Geo : Interim Results Announcement

NZX and Media Release

27 August 2021

UNAUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2021

GEO (NZX.GEO) today announces its financial results for the year ended 30 June 2021 and details the continuation of the strong growth trends in new customer numbers and revenue retention resulting from the Company's 'Scaling Programme'.

Summary

• Net losses from operations improve 12.9% to $(1.8)m(1), EBITDA(2) losses improve 35.6% to $(0.8)m and operating and investing cash outflows improve 10.9% to $(1.3)m on a 17.2% reduction in Group revenues (significantly due to the divestment of Geo for Sales). Subscription revenues for the continuing Geo product reduce by 7.3% versus the prior year, largely due to the annual recurring revenue (ARR) reduction in the prior year (and therefore lower starting ARR for FY21) but end the year growing strongly.
• FY21 saw strong and consistent improvements in new customer ARR and revenue retention trends, particularly in the second half (H2) as marketing spend was progressively increased on improved metrics:
• • new customer numbers up 286% in H2 on prior corresponding period (PCP) and up 87% on H1 FY21;
  • new licence sales up 174% in H2 vs PCP and up 75% on H1 FY21;
  • new customer ARR up 107% in H2 vs PCP and up 60% on H1 FY21;
  • five of the six largest new customer months in the last three years were delivered in H2; and
  • ARR retention rate improved to 90.5% across FY21, up from 87.2% in PCP.
• Costs reduced significantly in FY21 through a combination of permanent efficiencies, and temporary reductions in salaries, rent and marketing spend in H1 due to COVID. Marketing spend across FY21 was down 32% on FY20, principally due to reductions during the H1 lockdowns, with the run rate spend largely restored by June 2021. Other direct costs and overheads were reduced by 21%.
• Operating and investing cash outflows improved by 11% on FY20 and averaged $(0.14)m per month in H2 (in line with previous indications given).
• The Geo for Sales platform was considered non-core and was also impacted by early COVID restrictions. The platform and customer base were sold to SalesRabbit USA during the year.
• The new customer growth run rate (before customer churn) grew progressively during H2 to an annualised run rate of 24% for June 2021. GEO plans to double its investment in customer acquisition marketing across FY22 while maintaining ARR retention above 90%, providing a clear path to achieving the Company's target of 30-40% top line growth.
• Scaling up in other markets such as the UK is now underway.
• As at 30 June 2021, GEO had $0.9m of cash at hand and $0.3m in annual R&D grants due. The Company has a range of options available to fund its growth programme including $0.5m in headroom under its 2019 convertible note facility.

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GEO (NZX.GEO), a global provider of Software-as-a-Service (SaaS) mobile workforce solutions, today announces its unaudited financial results for the financial year to 30 June 2021.

The FY21 financial year was impacted in H1 by the initial phases of the COVID pandemic, with customer acquisition activities temporarily reduced and management focusing heavily on optimising processes across product and development and go-to- market teams, as well as delivering efficiencies in the Company's cost base. This set the foundation for a strong H2 as marketing spend was progressively increased as GEO delivered record new customer results and high ARR retention.

1. All figures are for the twelve months ended 30 June 2021 unless otherwise stated.
2. Earnings before Interest, Tax, Depreciation and Amortisation.

Financial Year Summary

	2021	2020	VARIANCE	VARIANCE
YEAR ENDED 30 JUNE	$'000	$'000	$'000	%
Revenues
Geo Subscription Revenue	3,074	3,317	(243)	-7.3%
Geo for Sales Subscription Revenue	69	664	(595)	-89.6%
Recurring Revenues (Subscriptions)	3,143	3,981	(838)	-21.0%
Training & Implementation Fees	6	28	(22)	-78.6%
Other Revenues (incl. grants)	803	764	39	+5.1%
Total Revenues incl. discontinued operations	3,952	4,773	(821)	-17.2%
Less Discontinued operations	(255)	(692)	437	-63.2%
Total Revenue excl. discontinued operations	3,697	4,081	(384)	-9.4%
Geo Annual Recurring Revenue - at 30 June	3,147	3,173	(26)	-0.8%
Earnings
Statutory Net (Loss) after Tax	(1,790)	(2,054)	264	-12.9%
EBITDA	(772)	(1,198)	426	-35.6%
Operating & Investing Cash Flows
Operating Cash Flows	(641)	(439)	(202)	-46.0%
Investing Cash Flows	(640)	(998)	358	-35.9%
Total Operating & Investing Cash Flows	(1,281)	(1,437)	156	-10.9%

