Mi Minds nds + Ma Machi chine nes Group up Limited
Financial Results FY2018
Presentation – 3 April 2019
http://mmx.co
Financial Results FY2018 Presentation 3 April 2019 http://mmx.co - - PowerPoint PPT Presentation
Mi Minds nds + Ma Machi chine nes Group up Limited Financial Results FY2018 Presentation 3 April 2019 http://mmx.co Disclaimer The following is a presentation (the Presentation) relating to Minds + Machines Limited (MMX).
Presentation – 3 April 2019
http://mmx.co
The following is a presentation (the “Presentation”) relating to Minds + Machines Limited (“MMX”). The Presentation is being communicated by MMX. It is confidential. Recipients may not provide, or otherwise make available, this Presentation to any person whatsoever and no part of it may be reproduced in any manner without the written permission of MMX. The information in the Presentation is subject to updating, revision and amendment. The Presentation does not constitute or form part of any offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any shares in MMX. No reliance may be placed for any purpose whatsoever on the information contained in the Presentation or any assumptions made as to its completeness. No representation or warranty expressed or implied is given by MMX or any of their officers, employees or agents as to the accuracy of the information or opinions contained in the Presentation and no liability is accepted for any such information or opinions (which should not be relied upon) or for any loss howsoever arising directly or indirectly from any use of the Presentation or its contents. The actual results, performance or achievements of MMX may be materially different from the future results, performance or achievements expressed or implied by any opinions, estimates and projections included in the Presentation. This Presentation is exempt from the general restriction on communications contained in section 21 of the Financial Services and Markets Act 2000 (“FSMA”) on the grounds that it is being provided
net worth individual), Regulation 49 (being high net worth companies, trustees of high net worth trusts or unincorporated associations), Regulation 50 (being a sophisticated investor) or Regulation 50A (being a self-certified sophisticated investor) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Financial Promotion Order”) or to persons who are otherwise permitted by law to receive it. Any recipient of this Presentation who does not fall within Regulations 19, 48, 49, 50 or 50A of the Financial Promotion Order or as described above; or to whom distribution is otherwise not lawful may not rely on it and should return the Presentation to MMX immediately. Neither any company nor any person involved in the preparation of the Presentation owes a duty of care to any person or any recipient. Each person or company must undertake such investigations as they see fit before entering into any contract of any kind. If you are in any doubt as to what action to take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorized under the FSMA immediately. Presentation to MMX immediately. Neither any company nor any person involved in the preparation of the Presentation owes a duty of care to any person or any recipient. Each person or company must undertake such investigations as they see fit before entering into any contract of any kind. If you are in any doubt as to what action to take, you are recommended to seek your own financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorized under the FSMA immediately.
Minds + Machines Group Limited | Financial Results FY2018
Slide 2
.vip
.casa
.beer
.work
.yoga .fashion
.fit
.cooking .law
Minds + Machines Group Limited | Financial Results FY2018
Slide 4
(FY17: $3.2m**)
(FY17: $4.8m)
(31.12.17: 1.32m)
(FY 17: $14.3million)
based on book value (FY 17: $46.2m)
(FY17: $12.3m)
**
FY18 is net of $586k of revenue reversed from a prior period; net of reversal, revenue increased by 10% and adj. operating EBITDA by 31% Net of one-off revenue from resolution of contested new gTLD applications and contract restructuring
Slide 5
In partnership On behalf of clients .abogado .bayern .beer .boston .budapest .casa .cooking .dds .fishing .garden .horse .law .luxe .miami .nrw .rodeo .surf .vip .vodka .wedding .work .购物 .country .london .bradesco .gop
.music .hotel
interests
icm icm icm icm .fashion .fit .yoga
Typical Usage
.
