Exasol : Annual Report 2021

Annual Report 2021

| 02 | Annual Report of Exasol AG, 1 January - 31 December 2021

Highlights from the 2021 financial year

EUR 30.5 million

Annual Recurring Revenue

(ARR)

Growth of 29.8%	212
(based on comparable exchange rates)
	Broad customer base

95%

with many global players from various industries

Customer retention rate

Customer Churn Rate with 5% very

low compared to industry

| 03 | Annual Report of Exasol AG, 1 January - 31 December 2021

Content

Message from the Management Board	04	2.4	Business trend in the financial year 2021	15	Consolidated Financial Statements	26
			2.5	Results of operation, financial and net		Consolidated balance sheet Assets	27
Report of the Supervisory Board	07		asset position	16	Consolidated balance sheet Equity and Liabilities	28
			2.6	Overall assessment by the Executive Board	18	Consolidated income statement for the period	29
Exasol on the capital market	10				Consolidated statement of cash flows	30
			3.	Opportunities and risk report	18	Consolidated statement of changes in equity	31
Consolidated Management Report	12	3.1	Risk report	18	Movements in the Group's fixed assets	32
1.	General corporate information	12	3.2	Opportunities report	21
1.1	Business activity	12				Notes to the Consolidated Financial Statements	34
1.2	Corporate structure and locations	13	4.	Forecast	22
1.3	Research and development	13	4.1	Expected macroeconomic environment	22	Responsibility Statement	42
			4.2	Expected industry environment	23
2.	Economic Report of the Exasol Group	14	4.3	Expected company performance and outlook	23	Independent Auditor's Report	43
2.1	Macroeconomic environment	14
2.2	The industry environment	14	5.	Management report of Exasol AG	24	Financial Calendar	46
2.3	Financial and non-financial
	performance indicators	15

| 04 | Message from the Management Board

Message from the Management Board

Aaron Auld, CEO

Exasol AG

Dear shareholders,

In 2021 we experienced a year of light, but also some shade. On the one hand, we were able to continue to build on the positive trajectory of previous years with renewed strong growth on the sales side, by continuing to win global brands as new customers and growing our footprint with existing customers. Overall, we were successful in broadening and deepening our customer base, even if we know we can further improve. We also achieved further critical milestones in our product development, in particular in terms of our public Cloud capabilities. On the other hand, in the second half of the year we were forced to recognize that certain investments and expansion plans were not translating into the accelerated topline growth we had originally an- ticipated. With this realization we quickly moved to analyze the situation and took rapid remedial action by sharpening our go- to-market approach and restructuring our sales and marketing organization. Unhappily, this also meant that we failed to meet the high market expectations we had raised ourselves, which in turn adversely affected the share price. We fully understand that we have to rebuild confidence and trust in our ambitious growth plans and in our ability to execute. As a first step in this directions and as a result of the course-correction which we began to execute in October, we are now building a much stronger foundation for scalability, and are quietly confident that we are moving into a much better position to leverage the vast market opportunity and

to set course for accelerated mid- and long term growth.

Overall, in terms of progress, 2021 was an incredibly important period in our company's development, particularly in bringing together the right combination of people and processes. Despite the adjustments we had to make in the second half of the year and the short-term disruption they brought to our organization, we learnt quickly from our missteps and were able to maintain growth momentum and, most importantly, the unbroken trust of our customers. This led to an increase in our annual recurring revenues (ARR) of 29.8% compared to the previous year, although of course our mid-term growth expectations are higher still. Our mission always was and always will be to win and maintain the trust of the world's most ambitious companies. With the last ye- ar's results and the changes we have made to our organization we took several important steps towards that goal - with many more yet to follow.

Even during a quite tumultuous year by any standards we not only continued to demonstrate strong revenue growth, we also worked tirelessly on the further development of our products. Our roadmap is now well advanced and fully aligned with our go-to- market strategy and will enable us to effectively address new and expanded markets and use cases. In view of the rapidly growing volumes of data worldwide and the increasingly critical role of high-speed data analytics for business, our unique performance advantage remains a decisive competitive advantage and will

| 05 | Message from the Management Board

Mathias Golombek, CTO

Exasol AG

enable us to compete at a global level. Moving forward our capabilities and license models will put performance into the hands of many more users and customers worldwide.

We also continued to excel in customer relationships as numerous top ratings and customer recommendations scores in various independent studies demonstrate. We also continued to sharply refocus our partner strategy towards demonstrably value-add alliances and collaborations. A great example of this focus in action is how we successfully developed the partnership with Amazon Web Services (AWS). In 2020 we made the strategic decision to re-engineer our technology to be able to better leverage public cloud architectures and provide easier access and scalability to our customers and partners. We opted for AWS as the first platform for this new Software as a Service (SaaS) business model and quickly established a strong partnership with AWS, which resulted in their selecting Exasol as their Technology Partner of the Year 2021 in the DACH region. This represents clear validation of where and how our go-to-market strategy and sharpened partner and alliance focus come together.

The outcome we expect specifically from this partnership is access to additional markets while strengthening our strategic positioning with existing customers. In our view, the trend among customers to increasingly manage their data in the cloud will continue, while many customers will by necessity or choice continue to work on premises within their own infrastructure. With our approach of making our software available both in the cloud, on-premises and as a SaaS application in all environments, we can offer a highly flexible way to serve the growing performance needs of very different customers and business owners.

In addition to our operational successes, we also increased our focus on sustainability last year. Our software is already helping our customers to consume less energy to process their data, as our database architecture allows a more efficient usage of available infrastructure, thus minimizing hardware and energy requirements to achieve the same or better results. But we also strive to set the highest standards in other critical sustainability criteria, such as data security. We are therefore particularly pleased that one of the leading rating agencies has recognized our efforts with the highest award of a prime rating. For us, this is both vali- dation, but also motivation: we will continue to attach the greatest importance to the issue of sustainability in the future while significantly expanding our reporting on this topic.

Our market, and with it the volume of data to be processed, continues to expand unabated at high growth rates among companies worldwide. We have built a significant technological lead over our competitors in terms of performance and platform independence, and with our SaaS product we are opening up additional customer groups and thus revenue potential. And last but not least: with a highly qualified and highly motivated team, we are confident about our growth opportunities for this year and beyond. With the reorganization and a new and experienced management team, we are setting the company up for both efficiency and growth, and have already seen the first successes in terms of our profitability in the fourth quarter. We remain fully confident for the current year to achieve a planned ARR growth of between 38.5 million euros and 40.0 million euros and reduce our EBITDA loss by half to between -14 million euros and -16 million euros on an adjusted basis. This means that we are sufficiently well financed to achieve this year's target, but also our ambitious mid-term target

Jan-Dirk Henrich, CFO/COO

Exasol AG