Cxense ASA – Q2 2018 22 August 2018 www.cxense.com
Cxense at a glance Sector Software-as-a-Service (SaaS) Product Data Management and Personalization Software Value proposition Increasing online engagement and revenue from digital channels Customers ~180 publishers and ecommerce companies Data processing footprint 2bn devices, 19bn sessions per quarter Offices Oslo (HQ), Samara, New York, Buenos Aires, Tokyo, Singapore Share ticker OSE:CXENSE 2 www.cxense.com
Q2 2018 highlights Quarterly revenue development • Strong growth for core DMP and Personalization segment 3.9 USD million • 22% YoY and 2% sequentially • 44% gross growth, partly offset by churn Data Management and Personalization license revenues • Churn declined from previous quarter, however still above 3.2 Consulting revenues long-term target • Strengthened product offering • Improved DMP post Enreach acquisition • Strong interest for the new Conversion Engine • Strong international leadership team in place with appointment of new CTO, CPO and CCO • 79% reported gross margin • Impacted by investment in EU based data center increasing hosting capacity by 33% • Q2 2018 EBITDA of USD -0.5 million • Funded through break-even Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 • Churn improvement program and cost reductions ongoing 3 www.cxense.com
The future of Media & Publishing, eCommerce & Retail Data is your most valuable resource 4 www.cxense.com
Our offering targets high-growth markets Segment Market size Growth Description USD billion CAGR DMP for Publishers / Ad networks ~0.7 16% Core market Content Recommendation Engines ~3.8 17% Global Intelligence Platforms ~5.8 18% Digital Marketing Software 33 16% Adjacent market opportunities E-commerce 2,300 23% Sources: Markets&Markets.com, Marketprognis.com, Persistence Market Research, Forrester 5 www.cxense.com
We enable customers with a leading DMP with intelligent personalization 1 2 3 Unique Rich user profiles Real-time user tracking & segmentation personalization 6 www.cxense.com
Ongoing Cxense and Enreach integration and global rollout • Creates a stronger DMP with significantly improved feature set • Improved socio-demographic and interest-based segment creation • Audience insight on advertiser’s own website with Audience Radar • Automated campaign reports on targeted audience • Continued strong interest in EMEA • Commercial launch in Japan after product adaptation 7 www.cxense.com
Strong market interest for Conversion Engine – Market launch imminent • Subscription revenues increasingly important for publishers • Proven, world-class solution developed with WSJ • Strong market interest: First new customer signed, several in the pipeline • Official launch together with WSJ on Sept 5 • Sign up here 8 www.cxense.com
Selected contracts signed in Q2 2018 One of the largest publishers in International digital marketing Danish Broadcasting Corporation Czech Republic agency based (DR) in Vienna and Malta with main VLMedia will deploy a wide range DR has expanded its use of the focus on betting. of Cxense solutions including Cxense DMP and Personalization Insight, DMP for Advertising (with E2 chose Cxense DMP to sell solution to give readers a Enreach capabilities) and better audience segments to their personalized experience on their Conversion Engine advertising partners. online sites and apps. 9 www.cxense.com
Strong international leadership team in place Pankaj Saharan Ben Graham David Gosen Chief Technology Officer (CTO) Chief Product Officer (CPO) Chief Commercial Officer (CCO) August 2018 August 2018 July 2018 10 www.cxense.com
Cxense welcomes changing regulatory environment and the General Data Protection Regulation (GDPR) 1st party data DMPs, such as Cxense, strengthened over 3rd party data DMPs • EU regulation implemented on 25 since implementation of GDPR May 2018 • Strengthened data protection for all EU and EEA citizen No financial impact from GDPR so far https://www.cxense.com/insights-lab/obstacle-opportunity-cxense-commitment-gdpr 11 www.cxense.com
Financials 12 www.cxense.com
Building recurring revenue base to drive growth Cxense’s SaaS recurring revenue business model Illustrative New customers Upsell existing customers Lost customers Last recurring revenue Churn New Revenue New recurring revenue 13 www.cxense.com
