Cxense ASA Q November

Transcription

1 Cxense ASA Q November 2018

2 Cxense at a glance Sector Product Value proposition Customers Data processing footprint Offices Share ticker Software-as-a-Service (SaaS) Data Management and Personalization Software Real-time audience insight, increased online engagement and digital revenue growth ~190 publishers and ecommerce companies 2bn devices, 19bn sessions per quarter Oslo (HQ), Berlin, Samara, New York, Buenos Aires, Tokyo, Singapore OSE:CXENSE 2

3 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

4 We enable customers with a leading DMP with intelligent personalization Web Gender Age Apps Location Interests Advertising CRM Content Subscriptions Device Look-alike Commerce Panel CRM data Subscription propensity Products Survey Behavior 3rd party Deterministic data AI modelled data Data fusion Track behavior and integrate with internal/external data sources to get a 360 view of each user Data intelligence Enrich known data with AI modelling to create rich user profiles and segments Data activation Real-time 1:1 personalization Data driven ROI 4

5 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 Ad is shown to 200k high income and 800K low income Publisher gets The advertiser s cost for reaching high income is 50 CPM (10/200*1000) With premium segment Ad is shown to 750K high income and 250K low income Publisher get The advertiser s cost for reaching high income is 17 CPM (13/750*1000) 5 * CPM = Cost per mille (cost per thousand impressions)

6 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 Q highlights Quarterly revenue development USD million Data Management and Personalization license revenues Consulting revenues Growth for core DMP and Personalization segment 19% YoY and 3% sequentially 15 new contracts including leading Asian media companies Singapore Press Holdings, Mainichi and Star Media Group 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 Q Adjusted EBITDA of USD million compared to USD -2.1 million in Q 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 Positive outlook for new sales in Q4 6

7 Financials 7

8 Building recurring revenue base to drive growth Cxense s SaaS recurring revenue business model Illustrative New customers Lost customers Upsell existing customers Last recurring revenue Churn New Revenue New recurring revenue 8

9 Core business grew 19% Y/Y Revenues USD million Core business: DMP & Personalization Mporium Advertising Video Non core Growth in core on demand from publishers and marketers 19% y/y net growth from; +45% gross organic growth from new revenue +4% from acquired growth -5% contribution from other DMP & Personalization Core -25% reduction from lost recurring revenue (churn) Customer retention a key priority Non-core business: Advertising divestment ongoing Q3'17 Q3'18 Video portfolio to remain in Cxense as bids came in below expected future cash flow 9

10 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 282 (92) 190 Lost QRR 366 Net new QRR (187) (219) Q3'17 Q4'17 Q1'18 Q2'18 Q3' (199) (253) (25) 1/3 related to one customer Closed 15 new contracts for DMP and Personalization New QRR of USD 229 thousand 32% of new QRR was from upsell to existing customers 9 average sales reps in Q3 (11.5 in Q2) Sales efficiency down 7% Q/Q due to seasonal effects 10 sales reps at end of October Lost QRR of USD 253 thousand 1/3 of churn related to one customer, a subsidiary having to implement a groupwide solution 10 *Full recurring revenue value of contracts closed and terminated in the period. For comparison to effect in reported figures see appendix.

11 Selected contracts signed in Q Star Media Group is one of the largest media companies in Malaysia Star Media Group has decided to use the Cxense DMP with Intelligent Personalization to help transform their raw data into valuable resource Mainichi Shimbun is one of the largest publishing companies in Japan Mainichi will upgrade Cxense DMP and implement Conversion Engine to grow subscription revenues Singapore Press Holdings is home to some of Asia's most influential and well-known publications. SPH will implement Conversion Engine to grow subscription revenues 11

12 Gross margin increase in Q3 Long term margin improvement potential Gross margin development % of Revenue 100% 90% 80% 70% 60% 50% 40% 30% 74% 74% 77% 80% 81% 79% Potential with new DC: 83% 80% Q3 18 gross margin of 80% Increase of 1 ppt from Q2 18 Cxense invested in a second EU data center in Q2 18 Adds 33% core hosting capacity 83% gross margin potential compared to current 80% Simplifies GDPR compliance, enabling Cxense to offer EUonly hosting Improved redundancy setup with 4 instead of 3 data centers 20% 10% 0% Q Q Q Q Q Q Q

13 Adjusted EBITDA increase on track to realize integration cost synergies Key figures USD 1,000 Q Q Q Q Q DMP & Intelligent personalization 3,357 3,617 3,816 3,875 3,993 SaaS Non-Core 1,699 1,530 1,423 1,243 1,077 Revenues 5,055 5,148 5,239 5,118 5,070 Gross margin 77% 80% 81% 79% 80% 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 EBITDA (3,567) (931) (420) (518) (1,191) EBITDA adjusted (2,103) (678) (204) (777) (468) Sequential adjusted EBITDA improvement as a result of gross margin increase and integration cost synergies Q3 18 adjusted EBITDA of USD -0.5 million, adjusted for 0.7 million integration cost and non-ifrs adjustments USD 0.4 million integration and office cost provisions USD 0.3 million share based payments and one-off receivable write-down On track to achieve targeted integration cost synergies Adjusted OPEX down 6% Q-o-Q More than half of the targeted ~10% reduction by end of Q1 19 realized 13

