Cxense ASA Q2 2015 presentation26 August 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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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
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Cxense helps businesses understand, engage and monetize their audience
> INCREASED CONVERSION
> INCREASED REVENUE
MORE PERSONALIZEDAND ENAGAGING
USER EXPERIENCES
BETTERAUDIENCE
DATA
CUSTOMER BENEFITS
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Adoption accelerating, customer base growing
KEY CONTRACTS SIGNED 2014 - YTD 2015
Consumerbrands
e-commerce and classifieds
Bank andFinance
Media
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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
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Highlights
Breakthroughs in new verticals driven by Cxense DMP
– A record 37 new contracts signed in the second quarter, an increase of 19% compared to Q1 2015
– Momentum continues into the Q3 2015 as global leaders Red Bull, Gannett (USA Today) and The Weather Channel sign contracts
– Confirms successful breakthrough into new verticals: Branded Consumer Goods, e-commerce and Banking, adding to the established leading position in the publishing vertical
Acquires Maxifier as part of ambitious growth strategy
– Extends North America and EMEA footprint
– Adds online advertising optimization to the Cxense portfolio
Signs three-year OEM agreement with Aim-listed mporium plc and takes minority stake
– mporium to upgrade their mobile commerce solutions with Cxense technology and Cxense SaaS technology platform gets positioned in mobile ecommerce
Currency adjusted revenue for the consolidated business was USD 4.1m in Q2 2015.
– The Q2 2015 adjusted SaaS segment EBITDA was USD -2.1 million, compared to USD -2.9 million in the same quarter last year.
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EMEA Branded Goods
North America Publisher
Japan Branded Goods
APAC Broadcasting
Latin America Publisher
Selected contracts in Q2 2015
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Maxifier deal strengthens position and product offering
Enhance North America and EMEA footprint
Adds online advertising optimization to our product suite
Complements Cxense’s data-driven products targeting personalizing and optimizing user experiences
In line with Cxense’ strategy of pursuing organic- and acquired growth
New York-based with sales offices in the UK and Japan, and R&D in Russia
Portfolio of premium publishers (Condé Nast, Forbes, The Atlantic and Bauer Media) and leading classifieds publisher Leboncoin
Analyzes +40 billion ad impressions per month to optimize ~50,000 digital ad campaigns
Less time spent on manual campaign optimization and increased ad effectiveness and revenue
Near term focus on business restructuring and reaching positive EBITDA by end of Q3 2015
Key drivers are integration, synergy capture and new contracts
Significant new orders won since closing with The Weather Channel and The Guardian
Negative EBITDA run-rate of USD -0.8 million at time of acquisition
Payment made in form of new Cxense shares issued, equal to a value of USD 3.10 million
Earn-out clauses may trigger issue of further consideration shares for up to 24 months
TRANSACTION RATIONALE
TARGET COMPANY
TERMS
INTEGRATION STRATEGY
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Quarterly revenues – reported vs “run-rate” adjusted
4 845720
735
3 540
0
1 000
2 000
3 000
4 000
5 000
Q2 2015 reported
-150
Full effect of contracts
closed until 26 August 2015
Full effect of known churn until
26 August 2015
Maxifier Q2 2015 run-rate
Q2 2015 "run-rate" adjusted
USDk
Annualized: 19.3 million
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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
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0
5
10
15
20
25
30
35
40
Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
Record high level of new contracts
Breakthroughs in new verticals and strong demand from core publishing segment
– Cxense DMP the key demand driver
– Maxifier signing new contracts
Significant up-lift in average contract size
– Increase of 71% in Q2 2105 from Q1 2015
– Annualized recurring revenue per contract of USD 72 thousand (USD 42 thousand)
Sales efficiency improving further
– Average new annualized recurring revenue per sales representative of USD 528 thousand
– Up 76% from USD 300 thousand in Q1 2015
Quarterly number of new contracts
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Churn nearly halved from previous quarter
Churn significantly reduced in Q2 2105 from Q1 2015