Core business grew 22% Y/Y Revenues Core business: DMP & Personalization USD million • Strong interest for our DMP & Personalization solution 5.1 5.1 from publishers and marketers Advertising 0.4 • 22% y/y net growth from; 0.1 mporium Non 0.9 core Video 0.8 • +44% gross organic growth from new revenue 0.1 0.9 • +3% from acquired growth • +3% contribution from other • -28% reduction from lost recurring revenue (churn) DMP & 3.9 Core • Existing customer retention is a key priority Personalization 3.2 going forward • Ongoing divestments of non-core business Q2'17 Q2'18 14 www.cxense.com
Strong sales efficiency but churn remains high in Q2 2018 DMP & Personalization – new and lost quarterly recurring revenue (QRR) – value of closed an terminated contracts in the period* USD thousand Q2 2018 update New QRR Lost QRR Net new QRR 366 335 Closed 25 new contracts on Data 316 282 Management & Personalization 272 190 179 New QRR of USD 316 thousand 116 117 102 22% of new MRR was from upsell to existing customers High sales efficiency with 11.5 average (92) sales reps. (170) (187) (199) Lost QRR of USD 199 thousand, down (219) 9% sequentially Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 15 *Full recurring revenue value of contracts closed and terminated in the period. For comparison to effect in reported figures see appendix. www.cxense.com
Short term gross margin dip due to new data center Long term margin improvement potential Gross margin development % of Revenue 100% Potential with • In Q2’18 Cxense invested in a second EU data center new DC: 83% 90% 81% 80% • USD 400k investment 77% 80% 74% 74% • USD 27k monthly costs 79% 70% Benefits: 60% • Adds 33% core hosting capacity – 83% gross 50% margin potential compared to current 79% 40% • Simplifies GDPR compliance, enabling Cxense to 30% offer EU-only hosting 20% • Improved redundancy setup with 4 instead of 3 data 10% centers 0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 16 www.cxense.com
Enreach integration synergies will reduce costs by ~10% Cash cost* 8 000 Enreach acquisition Excl. Acquisition USD thousand 6 345 85 • 6 259 Cost reduction initiatives primarily related 317 476 630 to the Cxense – Enreach integration 6 000 5 714 project • Realized by end of Q1’19 • USD 0.4-0.6 million restructuring 4 000 costs 5 942 5 869 • The Cxense – Enreach integration will deliver a more efficient DMP 2 000 development team and a DMP software with significantly enhanced features 0 Q2 ’18 Enreach full Cash cost Target Cash cost cash cost effect and run-rate planned run rate other known initiatives adjusted changes (Next 6 mo) 17 * Cash cost = Reported CoS + OPEX + Capitalized R&D www.cxense.com
Q2‘18 cash spend beyond operational burn rate Positive cash flow after reporting period due to working capital recovery Q2’18 changes in cash USD million Cash position 31 March 2018 7.7 EBITDA -0.5 Recoverable in 2H 2018 Capitalized R&D -0.4 Cost accrual reversals -0.3 Relates predominantly to changes in Operational cash burn -1.2 receivables and customer pre-payments. Additional 1.4 million recoverable from Q1 Recoverable working capital changes -1.0 New data center investments -0.3 Significant investment adding 33% hosting Severance pay, etc. -0.3 capacity Enreach working capital funding -0.4 PAN Spain funding -0.2 Other -0.3 Investments and one offs -1.4 Cash position 30 June 2018 4.1 Est. Operational cash burn -0.7 Working capital recovery in July and Working capital recovery 1.4 August leads to positive post quarter cash flow Cash position 20 August 2018 4.8 18 www.cxense.com
Summary and outlook 19 www.cxense.com
David Gosen – Chief Commercial Officer Previous Company Roles: Sizmek, Rocket Fuel, Nielsen and Microsoft Some early observations Immediate focus areas • Enthusiastic and passionate teams • Double down on churn prevention • Impressive platform and API technology • Accelerate the new sales process • Strong product roadmap • Drive new business growth with Conversion Engine launch • Encouraging core growth • Increase Cxense market presence • Powerful client advocacy • Re-enforce and clarify value to clients 20 www.cxense.com
Summary and outlook • Strong growth for core DMP and Personalization segment • Strengthened product offering • Strong international leadership team in place • Hosting capacity expanded for further growth • Q2 2018 EBITDA of USD -0.5 million • Funded through break-even 21 www.cxense.com
Appendix www.cxense.com
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