Q1 2017 results
10 May 2017
www.cxense.com
Cxense is a Software-as-a-Service (SaaS) company
Cxense offering:
Business model:
Customers:
Data
management &
personalization
software
Cxense’s customers subscribe for
software and services that they can
access in the cloud and pay a
monthly fee
Companies
with sites and
apps across the
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
• Data management and personalization up 21% yearover-year
4,5
4,3
4,3
3,9
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
• Ramp-up of sales team in North America on track –
reflected in growing lead pipeline
• Strategic investments in partners mporium and
RepKnight to strengthen Cxense’s offering, distribution
and sales
3
1,9
1,4
1,2
0,8
Q1'16
1,0
1,2
0,8
0,9
0,9
0,7
Q2'16
Q3'16
Q4'16
Q1'17
Data management & personalization software
Advertising software
PCAN
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
revenue contracts in Q1’17
13,2
• Continued long-term positive
momentum despite high churn in the
quarter
• Rapidly growing market
Q2'16
4
Q3'16
Q4'16
Q1'17
Ad Network / Programmatic = The PCAN segment
Advertising Software and Personalization and Data Management = The SaaS segment
www.cxense.com
Consumers want personalization
People expect relevant and engaging
online experiences
Content
5
Promotions
Personalized
Product Offerings
Emails &
newsletters
Display Ads
Push notifications
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 news sites
and increase revenue from ads
…personalize subscription offers
and increase subscription revenue
…personalize online shopping
to increase revenue from online sales
…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
26
21
22
All Q1’17 contracts for
data management &
personalization software
14
11
11
11
7
12
up-sell
18
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
9
Verticals
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
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
www.cxense.com
Financials
www.cxense.com
Growing recurring revenues from existing + new
customers
SaaS recurring revenue business model
Illustrative
New customers
Last recurring revenue
13
Lost customers
Upsell
existing customers
Churn
New Revenue
New recurring revenue
www.cxense.com
Data management and personalization is the main revenue
driver
Revenue
USD million
7,0
6,26
6,0
• Group revenues down 5.5% y/y
5,92
0,8
0,7
5,0
1,9
0,9
Ad network/
Programmatic, -12%
Advertising
software, -52%
4,0
3,0
2,0
4,3
3,6
Data management &
personalization software, +21%
• Revenue decrease is primarily driven by
revenue decrease in the advertising
software segment
• Data management and personalization
software growing 21% y/y
• Now comprise 83% of all software
revenues
1,0
0,0
Q1'16
14
Q1'17
Ad Network / Programmatic = The PCAN segment
Advertising Software and Personalization and Data Management = The SaaS segment
www.cxense.com
Strong demand for data management and personalization software
Advertising software
Personalization and Data Management software
4,30
3,60
4,50
4,30
3,90
Reported
Revenues,
USD million
1,90
1,40
Churn effect,
USD million
Q1 ’16
Q2 ’16
Q3 ’16
Q4 ’16
-0,07
-0,09
-0,06
-0,07
Q1 ’17
Q1 ’16
-0,09
-0,42
Q2 ’16
-0,27
1,20
1,20
Q3 ’16
Q4 ’16
-0,07
-0,06
0,90
Q1 ’17
-0,27
•
21% y/y growth
•
•
Q1 growth offset by unusually high Q1 ’17 churn led to
sequentual revenue drop
• One larger Video client account for -0.2 of churn
The advertising software market is mature and
competition is high
•
Expected to churn to marginal level throughout 2017
•
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
• 30 new contracts closed in Q1 2017
• New ARR from closed contracts of USD 1.7
million
• Strong performance from EMEA team. All sales
reps delivered results
• On track to increase sales organization to 30
effective sales quotas
Q4
Q1
Plan
18
19
30*
Avg. ARR per
SQ per quarter
0.12
0.09
0.12**
USDm
USDm
USDm
New ARR per
quarter
2.1
1.7
3.5
USDm
USDm
USDm
Avg. Sales
Quotas (SQ)
per quarter
