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Cxense ASA Q4 2014 presentation

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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 Q4 2014

Financials Q4 2014

Tech update

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Welcome and highlights Q4 2014 Financials Q4 2014 Tech update

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Selected highlights Q4 2014 Annualized currency adjusted run rate of USD 18.3m in December 2014, as

compared to a Q3 2014 run rate of USD 16.4m

Quarterly currency adjusted SaaS segment revenue of USD 3.8m, which represents a Y/Y growth of 43%

SaaS segment gross margin of 84% compared to 81% in the two previous quarters due to full effect from the change in hosting partners

The cost cutting plan is moving forward as planned, and the company is aiming for monthly operating expenses of of USD 1.5 million, a reduction of more than 20% compared to September 2014 opex level

North America is gaining traction, and was our strongest performing region in the quarter.

The Q4 2014 EBITDA for the SaaS segment was USD -3.3m. Adjusted for the expected full effect of the ongoing cost reductions as well as one-off items in the quarter, the loss would have been USD 1.5m

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Selected contracts in Q4 2014

APAC

EMEA

Japan

North America

Latin America

Publisher based in Hong Kong

Newspaper based in Copenhagen

Largest retailer in Japan

Publisher based in Utah, USA

Broadcaster based in Buenos Aires

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Strong momentum, and 34 new contracts signed in the quarter, a growth of 55% compared to Q3 2014

December contracts represent a monthly recurring revenue of USD 73k and a yearly revenue of USD 876k

The DMP (Data Management Platform) continues to gain traction

First Bank and Finance contract signed in February 2015

North American operation bounced back after the two previous modest quarters, and we see significant opportunities in the region in 2015

40 per cent of the contracts in the quarter were up-sell to existing clients

Record number of contracts in Q4 2014

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Uplift in sales efficiency

New MRR (monthly recurring revenue) per year ▪ 2012: USD 137k ▪ 2013: USD 161k ▪ 2014: USD 301k

New MRR per sales rep. per year (sales efficiency) ▪ 2012: USD 15k ▪ 2013: USD 16k ▪ 1H 2014 annualized: USD 17k ▪ 2H 2014 annualized: USD 25k ▪ Dec. 2014 closed annualized: USD 45k

Churn ▪ 2012: USD 35k ▪ 2013: USD 39k ▪ 2014: USD145k (whereof USD 83k from our acquired portfolio)

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Sales model with more people attacking the market

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

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The number of sales people from 20 to 27; a growth of 35%

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Welcome and highlights Q4 2014 Financials Q4 2014 Tech update

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Strong sales growth from Q4 2013 to Q4 2014

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1

2

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Q4 2014 Growth

USDm

Q4 2013

2.65

3.59 0.94

+35%

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

• Q4 2014 SaaS segment gross margin of 84%, compared to Q4 2013 gross margin of 81%

*Q4 2014 (Q4 2013) Consolidated revenues (SaaS segment and PCAN segment) of USD 4.15million (USD 3.2 million)

Gross Margin

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KPIs for Q4 2014 SaaS segment

New recurring revenue

New contracts / average deal size

Churn

• New committed Monthly Recurring Revenue (MRR) of USD 116,6 thousand in Q4 2014

• New committed MRR of USD 73 thousand in Dec 2014 – i.e. annualized run-rate of USD 876 thousand

• 34 new SaaS contracts in Q4 2014, compared to 22 last quarter

• Average deal size of new contracts is USD 3.4 thousand

• New churn with full MRR effect of USD -33 thousand – annualized run-rate effect of USD -132 thousand

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70

275

Churn / Lost MRR

3 531 -77

Q3 2014 revenues

New MRR Currency effect

3 591

-208

Change in services and

variable license

revenues

Q4 2014 revenues

3 800

Currency adjusted quarterly growth:

7.6%

~85% of revenue is invoiced in other currencies than USD

Q4 USD appreciation with negative impact on revenue growth Cxense SaaS revenues – Q3 2014 to Q4 2014 development, USD thousand

Reported quarterly

growth: 1.7%

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Revenues Growth negatively affected by USD hike versus other currencies

85% of recurring revenue base is invoiced in other currencies than USD

Healthy currency adjusted growth

Gross margin Increase versus previous quarters due to full effect of hosting

cost improvements launched in Q3 2014

Personnel costs Number of FTEs reduced from 118 at the end of Q3 2014 to 95

after the reorganization

Re-organization executed during Q4 2014 – limited cost effect in the quarter

Q4 2014 negatively affected by provisions for 2015 restructuring costs

Full effect from cost reduction measures by June 2015, >80% by March 2015

Other OPEX Significant one-off effects as a result of re-organization and

other one-off items.

EBITDA USD -1.5 million adjusted for one-off effects and expected full

effect of re-organization and cost reduction measures, a significant reduction vs Q3 2014 adjusted EBITDA level of USD 3 million

Q4 2014 comments P&L SaaS (USD thousands) Q4 2014 Q4 2013

Revenue 3590 2649

COGS 565 501

Gross Profit 3 025 2 148

In % of revenue 84 % 81 %

Employee benefits 4 487 2 935

Wherof share based payements cost 136

Wherof share based social cost provisions and costs 76

Wherof salary and social restructuring prov. and costs 345

Other operating expenses 2 034 1 834

Wherof office moving costs and restructuring costs 68 0

Wherof extraordinary/ special 496 0

Wherof direct transaction costs -419 0

Wherof one-off receivable provision 210 0

Wherof R&D refund -228 0

Total operating expenses 6 521 4 769

Total operationg expenses adj. 5 837 0

EBITDA -3 496 -2 621

EBITDA adj. -2 811 0

Estimated full effect of cost reduction program 1299 EBITDA adjusted for est. full effect of cost reduction -1512

Income statement – SaaS segment

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Consolidated Statement of Financial Position

Comments

Total assets of USD 15.6 million Largest components:

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

Cash

Very limited fixed assets except for USD 240 thousand invested in hosting equipment under Office machinery, equipment etc.