Revenue Model Annual reoccurring fee
Minds + Machines Group Limited | Financial Results FY2018
Slide 6
END USERS
MMX
EXTERNAL SALES CHANNEL (registrars) TECHNICAL BACK-END OUTSOURCED
Minds + Machines Group Limited | Financial Results FY2018
Slide 7
North America 58 South America 1 UK 10 China 59 Rest of the world 7 Continental Europe 57 Japan 6 India/South East Asia 12 Internal headcount (Excluding Board) 20 Registrar partners per region
Minds + Machines Group Limited | Financial Results FY2018
Global new gTLD Registrants per Country
Minds + Machines Group Limited | Financial Results FY2018
China | 35.8%
9,507,250 Domains
Whois Proxy | 11.8%
(Unknown Registrant) 3,128,773 Domains
USA | 13.8%
3,677,550 Domains
Other | 16.3%
4,266,472 Domains Germany 2.21% France 1.89% U.K. 1.68% Canada 1.56% India 1.47% Singapore 1.36% Russia 1.18%
Slide 8
Global growth of SME’s Digital entrepreneurs Domain investors
Panama | 6.3%
1,662,837 Domains
Japan | 5.4%
1,442,077 Domains 31-Dec-15 31-Dec-18
Verisign (.com, .net) 139.8m 153.0m 13.2m 3.1% Country codes 138.4m 154.3m 15.9m 3.8% New gTLDs 11.3m 26.5m 15.2m 44.8% MMX 289k 1.81m 1.5m 175.4%
Yearly Average Growth Net 3 year Growth
Minds + Machines Group Limited | Financial Results FY2018
Slide 9
2018 based on gross revenue net of 2016 adjustment
Minds + Machines Group Limited | Financial Results FY2018
Slide 10
In 2016, management set as its target OPEX to be 33%
In 2016, management set as its target Cost of Sales to be 20% of revenue in stable state (gross billings)
2015 2016 2017 2018 20% 17% 24% 23% 0% 5% 10% 15% 20% 25% 30%
1,000 1,500 2,000 2,500 3,000 3,500
Cost fo Sales as a % of Gross Revenue in 000's
Cost of Sales Cost of Sales as a % of Gross Revenue
2018 gross revenue net of 2016 adjustment 2018 gross revenue net of 2016 adjustment
application revenues and contract restructuring costs but include
reversal
Slide 11
Minds + Machines Group Limited | Financial Results FY2018
2015 2016 2017 2018
$(7,700) $2,400 $3,200 $3,600
Accounting Operating EBITDA Adjusted for one-off Items in 000's
years
portfolio in 2018 – H2 boost from maiden ICM contribution
renewal revenue surpassing OPEX
renewal revenue surpassing OPEX & COGs ahead of schedule
Slide 12
Minds + Machines Group Limited | Financial Results FY2018 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000
2015 2016 2017 2018 Gross Accounting Renewals vs COGs and OPEX (in $'000's)
Slide 13
First year premium name billings Standard names and renewals
1st Year 2nd Year 3rd Year 5th Year 4th Year
Minds + Machines Group Limited | Financial Results FY2018
f
2016 2017 2018 Today
Premium Channel
2021
Renewals
62% 16% 34% 37% 11% 10%
Premium Brokered Standards
23% 38% 13% 17% 24% 15%
Minds + Machines Group Limited | Financial Results FY2018
Slide 14
ORGANIC CORE MMX PORTFOLIO SELECTIVE ACQUISITION ICM INNOVATION RATIONALE
ü 23% registration growth ü 19% renewal revenue growth ü 5% growth on cash collected ü Accretive ü > 75% renewal revenue ü Accelerates renewal base growth/reduces exposure to one-off income ü Balance geographic revenues: 55% now in the US, 32% China (2017: 32% US, 53% China) ü R&D to better monetise portfolio by developing relevant, next generation products through DNS based innovation ü First project: .luxe, launched Nov 2018, creates standard naming method between WWW and blockchains
Slide 15
First, dedicated TLD to serve as a digital identifier on two different platforms
Minds + Machines Group Limited | Financial Results FY2018
Slide 16
Blockchain A Blockchain B Blockchain C Blockchain D My Website Ethereum (live) Bitcoin (in development) EOS (in development) Private Blockchain
Minds + Machines Group Limited | Financial Results FY2018
Slide 17
2018 $’m 2017 $’m
Revenue 15.09 14.32 Less: Partner payments (2.52) (2.36) Cost of Sales (3.48) (3.44) Gross Profit 9.09 8.51 gTLD applications 0.48 2.11 OPEX (5.53) (5.29)
Operating EBITDA 4.05 5.33
Strategic, Acquisition and Restructuring costs (1.45) (0.3) Bad debt provisions (2.11)
(4.15)
(7.15)
(1.50)
(1.05)
EBITDA (12.32) 3.99
Other (Depreciation, etc.)
