8common : Appendix 4C and Activity Report

8common

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ASX Release

21 January 2022

Quarterly SaaS revenue up 19% vs PCP

December 2021 Quarterly Report and Appendix 4C

Fintech company 8common Limited (8common or the Company) (ASX: 8CO), is pleased to release its consolidated quarterly cashflow and business update for the quarter ended 31 December 2021 (2Q FY22).

Key financial highlights for 2Q FY22 include:

• Quarterly SaaS and transaction-based revenue of $695k, up 19% on the previous corresponding period (pcp) as activity levels in New South Wales, ACT and Victoria initially started to normalise after the impact of COVID-19 lockdowns and travel restrictions.
• $1,029k in operating cash receipts and operating cash outflow of $311k reflecting the continued investment in to CardHero and expenditure associated with the early work packages of the GovERP project work
• Annualised Recurring SaaS and transaction Revenue (ARR) of c.$2.8million at 31 December
• Annualised ARPU for the quarter of $17, an 11% increase on 1Q FY22
• Total quarterly revenue of $1,007k, flat on the previous corresponding period (pcp) (2QFY21) but up 29% versus the prior quarter
• Cash balance at 31 December 2021 was $4.9m (30 September 2021: $5.6m) leaving 8CO well positioned to accelerate growth initiatives in CY22

Key operational highlights include:

• The commencement of the Federal GovERP work package and signing of two contracts (one post quarter end) with a cumulative value of over $1.4 million (inc-GST). Revenue from the contracts will be recognised in Q3 and Q4 FY22 with the associated SaaS transaction and recurring revenue commencing in 1H FY23
• CardHero went live during the quarter with the first customer transactions processed on the platform with Life Without Barriers commencing use of CardHero in line with its staged national rollout plan.
• User levels continue to increase to over 173k (up over 17% over the past 12 months)

	2QFY21	1QFY22	2QFY22	% Change
				(vs pcp)
Total Revenue ($Ak)	1,000	784	1,007	0%
SaaS & Transaction Revenue (A$k)	584	683	695	19%
Number of users (k)	148	171	174	17%
ARPU - Federal Government (A$)	36.37	30.27	36.17	(0.5%)
ARPU - Total (A$)	16.94	15.28	17.02	0.5%

8common CEO, Andrew Bond said "The strong recurring revenue growth during the quarter reflects our strong user growth and the increased penetration of Expense8 as a leading travel and expense management platform across Federal and State Governments and large enterprises, as well as the return of business activity post the COVID lockdowns in NSW, ACT and Victoria.

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"We continue to fast-track our product investment and we have expanded our group-wide support resources to support the anticipated growth of the CardHero platform and the GovERP program. With an additional 63 mandated entities and over 110k users to onboard to Expense8 in coming years (not including the opt-in entities), the GovERP program represents a significant driver of revenue growth and shareholder value, having already received $1.4m in contracts to deliver the accelerated capability.

"We now have 2 highly valuable and complementary lines of business. The combination of Expense8 with the Federal GovERP mandate and having Cardhero live and well received by its target market positions us very well for the remainder of FY22 and beyond."

Financial and operational review

The Company delivered quarterly SaaS revenue of $695k, up 19% versus the pcp, as business activities started to normalise after the impact of the COVID lockdowns and travel restriction in New South Wales, ACT and Victoria. Total revenue of $1,007k for the quarter increased compared to the last quarter, and was steady versus the pcp.

The number of users on our platforms continue to increase to over 173k (up over 17% over the past 12 months) reflecting the scale of our offering.

The previously announced $1.6 million, three-year Life Without Barriers commenced during the quarter in line with the staged national rollout plan. Life Without Barriers plan to utilise CardHero+ to disburse funds and manage expenses across over 3,500 cards representing 380 disability care homes across Australia. The contract incorporates an implementation fee of $150k and approximately $500k per annum in transaction fees. During the quarter CardHero contributed $13.5k to recurring SaaS and

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transaction revenue ($73.5k to total revenue). Revenue levels will grow considerably in coming quarters as the Life Without Barriers rollout plan progresses.

In addition to Life Without Barriers, a broader opportunity exists to provide the CardHero product to other not-for-profits NDIS service providers, resulting in a significantly wider market opportunity for the CardHero offering. Importantly, we are also seeing our existing corporate clients explore the potential of CardHero.

