Capital Market Presentation Segments of operations, results for 2018 and Q4 2018. April 2019 website e-mail www.somoto.com investors@somoto.net
The presentation contains data, including results, estimates, forecasts, including forecasts regarding the Company ’ s income and revenue and the Company ’ s plans in respect of the activity thereof and of the activity of the Company ’ s subsidiaries, which constitute forward- looking statements, as such term is defined in the Securities Law, 5728-1968, whose materialization is uncertain and may not be solely or partly within the Company ’ s control. Safe Harbor There is no certainty that the information and/or estimates and/or forecasts and/or plans will materialize, in whole or in part, and they may be different from those presented in the Statement presentation, inter alia, due to the effect of external factors which are beyond the Company ’ s control, such as: changes in the competitive and business environment as well as the materialization of any of the risk factors affecting the Company. In addition, the presentation may contain data based on external sources which were not independently examined by the Company and therefore, the Company is not responsible for the accuracy thereof. 2
About Somoto Group Global software company Revenues in 2018 of $54.3 million , decrease of 16% specializes in online marketing. compared to 2017. Revenues in Q4 2018 of $14.8 million, increase of 3.5% compared to Q3 2018, and increase of 3.4% compared to Q4 2017 . Engaged in application distribution, video & mobile advertising. EBITDA in 2018 of $13.4 million , increase of 10.2% compared to 2017. Revenues in Q4 2018 of $4.2 million, increase of 7.7% compared to Q3 2018, and Advanced Profiling Technology. As increase of 110% compared to Q4 2017 . part of the Innovation Activities, Developing a new EduTech APP and The Company presents growth in its EBITDA Margins an Audio related product. over Revenues during 2018, on a quarterly basis, in Q4 Diverse technologies enabling high 2018 EBITDA margin of 28.4% . profit margin in its areas of activity, including among others, algo An organic growth strategy based on technology and trading technology for purchasing innovation as well as unorganic growth through inventories. mergers and acquisitions. 3
Quick Facts Market Listed on Management Employees Diversification Cap TASE 75 Different areas Strong and Significant positive cash balances 8/2013 (Appx. 43% of activity experienced Appx. $44m Appx. $17.2m as of December 2018; developers) Management Appx. $12.7m net cash. Dividend Dividend payments in 2018 of NIS 33.7m, with a dividend yield of M&A Strategy EBITDA CAGR 23.05%. In addition, a first dividend 2013-2018 CAGR of 32% 4 acquisitions in the fields of: payment in 2019 of NIS12m, with a distribution of applications, dividend yield of 7.1%. video and mobile 4
Entrepreneurs and Management Yaron Fishman | Product Innovation Assaf Itshayek | CEO & CFO Product Manager and Innovation Center Accountant, MBA from Tel Aviv University • VP Technology at Genieo- (sold to Somoto for appx. $34m) • CFO of Blue Snap sold for $115m • VP Product Development- Delver (Sears Israel) • CFO of Digital Power Corp (DPW) • Senior Product Manager- Babylon • Controller at Metalink (MTLK) • Senior Product Manager- Kasamba • Senior Audit Manager at Deloitte Eido Safrai | R&D Ron Jawroski | MEME VIDEO B.A Computer Science, Bar Ilan University BSc. Computer science Ben Gurion University, • VP R&D - Mystate Mobile Executive MBA Tel Aviv University • R&D Manager- Tabtale (Games industry) • CEO- TIM media • R&D Manager- CEVA (semiconductor) • COO- Meme Video • Head of Video – Adstract Ben Garrun | Mergers and acquisitions and Co-Founder Eyal Yaakov | User Acquisition Co-Founder Founder of SweetPacks Free Entertainment Software Founder of SITE ON SPOT (specialist advertising network) • Sales of $ 35m; $ 7m profit • 12 billion annual exposures • 200 million installations, 500,000+ daily installs • Optimization, management of advertising growth of leading Web sites • More than 15 years of experience in developing Internet systems • Alexa rank of 230, among top global websites • Graduate of the ZEL Computing program at IDC Herzliya • Return of 126x; sale value and dividends worth $54m+ • Major in Computer Science • MBA from Tel Aviv University 5
M&A and Unorganic Growth through M&A May Sep. Jan. Sep. Mergers & Acquisitions 2014 2014 2016 2016 Tabatoo Meme Genieo Terser Ltd. Video Ltd. Innovation Tude Ltd. Ltd. Growth Acquisition Cash based and shares through structures and based transactions, and M&A terms so far additional payments based on goal achievements 6
Growth Strategy Video Advertising and Mobile 7
Video Advertising Entering the video advertising market - gaining profits from a growing sector Online video Online video Volume of mobile CAGR of 40%; advertising advertising video advertising expected to market in USA is market worldwide expected to reach appx. expected to is expected to grow 5x between $6.5bn in reach appx. reach appx. 2015 and 2020 in the US $22bn in 2021 $427bn in 2022 the US alone 8
Video Activity in the Somoto Group Develops innovative Various activities including Appx. 30 employees. technological tools in the Mobile, PC, in-App CTV, Audio digital video field. Purchases media inventory Relationships with Advertisers Tens of millions of video advertisements per day. and matches advertisers and Publishers. Skilled man power with the target audience and knowledge in the video Primary activities in the US, needs. advertising field. Canada, Australia, Britain, Germany and South America. Use of advanced Highly experienced with Technology, technologies, including digital media and algorithm trading. Big Data, Player, Waterfall, Algorithmic system that optimize Bids Bidder, Ad Server. for digital impressions. 9
Mobile Advertising Mobile Market - Mobile Application Distribution 205 Billion 106 Billion Over 100 Monetization and distribution Dollars Application Advertisers and platform installations in distribution For websites Mobile market 2018 partners income in 2018 and mobile applications 10 Data based on research data and from Statistica Inc. and Gartner and AppAnnie.
