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

5

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

7

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

12

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

16

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