Adveritas : Quarterly Activities Report & Appendix 4C

For personal use only

Adveritas Limited

U10, 16 Brodie Hall Drive

Bentley 6102 Western Australia

[phone]

ASX RELEASE (ASX: AV1)

19 July 2022

ADVERITASDELIVERSRECORD$2.51MANNUALISEDREVENUE,

UP145%YOY

QUARTERLYACTIVITIESREPORTFORTHEJUNE2022QUARTER

Q4 FY22 highlights (vs Q4 FY21):

• Annualised revenue at 30 June 2022 of circa $2.51 million, up 145% over the 12 months since 30 June 2021
• Revenue for the quarter up 87% to $599k (compared to Q4 FY21)
• Cash receipts for the quarter up 261% to $610k (compared to Q4 FY21)
• Key enterprise clients in the banking, technology, entertainment and betting sectors were signed in the quarter
• FirstsalesachievedthroughGoogleCloudMarketplace,providingcirca$210k of annualised revenue
• TrafficGuard's second product (mobile app anti fraud offering) added to Google Cloud Marketplace during the quarter
• Continued growth in revenue leading indicators such as new trials, cross sell opportunities to existing customer and Freemium subscribers
• $3 million raised through issue of convertible notes underpins healthy pro- forma cash balance of $6.2 million (once R&D grant of $1.15 million is received)

Adveritas Limited (ASX: AV1) (Adveritas or the Company) is pleased to provide its quarterly activities report for the three months ended 30 June 2022 (Q4 FY22).

For personal use only

Revenue and customer base continues to scale

Several industry leading clients across the betting, banking, technology and entertainment sectors signed up to TrafficGuard during Q4 FY22.

Annualised revenue at 30 June 2022 was up 37% since 31 March 2022 to a record $2.51 million, and up 145% YoY. This growth was underpinned by new customer contracts acquired by the direct sales team and through the Google Cloud Marketplace.

Annualised Revenue (A$ millions)

3.00

2.50

2.00

1.50

1.00

0.50

0.00

30-Jun-21

31-Dec-21

30-Jun-22

Commenting on Adveritas' Q4 FY22 performance, Co-founder & CEO Mat Ratty said:

"Our global sales team has been successfully executing on our pipeline, delivering strong revenue growth and a record $2.51 million annualised revenue, while our marketing team has been further increasing the product and brand awareness amongst enterprises in our key verticals, which is scaling new revenue opportunities. We also focused on utilising key channel partnerships to grow our client base, which culminated in our first sale via the Google Cloud Marketplace in May. TrafficGuard has received significant interest from other enterprises since we launched our tactical Go to Market strategy, and as a result, we expect to see our growth rate further increase in upcoming quarters."

2 | P a g e

For personal use only

Google Cloud Marketplace and direct sales underpin growth

In April, the Company's Google Cloud Marketplace Go-To-Market strategy was launched, driving significant interest from large enterprises. The TrafficGuard solution is being actively promoted by Google Cloud's independent software vendors and Partner Sales teams to key Google Cloud Platform customers.

The Google Cloud Marketplace lets users quickly deploy value added software solutions like TrafficGuard that run on the Google Cloud Platform, significantly reducing the legal and procurement timelines usually experienced with enterprise level contracts.

TrafficGuard's mobile solution, utilised by multiple Unicorn clients of Adveritas, has now been accepted into the Google Cloud Marketplace, following enquires by companies utilising the Marketplace. This is the Company's second product that has been successfully added and ensures that TrafficGuard is able to offer both products (PPC and Mobile app solution) to clients.

Following the early success in driving growth from the Google Cloud channel, Adveritas has built solutions that detects and prevents invalid traffic in Meta's Facebook platform, with trials being undertaken by current enterprise clients. This will provide yet another key sales channel, given the vast scale of advertising on Meta's Facebook platform by TrafficGuard's existing clients. This is the Company's first release on a social platform, with further releases on other social platforms planned for the second half of 2022.

Revenue leading indicators gaining strong momentum

A key indicator of future revenue growth is the level of Freemium subscribers. Over Q4 FY22, Freemium subscribers increased another 7% from Q3 FY22 to over 4,300. Conversion of Freemium subscribers to paying customers remained strong at approx. 11% in Q4 FY22 which was underpinned by platform UI/UX, workflow and user nurturing sequence improvements put in place by Adveritas' Chief Marketing Officer to maximise self-serve conversions.

The Freemium subscriber base provides a paying customer pipeline with significant cross and upsell potential as the Company diversifies the channels in which it operates. It also serves as a rich data set across multiple industry verticals and markets, enhancing the value of the Company's global, proprietary anti-fraud

3 | P a g e

For personal use only

database. During FY23, the Company will focus on an aggressive user acquisitions strategy targeting the SME market aimed at monetising its self-service product line.

Cumulative Freemium Subscribers

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

30-Jun-21

30-Sep-21

31-Dec-21

31-Mar-22

30-Jun-22

Balance Sheet supports growth initiatives

in April, Adveritas raised $3 million through the issue of convertible notes to strategic, professional and sophisticated investors. The pro-forma cash balance at 30 June was $6.2m, inclusive of an $1.15m R&D grant which is expected in Q1 FY23. The convertible notes offer was supported by long-term major shareholders, who have participated in previous capital raisings, as well as new investors who wanted to join the register.

The convertible notes have a two-year term, 8% per annum coupon, and a conversion price based on 80% of the Company's 90-day VWAP subject to a ceiling price of $0.17 per share and a floor price of $0.08 per share. The conversion can only happen at maturity and the Company has the ability to repay the loan at any time.

Funds raised from the offering strengthened Adveritas' capital position and balance sheet, supporting the acceleration of sales and marketing growth initiatives, as the Company executes on its significant growth pipeline.

4 | P a g e

For personal use only

Commenting on the Company's strong outlook for growth, Mr. Ratty said:

"Having grown our annualised revenue base by 145% YOY to a record $2.51m, and signed our first sales via the Google Cloud Marketplace, we are building strong momentum for continued rapid growth. Our sales and marketing teams are working extremely closely with the Google Go to Market team to ensure accelerated growth. The Google Cloud Marketplace is an important sales channel providing strong opportunities for revenue producing contracts, combined with our direct sales force.

"We are progressing into other channels to service client needs, including Meta, to further accelerate our global roll out and with several enterprise trials in progress, we are well positioned to land our first deals via this channel. In keeping with the Company's vision of being a full funnel and omnichannel solution this puts our sales force in a strong position to upsell and cross sell other products to our ever growing client base. I look forward to updating the market on further client wins via our direct sales strategy and channel partnerships, in the months ahead."

Cash receipts

Previous quarters

Jun 2022 Mar 2022 Dec 2021 Sep 2021 Jun 2021 $'000 $'000 $'000 $'000 $'000

Receipts from customers

610

481

651

423

169

Cash receipts were up 261% on Q4 FY21, reflecting the growth in paying customers.

Managing cash payments
	Jun 2022	Previous quarters
	Mar 2022	Dec 2021	Sep 2021	Jun 2021
	$'000	$'000	$'000	$'000	$'000
Research and development	(844)	(682)	(941)	(1,196)	(822)
Product manufacturing &	(112)	(377)	(175)	(292)	(233)
operating
Advertising and marketing	(257)	(283)	(113)	(148)	(365)
Staff costs	(1,334)	(1,362)	(1,254)	(1,143)	(927)
Administration and corporate	(315)	(309)	(265)	(441)	(252)
Total operating expenditure	(2,862)	(3,013)	(2,748)	(3,220)	(2,599)
payments

5 | P a g e