LiveTiles : FY22 Q2 Quarterly Activities Report and Appendix 4C

For personal use only

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

ASX Announcement

25 January 2022

LiveTiles delivers strong H1 revenue growth and record cash receipts.

Highlights

• 1H 2022 Operating Revenues (unaudited) of $26.7m, a 32% increase compared to 1H 2021.
• Contracted licence base of 2.7m at 31 December 2021 grew 15% from 2.3m at 30 June 2021.
• Record cash receipts quarter of $15.3m, 18% higher than pcp of $13m.
• $65.2m Annualised Recurring Revenue (ARR) at 31 December 2021 grew 12% versus the prior corresponding period (pcp); ARR on a Constant Currency basis was $64.3m.
• An operating cashflow break-even quarter when excluding one-off items; a +$0.5m improvement on Q1FY22 and +$2.7m on pcp.
• A cash position of $17.6m at 31 December 2021. With an additional $4m available to draw from the OneVentures debt facility, taking total cash available to $21.6m.
• Strategic investment in December 2021 to acquire BindTuning, a leading Digital Workplace software company helping to accelerate the development of the LiveTiles Marketplace for Employee Experience solutions

LiveTiles Limited (ASX:LVT) (LiveTiles or the Company), a global leader in employee experience software for employee collaboration and communications, has today released its Appendix 4C and Quarterly activities report for the three month period ended 31 December 2021 and is pleased to provide the following update on financial and operating performance.

BUSINESS AND FINANCE HIGHLIGHTS

LiveTiles throughout the quarter has again continued to grow its revenues, cash receipts and new customers as the structural shift and focus towards Employee Experience solutions continues across the globe. The Company achieved the following key highlights through the quarter, including:

1. SALES AND CUSTOMER UPDATE

Operating revenues (unaudited) for 1H 2022 was $26.7m, up 32% from 1H 2021 - a successful result, driven through strong performances in Software subscriptions. Contracted Licenses grew to 2.7m at 31 December, up 15% from 2.3m users at 30 June 2021, with LiveTiles Reach continuing its growth success, up 48% in the same 6 month period. Total customer count also rose to 1,055 at 31 December 2021.

ARR on a reported currency basis of $65.2m as at 31 December 2021, up 12% from pcp. On a constant currency basis1 ARR was $64.3m, growing 11% from pcp. ARR Net $ Retention for the trailing 12month period was 86% at 31 December, a drop from 30 June 2021, contributing factors included customers and partners provided with COVID billing relief, as disclosed in FY2021 accounts, not returning to active billing.

The Average ARR per Customer as at 31 December 2021 grew +21% to $61.8k versus the pcp, as the business continues to focus its efforts on a shift to the larger Mid-market and Enterprise segment. On a constant currency basis, average ARR per customer grew +19% over the pcp to $61.0k.

1 December 31 2021 ARR is shown on a constant currency basis when compared with using 31 December 2020 FX rates. Note: The Group commenced constant currency reporting in the quarter ended 30 June 2020

ASX Listing Rules Appendix 4C (17/07/20)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

					ARR + 12% YoY								Average ARR per Customer
																	40%
AUD$m								AUD$000s			4yr- CAGR	61.8	61.0
				65.2
				64.3
		58.1			51.1	51.3
					52.7										35.8
				21.4						16.3
7.3
	Dec-17	Dec-18	Dec-19		Dec-20	Dec-21			Dec-17	Dec-18	Dec-19	Dec-20	Dec-21
			ARR (reported currency)		ARR (Constant Currency)					Average ARR (reported)	ARR (Constant Currency)

TOTAL CONTRACTED LICENCES		Operating Revenues + 32% YoY
+15% vs	2.7				26.7
30Jun21
Millions				.3
			17.9
2.3		AUD $m
		5.7
30-Jun-21	31-Dec-21	H1 FY19	H1 FY20	H1 FY21	H1 FY22

Customer Highlights

The following key customer highlights were made during the quarter, including new signings and operational updates across the regions:

• US medical centre, one of largest in US with 90,000+ employees (US)
• A key division of the United Nations (Switzerland)
• Global mining services and equipment company (US) with 60,000+ employees
• A large Australian city council (AUS)
• A UK based University (UK)
• An Australian University (AUS)
• Multinational Food Manufacturing company (US)
• A Swiss Financial Institution (Switzerland)

Operationally, during the quarter the Company completed its largest customer deployment project undertaken, with UnitedHealth Group program successfully deployed and now live across the business.

