Cxense Quarterly Presentation 2014-Q3

2014-11-19 Oslo, Norway

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Important notice

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

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Agenda

Welcome and highlights Q3 2014

Financials Q3 2014

Technology update

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Welcome and highlights Q3 2014 Financials Q3 2014 Technology update

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Predictable high-growth revenue stream 1

Unique technology with infinite scalability and real-time accessibility 2

Robust growth in several geographical markets and verticals 3

Powering premium publishers and E-commerce companies

The enterprise market is an untapped potential

Our three core assets

The “SaaS” (software as-a-service) revenue model represents a predictable revenue stream

Contracts are normally signed for 12-24 months with auto renewal

Proprietary real-time big data technology: Extraordinary Insight Engine (“EIE”) is the core

part of our clients internet offering

More than half a billion user profiles maintained across more than 5000 internet sites

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We empower online companies (our clients)…

… to analyze and understand

their web and mobile audience… … to deliver individualized…

More product sales, advertising revenue, digital subscriptions, engagement and traffic

…Advertising

…Content

& Promotions

Cxense Software

Internet audience / our customers audience

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Selected highlights Q3 2014

Q3 2014 SaaS revenue reached USD 3.53m, up 221% from Q3 2013

22 new contracts signed in the quarter

EMEA and APAC continued to be our strongest performing markets with 84% of the SaaS revenue

Major wins in Latin America during the quarter

SaaS segment gross margin of 81%

R&D delivers new advertising functionality representing a significant milestone within networked online advertising, as well as unique ID management for all devices incl. mobile

SaaS segment adjusted EBITDA of – USD 3.0 million

Ongoing organizational optimization to reduce OPEX by > 20% without sacrificing growth

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Streamlining of the operation

Synergy realization following the Emediate acquisition in Q4 2013

Staff trimmed to 95 employees

Removing overlapping resources in sales & account management and customer onboarding & support

Reallocating sales resources from North America to EMEA and APAC making these regions stronger to handle the increased volume

Opex run rate reduced with more than 20%

With continued top line growth combined with a leaner cost base, we are well positioned to move towards profitability at the same time as we increase our footprint

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Improved ”go-to-market ” strategy

Continued focus on premium publishers and e-commerce companies

Intensify the work on our real-time ”big data” offering to enterprises

Launch an online self-service offering in Q1 2015

Dedicated team working towards ”elephant hunting” world wide

Establish partner sales channel

EXPAND Upsell of more Cxense applications

GROW Increase usage by additional deployment or traffic increase

LAND Acquire new customer

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22 new recurring revenue contracts in different parts of the world

Vocento, S.A., also known as Grupo Vocento, is the leading multimedia communications group in the general press market in Spain

20 minutes is a free, daily online newspaper in France

CVC is the largest retailer of tourism in Latin America, accounting for 60 % of tour packages sold in Brazil

Singapore Press Holdings Limited is a media organization in Singapore with businesses in print, internet, new media, television and radio

Grupo Clarin is the largest media conglomerate in Argentina

Spain

France

Brazil

Singapore

Argentina

Japan Yodobashi Camera Co. is the leading Japanese retailer of electronic products

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Welcome and highlights Q3 2014 Financials Q3 2014 Technology update

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Strong sales growth from Q3 2013 to Q3 2014

0

1

2

3

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1.09

Q3 2013

2.44 3.53

USDm

Q3 2014 Growth

Cxense SaaS segment* revenue growth Growth drivers • Growth in existing customer

base • Capacity increase and upsell of new

applications

• Sale of recurring software

licenses to new customers • Gives accumulating revenue base

• Acquisition of existing customer

bases • Upsell and value increase/leverage

on acquired customer bases by connecting the EIE platform

• Q3 2014 SaaS segment gross margin of 81% (vs. 84% 2013-Q3)

*Q3 2014 (Q3 2013) Consolidated revenues (SaaS segment and PCAN segment) of USD 4.14million (USD 1.7 million)

Gross margin

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KPIs for Q3 2014 SaaS segment

New recurring revenue

New contracts / average deal size

Churn

• New Monthly Recurring Revenue (MRR) of USD 96 thousand in the quarter, whereof USD 53 from September alone

• Annualized effect of new MRR of USD 1.2 million, whereof USD 0.6 million from Sept.

• Annualized revenue run-rate at the end of the quarter of USD 14.4 million

• 22 new SaaS contracts

• Average deal size of new contracts is USD 4.4 thousand (USD 3.4 last quarter)

• New churn with MRR effect of USD 18 thousand (vs. USD 107k in first half)

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SaaS Segment: Income Statement

Q3 2014 gross margin of 81%. CoS relates mainly to hosting of our software solutions.

