Capital Market Presentation Segments of operations, results for - - PowerPoint PPT Presentation

Capital Market Presentation

Segments of operations, results for 2018 and Q4 2018.

April 2019 investors@somoto.net e-mail www.somoto.com website

Safe Harbor Statement

2 The presentation contains data, including results, estimates, forecasts, including forecasts regarding the Company’s income and revenue and the Company’s plans in respect of the activity thereof and of the activity of the Company’s subsidiaries, which constitute forward- looking statements, as such term is defined in the Securities Law, 5728-1968, whose materialization is uncertain and may not be solely or partly within the Company’s control. There is no certainty that the information and/or estimates and/or forecasts and/or plans will materialize, in whole or in part, and they may be different from those presented in the presentation, inter alia, due to the effect of external factors which are beyond the Company’s control, such as: changes in the competitive and business environment as well as the materialization of any of the risk factors affecting the Company. In addition, the presentation may contain data based on external sources which were not independently examined by the Company and therefore, the Company is not responsible for the accuracy thereof.

About Somoto Group

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Global software company specializes in online marketing. Engaged in application distribution, video & mobile advertising. Advanced Profiling Technology. As part of the Innovation Activities, Developing a new EduTech APP and an Audio related product. Diverse technologies enabling high profit margin in its areas of activity, including among others, algo trading technology for purchasing inventories. Revenues in 2018 of $54.3 million, decrease of 16% compared to 2017. Revenues in Q4 2018 of $14.8 million, increase of 3.5% compared to Q3 2018, and increase of 3.4% compared to Q4 2017. An organic growth strategy based on technology and innovation as well as unorganic growth through mergers and acquisitions. The Company presents growth in its EBITDA Margins

• ver Revenues during 2018, on a quarterly basis, in Q4

2018 EBITDA margin of 28.4%. EBITDA in 2018 of $13.4 million, increase of 10.2% compared to 2017. Revenues in Q4 2018 of $4.2 million, increase of 7.7% compared to Q3 2018, and increase of 110% compared to Q4 2017.

Market Cap

• Appx. $44m

Quick Facts

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Employees 75 (Appx. 43% developers) Listed on TASE 8/2013 Management Strong and experienced Management Diversification Different areas

• f activity

M&A Strategy 4 acquisitions in the fields of: distribution of applications, video and mobile EBITDA CAGR 2013-2018 CAGR of 32% Significant positive cash balances

• Appx. $17.2m as of December 2018;
• Appx. $12.7m net cash.

Dividend Dividend payments in 2018 of NIS 33.7m, with a dividend yield of 23.05%. In addition, a first dividend payment in 2019 of NIS12m, with a dividend yield of 7.1%.

Entrepreneurs and Management

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Yaron Fishman | Product Innovation

Product Manager and Innovation Center

• VP Technology at Genieo- (sold to Somoto for appx. $34m)
• VP Product Development- Delver (Sears Israel)
• Senior Product Manager- Babylon
• Senior Product Manager- Kasamba

Assaf Itshayek | CEO & CFO

Accountant, MBA from Tel Aviv University

• CFO of Blue Snap sold for $115m
• CFO of Digital Power Corp (DPW)
• Controller at Metalink (MTLK)
• Senior Audit Manager at Deloitte

Eyal Yaakov | User Acquisition Co-Founder

Founder of SITE ON SPOT (specialist advertising network)

• 12 billion annual exposures
• Optimization, management of advertising growth of leading Web sites
• More than 15 years of experience in developing Internet systems
• Graduate of the ZEL Computing program at IDC Herzliya
• Major in Computer Science

Ben Garrun | Mergers and acquisitions and Co-Founder

Founder of SweetPacks Free Entertainment Software

• Sales of $ 35m; $ 7m profit
• 200 million installations, 500,000+ daily installs
• Alexa rank of 230, among top global websites
• Return of 126x; sale value and dividends worth $54m+
• MBA from Tel Aviv University

Eido Safrai | R&D

B.A Computer Science, Bar Ilan University

• VP R&D- Mystate Mobile
• R&D Manager- Tabtale (Games industry)
• R&D Manager- CEVA (semiconductor)

Ron Jawroski | MEME VIDEO

• BSc. Computer science Ben Gurion University,

Executive MBA Tel Aviv University

• CEO- TIM media
• COO- Meme Video
• Head of Video – Adstract

M&A and Unorganic Growth through M&A

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Mergers & Acquisitions Tabatoo Ltd.

