Cxense ASA – Q3 2018 9 November 2018 www.cxense.com
Cxense at a glance Sector Software-as-a-Service (SaaS) Product Data Management and Personalization Software Value proposition Real-time audience insight, increased online engagement and digital revenue growth Customers ~190 publishers and ecommerce companies Data processing footprint 2bn devices, 19bn sessions per quarter Offices Oslo (HQ), Berlin, Samara, New York, Buenos Aires, Tokyo, Singapore Share ticker OSE:CXENSE 2 www.cxense.com
The future of Media, Marketing and eCommerce Mass 1-1 Marketing Digital Targeted Personalization 1990s 2000s 2010s Present Data is your most valuable resource 3 www.cxense.com
We enable customers with a leading DMP with intelligent personalization Gender – Age Web Apps Location Interests Advertising Subscriptions Content CRM Device Look-alike Commerce Subscription Products CRM data Panel propensity Survey Behavior 3rd party Deterministic data AI modelled data Data fusion Data intelligence Data activation Track behavior and integrate with Enrich known data with AI modelling to create Real-time 1:1 personalization internal/external data sources to get a 360 rich user profiles and segments Data driven ROI view of each user 4 www.cxense.com
ROI increase for both Publishers and Advertisers Premium segments provide ad targeting to AI modelled audiences such as ”High income”, “Children 7 - 12y”, “Automotive”, “Health/fitness” Example • An advertiser wants to promote a product to the “high income” segment, with an impression goal of 1 million • 10€ CPM* without targeting / 13€ CPM* with premium segments • Distribution of high/low income audience on publisher is 20% / 80% • Prediction accuracy for the “high income” segment is 75% Without targeting With premium segment • • Ad is shown to 200k high Ad is shown to 750K high income and 800K low income income and 250K low income • Publisher gets 10 000€ • Publisher get 13 000€ • The advertiser’s cost for • The advertiser’s cost for reaching high income is 17€ reaching high income is 50€ CPM (10/200*1000) CPM (13/750*1000) * CPM = Cost per mille (cost per thousand impressions) 5 www.cxense.com
Q3 2018 highlights Quarterly revenue development • Growth for core DMP and Personalization segment 4.0 USD million • 19% YoY and 3% sequentially • 15 new contracts including leading Asian media companies Singapore Data Management and Personalization license revenues Press Holdings, Mainichi and Star Media Group 3.4 Consulting revenues • High churn driven by loss of one large customer • New leadership team, including CTO, CPO and CCO, successfully onboarded • New CFO hired (starting December 2018) • 80% reported gross margin, up 1 pp from Q2 2018 • Adjusted EBITDA of USD -0.47 million compared to USD -2.1 million in Q3 2017 • Reported EBITDA impacted by Enreach integration costs • Positive cash flow in the quarter • Cash position of USD 4.4 million, up 8% from end of Q2 2018, driven by working capital movements • Funded through break-even with ongoing churn improvement program and cost reductions • The new Conversion Engine and DMP features strengthens pipeline 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 Q3'18 • Positive outlook for new sales in Q4 6 www.cxense.com
Financials 7 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 8 www.cxense.com
Core business grew 19% Y/Y Revenues Core business: DMP & Personalization USD million • Growth in core on demand from publishers and 5.1 5.1 marketers 0.4 Advertising • 19% y/y net growth from; 0.7 Non core Video 0.7 Mporium 0.1 • +45% gross organic growth from new revenue 0.9 • +4% from acquired growth • -5% contribution from other • -25% reduction from lost recurring revenue (churn) DMP & • Customer retention a key priority 4.0 Core Personalization 3.4 • Non-core business: • Advertising divestment ongoing • Video portfolio to remain in Cxense as bids came in below expected future cash flow Q3'17 Q3'18 9 www.cxense.com