Q3 2014 personnel costs of USD 4.0 million, whereof USD 137 thousand relates to Share Based payments with no cash effect.

SaaS segment with 118 employees at the end of the quarter

Q3 2014 SaaS segment other OPEX of USD 1.64 million.

Other OPEX positively affected by IPO cost VAT refund of USD 189 thousand and a reversal of one-off receivable loss provision of USD 130 thousand.

Other Opex negatively affected by office moving costs USD 57 thousand and other extraordinary / special of USD 50 thousand.

Q3 2014 EBITDA of USD – 2.8 million and USD -3.0 million adjusted for the special other opex items.

Comments P&L SaaS (USD thousands) Q3 2014 Q3 2013 2 013

Revenues 3 530 1 091 5 573

COGS 666 179 1 030

Gross profit 2 864 912 4 543

In % of revenue 81 % 84 % 82 %

Employee benefi ts 4 034 1 833 8 389

Other operating expenses 1 636 643 3 970

Whereof office moving costs 57

Whereof extraordinary/ special 50

Whereof direct transaction costs -189

Whereof one-off receivable provision -130

Total operating expenses 5 670 2 476 12 359

Total operationg expenses adj. 5 458 2 903 12 346

EBITDA -2 805 -1 564 -7 816

EBITDA adj. -3 017 -1 564 -7 816

Depreciation & Amortization 334 6 223

EBIT -3 139 -1 570 -8 039

Net financia l income/expenses 74 41 194

Net income before tax -3 065 -1 529 -7 845

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Consolidated Statement of Financial Position

Comments

Total assets of USD 19.7 million Largest components:

Goodwill and intangible non-current assets related to the acquisition of Emediate

Cash

Very limited fixed assets, but invested USD 290 thousand in owned hosting capacity in Q3 2014

Q3 2014 Trade receivables of USD 2.7 million (59 days) compared to USD 1.5 million (78 days) in Q3 2013.

Cash and cash equivalents of USD 5.5 million

Other short term assets of USD 2.2 million including USD 1.2 million escrow account related to Emediate acquisition.

Current liabilities of USD 4.9 million, whereof USD 0.3 million relates to unpaid IPO costs and USD 1.2 million relates to the escrow account related to the Emediate acquisition.

Total equity of USD 14.2 million

USD thousandsAs at 30 Sept

2014

As at 30 Sept

20132013

Non-current assets

Goodwill 3,807 0 3,807

Deferred tax assets 10 18 36

Intangible assets 4,778 6 5,429

Office machinery, equipment, etc. 561 74 295

Other financial assets 79 18 20

Total non-current assets 9,235 116 9,586

Current assets

Trade receivables 2,716 1,479 3,000

Other short-term assets 2,201 840 1,870

Cash and cash equivalents 5,524 3,842 8,843

Total current assets 10,441 6,160 13,714

Assets classified as "held for sale" 0 0 0

Total Assets 19,676 6,276 23,300

Total Equity 14,219 3,963 16,883

Non-current liabilities

Deferred tax liabilities 562 0 654

Total non-current liabilities 562 0 654

Non-current liabilitiesTrade payables 1,191 886 1,933

Current taxes 99 66 35

Other short-term liabilities 3,604 1,361 3,794

Total current liabilities 4,894 2,313 5,763

Liabilities related to assets "held for sale" 0 0 0

Total equity and liabilities 19,676 6,276 23,300

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Cash Flow Statement

Comments

Share based payment of USD 137 thousand relates to the 216 thousand outstanding share options (no cash effect)

Depreciation and amortization: Largely attributable to amortization of the allocated purchase price from the Emediate acquisition.

Change on trade receivables affects cash flow negatively as a result more outstanding receivables and reversal of a USD 130 thousand provision

Change in other accrual and non-current items affects cash flow negatively as a result of USD 1.4 million of IPO costs paid in Q3 2014, that was accrued in Q2 2014

Investments in fixed assets includes a USD 290 thousand investment in owned hosting capacity

Q3 2014 net proceeds from share issues affected negatively by the USD increase

*After the share issue there were 3 681 717 shares outstanding. There were also 718 634 warrants and 216 300 share options outstanding

Cash flow statement Q3 2014 Q3 2013 2013

Cash flow from operating activities

P/(L) before income tax (inc. disposal group) -3,009 -1,373 -8,202

Adjustments: -

Income tax payable -66 -

Share- based payments 137 98 199

Result from investment in associates - -

Depreciation and amortization 335 7 227

Currency translation effects 17 118 -364

Change in trade receivables -500 872 465

Change in trade payables -650 -500 -544

Change in other accrual and non-current items -1,321 -1,375 409

Net cash flow from / (used in) op. activities -5,059 -2,153 -7,810-1321.4618 694.14643

