Cxense ASA Q1 2015 presentation 13 May 2015 Important notice THIS - - PowerPoint PPT Presentation

Cxense ASA Q1 2015 presentation

13 May 2015

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THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINAFTER JOINTLY REFERRED TO AS THE “PRESENTATION”) HAVE BEEN PREPARED BY CXENSE ASA (THE”COMPANY”) EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON. THE CONTENTS OF THIS PRESENTATION ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS, INVESTMENT OR TAX ADVICE. EACH RECIPIENT SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, INVESTMENT AND TAX ADVISER AS TO LEGAL, BUSINESS, INVESTMENT AND TAX ADVICE. THERE MAY HAVE BEEN CHANGES IN MATTERS, WHICH AFFECT THE COMPANY SUBSEQUENT TO THE DATE OF THIS PRESENTATION. NEITHER THE ISSUE NOR DELIVERY OF THIS PRESENTATION SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THE AFFAIRS OF THE COMPANY HAVE NOT SINCE CHANGED, AND THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT ANY INFORMATION INCLUDED IN THIS PRESENTATION. THIS PRESENTATION INCLUDES AND IS BASED ON, AMONG OTHER THINGS, FORWARD-LOOKING INFORMATION AND STATEMENTS. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS ARE BASED ON THE CURRENT EXPECTATIONS, ESTIMATES AND PROJECTIONS OF THE COMPANY OR ASSUMPTIONS BASED ON INFORMATION AVAILABLE TO THE COMPANY. SUCH FORWARD-LOOKING INFORMATION AND STATEMENTS REFLECT CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS, UNCERTAINTIES AND ASSUMPTIONS. THE COMPANY CANNOT GIVE ANY ASSURANCE AS TO THE CORRECTNESS OF SUCH INFORMATION AND STATEMENTS. AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS DOCUMENT. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. THIS PRESENTATION IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS PRESENTATION IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS

Important notice

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We enable businesses to understand, engage and monetize their audience

• Real-time user tracking and profile building regardless of

whether the users access the sites via mobile, tablet or desktop

• Individually tailored web content and advertisements

create unique user experiences

• Proprietary «big data» management software

Attractive outlook and leading position

• Increasing focus on user-targeted marketing
• Still in early stages of adoption

Long-term client relationships

• Attractive business model

We enable businesses to understand, engage and monetize their audience

• Real-time user tracking and profile building regardless of

whether the users access the sites via mobile, tablet or desktop

• Individually tailored web content and advertisements

create unique user experiences

• Proprietary «big data» management software

Attractive outlook and leading position

• Increasing focus on user-targeted marketing
• Still in early stages of adoption

Long-term client relationships

• Attractive business model

Adopted by global media leaders Adopted by global media leaders

Cxense at a glance

SaaS revenues and gross margin SaaS revenues and gross margin

50% 60% 70% 80% 90% 1 000 2 000 3 000 4 000 4Q12 1Q13 2Q13 3Q13 4Q13* 1Q14 2Q14 3Q14 4Q14 1Q15

USD 1 000

Revenues Gross margin

* Emediate included in revenues from 4Q13

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Predictable high-growth revenue stream

• The “SaaS” (software as-a-service) revenue model

provides revenue visibility

• 12-24 month contract durations and auto renewal

Unique technology with infinite scalability and real- time accessibility

• The Cxense data engine is a core part of our clients’

internet offering

• More than half a billion user profiles maintained across

more than 5 000 internet sites

Robust growth in several geographical markets and verticals

• Powering premium publishers and E-commerce

companies

• The enterprise market has untapped potential
• Market penetration accelerated with recent

strengthening of sales team

Predictable high-growth revenue stream

• The “SaaS” (software as-a-service) revenue model

provides revenue visibility

• 12-24 month contract durations and auto renewal

Unique technology with infinite scalability and real- time accessibility

• The Cxense data engine is a core part of our clients’

internet offering

• More than half a billion user profiles maintained across

more than 5 000 internet sites

Robust growth in several geographical markets and verticals

• Powering premium publishers and E-commerce

companies

• The enterprise market has untapped potential
• Market penetration accelerated with recent

strengthening of sales team Estimated annualized revenue from SaaS backlog at qtr. end Estimated annualized revenue from SaaS backlog at qtr. end

