Half Year Presentation- September 2016
Online Distribution & Digital Product Hub Half Year Presentation- September 2016 Disclaimer The information contained in these slides and communicated verbally to you, including the speech(es) of the presenter(s) and any materials distributed at or in connection therewith (together, the "Presentation") is confidential. Reliance upon the Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. If any person is in any doubt as to the contents of the Presentation, they should seek independent advice from a person who is authorized for the purposes of the Financial Services and Markets Act 2000 (“FSMA") and who specializes in advising on investments of this kind.
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. New Management Team . New Strategy . Restructuring . Organic Growth . Non-organic Growth . Financial Results . Outlook
3 Half Year Presentation- September 2016 New Management
Ido Erlichman CEO
. Joined Crossrider Plc in May 2016 as Group Chief Executive Officer . More than nine years’ experience in the technology sector garnered through roles in private equity, consulting and finance . Joint CEO of Visual DNA – executed turnaround and achieved EBITDA growth & geographical expansion . Senior Manager within KPMG's Transaction Services and Private Equity deal advisory practice . Author of the best seller book 'Battle of Strategies’ . CPA graduated Magna Cum Laude in Accounting and Economics from the Hebrew University and MBA, from the University of Cambridge Judge Business School
Moran Laufer CFO
. Appointed as Crossrider Plc Acting Chief Financial Officer in August 2016 . 8 years of experience in accounting and financial controls . 4 years as Crossrider’s Corporate controller supporting the IPO . Divisional controller at SafeCharge international . Senior Auditor at E&Y for London Stock Exchange and NASDAQ traded companies primarily focused on the technology sector . CPA & MBA Tel Aviv University
4 Half Year Presentation- September 2016
Highlights
Operational Financial
Strong Adjusted Cash App Distribution and Media Restructuring – realising Flow from Operations Appointment of new CEO segment results increased to $2M in annualised savings of $4.1M representing 119% $7.6M from $5.6M cash conversion of adj. EBITDA
Revenue in line with expectations down by $12.1M Strong current trading in to $28.7M primarily due to a Adjusted EBITDA of $3.5M Strategic plan in place both Media and App predicted revenue decrease in line with expectations Distributions Segments in the Web apps and License segment
5 Half Year Presentation- September 2016
New Strategy
. Restructuring . Organic Growth . In-organic Growth
6 Half Year Presentation- September 2016 Evolving business model …from ad-tech to an online distribution & product hub
Expanding product portfolio
Using distribution capabilities Online digital product distribution company Leveraging ad-tech capabilities Online Products
Online Distribution
Ad-tech
7 Half Year Presentation- September 2016 Change in reporting segments
Old segmentation New segmentation
Mobile Web App Distribution Media Web Apps and Licence
Definiti App distribution App distribution Definiti Web apps
Web apps Ajilion Web apps Ajilion Technology licensing
50% of Web apps 50% of Web apps Technology licensing Technology licensing
8 Half Year Presentation- September 2016 Our transformation framework will support the new strategy
Business Model Transformation
In-organic Growth
Laying the Foundation Organic Growth for Future Growth
9 Half Year Presentation- September 2016
The restructuring process: $2M in annualised cost savings and 119% Cash conversion
. 2 divisions created Media and App Distribution Re - Organisation in addition to the Web App Licensing Activity*
Cost Reduction . Realised $2M in annualised savings
. Improvement of working capital Standardising contracts . Enforcing working capital discipline
The new structure is expected to generate additional synergies going forward
*the Browser Extension platform has been outsourced through licensing since January. 10 Half Year Presentation- September 2016
App Distribution increasing
Bringing in house customer services improved retention and strengthened distribution channel
$18.2M revenues come from over a quarter of a million products sold to customers (H1 2016)
As a result, margins improved from 21.5% in H1 2015 to 32.3%
Transition to revenue from one off payments to recurring revenue
App distribution segment result increased from $4.1M (H1 2015) to $5.8M (H1 2016)
11 Half Year Presentation- September 2016
App distribution - platform for growth
. Diversification of media sources to increase quality and market share including native, video & search and consolidation of media acquisition activity Traffic . Optimisation of the distribution channel . Over 3M downloads per month Acquisition
Digital sales Reimage Renewals Optimisation Sales Funnel platform
Support
. Reached top 400 Alexa ranking for over two years . Consistently out preforming competitors 12 Half Year Presentation- September 2016
Expanding our product portfolio
Market through 125% improvement Identify our app distribution in revenues profit & synergetic product funnel on a profit 100% improvement in Product acquisition share agreement gross profit from monthly avg.
