Cyviz : Q2 2022 Report

QUARTERLY REPORT

Q2 2022

We transform how people work.

Key figures

• Cyviz delivered an EBITDA of NOK 5.0m in the second quarter, an improvement of NOK 23.3m compared to last reported quarter
• Revenues grew by 17% compared to Q2 2021 and ended at an all-time-high of NOK 119.8m
• Gross profit of NOK 54.2m representing a growth of 21% compared to Q2 2021
• Order intake of NOK 116.9m for the quarter leaving the rolling 12-months trend at NOK 445m
• Order backlog of NOK 218.8m after Q2

Key events

• Signed new strategic partnership deals with Atea Group and Techlit SCM. The first relates to offering managed services for customers with Microsoft Teams Rooms (MTRs) in Scandinavia, while the latter is a collaboration for implementing Cyviz Easy Agent for Teams integration in the Italian market
• Awarded several large contracts totaling NOK 33m in the Government & Defense-vertical including what will become one of the largest command & control centers in the world
• Completed installation of Microsoft Technology Center in Atlanta. This is the 15th Microsoft site that Cyviz has installed worldwide based on the global MTC Envisioning standards
• Received purchase order for Aker BP's new advanced onshore collaboration center in Trondheim with total contract value of NOK 12m
• Finalized new "divisible" board room for Accenture in Tampa and completed the boardroom and meeting rooms-upgrade at The Dock in Dublin
• Signed NOK 24m deal with Fortune 500-company to deliver collaboration technologies for the global CEO's personal workspace in Washington DC
• Completed installation of pharmaceutical company GlaxoSmithKline's shopper science lab in Tokyo. The solution will provide in-depth understanding of how and why shoppers make decisions and what influences their choices

CEO comment

The second quarter of 2022 was characterized by strong commercial and operational performance resulting in revenues reaching a new all-time-high for any given quarter with NOK 119.8m, an increase of 17% compared to the next best quarter achieved in Q2 2021. I am also proud that Cyviz delivered a positive EBITDA of NOK 5m for the quarter, in line with both our own expectations and what we communicated during the presentation of our Q1 report.

In the second quarter of last year, 75% of revenues came from the corporate segment with lion share stemming from several Microsoft-installations. During Q2 this year, we saw a continued diversification of our portfolio with the share of Microsoft revenues being less than 20% offset by an uplift in the government and defense-vertical with increased demand for command & control rooms. The same development applies for the booking trend where 60% of the order intake derived from Microsoft Technology Centers same quarter last year, while we saw orders more spread across both verticals and geographies during Q2 2022.

This was the sixth consecutive quarter with growth in order intake, and Cyviz is now at NOK 445m looking from a rolling 12-months perspective. That represents a growth of 45% compared to Q2 2021 with good contribution from our continuously expanding footprint in the key market segments corporate, energy and government and defense. A proof point of the latter includes the awarded contract for a new command and control room center in the Middle East, with total contract value of NOK 25m, which will be one of the largest in the world. This development of commercial excellence, combined with improved operational capabilities the last year, strengthens our belief that we are able to deliver a positive EBITDA-result for 2022.

During the quarter, Cyviz also entered two new strategic partnerships that supports the company`s direction towards platform and SW to exploit untapped potential in sales channels and extend the reach of Cyviz solutions into broader markets and verticals. The first deal was with Techlit SCM, an Italian integrator which will collaborate with Cyviz to implement Cyviz Easy Agent for Teams integration in the Italian market. The second deal was signed with Atea Group for building managed services for enterprise customers in Scandinavia with Microsoft Teams Rooms (MTRs). Hence, both new partners will be resellers of Cyviz SW and platform solutions in different parts of Europe, enable increased recurring revenue models and help accelerate Cyviz' ability to scale software and cloud platform services to enterprise accounts.

Financial review

Financial highlights (NOK million)	Q2 2022	Q2 2021	YTD 2022	YTD 2021
Total revenue	119.8	102.2	189.3	159.0
Gross profit1	54.2	44.8	83.6	69.6
Gross margin	45.2%	43.8%	44.2%	43.8%
EBITDA2	5.0	7.4	-13.3	-0.2
EBITDA margin	4.2%	7.2%	-7.0%	-0.1%
Cash flow from operations	-54.5	-2.7	-71.0	-20.1
Cash and cash equivalents	9.0	63.2	9.0	63.2
Net interest-bearing debt (-) / deposits (+)	-47.0	53.2	-47.0	53.2
Equity-ratio	40.8%	62.6%	40.8%	62.6%
Order intake	116.9	107.8	237.6	195.8
Order backlog	218.8	119.0	218.8	119.0
Book-to-bill ratio3	0.98	1.05	1.26	1.23

1. Gross profit is defined as revenues less cost of materials, including subcontractor costs
2. EBITDA is earnings before depreciation, amortization, interests and tax
3. Book-to-billratio is order intake in the period divided by revenue in the same period. A ratio above 1.0 indicates an increased order backlog and vice versa

Revenue and gross profit

Cyviz delivered revenues of NOK 119.8m in Q2, up 17% compared to same quarter last year and 71% compared to last reported quarter. The reason for the high variation between quarters in 2022 is both seasonal variations with Q1 historically being a slow quarter, but also our increased capabilities to ship more hardware, start and finalize projects and hence increase our ability to recognize revenues.

The composition of revenues was also more diversified in Q2 compared to same quarter last year. The corporate segment's relative share decreased from 75% to 55%, only to be offset by government & defense increasing from 12% to 35%. North America was the largest region measured in revenues with NOK 54.4m for the quarter. The performance in the region was driven by the corporate segment with large projects for key customers Accenture, KPMG and Microsoft.

Year-to-date, Cyviz has NOK 189m in revenues which is a growth of 19% compared to 2021. Looking at revenues from a rolling 12-months perspective, Cyviz is at NOK 353m after Q2. This represents a year-over-year growth of 30% or NOK 81m.

Gross profit ended at NOK 54.2m which is the highest gross profit ever reported by Cyviz. This a growth of 21% compared to Q2 2021 with margins increasing from 43.8% last year to 45.2% in Q2 this year. On a rolling 12-months basis, Cyviz has a gross profit of NOK 156m which is a growth of NOK 34m (+28%) compared to Q2 2021.

Order intake and order backlog

Order intake ended at NOK 116.9m in Q2, up NOK 9.1m compared to last year. The performance in Q2 2021 was boosted by NOK 65m in new orders for Microsoft Technology Centers, while this year's booking results were divided among 40 customers across several industry verticals and geographies.

Other factors contributing positively to the booking number was NOK 50m from the corporate segment with the largest deal amounting to NOK 24m from a Fortune 500-customer. Increased demand for command & control centers lead to a total order intake from government & defense-customers of NOK 33m, while the energy-vertical contributed with NOK 21m.

During first half of 2022, Cyviz has received orders for NOK 238m. Total order intake is up by 21% compared to 2021 and marks a milestone as we have never exceeded NOK 200m during any first half before. Cyviz' order intake measured on a rolling 12-months basis ended at NOK 445m after Q2, up 45% compared to Q2 2021. Total order backlog was NOK 219m which is an increase of NOK 100m compared to same quarter last year.