3 PRESENTATION OF THIRD QUARTER 2019 RESULTS President & CEO Håkon Volldal / CFO Tor Eirik Knutsen
Q-FREE AT A GLANCE >50 000 ~40 2 THIRD QUARTER 2019
SUMMARY
Q3-19 HIGHLIGHTS • 243 MNOK in revenues, up 12% YoY driven by good growth in the tolling and inter-urban segments • 31 MNOK in EBITDA (13% margin), almost a doubling from 16 MNOK in Q3-18. The number is positively impacted by 9 MNOK in reduced pension obligations • 206 MNOK in order intake plus a new 80-130 MNOK ALPR frame agreement • 1 091 MNOK in order backlog (excluding frame agreements), unchanged from Q3-18 • Improved financial situation due to 36 MNOK in net cash flow from operations leading to a 10 percent reduction in net interest-bearing debt • 95 MNOK tolling contract in Thailand awarded in early October after closing of Q3-19 4 THIRD QUARTER 2019
SUMMARY FINANCIALS MNOK Q3 2019 Q3 2018 YoY YTD 2019 YTD 2018 YoY FY 2018 Change Change 717 647 +10.8% 889 Revenues 243 217 +11.6% Gross contribution 142 136 +3.9% 405 418 -3.1% 569 Gross margin 58.4% 62.7% -4.3pp 56.5% 64.6% -8.1pp 64.1% OPEX 111 120 -8.1% 343 356 -3.5% 498 62 62 - 71 EBITDA 31 16 +95.6% 8.7% 9.7% -1.0pp 8.0% Margin 12.7% 7.3% +5.3pp 53 62 -14.5% 89 EBITDA before non- 22 16 +38.6% recurring items 7.4% 9.7% -2.3 pp 10.0% Margin 9.0% 7.3% +1.7 pp 7 27 -72,3% 24 EBIT 13 5 161% EBIT margin 5.2% 2.2% +3.0 pp 1.0% 4.2% -3.2pp 2.7% 5 THIRD QUARTER 2019
BUSINESS UPDATE
TOLLING HIGHLIGHTS Q3-19 REVENUES AND EBITDA NOK million • Revenues up 14% YoY Q3-19 Q3-18 YTD19 YTD 18 − High product and ALPR revenues in EUROPE EUROPE 107 92 307 277 − Storebælt project in Denmark and Cross City Tunnel APMEA 26 19 57 47 in Australia AMERICAS 14 7 47 37 REVENUE 147 117 411 361 • Strong EBITDA performance EBITDA 40 15 79 62 − High contribution from ALPR − Project financials still weak, will improve from 2020 − One-time positive impact from pension plan REVENUE AND ORDER INTAKE DEVELOPMENT adjustment NOK million 177 147 • Good order intake 144 138 137 126 121 121 117 117 − New MLFF project in Australia (55 MNOK) − Misc. smaller product/service orders (82 MNOK) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Revenue Order intake 8 THIRD QUARTER 2019
RECENT KEY CONTRACT WINS IN TOLLING MLFF project in ETC project in Queensland, Australia Bangkok, Thailand (~ 55 MNOK ) (~ 95/75 MNOK ) 9 THIRD QUARTER 2019
PARKING HIGHLIGHTS Q3-19 REVENUES AND EBITDA NOK million • Revenues up 23% YoY driven by increased deliveries Q3-19 Q3-18 YTD19 YTD 18 in AMERICAS (ref. Charles Schwab project EUROPE 5 6 15 19 announced earlier this year) APMEA 0 2 2 4 AMERICAS 13 5 31 16 • EBITDA still not positive, but development cost will go REVENUE 18 13 48 39 down going forward EBITDA -5 -4 -10 -13 • New indoor sensor gaining momentum in the US and France, several pilots of outdoor sensors REVENUE AND ORDER INTAKE DEVELOPMENT NOK million 35 22 18 18 14 13 13 13 13 5 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Revenue Order intake 10 THIRD QUARTER 2019
INFOMOBILITY HIGHLIGHTS Q3-19 REVENUES AND EBITDA NOK million • Revenues fairly flat YoY, no special events during the Q3-19 Q3-18 YTD19 YTD 18 quarter EUROPE 14 15 50 45 APMEA 1 1 1 3 • YTD EBITDA negatively impacted by lower ALPR license AMERICAS 2 0 6 4 revenues in the segment REVENUE 17 16 57 52 EBITDA 1 2 5 6 REVENUE AND ORDER INTAKE DEVELOPMENT NOK million 30 27 26 25 23 18 17 16 16 14 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Revenue Order intake 11 THIRD QUARTER 2019
URBAN HIGHLIGHTS Q3-19 REVENUES AND EBITDA NOK million • Low revenues in the quarter as several deliveries have Q3-19 Q3-18 YTD19 YTD 18 been postponed to Q4-19 and 2020 (orders are not lost) EUROPE 0 1 1 1 APMEA 0 0 0 0 • EBITDA decline explained by low share of SW revenues AMERICAS 23 40 110 107 in the quarter (rebound expected in Q4). YTD margin is REVENUE 23 41 111 108 also down YoY due to limited SW sales EBITDA -7 7 3 19 • Order intake fairly stable – several small and medium- sized contracts REVENUE AND ORDER INTAKE DEVELOPMENT NOK million 74 58 49 41 42 41 32 32 30 23 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Revenue Order intake 12 THIRD QUARTER 2019
