Image won't come back in the second half. Just keen to understand how you're thinking about the second half revenue could accelerate?

Mark Brayan: It's a little hard to give Siraj -- sorry -- that -- let me -- the mathematics, I suppose, around the numbers moving back year-on-year, right? So, I think it's a good starting point to use the ratio for the same time last year to see where we'll end up for the full year. And if we do -- you do that math, you come up with a revenue number. And from there we derive our earnings number. So, other than to recommend to that mathematics, that's the state of it sort of forward looking, guidance we have given on revenue.

Siraj Ahmed: Sure. And -- so Mark just clarifying, I mean, there's no reason why the math shouldn’t work out this year, I guess is the question. Because it sounds like some of the existing workers coming off, but you potentially have new work that could -- don't do it. Is that the way to think about it?

Mark Brayan: So the -- and again, it’s a little hard to hear, your voice is quite muffled, Siraj. I'm sorry.

The second half will be stronger than the first half. I think we have made that clear earlier on. And you can draw some conclusions as to where the revenue will end up based on that order book number. However, we caution that the ratio of that order book number full year doesn't move around from year-to-year. So it's not a fixed amount.

We'll give you some guidance.

Siraj Ahmed: Sure. Thanks. Just moving on to the cost comment, just clarifying that you're saying you're not reducing costs, which then implies that to me to guidance gross margins have to improve. Is that -- can you give some color on that?

Kevin Levine: Yeah.

Siraj, hi. So the way we can think that, that is it's something that a lot of that investment and so think about that's customer base is that's essentially happening uniformly during the year. And -- but then to leveraging the expected revenue, H2 revenue, uplift of H1 essentially gives us the compounding positive impacts then to [indiscernible].

Siraj Ahmed: Sorry, Kevin. So you're saying that cost investment, that will go away or is that because the cost space -- just -- if you just clarify that, please.

Kevin Levine: Yeah. And I'm not sure if I've heard the question clearly. But I think honestly, in terms of what I think you said in terms of the cost per state in uniform [technical difficulty] investment. And so that's been throughout the year into H2, that will be -- not that much different from H1, [indiscernible] so more revenue uniform cost base get us to high [technical difficulty].

Siraj Ahmed: Got it.

Thanks. I jump off the line. And I will just come back and even it’s not clear. Thanks.

Operator: Thank you.

Your next question comes from John -- Josh Kannourakis from UBS. Please go ahead.

Josh Kannourakis: Hi, Mark and Kevin. Just following on from that prior question, just because -- sorry, it wasn't that clear just on the line. So when we're talking about the level of investment, do you expect that level of investment to be replicated, and apologies if I missed earlier? And just interested in your views on how we should be looking at that sort of step-change investment medium term in terms of what the sort of steady state, that investment level would be.

Mark Brayan: So, what we've done is we've taken on a lot of resources so late last year and in the first half to build the sales team. And so on -- mainly in South Sydney, you can see in the bridge on that slide, I forget which number it is. In prior years, for example, we did a lot of investment into the tech team and less going forward. So a lot of investment in the sales team sort of ramp up and expense was very high in the first half. And we got hold that through the second half.

But that sales team is going to deliver more earnings. So revenue is going to go up and cost is going to be relatively constant and that's going to result in an earnings uplift. And the math is pretty simple.

Josh Kannourakis: Yeah. No.

I got it. That was clear. Sorry. I just wanted to make sure. Yeah.

That's very good.

Kevin Levine: And Josh, sorry to say just as well to [technical difficulty] incremental spend, right? Certainly that's sort of what Mark said. That's essentially the guidance for this year. There will be large immediate form we expect to see some level in H2, however then when it comes to 2021, then once you were looking at businesses, the market we are going to be doing and repeat of several marketing investments to this level from an incremental point of view.

Mark Brayan: Yeah.

That's a good point. And again, we didn't provide this bridge last year, we hadn’t provided a bridge like the one. So, have we done a bridge like that last year, this time last year, you would have seen an uptick in the technologies, right? So last year was the year of building technology and clearly there's more work to do on the tech and [technical difficulty] this year is a year of building salesforce. So going into next year, you will have itself the incremental spend, but not at this level.

Josh Kannourakis: Got it.

And then just onto the -- another question around the guidance. So, you obviously called out that first half, second half SKU even pre-COVID. And so I guess since then you've noted the incremental -- the lowest sort of ad spend. I'm just also interested if you could give in line with that more context on some of the relevance projects that we've been winning and it looks like there's been a few decent awards of new projects across the first half based on some of the online activity. Interested, if you could just give a bit more context on that new projects into the second half.

Mark Brayan: Yeah. We had won a number of projects through the year. In fact, I've heard just overnight, we'd won another, and you're familiar enough, Josh, for the business to know that if these things grow, they can consume all pretty well. But there is -- we're expressing some caution because some of the ad related programs which is not a massive amount, but some of those programs, we're seeing the customer tap the brakes a little bit because if their revenue from ad spend goes down, they spend less with us. They're the opposite required -- applies, right? If it goes back up, they spend more with us.

So for the moment, we're just tapping the brakes a little bit on that advertising spend. The good news is much of it as being papered over by some of these new projects. But we don't have as much of sort of a steamroller -- but we can't see much of as sort of a steamroller at the moment then that we would normally say at this point in the year.

Josh Kannourakis: Got it. And then just you mentioned a bit of context around your views around M&A and debt funding and alike around the capital management.

Just interested, if you could talk a little bit about where you see some capability gaps or potential adjacencies to happen, given it expanded client and customer base.

Mark Brayan: Yeah. And Josh that the challenge for us is always finding the opportunities relatively in 2019 space. And many of the players in that space -- mostly inventory funded businesses is very field scale. From a core business, we don't see any material capability gaps.

We've got the crowd that we need and we've got the technology we need. We're building out the sales team that we need. We've got tremendous recruiting and delivery capability. So, the core business is pretty solid. We do look a little bit to the left and right from occasion.

So, for example, our scale businesses that could be deployed violent crowd mole. So we're looking for opportunities to grow the business and to leverage the capabilities that we've got. And the point of the slide on capital management is just to give you some insight into how we think about managing the capital relevant to signal anything specific.

Josh Kannourakis: Okay. Great.

Thanks guys.

Kevin Levine: And sorry, I just want to cover something because Josh write it in [technical difficulty] and that is just to clarify. Mark said just try to clarify, so in terms of how we see the last year results relative to our internal budgets, we're very close to -- 2% of that. So, for us, it's -- we set these plans at the beginning in a way before anyone knew what coming [ph] was about and we haven't taken up for the dependent. So we put the view on the long term, not in the short term, we have those plans, we're sticking to those plans and they're for us very much H1 result is running on an expectation.

And so, therefore, [technical difficulty] guidance during the second month.

Operator: Thank you. That does conclude our question-and-answer session. At this time, I will now hand back to Mr. Brayan for closing remarks.

Mark Brayan: Yeah. Thanks, Amanda. And thank you everybody for attending. We hope you're safe and well during the pandemic. And we as always appreciate your interest and support and no doubt we'll see you, or maybe not face-to-face, maybe over the video conference during the road show over the next a week or two.

Thanks once again and good night everybody.

Kevin Levine: Yeah. Thanks, everyone.

Operator: Thank you. That does conclude our conference for today.

Thank you for participating. You may now disconnect.