Q1 2017 results 10 May 2017 www.cxense.com
Cxense is a Software-as-a-Service (SaaS) company Business model: Cxense offering: Customers: Cxense’s customers subscribe for Data Companies management & software and services that they can with sites and access in the cloud and pay a personalization apps across the software monthly fee world Recurring revenues and gross margin >80% | Organization of ~170 employees in Europe, North and South America, and Asia | Listed on Oslo Børs 2 www.cxense.com
Highlights Q1 report Cxense revenue overview USD million 4,5 4,3 4,3 • Data management and personalization up 21% year- 3,9 over-year 3,6 • High Q1 churn driven by one large acquired video customer and continued decline of advertising portfolio • Group revenue down year-over-year due to churn 1,9 1,4 • Ramp-up of sales team in North America on track – 1,2 1,2 1,0 0,9 0,9 reflected in growing lead pipeline 0,8 0,8 0,7 • Strategic investments in partners mporium and RepKnight to strengthen Cxense’s offering, distribution Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 and sales Data management & personalization software Advertising software PCAN 3 www.cxense.com
Underlying data management and personalization growth Rolling 12-month data management and personalization revenue USD million 17,0 16,3 15,2 • Segment represented all new recurring 13,2 revenue contracts in Q1’17 • Continued long-term positive momentum despite high churn in the quarter • Rapidly growing market Q2'16 Q3'16 Q4'16 Q1'17 Ad Network / Programmatic = The PCAN segment 4 www.cxense.com Advertising Software and Personalization and Data Management = The SaaS segment
Consumers want personalization People expect relevant and engaging online experiences Content Promotions Personalized Emails & Display Ads Push notifications Product Offerings newsletters 5 www.cxense.com
Personalization makes it easy • Easy for people to find and consume what they want • Easy for people to consume when they want it Personalized content, advertising and product offering 6 www.cxense.com
Cxense’s software helps customers… …personalize online shopping …personalize news sites …personalize subscription offers to increase revenue from online sales and increase revenue from ads and increase subscription revenue …increase revenue from websites and apps 7 www.cxense.com
All new contracts in Q1 for data management and personalization software # of new SaaS contracts 41 39 37 37 35 34 31 31 30 All Q1’17 contracts for 26 data management & 22 personalization software 21 14 11 11 11 12 18 7 up-sell new customers 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 8 www.cxense.com
Growing customer base and adoption Consumer brands Financial services Cxense customers Q1’17 Sports e-commerce and classifieds Media Publishers and Broadcasters Time Verticals 9 www.cxense.com
Powering more than 7,000 sites 10 www.cxense.com
>1.8bn devices interacted with Cxense software in Q1’17 Million 2000 1800 1600 1400 1200 1000 800 600 400 200 0 Q3'11 Q4'11 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 11 www.cxense.com Device = Browser with unique history. A user using Opera, Firefox and Chrome on one PC equals 3 devices. Mobile, iPad and so on are devices, as is one PC with several unique logins
Financials www.cxense.com
Growing recurring revenues from existing + new customers 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
Data management and personalization is the main revenue driver Revenue USD million 7,0 6,26 • Group revenues down 5.5% y/y 5,92 6,0 0,8 0,7 Ad network/ • Revenue decrease is primarily driven by Programmatic, -12% 5,0 0,9 revenue decrease in the advertising Advertising 1,9 software, -52% software segment 4,0 • Data management and personalization 3,0 software growing 21% y/y Data management & 4,3 personalization software, +21% 2,0 3,6 • Now comprise 83% of all software revenues 1,0 0,0 Q1'16 Q1'17 Ad Network / Programmatic = The PCAN segment 14 www.cxense.com Advertising Software and Personalization and Data Management = The SaaS segment