ASX Listing Rules Appendix 4C (17/07/20)	Page 2
+ See chapter 19 of the ASX Listing Rules for defined terms.

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

2. CASH UPDATE

use only

Cash Receipts

LiveTiles recorded another consecutive record cash receipts quarter of $15.3m in Q2 FY22, a +18% increase on the pcp (Dec-20). A great effort in a quarter that is typically disrupted with the Holiday season break.

Trailing-twelve-month (TTM) cash receipts of $56.7m growing +20% compared to pcp.

Cash Balance and Cash Flows

+20% Growth in Cash Receipts (TTM)

	60									54.4	56.7
									51.8
	50						44.5	47.1	48.4
						41.0
	40				32.9
AUD$m				31.9
30		25.6
	19.6
	20	15.1						13.0	14.6	14.6	15.3
	11.4						12.0
			10.4	10.9	11.2	12.2
		7.9	8.5
	10

4.1	5.2

0

Dec-18Mar-19Jun-19Sep-19Dec-19Mar-20Jun-20Sep-20Dec-20Mar-21Jun-21Sep-21Dec-21

For personal

Cash on hand balance as at 31 December 2021 was $17.6million. With a further $4m in funds available to drawdown with the OneVentures debt facility announced 27 September 2021, leaving total available cash of $21.6million.

Net cash operating outflows in the quarter of $(1.36)m, was a 90% improvement in outflows compared to pcp.

Adjusting for one-off items, an underlying breakeven Net Operating Cashflow was achieved for the quarter, when excluding a one-off $(1.38m) tax adjustment payment relating to a US withholding tax review for prior years (2015-20). Tax payments related to current quarter and fiscal year, are reported in ongoing operating activities.

The underlying Net Operating cashflow result saw a +$0.5m and 104% improvement on the Sep-21 quarter cashflows and +$2.7m improvement compared to pcp. On a TTM basis, underlying Net Operating Cashflows of $(3.3)m (excl. Govt Grants and non-recurring items) at 31 December 2021 has improved 70% compared to pcp.

Cash outflows related to business operations included: R&D ($5m), Operating costs ($4.2m) Advertising and Marketing ($1.3m), Staff costs ($3.5m) and Admin and Corporate costs ($1.2m).

Note: in the Appendix 4C report (page 7) for this quarter and going forward, the salary costs associated with the professional services delivery teams are reclassed from 1.2(e) Staff Costs into 1.2(b) Product Manufacturing & Operating Costs, this has also been reflected in the YTD amounts.

Cash outflows for investing activities during the quarter consisted of the following material items, with further details in the Business Operations Update:

• $985k consideration paid for a 19.97% investment into My Net Zero.
• $370k paid for initial 19.99% investment in BindTuning as announced on 15 December 2021.
• $250k invested into Hide & Seek Pty Ltd for a 10% equity stake and establishment of strategic partnership with a key sales partner in Canberra market.
• $82k for associated advisor fees for the above transactions and Q1-21 investment activities.

Cash outflows for financing activities included $112k of advisor fees in relation to the debt facility transaction.

ASX Listing Rules Appendix 4C (17/07/20)	Page 3
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

								Appendix 4C
			Quarterly cash flow report for entities subject to Listing Rule 4.7B
QUARTERLY NET OPERATING CASH FLOW	QTR NET OPERATING CASH FLOW
(excl. govt grants and non-recurring items)
Dec-20	Mar-21	Jun-21	Sep-21	Dec-21	Dec-20	Mar-21	Jun-21	Sep-21	Dec-21
									0.02
		(0.2)
			(1.1)	(1.4)			(1.2)	(0.5)
	(2.3)					(1.6)

AUD $m		AUD$m	(2.7)	+101% YoY
+90% YoY

Q 2 F Y 2 1

(13.6)

NET OPERATING CASH FLOW (TTM)		NET OPERATING CASH FLOW (TTM)
	(excl. govt grant income and non-recurring titems)

Dec-20	Mar-21	Jun-21	Sep-21	Dec-21	Dec-20	Mar-21	Jun-21	Sep-21	Dec-21
					AUD $m	(3.7)			(3.3)
AUD $m				(5.0)
					(6.2)	(5.9)
							+70%
				+73%
								YoY
	(11.9)			YoY	(10.8)
			(17.2)
(18.4)		(18.5)

The payments to related parties of the entity and their associates in section 6 of the Appendix 4C includes payments such as compensation to executive directors and director's fees and loans to executive directors on arms-length terms.