Under legacy pricing schedules used prior to FY21, average revenue per licence varied significantly across the Company's customer base, meaning that licence numbers did not provide a consistent indicator of revenue impact.

During FY21 GEO implemented a simplified pricing structure. In its future reporting, the Company will prioritise Annualised Recurring Revenues, which are more comparable across both new and existing customers and an appropriate metric for measuring value creation.

Quarterly Trend Summary (FY20 - FY21)

NEW CUSTOMERS				NEW LICENCES			NEW ARR
175				600		+241%	$150k		+139%
	+292%
150
			500						+76%
	+279%
125				+116%
			400			$100k
							-5%
100								+3%
	+124%		300		+33% -15%

75+50%

50

200

$50k

25

100

0

0

$k

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

ARR GROWTH RATE - NEW

MARKETING SPEND

CUSTOMERS (ANNUALISED)

ARR RETENTION RATE (ANNUALISED)

200k

25%

June 21 run-rate

100%

150k

20%

80%

n/m

15%

60%

100k

10%

40%

50k

-66%-77%

+2%

5%

20%

k

0%

0%

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

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Q1

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Q1

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Q1

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Q4

* percentages show change on prior corresponding period. n/m = not meaningful

Commentary

Revenues

GEO reports a 12.9% improvement in net loss from operations, a 35.6% improvement in EBITDA and a 10.9% improvement in operating and investing cash outflows.

Group revenue for the financial year fell 17.2% to $4.0m (FY20 $4.8m), largely due to the divestment of the Geo for Sales business operations in October 2020.

Subscription revenues for the Company's Geo platform were down 7.3% to $3.1m, while year-end ARR remained stable at $3.1m (vs June 2020 levels). Geo revenues were impacted in early FY21 by the initial phases of COVID with existing customer ARR reducing modestly due to licence downgrades and temporary customer retention initiatives (i.e. subscription pauses or free months for affected customers).

These impacts proved to be temporary with customers returning to normal subscription payments and net existing customer upgrades commencing in Q2. ARR retention metrics reflect the temporary impact, with a dip in Q4 FY20 and Q1 FY21, before a rebound led to an average annualised ARR retention rate of 96.4% during Q2-Q4 of FY21. ARR retention across the full financial year was 90.4%, up from 87.0% in the prior year.

At the same time, customer acquisition spend was being progressively increased leading to significant and consistent quarter-on- quarter increases in new customers won. New customer ARR run rate in Q4 was up 103% on the average levels in FY20. In H2 the Company experienced five of its six largest new customer months in the last three years. The annualised ARR growth run rate from new customers was 18.6% for the final quarter of FY21 and 24.3% for June 2021.

Cost Base

The Company's cost base was reduced through a combination of permanent operational efficiencies identified as part of the Company's 'Scaling Programme', and some temporary cost reductions resulting from the initial COVID lockdown period in mid- 2020.

External marketing spend was down 32% in FY21, but despite this reduction vastly improved customer acquisition metrics drove a 46% increase in new customer ARR vs FY20. Run rate marketing spend has now returned to pre-COVID levels and GEO intends to double this investment across FY22.

Other direct costs were reduced by 21% over FY20 levels, reflecting carefully targeted reductions in staff numbers and temporary salary reductions for senior team members during the initial period of COVID.

General overhead costs were reduced by 20% vs FY20, with sustained savings gained across administrative staffing, and reductions in Director Fees and reduced levels of travel and other miscellaneous costs.