• 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
83%
75%
SaaS segment
82%
73%
PCAN segment
77%
79%
70%
70%
74%
66%
• Ongoing projects to strengthen SaaS segment gross
margin:
• Moving hosting capacity from pure lease to colocation solution
• Optimizing code and delivery of existing new
data management features
19%
Q1'16
17
18%
Q2'16
16%
Q3'16
12%
12%
Q4'16
Q1'17
• Goal to bring SaaS gross margin back above 80%
www.cxense.com
Profit and loss statement
USD 1,000
Q1 2016
Q4 2016
Q1 2017
Revenues
6 263
6 562
5 918
Gross profit
4 717
4 574
3 937
Gross margin
OPEX
6 689
Non-IFRS OPEX adjustments
(659)
Estimated full effect of cost-reduction program
(525)
OPEX adjusted
EBITDA
EBITDA adjusted
18
75 %
70 %
7 204
(397)
• Q1 2017 EBITDA of USD – 2.9 million compared to USD -2.0
million in Q1 2016
• Loss increase reflects;
67 %
6 848
• Gross margin decrease
(358)
5 505
6 807
6 490
(1 973)
(2 629)
(2 911)
(790)
(2 233)
(2 553)
• OPEX increase reflects more sales & marketing
spending
www.cxense.com
Illustrative**
SaaS cost model scalability illustration
100
Variable costs
20
Economies of scale
80
20
50% increase in sales & implementation capcity
costs 17.5% of revenue baseline
10
35
45
ARR*
CoS (Hosting Gross Profit
cost)
Account
Mngmnt
& support
Marketing Sales & Impl.
R&D
*Annualized Recurring Revenue (ARR)
** All cost vouchers are not split by operational department, hence cost break-down is illustrative and in round numbers
15
10
-35
G&A
Capitalized
R&D
EBITDA
www.cxense.com
Cash flow development
Q1 2017 cash flow
USD 1,000
21 960
• Q1 2017 Cash flow from operations of USD -4 million
• Affected negatively by year-end bonus payments
accrued for in 2016 and paid in Q1 2017.
• Over time cash flow from operations will be near
EBITDA
(3 995)
(5 160)
0
12 805
• 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
period start
operations
investing
financing
activities
activities
20
Cash at
period end
• USD 12.8 million cash position at period end
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
… and Cxense are among those that help the winners
Feb 2017: Gartner Group included Cxense in its Third Magic
Quadrant for Digital Marketing Hubs made up of 22 selected
vendors globally
Gartner said “marketing leaders need a system that can
integrate and coordinate data and activities across
channels, devices and contexts, continuously and in real
time”.
The quadrant provides an overview of vendors from
advertising, marketing automation and analytics that
deliver personalized digital marketing at scale.
23
www.cxense.com
Investing in North America growth
BOSTON OFFICE
NEW YORK OFFICE
• Significant market potential North America
• Existing high quality penetration in the media/publishing industry
to grow from
• Ramp-up of sales team in North America on track
• Growing lead pipeline
24
www.cxense.com
Strengthening offering, distribution and adoption
Strategic investments made in Q1 2017 to add capabilities and widen market reach
mporium Group plc - GBP 0.65 million
• Strategic partner since initial investment in 2015, holds 21.2% stake
• Mobile technology managing digital ad campaigns
• Combined one-stop-shop solution for advertising campaigns targeting mobile
device users
RepKnight - GBP 3 million
• Real-time analytics from Twitter providing Cxense’s clients insight on social media
reach and impressions
• Combined solution drives customer engagement, increases site traffic and
enables more relevant personalization
• To increase conversion for publishers and e-commerce companies
25
www.cxense.com
Summary and outlook
www.cxense.com
Summary and outlook
• Data management and personalization up 21% year-over-year
• Recognition increasing
• Ramp-up of sales team in North America on track
• Strategic investments in partners to strengthen Cxense’s offering, distribution and sales
• Record lead pipeline of sales opportunities
27
www.cxense.com
Appendix
28
www.cxense.com
Key figures
USD 1,000