(0.38)
(0.16) Income tax
0.05
(0.02)
Net Profit / (Loss) for the year (12.64) 3.81
Group Statement of Comprehensive Income
Revenue masks underlying growth - cash collections up 30% to $16.1m Renewal revenue now accounts for 62% of total revenue Reflects new IFRS 9 standard – historically, no bad debt Includes $0.7m legacy contract restructuring payment and overhang from 2017 strategic review resulting in acquisition of ICM
COMMENTS
Modest increase in OPEX reflecting efficient integration of ICM COGS flat in spite of portfolio expansion and 2 TLD launches 2017 inflated by one-off revenue of $2.1m of one-off contested gTLD application revenue Provision made based on future min. rev. guarantees above revenue for 2018 - 2021 Consequence of onerous contract provision
Minds + Machines Group Limited | Financial Results FY2018
Minds + Machines Group Limited | Financial Results FY2018
Slide 18
Group Statement of Financial Position COMMENTS
Non-current Assets 2018 $’m 2017 $’m
81.46 46.18
2.83 2.83
0.06 0.08
0.06 0.50
0.43 0.43
0.44 2.96 Total Non-current Assets 85.27 52.98 Current Assets
10.37 15.87
9.13 9.42 Total Current Assets 19.50 25.29 Total Assets 104.77 78.26 Liabilities
(24.39) (12.71)
(5.77)
(30.16) (12.71) NET ASSETS 74.60 65.55 Equity
80.66 60.06
1.14 1.20
(6.87) 4.37
(0.33) (0.07) TOTAL EQUITY 74.60 65.55 $35.3m increase reflects ICM acquisition ($39.6m) and impairment of intangible asset ($4.2m) Includes $0.6m collected in January + $0.5m of long-term receivables collected in March Impact of ICM acquisition $11.7m increase reflects deferred revenue of $9.1m from ICM and drawdown of $3m W.C. facility (fully paid back in March) Remaining onerous contract provision Reflects full ICM acquisition of 225m MMX shares @6.9p - final 128m tranche issued January 2019
Slide 19
Group Cash Flow Statement COMMENTS
2018 2017 Operating EBITDA 4.05 5.33
(0.85) (0.30)
(1.14) (0.67)
0.26 0.26 Cash from Operating Activities 2.32 4.63 Cash from Investing Activities (10.64) (4.00) Cash from Financing Activities 2.82 (0.03) Net (decrease) / increase in cash (5.50) 0.59
15.87 15.28 Cash at end of period 10.37 15.87
ICM acquisition $10m and paying down of restructuring liabilities from 2016 amended contracts 2017 includes one-off gTLD contested application fees of $2.1m 2018 is net of one-off gTLD contested application fees. Reflects proceeds from W.C. facility
Minds + Machines Group Limited | Financial Results FY2018
Decrease due to unwinding of deferred revenue
Slide 20
A robust operating and financial platform in place and well-positioned for future growth ICM acq. completed Revenue mix better balanced across regions Strong outlook
and progress against KPIs
innovation: .luxe integration into Bitcoin and EOS blockchains progressing
Operating performance
domains under management
improved – China dependency reduced
Financial performance
across key metrics
doubled for the second year - exposure to lumpy
reduced
surpassed COGs and Fixed Overheads for first time
http://mmx.co
Slide 22
Chief Executive Officer
Chief Financial Officer
Non-Executive Chairman
Non-Executive Director
Deep Shah
Financial Controller
Solomon Amoako
VP, Channel Management
Yuling Huang
General Manager, China
Caspar von Veltheim
Director of European Sales + Operations
Sheri Falcon
ICANN Policy & General Counsel
Len Bayles
Group CTO
Tony Farrow
Group COO
Minds + Machines Group Limited | Financial Results FY2018
Christa Taylor
CMO
Non-Executive Director
Slide 23
Holder Amount Percent
Stuart Lawley 147,258,683 15.92% London and Capital Asset Management Ltd 121,921,243 13.18% Lombard Odier Asset Management 117,449,116 12.70% Hargreave Hale 64,014,389 6.92% Oryx International Growth Fund Limited 52,550,000 5.68% Hony Capital 50,107,692 5.42% Afilias 28,507,314 3.08% Guy Elliott 20,750,000 2.24% Michael Salazar 1,975,050 0.21% Caspar von Veltheim 916,613 0.10% Toby Hall 500,000 0.05%
The Company’s issued share capital consists of 924,857,562 Ordinary Shares of no par value. No Ordinary Shares are held in treasury. The total number of voting rights in the Company is 924,857,562. The percentage of Ordinary Shares not in public hands is 44.42% per cent. The Company has been notified, in accordance with the Disclosure and Transparency Rules, of the following directors’ holdings and shareholdings amounting to 3% or more of the issued capital with voting rights:
Minds + Machines Group Limited | Financial Results FY2018