SaaS is the business model for the future

Number of new contracts signed Number of new contracts signed

10 11 12 13 14 15 16 17 18 19 2Q14 3Q14 4Q14 1Q15

USDm

5 10 15 20 25 30 35 40 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15

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Agenda Highlights Operational review Financial review Technology update

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Selected highlights Q1 2015

• 31 new contracts signed in the quarter, an increase of 72% compared to Q1 2014
• Record new recurring license revenue of USD 0.45m in the quarter with an annualized effect
• f USD 1.8m.
• The Cxense DMP is continuing to drive revenue growth
• Premium publishers have historically represented the main client segment, but Cxense is

continuing its move into new verticals such as Bank and Finance and Branded Consumer Goods

• Currency adjusted revenue for the consolidated business was USD 4.4m in Q1 2015.
• The churn in the quarter was USD 0.42, above the average churn rate in 2014. The main

reason is loss of clients in the acquired base. We expect the churn to be back to normalized levels in Q2 2015

• The SaaS segment EBITDA was USD -1.5m in the quarter compared to USD -1.8m in Q1 2014

and USD -3.5m in Q4 2014

• The gross margin was 84%, the same level as Q4 2014
• Following the Q1 2015 private placement and subsequent offering, the company had a cash

position of USD 8.3 million by end of the quarter

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Agenda Highlights Operational review Financial review Technology update

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EMEA Swedish Publisher EMEA Spanish Publisher Japan Japanese Publisher North America Reseller/Partner Latin America Broadcaster in South America

Selected contracts in Q1 2015

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Strong momentum in new contracts and new recurring revenue

• 31 new contracts signed in the quarter. Slightly down from the record level in Q4 2014, but

significantly above the average level for 2014, and a 71% increase compared to Q1 2014

• The new recurring revenue is mainly from our DMP offering, where as last year it was mainly

ad serving software

• 2015 new recurring revenue will continue to be dominated by the DMP offering
• Cxense ASA has experienced an increasing number of invitations to RFP´s in North America

and EMEA, both within publishing but also within the enterprise market

• We are also experiencing also an increase in the number of companies approaching us for

partner agreements

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Business as usual for portfolio

• We experienced higher churn in Q1 2015 –
• ne lost contract represent a large part of

total churn in Q1

• The churn is from our acquired customer

base (Q4 2013)

• We expect the churn, in percentage of

client base, to be the same for 2015 as for 2014

Quarterly churn in USD

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2 20 5

The sales model is working

High End sales ”The Elephant Hunters” Regional Sales The five sales regions Online sales Cxense.com

Serving the largest clients world wide within its sector Professionals with local knowledge performing sales in a region New self service offering on Cxense.com

The number of sales people from 20 to 27

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Agenda Highlights Operational review Financial review Technology update

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USD appreciation masks growing underlying SaaS sales

1.0 0.5 0.0 4.0 3.5 3.0 2.5 2.0 1.5

• 8%

Q1 ’15 3.30 Q4 ’14 3.59 Q3 ’14 3.53 Q2 ’14 3.44 Q1 ’14 3.57 Reported SaaS segment revenues – USD million 4 8 12 16 20 24 28 25.3 Q3 ’14 22.3 Q2 ’14 21.1 Q1 ’14 21.8 +19% Q4 ’14 Q1 ’15 25.9 SaaS segment revenues – NOK million*

*Calculated from reported revenues using average quarterly FX rates

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Good growth trend in new recurring revenue