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Change y/y
3 566
3 933
4 295
4 495
4 299
21%
1 900
5 467
1 448
5 381
1 216
5 511
1 159
5 654
911
5 209
-52%
-5%
PCAN segment
Inter-segment elimination
Revenues
837
(41)
6 263
990
(41)
6 330
840
(34)
6 317
938
(30)
6 562
733
(24)
5 918
-12%
Gross profit
Total gross margin
Gross margin SaaS segment
Gross margin PCAN segment
4 717
75 %
83 %
19 %
4 594
73 %
82 %
18 %
4 394
70 %
77 %
16 %
4 575
70 %
79 %
12 %
3 937
67 %
74 %
12 %
-17%
OPEX
Non-IFRS OPEX adjustments
Estimated full effect of cost-reduction
program
OPEX adjusted
6 689
(659)
5 904
(204)
6 266
(226)
7 204
(397)
6 848
(358)
2%
5 505
5 700
6 040
6 807
6 491
(1 972)
(1 310)
(1 873)
(2 629)
(2 911)
Data Management & Personalization
software
Advertising software
SaaS segment
EBITDA
29
-6%
(525)
www.cxense.com
Quarterly new recurring revenue and churn
USD 1,000
Quarterly Recurring Revenue (QRR) on contracts closed in the quarter
New QRR effect in reported figures
Lost QRR (churn)
800
663
637
610
600
514
446
400
429
384
369
413
395
516
418
469
429
373
290
271
240
200
0
(122)
(130)
(200)
(131)
(162)
(131)
(223)
(400)
USD 0.2 million
related to one
large video
customer
(360)
(417)
(600)
(691)
(800)
Q1'15
30
Q2'15
Q3'15
Q4'15
Q1'16
Q2'16
Q3'16
Q4'16
Q1'17
www.cxense.com
Income Statement
USD 1,000
Q1 2017
Q1 2016
5 918
6 263
Cost of goods sold
1 981
1 546
Employee benefit expense
4 586
4 857
Other operating expense
2 262
1 832
(2 911)
(1 973)
983
865
(3 894)
(2 838)
76
(375)
(171)
(149)
Net Income/(loss) before taxes
Income tax expense
(4 193)
(3 158)
85
27
Net income/(loss) for the period
(4 278)
(3 185)
Revenue
Operating expense
EBITDA
Depreciation & amortization expense
Net operating income/(loss)
Net financial income/(expense)
Share of profit of investments accounted for using the equity method
31
www.cxense.com
Balance sheet
USD 1,000
Non-current assets
Goodwill
Deferred tax asset
Intangible assets
Office machinery, equipment, etc.
Investments in associated companies
Other financial assets
Total non-current assets
Current assets
Trade receivables
Other short-term assets
Cash and cash equivalents
Total current assets
Total Assets
Total Equity
Non-current liabilities
Deferred tax liabilities
Other provisions
Other long-term liabilities
Total non-current liabilities
Non-current liabilities
Trade payables
Current taxes
Other short-term liabilities
Total current liabilities
Total equity and liabilities
32
As at 31 Mar 2017
As at 31 Mar 2016
14 364
15
11 426
280
8 391
646
35 121
14 364
37
13 061
314
4 620
251
32 647
3 046
1 382
12 805
17 233
52 354
3 725
989
3 072
7 786
40 433
44 338
27 035
674
121
199
994
968
2 688
3 657
1 403
178
5 441
7 022
52 354
1 463
109
8 170
9 742
40 433
www.cxense.com
Cash Flow Statement
USD 1,000
Cash flow from operating activities
Profit/(loss) after income tax (including disposal group)
Adjustments:
Income tax payable
Share-based payments
Share of profit of investments accounted for using the equity method
Depreciation and amortization
Currency translation effects
Change in trade receivables
Change in trade payables
Change in other accrual and non-current items
Net cash flow from / (used in) op. activities
Cash flow from investing activities
Investment in furniture, fixtures and office machines
Investment in intangible assets
Investment in associated companies
Investment in subsidiary
Net cash effects from disposal subsidiary
Net cash flow from / (used in) investing activities
Cash flow from financing activities
Net proceeds from share issues
Proceeds from minority interest
Net cash flow from / (used in) financing activities
Net increase/ (decrease) in cash and cash equivalents
33
Q1 2017
Q1 2016
(4 278)
(3 185)
(110)
242
375
983
210
587
(361)
(1 644)
(3 995)
(93)
171
149
865
243
(188)
82
(286)
(2 241)
(76)
(507)
(4 577)
-
(20)
(496)
(5 160)
(516)
(9 155)
(2 757)
www.cxense.com
Important notice
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
34
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