Exasol : Annual financial statements 2021

Financial Statements 2021

of

Exasol AG, Nuremberg

Exasol AG

Consolidated Management Report for the financial year 2021

Financial statements 2021	2
Exasol AG, Nuremberg

Consolidated Management Report	4
1.	General corporate information	4
1.1	Business activity	4
1.2	Corporate structure and locations	5
1.3	Research and development	6
2.	Economic Report of the Exasol Group	7
2.1	The macroeconomic environment	7
2.2	The industry environment	7
2.3	Financial and non-financial performance indicators	8
2.4	Business trend in the financial year 2021	9
2.5	Results of operation, financial and net asset position	10
2.6	Overall assessment by the Executive Board	14
3.	Opportunities and risk report	14
4.	Forecast	21
4.1	Expected macroeconomic environment	21
4.2	Expected industry environment	21
4.3	Expected company performance and outlook	21
5.	Management report of Exasol AG	23

Financial statements 2021	3
Exasol AG, Nuremberg

Consolidated Management Report for the financial year 2021

1. General corporate information 1.1 Business activity

The increasing degree of digitalization produces a constantly growing amount of data. These data tell something about existing or future customers, about a company's own processes and products and about the market as a whole. Continuously analyzing these data and gaining insight from them is therefore of growing importance for any organization. If analysis, insight and the resulting business decision can be made faster and more efficiently than the competition, this additionally represents a significant potential competitive advantage. Organizations often have to deal with very large, heterogeneous and unstructured data from which knowledge and a basis for decision-making are to be extracted. It is our vision and our mission to drive insight from the global data volume and to help our customers generate the critical competitive advantage from this insight.

The continuously growing amount of data and applications leads to huge growth rates in big data and data analytics. According to independent studies, this market is growing at a compound annual growth rate of 13%. Starting from a global market size of approx. USD 108 billion in 2021, the market is expected to reach USD 197 billion by 2025.1

When evaluating these data volumes, speed, efficiency and flexibility will be the essential key for companies in the future. The installed base of older analysis and database systems no longer meets the above-mentioned requirements: results are sometimes available only after hours or even days, making significant demands on the installed hardware. Exasol's analytical database technology has made speed and performance its brand core. Established in 2000, the company today has the fastest and most powerful analytical database technology in the market, as regularly confirmed by numerous independent studies.

In our opinion, our technological lead is based on three pillars: The processing of data in main memory or RAM (in-memory technology), the combination of several main memories into a distributed, virtual "supercomputer" (massive parallel processing), and the use of intelligent algorithms for optimal and intervention-free operation of the system. Moreover, the design and product know-how support the very cost-efficient use of the installed hardware.

Today's common systems all have the same challenge: the analysis of data is mainly done on hard disks, which are inexpensive to purchase, but work much more slowly than main memory. This limits the possibility to gain important insights from these data quickly and on a large scale. These processes only pick up speed when processing takes place in the main memory. Main memory can process data up to 100,000 times faster2, but is expensive and is only available to a limited extent in most applications. However, intelligent algorithms such as those used in Exasol's database can cost- efficiently analyze any amount of data in main memory. In this process, several RAMs are connected in parallel and interconnected to form a kind of "supercomputer", thus raising processing speed to a new level. Our self-learning algorithms reliably distinguish between "hot" and "cold" data, enabling greatly optimized use of the available main memory. If required, many users can access the data easily

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Exasol AG, Nuremberg

and simultaneously. This innovative approach differs fundamentally from legacy database architectures.

Customers can use the Exasol platform regardless of whether their data are stored in a public cloud, a private cloud, in their own data center or in hybrid environments. In the public cloud, the Exasol database can be deployed on all relevant providers such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform.

Exasol customers are typically companies with large data sets that use them with high frequency for business-critical processes and applications. A powerful and fast analytical database solution is therefore mission-critical for their daily business success. 65% of Exasol's customers come from the financial services, e-commerce, software/IT, media and healthcare sectors.3 But the performance of our solution not only allows data to be analyzed and used more quickly. What is more, the demands made on the infrastructure are much lower, enabling our customers to use existing systems more cost- efficiently or to implement given data applications with a leaner infrastructure and reduced computing effort than the competition.

This results not only in an economic advantage. Today already, the storage and processing of data have an influence on global energy consumption that should not be underestimated.

According to Greenpeace, data centers worldwide consume roughly the same amount of energy as global aviation.4 This aspect is therefore also becoming increasingly important with regard to companies 'sustainability efforts. And energy consumption increases in line with the growing data volumes. The Exasol solution allows customers to implement a given analytical data application with optimal footprint in terms of energy consumption and carbon emissions.

Many business models are barely conceivable already today without the insights gained from big data and data analytics.

Accordingly, Exasol has a very low customer churn rate of just about 4%. Companies that have opted for Exasol use the products and services for many years and typically expand the use continuously. Upselling, i.e. revenue growth with existing customers, is thus an important growth driver. Winning new customers is the second pillar of the company's growth. In 2022, the company additionally started offering Exasol as software as a service (SaaS), thus facilitating access to a fully Exasol-managed system and targeting additional customer groups and applications. Extending usage-based billing models to all platforms - in the cloud or in our own data center, i.e. "on-premise" - will also clearly lower the commercial entry barrier for using our products. At the same time, Exasol is continuously expanding the existing partnerships with AWS, Microsoft Azure and Google Cloud Platform and is pushing ahead the ongoing internationalization of its business.

1.2 Corporate structure and locations

The Exasol Group currently comprises Exasol AG, headquartered in Nuremberg, Germany, and a total of five subsidiaries. All of these are pure sales companies that are responsible for operational sales in the respective regions.

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Exasol AG, Nuremberg