May 2014

Genieo Innovation Ltd.

Sep. 2014

Terser Tude Ltd.

Jan. 2016

Meme Video Ltd.

Sep. 2016 Growth through M&A Acquisition structures and terms so far Cash based and shares based transactions, and additional payments based

• n goal achievements

Growth Strategy Video Advertising and Mobile

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Video Advertising

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Entering the video advertising market - gaining profits from a growing sector

Online video advertising market in USA is expected to reach appx. $22bn in 2021 Online video advertising market worldwide is expected to reach appx. $427bn in 2022 Volume of mobile video advertising expected to grow 5x between 2015 and 2020 in the US alone CAGR of 40%; expected to reach appx. $6.5bn in the US

Video Activity in the Somoto Group

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Various activities including Mobile, PC, in-App CTV, Audio Relationships with Advertisers and Publishers. Skilled man power and knowledge in the video advertising field. Highly experienced with Technology, digital media and algorithm trading. Algorithmic system that optimize Bids for digital impressions.

• Appx. 30 employees.

Develops innovative technological tools in the digital video field. Purchases media inventory and matches advertisers with the target audience needs. Use of advanced technologies, including Big Data, Player, Waterfall, Bidder, Ad Server. Tens of millions of video advertisements per day. Primary activities in the US, Canada, Australia, Britain, Germany and South America.

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Data based on research data and from Statistica Inc. and Gartner and AppAnnie.

106 Billion Dollars

Mobile market income in 2018

Over 100

Advertisers and distribution partners Monetization and distribution platform

For websites and mobile applications

Mobile Advertising

Mobile Market - Mobile Application Distribution

205 Billion

Application installations in 2018

The Group’s Technology

Appx.

• x. 43

43% techno nology y related ed employees yees

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Video Technology

Alert system and decision support Use of multiple ad servers (Vidible, LKQD, SpotX, Optimatic) Unique algorithm determining the viability of purchasing inventory and matching the advertisement to the inventory

Mobile Technology

Automated production of advertising campaigns Self service systems for partners BI capabilities Mobile adserver algorithm

Installation & Monetization

Dynamic HTML-based File less than 150 KB A cloud-based CDN Optimization algorithm End-user analytics in real time

BI & Media Purchase

Big data technology Advanced data mining capabilities Real-time offer management engine API interface for online advertising exchange

Patents & Artificial Intelligence Technology

AI based micro behavioral targeting technology Creating a deep user profile automatically Three registered patents Full end-user privacy A wide range of potential applications

Financial Data

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Results for 2018, 2017 and Q4 2018

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Revenue, EBITDA & Financial Strength

Revenues in 2018 of appx. $54.3m, decrease of 16% compared to 2017. Revenues in Q4 2018 of appx. $14.8m, increase of 3.5% compared to Q3 2018, and increase of 3.4% compared to Q4 2017. EBITDA in 2018 of appx. $13.4 million, increase of 10.2% compared to 2017. Revenues in Q4 2018 of appx. $4.2 million, increase of 7.7% compared to Q3 2018, and increase of 110% compared to Q4 2017. Cash balance in December 2018 of appx. $17.2m; net cash of appx. $12.7m. Dividend payments in 2018 of NIS 33.7m, with a dividend yield of 23.05%. In addition, a first dividend payment in 2019

• f NIS12m, with a dividend yield of 7.1%.

Cash flow from operations in 2018 of $13.6m, a decrease of 4.9% compared to

• 2017. Cash flow from operations in Q4

2018 of $3.9m, an increase of 68.17% compared to Q4 2017. Total equity – December 2018 of $31.3m. Revenues in 2017 of $64.7m, representing an increase of 26% compared to 2016. EBITDA in 2017 of $12.2m. Cash balances in 2017 of $17.1m, net cash of $12.2m. Cash flow from operations in 2017 of $14.2m, increase of 370% Compared to 2016.