Cash flow from investing activities

Investment in fixed assets -331 -5 -62

Investment in intangible assets 0 0 0

Investment in associated companies 5 0 0

Investment in subsidiary (1) 0 0 -9,809

Sale of subsidiary (1) 0 55 55

Net cash flow from / (used in) investing activities -326 50 -9,817

Cash flow from financing activities

Net proceeds from share issues -338 142 16,260

Proceeds from minority interest 0 0 0

Net cash flow from / (used in) finaning activities -338 142 16,260

Net inc / (dec) in cash and cash equivalents -5,722 -1,961 -1,367

(1) Cash effects are net of cash received on sale of subsidiary,

and cash held by the subsidiary.

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Q3 2014 - USD thousands EMEA Americas APAC

Revenues 2 586 507 437 3 530

COGS 489 96 83 666

Gross profit 2 097 411 354 2 864

Gross magin % 81 % 81 % 81 % 81 %

Employees (FTEs) 29,0 16,3 9,0 64,0 118

OPEX 1 326 705 412 3 437 5 880

EBITDA adjusted 771 -294 -57 -3 437 -3 017

In % of revenues 30 % -58 % -13 % -85 %

SaaS segmentSaaS Segment: Regional Sales & Operations SaaS segment:

Group

functions and

R&D

Strong scalability opportunity of group functions and R&D resources through organic growth and acquisition of customer portfolios

Whereof 46 within R&D

Streamlining of the organization after the Q3 2014 will reduce opex run-rate with more than 20%

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Agenda

Welcome and highlights Q3 2014

Financials Q3 2014

Technology update

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Cxense powers the next generation digital consumer experiences…

Internet in 1995 Now Next Generation

Search

Social

Directory

Mobile

Relevant and individualized internet experience

Use

r ex

pe

rie

nce

Cxense provides the opportunity for independent players to get access to similar technology that Facebook, Google and Amazon use today

Sta

tic

& G

ener

ic

Ind

ivid

ua

l & R

elev

an

t

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Data (consumer insight) is the new oil…

• Actionable user data is required to provide relevant, individual user experience • To leverage user data, companies needs advanced technology, for harvesting, processing and applying the extracted insight • Amazon, Google and Facebook have this technology, but keep it for themselves to dominate the online advertising and e-commerce value chains • Cxense is the independent provider of that technology to all other companies

…and it is the users that generate the oil

Capture user data from ANY device,

and across MULTIPLE devices using

multiple tracking technologies

Our 600 million USER PROFILES contain details on every

user’s interest and intent, locations and devices, as well as

data from business systems, such as demographics,

subscription status, or purchase history

Audience Interests Audience Interests

Location Location

Devices Devices

Gain actionable REAL-TIME INSIGHT about traffic, content, and users

from standard and HIGHLY CUSTOMIZABLE dashboards

Custom Dashboard Custom Dashboard

Create AUDIENCE SEGMENTS using

flexible segment criteria, combining

data captured from websites and

apps, with 1st party business data

Leverage the audience segments to drive TARGETED MESSAGING

across multiple marketing channels, increasing REVENUE and

creating ENGAGING user experiences

Targeted Advertising Targeted Advertising Targeted Email Marketing Targeted Email Marketing Personalized Content Personalized Content

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DMP: Contextual & Behavioral User Profiling Targeted advertising & promotions

Conversion to product sales

Compelling value proposition, providing real time consumer insight & customer engagement and monetization

360° customer view

Relevant & individualized content

Female, 31 years old Buenos Aires Likes entertainment news Enjoys premium content Subscribes to sports

Internet user

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Summary

Q3 2014 SaaS revenue of USD 3.53m, up 221% from Q3 2013 (USD 1.1m).

22 new contracts signed in Q3 2014

APAC and Europe continue to be our best performers. A total of 13 new SaaS contracts were signed in the two regions in the quarter representing 59% of the total contract volume in Q3 2014

Realizing synergies from the Emediate acquisition, reducing the Opex run-rate with more than 20%.

The DMP (data management platform) launched in Q2 2014 represented close to 10% of total revenue in Q3 2014

Q3 2014 Adjusted EBITDA for the SaaS segment was USD -3.0m. Extraordinary churn in Q2 2014, which gives a full revenue effect in this quarter, affected the EBITDA negatively.