INTER-URBAN HIGHLIGHTS Q3-19 REVENUES AND EBITDA NOK million • Strong YoY revenue growth driven by Slovenia, which Q3-19 Q3-18 YTD19 YTD 18 has caught up after a slow first half, and ALPR camera EUROPE 11 2 22 16 contract with Norwegian Customs APMEA 0 0 0 0 AMERICAS 27 27 68 72 • YoY EBITDA significantly up driven by high revenue REVENUE 38 29 90 88 recognition in the quarter. YTD margin is stable versus 2018 EBITDA 12 6 15 15 • Low order intake in the quarter as a couple of tender REVENUE AND ORDER INTAKE DEVELOPMENT awards were postponed, ALPR frame agreement (80- NOK million 130 MNOK) not included in order intake or backlog 37 38 32 29 26 25 25 23 17 8 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Revenue Order intake 13 THIRD QUARTER 2019
NEW ALPR LICENSE FRAME AGREEMENT (80-130 MNOK) Undisputed leader in Automated License Plate Recognition Q-Free can offer a range of Intrada products/services • Proprietary processing algorithms and patented analytics give • Intrada ALPR : unparalleled ALPR engine with high accuracy OCR unmatched accuracy and read rates for high automation and and lowest error rates available for custom integration predictability • Intrada Synergy Server (ISS) : integrated high performance • > 150 States and countries supported and actively maintained (private) cloud ALPR solution incl. multiple OCR engines, fingerprinting, tuned business rules and grouping • > 50 000 Licenses in operation • Intrada Synergy as a Service (ISaaS) : managed cloud solution • > 1 Billion tolling transaction images processed per year for flexible scaling and centralized operations • Supports any OS/platform architecture deployment without special • Intrada Insight : ISS including optimized workflows for handling dependencies, can operate on premise or in the cloud manual reviewing to achieve low operational costs • Risk-free OEM partner program supports customer growth 14 THIRD QUARTER 2019
FINANCIAL UPDATE
REVENUE DEVELOPMENT QUARTERLY REVENUES Q3-19 REVENUES PER REGION/BUSINESS AREA NOK million Percent 251 243 APMEA 241 INTER- 11 % 223 217 URBAN EUROPE 16 % 57 % URBAN 9 % AMERICAS 32 % TOLLING INFOMOBILITY 61 % 7 % PARKING 7 % Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • EUROPE is the largest region with 57% of revenues, up from 53% Revenues up 12% from Q3 2018 in Q3-18. Nominally, revenues increased YoY in all regions • Tolling revenues up 25% YoY driven by Denmark • Non-tolling businesses accounted for 39% of revenues in the • Non-tolling revenues down 4.5% YoY due to postponed quarter, down from 46% in Q3-18 delivery of urban SW contracts 16 THIRD QUARTER 2019
EBITDA DEVELOPMENT EBITDA EXCL. NON-RECURRING ITEMS EBITDA MARGIN EXCL. NON-RECURRING ITEMS NOK million Percent 10% 9,2 % 9,0 % 9,1 % 9% 7,3 % 8% 7% 6% 5% 23 22 22 3,8 % 4% 16 3% 2% 9 1% 0% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 • YoY EBITDA improvement due to higher revenues and high • Significant rebound in EBITDA margin in Q2-19 and Q3-19 margin ALPR deliveries compared to a weak Q1-19 • Q3-19 EBITDA has been adjusted with 9 MNOK in positive • 2019 EBITDA negatively impacted by several low-margin tolling effect from reduced pension obligations projects that will be finalized in 2019 • Q1-19 number adjusted for positive pension obligation 17 THIRD QUARTER 2019
SEGMENT PROFITABILITY OVER TIME Tolling EBITDA Inter-Urban EBITDA 60 20 10 40 0 20 -10 0 -20 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Infomobility EBITDA Urban EBITDA 20 20 10 10 0 0 -10 -10 -20 -20 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Parking EBITDA • Urban: Profitability negatively impacted by Serbia up until end of 20 Q1-18 10 • Parking: Profitability in the period negatively impacted by Malta up 0 until end of Q2-18, and R&D expenses related to development of -10 new parking sensor and SaaS platform -20 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 18 THIRD QUARTER 2019
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