14 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

15 Operations and strategy 15

16 CEO One year at Cxense New and profitable growth trajectory Sharpen technology vision Focus on core product growth Strengthened product offering in areas with clear customer traction Enreach (13 joint cases before acquisition) Conversion Engine (WSJ collaboration) Extended machine learning capabilities Refine go-to-market model Global rollout of Conversion Engine and Enreach Same product offering in all regions Customer retention increase through: Larger accounts Better implementations New leadership team International experience from relevant companies Fresh perspectives and strengthened competencies Agile, customer-driven product development B2B solution sales Improved execution power New and profitable growth trajectory 16

17 Customer driven development and commercialization of Cxense Conversion Engine Proven, world-class solution developed with The Wall Street Journal Commercialization of Conversion Engine generating revenue May June July August September October November WSJ re-invents its pay model with new user-centric solution based on Cxense software WSJ wins Axel Springer paid content award for pioneering digital subscriptions Productizing v2 of Conversion Engine for general availability First publisher signs up for Conversion Engine Conversion Engine officially introduced as standalone service Strong market interest and several leads in pipeline 17

18 Our offering targets high-growth markets Segment Description Market size USD billion Growth CAGR DMP for Publishers / Ad networks ~0.7 16% Core market Content Recommendation Engines ~3.8 17% Global Intelligence Platforms ~5.8 18% Adjacent market opportunities Digital Marketing Software E-commerce 33 2,300 16% 23% Sources: Markets&Markets.com, Marketprognis.com, Persistence Market Research, Forrester 18

19 WHERE TO PLAY Publishing Digital Marketing Growth opportunities beyond Publishing 5 8 DEVELOP 7 Solid core offering: 1. DMP for Publishers 2. Personalization for Publishers Personalization DMP MONETIZE Recent product extensions: 3. New DMP capabilities (Enreach) 4. Subscription optimization (Conversion Engine) 2 1 RETAIN Unrealized market extensions: 5. Conversion optimization for marketers* 6. DMP for data alliances 7. DMP for media agencies 8. DMP for marketers* Existing products HOW TO WIN New products 19 * Industries with long-lasting customer relationships to be approached first, e.g. telecom, finance, gaming/entertainment, other memberships

20 Cxense is well positioned for the data alliances growth Larger deals with network opportunities Common data alliance architecture Example customers Private Shared bilaterally Shared among all 20

21 Strong, international leadership team Christian P. Halvorsen Chief Executive Officer Jørgen Evjen Chief Financial Officer David Gosen Chief Commercial Officer Pankaj Saharan Chief Technology Officer Ben Graham Chief Product Officer Elisabeth Monrad-Hansen VP of Human Resources 21

22 Summary and outlook 22

23 Summary and outlook Growth for core DMP and Personalization segment Adjusted EBITDA of USD million and positive cash flow Funded through break-even with ongoing churn improvement program and cost reductions New leadership team successfully onboarded The new Conversion Engine and DMP features strengthens pipeline Positive outlook for new sales in Q4 23

24 Appendix

25 Cxense welcomes changing regulatory environment and the General Data Protection Regulation (GDPR) EU regulation implemented on 25 May st party data DMPs, such as Cxense, strengthened over 3rd party data DMPs since implementation of GDPR Strengthened data protection for all EU and EEA citizen No financial impact from GDPR so far 25

26 Core business historical revenue development USD 1,000 (unaudited) 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 Total SaaS revenues Where of Advertising ,090 2,650 3,568 3,442 3,530 3,590 3,301 2,954 4,183 5,291 5,467 5,381 5,511 5,654 5,209 5,077 5,055 5,148 5,239 5,118 5, ,762 2,439 2,202 2,074 2,046 1,558 1,347 1,920 1,847 1,900 1,448 1,216 1, Total DMP and Personalization revenue (old segm.) ,129 1,240 1,456 1,544 1,743 1,607 2,263 3,444 3,566 3,933 4,295 4,495 4,299 4,215 4,378 4,622 4,802 4,754 4,715 Where of consulting Where of license ,043 1,246 1,310 1,381 1,446 2,017 2,963 3,273 3,556 3,947 4,217 3,981 3,946 4,011 4,357 4,557 4,542 4,530 Video revenue Where of consulting Where of license 967 1,001 1,230 1,224 1,297 1, ,115 1,088 1, Mporium Where of consulting Where of license Total DMP and Personalization revenue (CORE) ,129 1,240 1,456 1,544 1,743 1,533 2,115 2,335 2,429 2,518 2,930 3,066 3,130 3,188 3,357 3,617 3,816 3,875 3,993 Where of consulting Where of license ,043 1,246 1,310 1,381 1,370 1,869 2,126 2,173 2,298 2,718 2,902 2,885 2,988 3,045 3,395 3,626 3,736 3,863 growth q/q -11 % -6 % 30 % 37 % 15 % 24 % 27 % 10 % 17 % 6 % 13 % -12 % 38 % 10 % 4 % 4 % 16 % 5 % 2 % 2 % 5 % 8 % 5 % 2 % 3 % growth y/y 17 % 49 % 92 % 152 % 148 % 99 % 103 % 74 % 54 % 24 % 45 % 51 % 39 % 64 % 39 % 31 % 29 % 27 % 15 % 18 % 22 % 22 % 19 % 26