Strong sales efficiency – high churn driven by one large customer loss DMP & Personalization – new and lost quarterly recurring revenue (QRR) – value of closed an terminated contracts in the period* USD thousand Q3 sales update New QRR Lost QRR Net new QRR • Closed 15 new contracts for DMP and 366 Personalization 335 316 • New QRR of USD 229 thousand 282 • 32% of new QRR was from upsell to 229 190 existing customers 179 • 9 average sales reps in Q3 (11.5 in Q2) 117 116 • Sales efficiency down 7% Q/Q due to seasonal effects • 10 sales reps at end of October • Lost QRR of USD 253 thousand (25) • 1/3 of churn related to one customer, a (92) subsidiary having to implement a group- wide solution 1/3 related to (187) one customer (199) (219) (253) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 10 *Full recurring revenue value of contracts closed and terminated in the period. For comparison to effect in reported figures see appendix. www.cxense.com
Selected contracts signed in Q3 2018 Star Media Group is one of the Mainichi Shimbun is one of the Singapore Press Holdings is largest media companies in largest publishing companies in home to some of Asia's most Japan influential and well-known Malaysia publications. Star Media Group has decided to Mainichi will upgrade Cxense use the Cxense DMP with DMP and implement Conversion SPH will implement Conversion Intelligent Personalization to Engine to grow subscription Engine to grow subscription revenues revenues help transform their raw data into valuable resource 11 www.cxense.com
Gross margin increase in Q3 Long term margin improvement potential Gross margin development % of Revenue Potential with 100% new DC: 83% • Q3’18 gross margin of 80% 90% 81% • Increase of 1 ppt from Q2’18 80% 80% 77% 80% 74% 74% • Cxense invested in a second EU data center in Q2’18 79% 70% • Adds 33% core hosting capacity – 83% gross margin potential compared to current 80% 60% • Simplifies GDPR compliance, enabling Cxense to offer EU- 50% only hosting 40% • Improved redundancy setup with 4 instead of 3 data centers 30% 20% 10% 0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 12 www.cxense.com
Adjusted EBITDA increase – on track to realize integration cost synergies • Sequential adjusted EBITDA improvement as a result of gross Key figures margin increase and integration cost synergies • Q3’18 adjusted EBITDA of USD -0.5 million, adjusted for 0.7 million USD 1,000 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 integration cost and non-IFRS adjustments DMP & Intelligent personalization 3,357 3,617 3,816 3,875 3,993 • USD 0.4 million integration and office cost provisions SaaS Non-Core 1,699 1,530 1,423 1,243 1,077 Revenues 5,055 5,148 5,239 5,118 5,070 • USD 0.3 million share based payments and one-off receivable Gross margin 77% 80% 81% 79% 80% write-down OPEX 7,476 5,074 4,661 4,544 5,230 Non-IFRS OPEX adjustments (1,464) (253) (215) 259 (723) OPEX adjusted 6,012 4,821 4,446 4,803 4,507 • On track to achieve targeted integration cost synergies EBITDA (3,567) (931) (420) (518) (1,191) EBITDA adjusted (2,103) (678) (204) (777) (468) • Adjusted OPEX down 6% Q-o-Q • More than half of the targeted ~10% reduction by end of Q1’19 realized 13 www.cxense.com
Positive cash flow in Q3’18 Cash flow summary • USD 4.4 million of cash at period end, up 8% from Q2’18 • Driven by reduction of working capital after build-up in previous quarter • Funded through break-even with ongoing churn improvement program and the integration cost synergies 14 www.cxense.com
Operations and strategy 15 www.cxense.com
CEO – One year at Cxense New and profitable growth trajectory Sharpen technology vision Refine go-to-market model New leadership team • Focus on core product growth • Global rollout of Conversion • International experience from Engine and Enreach relevant companies • Strengthened product offering in • Same product offering in all • Fresh perspectives and areas with clear customer traction regions strengthened competencies • Enreach (13 joint cases • Customer retention increase • Agile, customer-driven before acquisition) through: product development • Conversion Engine (WSJ • Larger accounts • B2B solution sales collaboration) • Better implementations • Extended machine learning • Improved execution power capabilities New and profitable growth trajectory 16 www.cxense.com
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