Q4 2014 Trade receivables of USD 2.15 million (44 days) compared to USD 3.0 million (84 days) in Q4 2013.

Cash and cash equivalents of USD 2.8 million

Other short term assets of USD 1.8 million including USD 1.1 million escrow account related to Emediate acquisition.

Current liabilities of USD 5.8 million, whereof USD 0.15 million relates to unpaid restructuring costs and USD 1.1 million relates to the escrow account related to the Emediate acquisition.

Total equity of USD 9.4 million

USD thousandsAs at 31 Dec

2014

As at 31 Dec

2013

Non-current assets

Goodwill 3 807 3 807

Deferred tax assets 35 36

Intangible assets 4 309 5 429

Office machinery, equipment, etc. 483 295

Other financial assets 197 20

Total non-current assets 8 829 9 586

Current assets

Trade receivables 2 150 3 000

Other short-term assets 1 827 1 870

Cash and cash equivalents 2 828 8 843

Total current assets 6 805 13 714

Assets classified as "held for sale" 0 0

Total Assets 15 635 23 300

Total Equity 9 385 16 883

Non-current liabilities

Deferred tax liabilities 480 654

Total non-current liabilities 480 654

Non-current liabilitiesTrade payables 1 454 1 933

Current taxes 119 35

Other short-term liabilities 4 196 3 794

Total current liabilities 5 770 5 763

Liabilities related to assets "held for sale" 0 0

Total equity and liabilities 15 635 23 300

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Cash flow statement Q4 2014 comments

Cash flow from operations significantly lower than group EBITDA for Q4 2014 due to the following reasons:

Good accounts receivable collection results in Q4 2014

Additional year-end receivable loss provision

Provisions for restructuring costs related to the cost reduction program executed in Q4 2014

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

Cash flow statement Q4 2014 Q4 2013 2013

Cash flow from operating activities

P/(L) before income tax (inc. disposal group) -4 125 -2 833 -8 202

Adjustments:

Income tax payable -107 -

Share- based payments 135 51 199

Result from investment in associates - -

Depreciation and amortization 365 211 227

Currency translation effects -293 260 -364

Change in trade receivables 566 71 465

Change in trade payables 264 221 -544

Change in other accrual and non-current items 934 763 409

Net cash flow from / (used in) op. activities -2 261 -1 257 -7 810-1321,4618 694,14643

Cash flow from investing activities

Investment in fixed assets -6 -54 -62

Investment in intangible assets 0 4 0

Investment in associated companies -12 0 0

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

Sale of subsidiary (1) 0 0 55

Net cash flow from / (used in) investing activities -18 -9 859 -9 817

Cash flow from financing activities

Net proceeds from share issues -416 16 118 16 260

Proceeds from minority interest 0 0 0

Net cash flow from / (used in) finaning activities -416 16 118 16 260

Net inc / (dec) in cash and cash equivalents -2 695 5 002 -1 367

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

and cash held by the subsidiary.

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Cxense SaaS: Significant EBITDA run-rate improvement

SaaS segment

USD thousands

Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014 Q4 2014 Q3 2014

Revenues 2 609 2 587 503 507 479 437 3 591 3 531

COGS (allocated) 411 489 79 96 76 83 566 667

Gross profit 2 197 2 098 424 411 404 354 3 025 2 864

Gross magin % 84 % 81 % 84 % 81 % 84 % 81 % 84 % 81 %

Employees (FTEs) 20 29 14 16 10 9 50 64 95 118

OPEX (allocated) 968 1 325 649 704 484 411 2 443 3 433 4 544 5 873

EBITDA adjusted 1 229 773 -225 -293 -80 -57 -2 443 -3 433 -1 519 -3 009 In % of revenues 47 % 30 % -45 % -58 % -17 % -13 % -42 % -85 %

Group functions

and R&D

SaaS business

segment TOTAL

Regional Sales & Operations

EMEA Americas APAC

The table above shows a SaaS segment EBITDA allocation by geography. The allocated EBITDA is adjusted for one-off costs and provisions and the expected full effect of the cost reduction program executed in Q4 2014.

Whereof 40 within R&D

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Welcome and highlights Q4 2014 Financials Q4 2014 Tech update

Cxense DMP (Data Management Platform): The Operating System for Online Business

Simple online sign-up to

capture more leads

Four pricing levels to fit a wide

range of businesses

Minimizes sales team

involvement

Focuses sales force on upsell

of related products such as

the Cxense DMP

Sign-up and pay online

Personalized bank website

Cxense to customize the online banking

experience to match user needs and

increase sales & loyalty.

Youth saver, mortgage or pension?

Individual user profiles determine whether a

bank should promote a mortgage, youth

savings account, credit card or pension.

Educate and convert

By identifying customer segments with high

propensity to buy products, a bank can

create tailored sales funnel to increase

conversions across all devices, including

mobile phones and tablets

Cxense signs first bank client

Introducing Cxense Insight 30 day free trial & online registration

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Summary Q4 2014

Record number of new contracts

Annualized currency adjusted run rate of USD 18.3m in December 2014

The DMP is gaining traction

New sales model with more people ”in front”

Raised USD 7m in new equity in January 2015

Well positioned for growth