No churn to date for Cxense DMP ⁻ Churn comes from the ad serving business
⁻ Related to acquired customer base (Q4 2013)
We expect churn to decline further in Q3 2015
Quarterly churn (USD 1 000)
0
100
200
300
400
500
Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
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Multinational sales footprint established, organizational optimization continues
OSLO
ZURICHLONDON
MADRIDNEW YORK
MIAMI
BUENOS AIRES
TOKYO
SINGAPORE
Organization of 27 sales people:• High End sales ”The Elephant Hunters”• Regional sales • Online sales Cxense.com
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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
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Q2 2015 revenue run-rate significantly above reported revenues due to very good sales momentum at the end of the quarter
4 845720
735
3 540
2713 881
0
1 000
2 000
3 000
4 000
5 000
Maxifier Q2 2015 run-rate
-150
Full effect of known churn
until 26 August 2015
Q2 2015 reported
Full effect of contracts
closed until 26 August 2015
Q1 2015 reported
-223
Q2 2015 "run-rate"
adjusted
USDk
Currency effect
-74
Churn Service revenue
and other
variable
New recurring
license
-315
Quarterly SaaS segment revenues – reported vs “run-rate” adjusted
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Increasing sales efficiency and average contract value
Sales efficiency / sales rep.2:
1 Annualized recurring revenue effect of quarterly performance2 Sales efficiency: Annualized recurring revenue effect of contracts closed on a yearly basis per sales rep
240 288 312 300 528
Recurring revenue on contracts closed in the quarter up 80% compared to last quarter
Net value of closed contracts and churn translates to a quarterly organic growth of 13%
Sales efficiency / sales rep more than double of same quarter last year
Average annualized revenue per contract of USD 72k vs 42k in previous quarter – up 71%
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Significant OPEX reduction effect from the ongoing organization streamlining following the Maxifier acquisition
1 470 1 227
4 6504 407
5 699
0
1 000
2 000
3 000
4 000
5 000
6 000USD 1,000
Q2 2015 combined OPEX adjusted for ongoing reduction
Full effect of ongoing combined
OPEX reduction
Maxifier Q2 run-rate OPEX
Q2 2015 OPEX adjusted
Q2 2014 OPEX adjusted
Program effectuated 5 days after Maxifier
closing:
70% of cash opex effect expected by end of Q3
2015, 85% by end of Q4 and 100% by end of Q1
2016
Lower opex base – higher sales efficiency
Maxifier: Expected small net OPEX-addition – significantly better platform for future growth
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Timing of new contracts impacts revenues
Record momentum in new sales to impact from Q3 2015
Other factors: Churn, currency and lower other income
Churn reduced ~50% in Q2 2015 from Q1 2015
Above expectations, impacting ad serving portfolio
No churn on the DMP
Expected to decline further in Q3 2015
Gross margin declined to 78%
Reflects added capacity from opening of a new datacenter in Japan
Cost reduction in Japan DC expected towards year end through move from lease to co-location
Adjusted OPEX down compared to last year due to organizational streamlining
EBITDA
USD -2.13 million adjusted for one-offs, transaction costs , severance costs and share based payments
Income statement – SaaS segmentP&L SaaS (USD thousands) Q2 2015 Q2 2014
Revenue
Cxense SaaS 2 954 3 442
COGS 664 646
Gross Profit 2 290 2 796
In % of revenue 78 % 81 %
Employee benefits 3 063 3 861
Wherof share based payements cost 93 -
Wherof share based social cost provisions and costs 10 -
Wherof salary and social restructuring prov. and costs 140 -
Other operating expenses 2 255 3 685
Wherof office moving costs and restructuring costs - -
Wherof extraordinary/ special - 40
Wherof one-off receivable provision - 200
Wherof direct transaction costs 658
1 607
Wherof R&D refund - -
Total operating expenses 5318 7 546
Total operationg expenses adj. 4 417 5 699
EBITDA -3 028 -4 750
EBITDA adj. -2 126 -2 903
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Consolidated Statement of Financial Position
Total assets of USD 21.4 million
Goodwill and intangible non-current assets related to the acquisition of Emediate and capitalized development costs
Maxifier not included – to be consolidated from Q3 2015
Office machinery, equipment etc. includes hosting servers
Investments in associated companies reflecting ownership in mporium of 100 million shares.
Q2 2015 trade receivables of USD 1.74 million (44 days) compared to USD 2.22 million (48 days) in Q2 2014.