Higher than expected churn from acquired portfolio in Q2 ’14 and Q1 ‘15

369 351 330 219 446 275 241 201

• 417
• 77
• 53
• 271
• 500
• 400
• 300
• 200
• 100

100 200 300 400 500 600 700 800 Q3 ’14 Q2 ’14 USD 1,000 Q4 ’14 Q1 ’15 Recurring revenue on contracts closed in the qrtr. 1) Lost recurring revenue (churn) New Recurring Revenue effect in reported figures

Acquired portfolio:

• 334

Acquired portfolio:

• 208

2015 growth levers vs 2014  Simplified organizational model with more sales people in front  Increasing sales rep. efficiency  Data Management Platform (DMP)  Launched 2H 2014  Now good sales momentum  We expect churn to normalize  Expect lower churn from acquired portfolio  Good progress on upsell and account management  We expect to maintain a SaaS segment gross margin > 80%

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Significant OPEX reduction realized since previous quarter

SaaS segment OPEX comparison: 2 257 4 417 450 4 264 6 521 3 967 1 000 2 000 3 000 4 000 5 000 6 000 7 000 Q1 2015 reported OPEX Reduction Q4 2014 reported OPEX 176 Expected full effect of cost reductions Q1 2015 adjusted 121 Non-IFRS adjustments Q1 2015 adjusted and comparable to Q4 Development cost Capitalization add back USD 1,000

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Significant EBITDA improvement compared to previous quarters

x

• Churn predominantly with effect in EMEA
• USD appreciation affects revenue development negatively in EMEA, JAPAN and APAC
• Good momentum in Americas

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• Revenues
• USD appreciation versus all other currencies has affected sales

growth negatively

• Good momentum in new sales
• Higher churn than expected in acquired portfolio
• We expect less churn from acquired portfolio going forward
• Acquired portfolio now only 30% of revenues in Q1 2015,

compared to 55% in Q1 2014.

• Gross margin
• Gross margin of 84%
• OPEX / Organization
• Streamlining of organization with more sales people in front (Now

27 vs 14 at the beginning of Q1 2014)

• Overall cost level down, even with stronger sales & marketing team
• Initiated Capitalization of Development expenses in Q1 2015
• USD 450k development expenses capitalized in Q1 2015 –

representing ~25% of total R&D expenses

• EBITDA
• USD -1.2 million adjusted for one-off effects and expected full effect
• f re-organization and cost reduction measures
• Adding back USD 450k of capitalized expenses “cash burn-effect” is

USD -1.65 million for the quarter

Income statement – SaaS segment

Comments

P&L SaaS (USD thousands) Q1 2015 Q1 2014

Revenue Cxense SaaS 3301 3568 COGS 532 644 Gross Profit 2 769 2 924 In % of revenue 84 % 82 % Employee benefits 2 802 3 055

Wherof share based payements cost 121

Other operating expenses 1 462 1 662 Total operating expenses 4264 4 717

Estimated full effect of cost reductions 176

Total operationg expenses adj.

3 967

EBITDA

• 1 495
• 1 793

EBITDA adj.

• 1 199

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Consolidated Statement of Financial Position

Comments

• Total assets of USD 20.9 million
• Largest components:
• Cash
• Goodwill and intangible non-current assets related to the

acquisition of Emediate and capitalized development costs.

• Very limited fixed assets except for USD 400 thousand invested in

hosting equipment under Office machinery, equipment etc.

• Q4 2014 Trade receivables of USD 2.12 million (49 days)

compared to USD 2.9 million (59 days) in Q4 2013.

