Expert ai S p A : The Board of Directors approved the consolidated results as of June 30, 2021

Expert.ai: the Board of Directors approved the

consolidated results as of June 30, 2021

Total revenues up 11% vs. 1H 2020

Continues the increase of the recurring licenses (+102% vs. 1H 2020) and in the indirect channel (+133% vs. 1H 2020) confirming the evolution of the business model according to the Group's strategic growth lines

Significant investments in S&M and R&D continue to be made in the

US and Italy respectively as a driver of growth

Solid capital structure

Cash positive net financial position

To confirm and support the significant growth of the Company in the last two years, the Board of Directors approved the translisting to the MTA Market

The Ordinary and Extraordinary Shareholders' Meeting convened on October 14, 2021 to approve, inter alia, the transition to the one-tier system and the granting of powers to the Board of Directors pursuant to Articles 2443 and 2420-ter of the Italian Civil Code

Modena, September 28, 2021

The Board of Directors of expert.ai, a company listed on the market AIM Italia and a leader in the Artificial Intelligence market, met today and approved the Group's Consolidated Financial Report as of June 30, 2021, fully audited.

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Walt Mayo, CEO of expert.ai commented as follows:

"Over the first-half, we have executed on our plan to lead the AI-based language technology market by advancing the product roadmap and by establishing a global marketing pipeline. As enterprises look to unlock the value of language, they are exploring more sophisticated use cases to harness the potential of artificial intelligence. These results reflect our ability to provide an immediate business impact by helping companies reduce the cost and complexity associated with natural language workflows.

With the launch of our new Platform at the end of June, we made our technology more accessible. By fueling the combination of different artificial intelligence techniques to design and deploy powerful, practical ROI-oriented applications, we enable organizations to create the strategic capability for reaching full natural language potential at speed and scale for the long-term.

Looking forward, we are also positioning our company for a broader market offered by Borsa Italiana (MTA) and the governance provided by a board structured in line with the one-tier system, that closely supports both strategic decisions as well as day-to-day business. While delivering value and insights organizations can understand and act upon, we are looking forward towards our unique vision to combine the best of AI-based knowledge and learning approaches to help enterprises accelerate, augment and expand specific expertise for every job and process that involves language."

Key consolidated financial results as of June 30, 2021

The Board of Directors also resolved to adopt the International Accounting Standards (IAS/IFRS) starting from the consolidated financial report as of December 31, 2020.

	1H 2021	1H 2021	1H 2020	1H 2020
Euro/million	IFRS	ITGAAP	IFRS	ITGAAP
Total revenues	11.8	11.8	10.6	10.6
EBITDA	(8.1)	(7.0)	(6.0)	(4.6)
EBIT	(11.5)	(10.2)	(9.1)	(7.8)
Net result	(10.9)	(9.9)	(4.3)	(3.1)

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	1H 2021	1H 2021	FY 2020	FY 2020
Euro/million	IFRS	ITGAAP	IFRS	ITGAAP
Net financial debt	(11.2)	(13.3)	(18.8)	(20.9)
Shareholders' equity	37.1	34.2	46.9	44.6

In the context of the translisting from the AIM Italia to MTA, where, in accordance with requirements from Borsa Italiana, financial information must be represented in accordance with International Financial Reporting Standards (IFRS), the Company has drawn up the consolidated financial statements for the year ended December 31, 2020, and the consolidated half-yearly financial report for the six months ended June 30, 2021 in accordance with IFRS.

For greater clarity and consistency with the past, the initial table also shows the data reported with ITGAAP. For further details please refer to the reconciliations between OIC and IFRS information contained in the report dated June 30, 2021. The following paragraphs contain comparisons and comments on the financial information of June 30, 2021 and on the entire 2020, both expressed using International Financial Reporting Standards (IFRS).

Total Revenues1 as of June 30, 2021 amounts to Euro 11.8 million recording a growth of approximately 11% compared to the value as of June 30, 2020 (Euro 10.6 million). This growth is mainly attributable to recurring licensing revenue of Euro 4.5 million (Euro 2.2 million, as of June 30, 2020), up 102% YoY and accounting for 87% of total licensing revenue.