27 Closed and notified terminated compared to P&L effect DMP & Personalization new and lost quarterly recurring revenue (QRR) Closed and terminated in the period USD thousand Effect in reported figures USD thousand * (92) (187) (219) (199) (253) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 (138) (206) (182) (274) (262) Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 *Includes USD 48k in acquired revenue (Enreach) New QRR Lost QRR 27

28 SaaS segment P&L USD 1,000 Q Q Q Q Q Q Q Q Q IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS SaaS segment DMP with Intelligent Personalization (CORE) 2,930 3,066 3,130 3,188 3,357 3,617 3,816 3,875 3,993 Advertising (Non-core) 1,216 1, mporium (Non-core) Video (Non-core) 1,224 1,297 1, Revenues total 5,511 5,654 5,209 5,077 5,055 5,147 5,239 5,118 5,070 Cost of sales 1,252 1,195 1,361 1,321 1,146 1, ,091 1,031 Gross profit 4,259 4,460 3,848 3,756 3,909 4,143 4,242 4,027 4,039 Gross margin % 77 % 79 % 74 % 74 % 77 % 80 % 81 % 79 % 80 % Personnel 4,141 4,574 4,402 5,826 5,305 3,018 2,505 2,474 2,931 Other OPEX 1,772 2,258 2,088 2,284 2,170 2,056 2,156 2,070 2,299 OPEX 5,913 6,832 6,490 8,110 7,476 5,074 4,661 4,544 5,230 EBITDA (1,654) (2,374) (2,642) (4,354) (3,567) (931) (420) (518) (1,191) Non-IFRS adjustment of OPEX level Share-based payment costs (32) (18) (4) Share-based social costs provision Commission accrual reversals (343) Restructuring costs and provisions 1, Office moving costs 210 (21) Extraordinary/special One-off provision for doubtful debt (2) 137 Transaction costs R&D refund (167) Total reported OPEX adjustment items , (259) 723 OPEX adjusted 5,686 6,435 6,132 7,228 6,012 4,821 4,446 4,803 4,507 EBITDA adjusted (1,428) (1,977) (2,284) (3,472) (2,103) (678) (204) (777) (468) Capitalized operating expense (496) (891) (507) (507) (557) (268) (226) (365) (421) EBITDA adjusted with capitalization add back (1,924) (2,868) (2,791) (3,980) (2,660) (946) (431) (1,142) (889) 28

29 Revenue bridge for SaaS- and core DMP and personalization segment Quarterly figures (unaudited) Total revenue DMP and personalization revenue USD 1,000 Q Q Q Q Q Q Q Q Q Q Revenue in previous quarter 5,077 5,055 5,147 5,239 5,118 3,188 3,357 3,617 3,816 3,875 New recurring license revenue effect Acquired recurring license revenue Divested recurring license revenue - (93) (183) Churn effect (333) (240) (292) (429) (315) (206) (182) (274) (262) (138) Change in service revenue 97 (102) (21) (33) (27) 111 (89) (33) (50) (10) Change in other variables (121) (49) (30) (56) (20) (48) Currency effect 92 (10) 64 (63) (57) (44) (66) Revenue this quarter 5,055 5,147 5,239 5,118 5,070 3,357 3,617 3,816 3,875 3,993 Accumulated currency effect, reversed (95) (85) (149) (86) (29) (60) (77) (111) (67) (1) Outbound revenue currency adjusted 4,960 5,062 5,090 5,033 5,041 3,297 3,540 3,705 3,807 3,992 Q3 run-rate adjustments Full effect of contracts closed until 02 November 2018 (Core) 226 Full effect of known churn until 02 November (Core) (326) DMP & Personalization run-rate revenue after adjustments 3,893 Number of closed contracts in the quarter* Whereof new customers* Whereof upsell* Full QRR effect of contracts notified closed in the period Full QRR effect of contracts notified lost in the period (215) (221) (335) (221) (442) (92) (187) (219) (199) (253) Net (0) 95 (213) (25) *Restated to include only license revenue contracts. Previously also included service and consulting contracts. In Q3 2018, number of new contracts were 15 license contracts and 2 service and consulting contracts 29

30 New contracts reflect demand for core offering # of new core contracts and average contract size* Closed 15 new contracts on Data Management & Personalization QRR of USD 229 thousand average sales reps., lower sales efficiency on seasonal effects 60% of contracts were upsell on existing customers Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 # new SaaS contracts for DMP and Personalization segment Average QRR per new contract (USD k) *Restated to include only license revenue contracts. Previously also included service and consulting contracts. In Q3 2018, number of new contracts were 15 license contracts and 2 service and consulting contracts 30