Cash Flows and Capital Position

Investing and operating cash outflows improved by 11%, with timing-driven movements in working capital balances at year end largely offsetting bottom line improvements. GEO's monthly operating and investing cash burn stabilised at ~$0.14m in H2 (after temporary impact of COVID) consistent with previous guidance given.

CEO Commentary FY21

GEO CEO Tim Molloy said:

"I am extremely pleased with the progress the Company has made in FY21. We are now firmly established in our growth phase, with five of the six largest new customer months in the last three years delivered in H2.

"The market is still large and mostly untapped. Tradies and home services businesses continue to discover the benefits of systematising their own operations with software and continue to need our solutions.

"The Geo platform is highly competitive and continues to evolve in direct response to customer feedback.

"Our Sales and Marketing operations are now securing new business for Geo on cost-effective metrics, profitably acquiring new customers in defined segments and geographies. Our customer acquisition run rate in Q4 FY21 was 300% higher than the average across FY20, providing us with the confidence to continue to increase marketing and customer acquisition spend to drive higher growth rates in FY22.

"Retention of existing customers has been a focus area in FY21, with annualised ARR retention rates averaging 96% for Q2-Q4 (after initial COVID lockdown impact). GEO continues to target long term retention rates in excess of 90%.

"The Company proved its resilience through COVID lockdowns in FY21, and while we cannot predict the timing of the current lockdowns, our experience is that these will only result in temporary impacts for GEO. Tradies and home services businesses have been working, while discretionary consumer spending on home improvement and maintenance has surged.

"To continue creating shareholder value the fastest path is to now accelerate sales and marketing investment and to cautiously scale other markets where customers can be won on attractive metrics. In recent months we have been testing the UK market, and are now accelerating our customer acquisition programme there within the Company's existing cost structure.

"Our teams have adjusted very well to the new working environment. I would like to pay tribute to their vision, focus and day- to-day engagement in our strategic ambitions.

Chair Commentary FY21

GEO Chair Roger Sharp said:

"GEO performed well in H2, delivering a strong growth trajectory.

"The growth now being delivered demonstrates that GEO's scaling programme is working. With the path forward now clear, I am pleased to welcome Rod Snodgrass to the Chair role with effect from 1 September 2021.

Thanks to the GEO executive team and to my fellow board members for an extraordinary turnaround. With their laser-like focus on execution driven by clear metrics, Tim Molloy, Scott Player, Peter Hynd, Minas Kamel and the team are now able to plot future growth and the creation of value with confidence.

For more information:

Tim Molloy

Chief Executive Officer

Tel: [phone]

Email: [e-mail]

ABOUT GEO

Geo is a leading SaaS business that provides smart software platforms for tradies, field and home service businesses. The market for Geo's products is growing quickly as the global mobile workforce expands. Geo's simple yet powerful software platform helps business owners reduce the complexity of running their business whilst saving time and improving cashflow. For more information: www.geoworkforcesolutions.com

Results announcement

Results for announcement to the market

Name of issuer		Geo Limited
Reporting Period		12 months to 30 June 2021
Previous Reporting Period		12 months to 30 June 2020
Currency		NZD
		Amount (000s)	Percentage change
Revenue from contracts with customers	$3,074	-7.3%
Total Revenue	$3,697	-9.4%
Net profit/(loss) from continued operations	$(1,983)	-8.9%
			(improvement)
Net profit/(loss) attributable to security holders	$(1,782)	-22.3%
			(improvement)
Interim/Final Dividend
Amount per Quoted Equity Security		No dividends paid or proposed
Imputed amount per Quoted Equity Security		Not Applicable
Record Date		Not Applicable
Dividend Payment Date		Not Applicable
		Current period	Prior comparable period
Net tangible assets per Quoted Equity Security	-$0.011	-$0.018
A brief explanation of any of the figures above		Refer to attached 'Results Announcement' documents
necessary to enable the figures to be
understood
Authority for this announcement
Name of person authorised to make this		Tim Molloy
announcement
Contact person for this announcement		Tim Molloy
Contact phone number	[phone]
Contact email address		[e-mail]
Date of release through MAP		27 August 2021

Unaudited financial statements accompany this announcement.