Cash and cash equivalents of USD 5.38 million
Unpaid transaction costs at 30.06.15’ of USD 0.7 million
Current liabilities of USD 6.58 million
Other short term liabilities includes deferred mporium revenue of USD 1.5 million and USD 0.5 million in the Emediate Escrow account
The escrow account related to the Emidate acquisition was released during Q2 2015
Total equity of USD 14.4 million
USD thousandsAs of 30 Jun
2015As at 30 Jun
2014
Non-current assets
Goodwill 3 807 3 807
Deferred tax assets 34 11
Intangible assets 4 550 5 060
Office machinery, equipment, etc. 361 284
Investment in associated companies 4 276
Other financial assets 199 65
Total non-current assets 13 227 9 228
Current assets
Trade receivables 1 736 2 216
Other short-term assets 1 097 2 123
Cash and cash equivalents 5 376 11 245
Total current assets 8 208 15 584
Assets classified as "held for sale" 0 0
Total Assets 21 435 24 812
Total Equity 14 440 17 616
Non-current liabilities
Deferred tax liabilities 414 581
Total non-current liabilities 414 581
Non-current liabilities
Trade payables 1 073 1 841
Current taxes 74 102
Other short-term liabilities 5 433 4 673
Total current liabilities 6 581 6 615
Liabilities related to assets "held for sale" 0 0
Total equity and liabilities 21 435 24 812
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Cash flow statement
Net cash flow used in operating activities was USD 1.54 million in Q2 2015, compared to USD 2.16 million in Q2 2014 and USD 2.76 in Q1 2015
Net cashflow used for investments of USD 1.24 million in Q2 2005 relates to the mporiuminvestment and capitalization of development expenses
Q2 2015 cash flow used in operating activities was significantly better than EBITDA
Accrued costs at end of quarter to be paid in Q3 2015
Positive effect from better collection results
Currency translation effects
*As at 30 June 2015, there were 4,432,892 shares outstanding. There were also 718,434 warrants and 257,200 share options outstanding
Cash flow statement Q2 2015 Q2 2014
Cash flow from operating activities
P/(L) before income tax (inc. disposal group) -3 495 -5 115
Adjustments:
Income tax payable -93 -
Share- based payments 93 140
Result from investment in associates - -
Depreciation and amortization 399 321
Currency translation effects 322 -27
Change in trade receivables 384 715
Change in trade payables -27 729
Change in other accrual and non-current items 872 1 076
Net cash flow from / (used in) op. activities -1 544 -2 162
Cash flow from investing activities
Investment in fixed assets 7 -46
Investment in intangible assets -484 -
Investment in associated companies -760 -74
Investment in subsidiary (1) - -
Sale of subsidiary (1) - -
Net cash flow from / (used in) investing activities -1 236 -120
Cash flow from financing activities
Net proceeds from share issues -134 7 591
Proceeds from minority interest - -
Net cash flow from / (used in) finaning activities -134 7 591
Net inc / (dec) in cash and cash equivalents -2 915 5 310
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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
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Megatrend: Personalization as a key strategy to succeed in digital
Users increasingly expects a personalized experience across devices
– Tailored content to their needs and interest– Relevant product offerings and ads
Companies who succeeded with personalization have a significant uplift in:
– Engagement & loyalty– Conversions & revenue
Cxense DMP – “The Operating System for Online Business” is perfectly positioned
– Individual user tracking across devices– Actionable data in real-time through our applications Content,
Search & Ad
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Leading brands have chosen Cxense as their primary technology partner for personalization
Our technology has proven a strong ROI across multiple verticals*
30%
User engagement
529%
Conversion rates
42%
Product sales
* Results from Cxense customers within Publishing, E-commerce and Finance
Selected recent customers choosing Cxense as their partner for Personalization
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Agenda
Cxense snapshot
Highlights
Operations
Financials
Sales update
Outlook and Summary
26
Summary and outlook
A record 37 new contracts signed in the quarter with significant uplift in average contract size
Record new recurring revenue with Cxense DMP as the key driver
Position and offering strengthened with Maxifier acquisition and Mporium agreement
Churn from acquired base declining and expected to continue down in Q3 2015
Cost control maintained with continuous focus on improvements
Q&ANext event: Q3 2015 – 13 November 2015
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John PatonChairman & Managing Partner IVA Ventures
and Former CEO Digital First Media
Christian PansonVP Digital Content & Audience Revenue
Winnipeg Free Press
Miguel FernandezCorporate Technology Officer
Grupo Clarín
Customer case studies from around the globe – demos & workshops using Cxense tech Register today to attend: Cxense.com/CXXP