Leveraging our app distribution funnel
13 Half Year Presentation- September 2016
App Distribution Division – Constant Growth
7,000 35.00% Geographical Revenue
6,000 Distribution 2016 30.00%
5,000 Austria Canada Australia Brazil 25.00% Denmark 4,000
France 3,000 United states, 20.00% 42.85% Germany
2,000 Japan 15.00% United Kingdom India 1,000 Italy
Netherlands 0 10.00% South Spain H2 2014 H1 2015 H2 2015 H1 2016 Africa Russian New Zealand Federation Segment result Margin
14 Half Year Presentation- September 2016
Media Division shifting gears
Mobile activity growing: entered new distribution channels and new territories
As a result, 100% increase in conversions of mobile app downloads and subscription services
Enhancing cross division synergies
Media segment result increase of 17% compared to H1 2015
15 Half Year Presentation- September 2016
M&A will be used as a tool to support the evolution of our business model
Business Model Transformation
Immediate earnings . Portfolio of products Strong growth trajectory Strategic M&A . User base Scale
. Products to expand the portfolio Add immediate value Bolt-on M&A . Technology supporting the distribution funnel Tactical deals to enhance organic growth
M&A is vital to achieve critical scale 16 Half Year Presentation- September 2016
Crossrider Innovation
Technology for distribution funnel
Business . Opened June 2016 Intelligence Big data & AI . Access to top tier teams
. 5 active companies
. Eyes and ears to current market trends
Games Content . Ability to test early stage innovation
Internet and mobile security
17 Half Year Presentation- September 2016
Financial Results
18 Half Year Presentation- September 2016 Results
TOTAL SEGMENT RESULTS $M MEDIA & APP DISTRIBUTION SEGMENT RESULTS $M H1 2016 H1 2015 H1 2016 H1 2015
40.8
25.7 25.9
28.7
12.9 10.6 7.6 5.6
H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015
Revenue Consolidated segment results Revenue Segment results
(29.6%) (17.8%) (0.8%) 38.2%
19 Half Year Presentation- September 2016 Revenue Analysis
STATUTORY REVENUE BY SEGMENT $M Statutory $M H1 2016 H1 2015 % Change
H1 2016 H1 2015 App Distribution 18.2 19.1 (4.7%)
Media 7.5 6.8 8.7% 19.1 18.2 Web Apps and 14.9 3 14.9 (79.9%) License
7.5 Total revenue 28.7 40.8 29.6% 6.8 3 H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015
App Distribution Media Web Apps and License (4.7%) 8.7% (79.9%)
20 Half Year Presentation- September 2016 Revenue Analysis
Revenue by Geography Revenue by Channel
United States 4% 3% Rest of the world 4% 4% Germany 31% 5% Media United Kingdom End Users Partners Australia 6% 63% 37% France 6% Spain Italy 9% Japan 17% Mexico 11%
21 Half Year Presentation- September 2016 Margin Analysis
App Distribution $M H1 2016 H1 2015 Chg RESULTS BY SEGMENT $M
Revenue 18.2 19.1 (4.7%) H1 2016 H1 2015
Direct costs (1) (12.3) (15.0) (18.0%)
Segment results 5.9 4.1 43.9% 7.3
Margin % 32.3% 21.5% +10.8% 5.9
Media $M H1 2016 H1 2015 Chg 4.1 3.0 Revenue 7.5 6.8 10.3% 1.7 Direct costs (1) (5.8) (5.3) 7.4% 1.5
Segment results 1.7 1.5 17.6% H1 2016 H1 2015 H1 2016 H1 2015 H1 2016 H1 2015
Margin % 23.2% 21.6% +1.6% App Distribution Media Web Apps and License
(1) Direct costs comprise cost of sales plus traffic acquisition costs included within sales and marketing 22 Half Year Presentation- September 2016 Income Statement Summary
$M H1 2016 H1 2015 Chg
App Distribution 18.2 19.1 (4.7% )
Media 7.5 6.8 8.7%
Web Apps and License 3.0 14.9 (79.9%)
Revenue 28.7 40.8 (29.6%)
Direct costs (18.1) (27.9) (35.1%)
Segment margin 10.6 12.9 (17.8%)
Segment margin % 36.9% 31.6% +5.3%
Opex (7.1) (7.4) (2.7%)
Adjusted EBITDA 3.5 5.5 (36.4%)
EBITDA % 12.1% 13.5% -1.4%
23 Half Year Presentation- September 2016 Cash Flow Summary
$M H1 2016 H1 2015 Chg
Adjusted Operating Cash flow 4.1 5.0 (0.9) Acquisition payments treated as remuneration 1.1 0.6 0.5
Non recurring costs 0.6 0.1 0.5 Operating cash flow 2.4 4.3 (1.9)
Cash conversion 119% 90% +29%
Tax paid (0.8) (0.2) (0.6) Cash generated from operations 1.6 4.1 (2.5)
Purchases of property, plant and equipment - (0.2) 0.2
Net cash paid for acquisitions (1.4) (0.6) (0.8) Capitalisation of development costs (0.3) (1) 0.7
Net cash generated from Investing activities (1.7) (1.8) 0.1 (Purchase)/issue of shares (1) - (1)
Net cash generated from financing activities (1) - (1)
Net cash (outflow)/inflow for the period (1.1) 2.3 (3.4) Closing Cash 70.2 78.3 (8.1) 24 Half Year Presentation- September 2016
Outlook
25 Half Year Presentation- September 2016 Outlook
Strong current trading in both Media & App Distribution divisions
Consistent growth from Media & App Distribution Segments
Launched new initiatives that build on our technological assets
Targeting acquisitions of new synergistic products, technologies or client base
26 Half Year Presentation- September 2016
Thank you!
27 Half Year Presentation- September 2016 Annex 1 - Margin Analysis (old segments)
Web and Desktop $M H1 2016 H1 2015 Chg SEGMENT RESULT Mobile Web and Desktop Revenue 20.4 33.2 (38.6%)
Direct costs (1) (12.2) (22.5) (45.1%) $12.9M
Segment result 8.0 10.7 (24.3%) $10.6M Margin % 39.5% 32.2% +7.3%
Mobile $M H1 2016 H1 2015 Chg 82.9% 75.5% Revenue 8.3 7.6 9.2%
Direct costs (1) (5.7) (5.4) 5.6%
Segment result 2.6 2.2 18.2% 24.5% 17.1% Margin % 31.3% 28.9% +2.4%
H 1 2 0 1 6 H 1 2 0 1 5
(1) Direct costs comprise cost of sales plus traffic acquisition costs included within sales and marketing 28