The Group ’ s Technology Appx. x. 43 43% techno nology y related ed employees yees Installation & Video Technology Patents & Monetization Artificial Alert system and decision Intelligence support Dynamic HTML-based Technology Use of multiple ad servers File less than 150 KB (Vidible, LKQD, SpotX, Optimatic) A cloud-based CDN AI based micro Unique algorithm determining behavioral targeting Optimization algorithm the viability of purchasing technology inventory and matching the End-user analytics in real time advertisement to the inventory Creating a deep user profile automatically BI & Media Purchase Mobile Technology Three registered Big data technology Automated production of patents advertising campaigns Advanced data mining Full end-user privacy capabilities Self service systems for partners A wide range of Real-time offer management BI capabilities potential applications engine Mobile adserver algorithm API interface for online advertising exchange 11
Financial Data 12
Results for 2018, 2017 and Q4 2018 Revenue, EBITDA & Financial Strength Cash balance in December 2018 of appx. Revenues in 2017 of $64.7m , Revenues in 2018 of appx. $17.2m ; net cash of appx. $12.7m. representing an increase of $54.3m , decrease of 16% 26% compared to 2016. compared to 2017. Revenues in Q4 2018 of appx. $14.8m, Dividend payments in 2018 of NIS 33.7m, increase of 3.5% compared to with a dividend yield of 23.05%. In EBITDA in 2017 of $12.2m. Q3 2018, and increase of 3.4% addition, a first dividend payment in 2019 compared to Q4 2017. of NIS12m, with a dividend yield of 7.1%. Cash balances in 2017 of EBITDA in 2018 of appx. $13.4 $17.1m, net cash of $12.2m. Cash flow from operations in 2018 of million, increase of 10.2% $13.6m , a decrease of 4.9% compared to compared to 2017. Revenues in 2017. Cash flow from operations in Q4 Cash flow from operations in Q4 2018 of appx. $4.2 million, 2018 of $3.9m , an increase of 68.17% 2017 of $14.2m , increase of increase of 7.7% compared to compared to Q4 2017. 370% Compared to 2016. Q3 2018, and increase of 110% compared to Q4 2017. Total equity – December 2018 of $31.3m. 13
Consolidated Profit and Loss Statement Yearly and Quarterly Year ended December USD thousand 31 Q4/2018 Q3/2018 Q2/2018 Q1/2018 2018 2017 Revenue 14,814 14,325 13,409 11,787 54,335 64,726 Cost of sales (inc. amortization) 6,294 6,763 6,219 5,522 24,798 41,662 R&D expenses 1,128 1,119 1,112 1,105 4,464 4,476 S&M expenses 2,980 2,437 3,287 3,330 12,034 8,385 G&A expenses 958 1,271 1,057 1,002 4,288 4,035 Other expenses 1,564 1,564 Total Expenses 12,924 11,590 11,675 10,959 47,148 58,558 Operating profit 1,890 2,735 1,734 828 7,187 6,168 Net profit 1,827 1,694 1,314 462 5,297 3,516 EBITDA 4,216 3,934 3,101 2,195 13,446 12,199 As a % of sales Operating profit 12.8% 19.1% 13% 7.0% 13.2% 9.5% EBITDA 28.5% 27.5% 23.1% 18.6% 24.7% 18.8% 14
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