• Cash and cash equivalents of USD 8.3 million
• Other short term assets of USD 1.6 million [including

escrow account related to Emediate acquisition of ~USD 1 million]

• Current liabilities of USD 4.8 million [including escrow

account related to Emediate acquisition of ~USD 1 million]

• Total equity of USD 15.6 million

USD thousands As of 31 Mar 2015 As of 31 Mar 2014 Non-current assets Goodwill 3 807 3 807 Deferred tax assets 34 49 Intangible assets 4 434 5 337 Office machinery, equipment, etc. 400 279 Other financial assets 173 48 Total non-current assets 8 847 9 519 Current assets Trade receivables 2 120 2 931 Other short-term assets 1 641 2 332 Cash and cash equivalents 8 291 5 936 Total current assets 12 051 11 199 Assets classified as "held for sale" Total Assets 20 898 20 718 Total Equity 15 616 15 135 Non-current liabilities Deferred tax liabilities 507 633 Total non-current liabilities 507 633 Non-current liabilities Trade payables 1 100 1 112 Current taxes 77 58 Other short-term liabilities 3 597 3 780 Total current liabilities 4 775 4 950 Liabilities related to assets "held for sale" Total equity and liabilities 20 898 20 718

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Cash flow statement

Comments

• Net cash flow used in operating activities was USD 2.76

million in Q1 2015, compared to USD 2.86 million in Q1 2015 and USD 2.26 in Q4 2014.

• In Q1 2015 cash flow used in operating activities was

significantly higher than the Q1 2015 EBITDA. This is explained by:

– Significant accrued costs and trade payables at the end of Q4 2014 that were paid during Q1 2015.

• The accrued costs in Q4 2014 relate mostly to the
• rganizational streamlining done in Q4 2014 were

provisions were made for costs with later payments following lay-offs.

– Currency translation effects also affected the Q1 2015 cash flow from operations negatively.

• In Q4 2014 we saw the opposite effect where cash flow

from operations was significantly better than reported EBITDA.

• Investments in intangible assets in Q1 2015 relates to

the cash effect of capitalized development expenses

*After the share issue there were 3 681 717 shares outstanding. There were also 718 634 warrants and 173 380 share

• ptions outstanding

Cash flow statement Q1 2015 Q1 2014 Cash flow from operating activities P/(L) before income tax (inc. disposal group)

• 1 890 -2 147

Adjustments: Income tax payable 29

• Share- based payments

121 74 Result from investment in associates

• Depreciation and amortization

358 313 Currency translation effects

• 624 117

Change in trade receivables 30 69 Change in trade payables

• 354 -821

Change in other accrual and non-current items

• 431 -465

Net cash flow from / (used in) op. activities

• 2 761 -2 860

Cash flow from investing activities Investment in fixed assets 6

• 16

Investment in intangible assets

• 406
• Investment in associated companies
• -31

Investment in subsidiary (1)

• Sale of subsidiary (1)
• Net cash flow from / (used in) investing activities
• 400 -47

Cash flow from financing activities Net proceeds from share issues 8 624

• Proceeds from minority interest
• Net cash flow from / (used in) finaning activities

8 624 Net inc / (dec) in cash and cash equivalents 5 462 -2 907 (1) Cash effects are net of cash received on sale of subsidiary, and cash held by the subsidiary.

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Agenda Highlights Operational review Financial review Technology update

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Cxense DMP: The Operating System for Online Business

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Winnipeg Free Press, Canada

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Excelsior, Mexico

Excelsior.com.mx, topic pages and front- page Content recommendation widgets automatically building topic pages

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Clarin Group, Argentina

Clarin TyC Video recommendations Usage of Cxense technology made CTR soar to 6% on recommendations

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Clarin Group, Argentina

Clarin.com article recommendations Recommendations are used prominently

• n top and at the bottom of articles

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Summary Q1 2015

• 31 new contracts signed in the quarter
• Record new recurring revenue
• Cxense DMP is continuing to drive revenue growth
• Higher churn from the acquired base, but expected to be back to normalized level in Q2 2015
• Cost control and significant reduction in operating cost
• Gross margin of 84%

Q&A

Next event: Q2 2015 – 26 August 2015

28 12.05.2015

Customer case studies from around the globe – demos & workshops using Cxense tech Register today to attend: Cxense.com/CXXP

John Paton CEO Digital First Media Elsie Cheung COO South China Morning Post Achillefs Manolopoulos Head of Digital UX Commercial Bank of Dubai