3. BUSINESS OPERATIONS UPDATE

Strategic investment to acquire BindTuning

On 15 December, the Company announced to the ASX that it had entered into an agreement to acquire 100% of issued capital in BindTuning over a 24-month period, with an initial payment of USD$540k for a 19.99% stake (50:50 cash and LVT stock) and the balance payment calculation linked to ARR performance hurdle.

BindTuning, with over 200 customers globally, is a leading software company for building technology to transform intranets into a modern and collaborative, intelligent digital workplace to improve the employee experience.

This acquisition helps accelerate the development of the LiveTiles Marketplace for Employee Experience solutions.

ASX Listing Rules Appendix 4C (17/07/20)	Page 4
+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

My Net Zero Investment

In December, LiveTiles signed a strategic partnership and took a 19.97% minority investment for AUD$985k into My Net Zero, a leading carbon reduction and climate change platform. This partnership will enhance LiveTiles' Employee Experience solutions with the launch of a new product to market "Reach Zero" by integrating the My Net Zero Framework into the LiveTiles Reach technology. This will provide organisations and employees across the globe a platform to help tackle Scope-4 emissions. Reach Zero provides the following capabilities:

• Gives employees an ability to build out and commit to a net-zero pledge
• Capture aggregated data about the employees' net zero plans and choices to help manage their net-zero journey
• Creates a communication and collaboration tool for users to receive progress dashboards, engage and receive advice from other users on how to progress their net-zero journey
• Creates a global benefits program as a way for employees to offset their home energy usage with renewables offsets.

During the quarter My Net Zero had its first partner join and sign up to the technology and participate, Ibredola, a global energy company with approximately 34,000 employees.

On 10 December 2021, LiveTiles and My Net Zero held a launch event, in conjunction with Monash University for the new partnership, with Federal Minister, Tim Wilson, Assistant Minister to the Minister for Industry, Energy and Emissions Reduction in attendance and was quoted saying:

What I like about the My Net Zero functionality is it's focused on empowering individuals, businesses and households to take a sense of responsibility. The platform is full of excellent examples that will help consumers collectively be part of the solution. It makes it easier dealing with the challenge of; if I want to put solar panels on my roof, but actually if I look at this decision from an energy efficiency proposition, actually what I need to do is fix my insulation first.

This is where the My Net Zero technology is obviously the critical part of the solution, because it works with the slipstream of what people are trying to achieve for the future. It's also very important to empower businesses and households as a part of the conversation and take them on the journey.

Hide & Seek Partnership

During the quarter, the Company took a minority 10% stake in a Canberra based digital design and UX consulting business, Hide & Seek, for AUD$250k. The investment, along with a key sales and reseller partnership, strategically positions LiveTiles with a footprint in the Canberra market alongside Hide & Seek, who is a trusted advisor to many Government departments and agencies.

LiveTiles Co-Founder and Chief Executive Officer, Karl Redenbach states:

"The December quarter was an extremely busy and successful one. We achieved a great top-line revenue result and the company made three strategic investments with key partners to grow and improve Employee Experience solutions on the LiveTiles platform. Our progress this quarter has been very deliberate to help us achieve our strategic goals that we outlined in at the FY21 result. The Employee Experience market is growing considerably, and we are leading the way in helping companies understand how to improve their own employee experience offering for their staff as well as providing the best employee experience platform to support the needs of users. There has never been a more important time for Employers to look after their employees as we are seeing today.

It is pleasing to report another strong quarter of financial results, with +32% growth in our 1H 2021 operating revenues (unaudited) as well as another record quarter for cash receipts, our first time collecting over $15m. We now have 2.7m contracted licences up from 2.3m at 30 June 2021 and these metrics will be our key focus going forward.

ASX Listing Rules Appendix 4C (17/07/20)	Page 5
+ See chapter 19 of the ASX Listing Rules for defined terms.