The total recurring component of sales (recurring licenses plus maintenance) represents more than half of total revenues in 2021, approximately 53%.

Perpetual licenses of Euro 0.7 million are stable compared to June 30, 2020, while professional services decrease compared to June 30, 2020, and amounted to Euro 3.5 million (Euro 4.1 million as of June 30, 2020).

In line with the company strategy, the indirect channel continues to grow (+133% compared to June 30, 2020), through international players and local partners who independently manage the sale of the platform and the implementation and customization of the product, according to the specific needs of the customer. The indirect channel represented 17% of total revenues as of June 30, 2021.

1Total given by net revenues (net of Inventory change) plus Other income

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The table below shows the breakdown of revenues as of June 30, 2021 compared to the data as of June 30, 2020:

Euro/million	1H 2021	%	1H 2020	%
	IFRS		IFRS
Recurring licenses	4.5	42%	2.2	23%
Maintenances	1.7	16%	2.2	23%
Perpetual licenses	0.7	6%	0.7	7%
Professional services	3.5	32%	4.1	43%
Hosting	0.3	3%	0.3	4%
Net revenue	10.8	100%	9.5	100%
Inventory change	(0.0)		(0.0)
Other income	1.0		1.1
Total revenues	11.8		10.6

EBITDA is negative by Euro 8.1 million (negative Euro 6.0 million as of June 30, 2021). The decrease in EBITDA, despite the growth in revenues, is mainly due to the significant investments in human resources for Sales & Marketing (S&M) and Research & Development (R&D) respectively in the USA and Italy. The main impact on EBITDA due to the transition to international accounting standards relates to the accounting of cost of work arising from the Stock Option and Stock Grant Plans.

EBIT is negative for Euro 11.5 million (negative for Euro 9.1 million as of June 30, 2021), against an amortization of intangible assets of Euro 2.9 million in line with June 30, 2020 (Euro 2.7 million) mainly referring to capitalised research and development costs.

Financial management reports a result of Euro 0.3 million (positive for Euro 4.6 million as of June 30, 2020). The 1H2020 figure was influenced by the significant capital gain realized on the sale of the minority shareholding in CY4Gate S.p.A., during the listing on AIM Italia.

The net result underlines a loss of Euro 10.9 million (loss of Euro 4.3 million as of June 30, 2020).

The Net Financial Position is cash positive for Euro 11.2 million compared to a cash NFP positive for Euro 18.8 million on December 31, 2020. The evolution in the Net Financial Position reflects the cash flow absorbed by investments in Sales & Marketing and Research & Development in line with the company strategy.

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Shareholders' equity amounts to Euro 37.1 million, compared with Euro 46.9 million on December 31, 2020.

In this context, the Company has also begun a review and the update of the "2020- 2024" Business Plan disclosed to the market on June 9, 2020, the outcome of which will be promptly disclosed to the market in accordance with current regulations.

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Main events occurring during the first half of 2021

FINANCIAL EVENTS

On February 12, 2021, expert.ai announced the renewal of its intercompany loan plan for subsidiaries.

On May 11, 2021, expert.ai announced the effectiveness of the new corporate name "Expert.ai S.p.A." and following the new company name, the Company requested to Borsa Italiana S.p.A. the modification of the ticker "EXSY" with the new ticker bearing the wording "EXAI".

On May 12, 2021, expert.ai announced the vesting of the third and final tranche of the 2018-2020 Stock Grant and Stock Option Plans and the first tranche of the 2020- 2023 Stock Grant and Stock Option Plans.

On June 22, 2021, expert.ai announced the launch of its new hybrid platform based on natural language understanding called "expert.ai Platform", consistent with the provisions of the 2020-2024 business plan.

CUSTOMERS, PARTNERSHIPS AND AWARDS

On January 7, 2021, expert.ai announced that it has entered into an agreement with HX, a business unit of Howden Group Holdings that specializes in digital data analytics and distribution in the insurance market, that will enable improved data analytics services.

On February 15, 2021, expert.ai announced that French independent mutual insurance group Le Conservateur has selected expert.ai's artificial intelligence technology to accelerate the contract review and verification process, optimizing the analysis and comparison of insurance policies.

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