Strong demand for data management and personalization software Advertising software Personalization and Data Management software 4,50 4,30 4,30 3,90 3,60 Reported 1,90 Revenues, 1,40 USD million 1,20 1,20 0,90 Q1 ’16 Q2 ’16 Q3 ’16 Q4 ’16 Q1 ’17 Q1 ’16 Q2 ’16 Q3 ’16 Q4 ’16 Q1 ’17 -0,07 -0,06 -0,07 -0,09 -0,07 -0,06 -0,09 Churn effect, -0,27 -0,27 -0,42 USD million • • 21% y/y growth The advertising software market is mature and competition is high • Q1 growth offset by unusually high Q1 ’17 churn led to • Expected to churn to marginal level throughout 2017 sequentual revenue drop • • One larger Video client account for -0.2 of churn Relatively less negative impact going forward as the segment now is relatively small to rest of revenue • Strong market growth, increasing adoption and solid customer results www.cxense.com
Ramping up sales team to increase growth capacity Q4 Q1 Plan • 30 new contracts closed in Q1 2017 Avg. Sales 18 19 30* Quotas (SQ) per quarter • New ARR from closed contracts of USD 1.7 million 0.12 0.09 0.12** Avg. ARR per • Strong performance from EMEA team. All sales SQ per quarter USDm USDm USDm reps delivered results 2.1 1.7 3.5 New ARR per • On track to increase sales organization to 30 quarter USDm USDm USDm effective sales quotas • Plan is to have 30 quotas by beginning of Q3 2017 ** Assuming the same sales performance as in Q4 2016 16 www.cxense.com
SaaS is a high gross margin business Quarterly gross margin Percent Group SaaS segment PCAN segment • Ongoing projects to strengthen SaaS segment gross 83% 82% 79% 77% margin: 74% 75% 73% • Moving hosting capacity from pure lease to co- 70% 70% 66% location solution • Optimizing code and delivery of existing new data management features 19% 18% 16% 12% 12% • Goal to bring SaaS gross margin back above 80% Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 17 www.cxense.com
Profit and loss statement • Q1 2017 EBITDA of USD – 2.9 million compared to USD -2.0 USD 1,000 Q1 2016 Q4 2016 Q1 2017 million in Q1 2016 Revenues 6 263 6 562 5 918 Gross profit 4 717 4 574 3 937 • Loss increase reflects; Gross margin 75 % 70 % 67 % • Gross margin decrease OPEX 6 689 7 204 6 848 Non-IFRS OPEX adjustments (659) (397) (358) Estimated full effect of cost-reduction program (525) • OPEX increase reflects more sales & marketing OPEX adjusted 5 505 6 807 6 490 spending EBITDA (1 973) (2 629) (2 911) EBITDA adjusted (790) (2 233) (2 553) 18 www.cxense.com
Illustrative** SaaS cost model scalability illustration 100 Variable costs 20 80 Economies of scale 20 50% increase in sales & implementation capcity 10 costs 17.5% of revenue baseline 35 45 15 10 -35 ARR* CoS (Hosting Gross Profit Account Marketing Sales & Impl. R&D G&A Capitalized EBITDA cost) Mngmnt R&D & support *Annualized Recurring Revenue (ARR) www.cxense.com ** All cost vouchers are not split by operational department, hence cost break-down is illustrative and in round numbers
Cash flow development Q1 2017 cash flow USD 1,000 • Q1 2017 Cash flow from operations of USD -4 million 21 960 (3 995) • Affected negatively by year-end bonus payments accrued for in 2016 and paid in Q1 2017. (5 160) • Over time cash flow from operations will be near EBITDA 12 805 0 • Cash flow from investing activities of USD -5.2 million • USD 4.6 million invested in mporium and RepKnight. • Strengthen Cxense’s distribution power and social media analytics capabilities • USD 0.5 million in capitalized R&D expense Cash at Net cash from Net cash from Net cash from Cash at period start operations investing financing period end • USD 12.8 million cash position at period end activities activities 20 www.cxense.com
Market and strategy www.cxense.com
The big digital shift creates winners and losers… “The world’s most valuable resource is no longer oil, but data” “Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft — look unstoppable. They are the five most valuable listed firms in the world . Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America . Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year .” The Economist, Print edition | Leaders | May 6th 2017 22 www.cxense.com
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