Consolidated Profit and Loss Statement Yearly and Quarterly

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Year ended December 31 USD thousand 2017 2018 Q1/2018 Q2/2018 Q3/2018 Q4/2018 64,726 54,335 11,787 13,409 14,325 14,814 Revenue 41,662 24,798 5,522 6,219 6,763 6,294 Cost of sales (inc. amortization) 4,476 4,464 1,105 1,112 1,119 1,128 R&D expenses 8,385 12,034 3,330 3,287 2,437 2,980 S&M expenses 4,035 4,288 1,002 1,057 1,271 958 G&A expenses 1,564 1,564 Other expenses 58,558 47,148 10,959 11,675 11,590 12,924 Total Expenses 6,168 7,187 828 1,734 2,735 1,890 Operating profit 3,516 5,297 462 1,314 1,694 1,827 Net profit 12,199 13,446 2,195 3,101 3,934 4,216 EBITDA As a % of sales 9.5% 13.2% 7.0% 13% 19.1% 12.8% Operating profit 18.8% 24.7% 18.6% 23.1% 27.5% 28.5% EBITDA

Balance Sheet Statements

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2017 2018 Current assets: 15,150 16,374 Cash and cash equivalents 212

• Short-term deposit

581 75 Restricted cash and deposit

• 500

Cash in trust in connection with wholly owned subsidiary acquisition 15,069 11,912 Receivables and other account receivables 31,012 28,861 Non-current assets: 1,336 785 Restricted cash and deposits 25,422 19,163 Intangible assets and goodwill 229 244 Fixed assets 668 375 Deferred taxes 27,655 20,567 58,667 49,428 Total assets 2017 2018 Current liabilities: 2,075

• Liabilities in connection with wholly owned

subsidiary acquisition 3,416 1,500 Bank loans 69 67 Liabilities to the OCS in Israel 12,502 12,352 Other current liabilities 18,062 13,919 Non-current liabilities: 1,406 2,969 Bank loans 1,018

• Liabilities in connection with wholly owned

subsidiary acquisition 2,115 1,288 Deferred taxes 22,601 18,176 Total liabilities Equity attributable to shareholders 36,066 31,252 Total equity 58,667 49,428 Total liabilities and equity

Consolidated company’s results on a quarterly basis, 2018 :

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14.8 4.2 14.3 3.9 13.4 3.1 11.8 2.2 Revenues EBITDA Q4 2018 Q3 2018 Q2 2018 Q1 2018

Somoto Consolidated Q1 18, Q2 18, Q3 18, Q4 18- in M$

Consolidated company’s results on a yearly basis:

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Somoto Consolidated 2016, 2017, 2018- in M$

54.3 13.4 64.7 12.2 51.2 16.4 Revenues EBITDA 2018 2017 2016

Company’s Results in App. Distribution segment, quarterly basis:

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Somoto - App. Distribution Quarterly- in M$

8.7 4.1 8.1 3.6 8.3 3 7.9 2.9 5.8 2.1 Revenues EBITDA Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017

2018, Vision and Summary

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Summary of Strategy and Growth Drivers

20 A global software company, specializing in

• nline marketing.

Engages in application distribution, video and mobile marketing and monetization. EBITDA in 2018 of $13.4 million, increase of 10.2% compared to 2017. Revenues in Q4 2018 of $4.2 million, increase of 7.7% compared to Q3 2018, and increase of 110% compared to Q4 2017. Cash balance in December 2018 of appx. $17.2m; net cash of appx. $12.7m. Preserving and increasing profitable activities and decreasing activities with low profit rate. Experienced management with a proven track record to grow in a dynamic market. Dividend payments in 2018 of NIS 33.7m, with a dividend yield of 23.05%. In addition, a first dividend payment in 2019 of NIS12m, with a dividend yield of 7.1%. Growth engine in video market, expected to grow to appx. $427bn in 2022. Growth engine in mobile market, expected to grow to appx. $106bn in 2018. Successful acquisitions of four companies with the intent of acquiring additional growth companies. Traded in the Tel Aviv Stock Exchange, Market cap of appx. $44m.

Advanced Profiling Technology. As part of the Innovation Activities, Developing a new EduTech APP and an Audio related product.

Thank You

investors@somoto.net e-mail www.somoto.com website