Post quarter end, the Company received a significant $752k (inc-GST) contract from the Australian Government under the GovERP program. Total value of signed contracts to date under the GovERP is over $1.4 million (inc-GST). The contract covers two streams which consists of upgrading seven existing customer entities to the GovERP version of Expense8 and the pre-onboarding consultation for eight new entities. This collectively incorporates over 10,500 users, on to the GovERP version of the Expense8 travel & expense management platform (of which more than half are new users).

The GovERP platform enables the selection of Expense8 under a pre-selected panel of service providers. Expense8 is the exclusive provider under the Travel and Expense Management Value Stream for the Shared Services Program which includes over 150k employees across 90 mandated and 68 opt- in Government Entities (i.e. 158 entities in total).

Total revenue

$1.3m

1.00

0.85

$1.0m

1.06

1.04

1.00

1.01

0.97

0.90

0.88

0.92

0.93

$0.8m

0.83

0.82

0.85

0.78

$0.5m

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

FY19

FY19

FY19

FY20

FY20

FY20

FY20

FY21

FY21

FY21

FY21

FY22

FY22

Recurring SaaS & Transaction revenue

$0.8m

$0.7m

0.85

0.72

0.70

0.69

0.68

0.66

$0.6m

0.63

0.59

0.58

$0.5m

0.54

0.55

0.52

0.46

$0.4m

0.44

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

FY19

FY19

FY19

FY20

FY20

FY20

FY20

FY21

FY21

FY21

FY21

FY22

FY22

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The company continues to focus on costs and expenses. Staff, administration, and corporate costs were $872k for the quarter, up from $823k in the previous quarter given the increase in investment in CardHero, the GovERP rollout and other corporate costs during quarter.

Payments to the Directors of the entity, comprising of salaries and fees for Executive and Non-Executive Director, totalled $73k during the quarter (see section 6 of the Appendix 4C). No other payments were made to any related parties or their associates of the entity.

The Company generated a net operating cash outflow of $311k for Q2 FY22, reflecting the investment in the GovERP program and in the roll out of the CardHero platform.

The company has a strong cash position of $4.9 million as at 31 December 2021.

Cash Flow performance

$2.0m

$1.5m			1.52
		1.07											1.31				1.27
$1.0m 0.81					1.00	0.82	1.03									0.87	1.02					1.03
					0.99
				0.39																	0.72
$0.5m
$0.0m					0.06							0.05							0.05		0.05		0.03
															-0.05									-0.02
-$0.5m	-0.21										-0.25														-0.15
																									-0.31
-$1.0m																																	-0.67
Q2		Q3	Q4		Q1		Q2		Q3	Q4	Q1		Q2		Q3		Q4		Q1		Q2
	FY19		FY19	FY19		FY20		FY20		FY20	FY20	FY21		FY21		FY21		FY21		FY22		FY22
										Cash Receipts						Net Operating Cash

Outlook

The Company has a significant pipeline of potential revenue growth via the implementation of its technology solutions across State, Federal, Not-for-profit and Corporate clients. GovERP provides the opportunity for rapid growth within the Federal Government sector in coming years with the potential to deliver transformative revenue increases for the Company.

The CardHero and CardHero+ products are a significant engine of growth and will further expand the client and revenue footprint of the Company.

With a dedicated team, robust financials and strong pipeline of Expense8 and CardHero growth opportunities, the Company has established a solid platform for continued growth over the remainder of FY22 and beyond.

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Further information

Corporate	Investors
Nic Lim	Craig Sainsbury
[e-mail]	[e-mail]
Executive Chairman

About 8common Limited

8common (ASX:8CO) solutions deliver enterprise grade financial transaction processing for government entities and large enterprise businesses. Its flagship Expense8 platform is a leading pureplay provider of end to end travel expense management software, card application and management. The innovative software solutions improve organisation, productivity, incorporate company organisational policies and expense auditing to reduce fraud. Expense8 by 8common was named a Major Player in the IDC MarketScape: Worldwide SaaS and Cloud-Enabled Travel and Expense Management Applications 2019 Vendor Assessment.

Its new product CardHero (pre-paid card fund distribution) delivers a closed loop solution to support regulated, large network and high volume requirements. 8common specialises in large enterprise and government segments.

Its growing client base of more than 173,000 platform users include enterprise customers Woolworths, Broadcast Australia, Amcor, and over 158 state and federal government entities. For more information, visit https://www.8common.com/