Mexedia S p A : Documento di inizio copertura (Report prodotto esclusivamente in inglese)

Research Report (Initial Coverage)

MEXEDIA S.p.A. - Società Benefit

From Telecom to Tech - Driving Innovation with

Customer eXperience Platform as a Service (CXPaaS)

-

Significant boost in sales and profits anticipated

Target price: 46.50 €

Rating: BUY

IMPORTANT NOTE:

Please note the disclaimer/risk warning

as well as the disclosure of possible conflicts of interest in accordance with § 85 WpHG and Art. 20 MAR from page 35

Note in accordance with MiFID II regulation for research "Minor non-monetary benefits": The research in question meets the

requirements for classification as "Minor non-monetary benefits". For further information, please refer to the disclosure

under "I. Research under MiFID II".

Date and time of completion of the research report: 10.05.2023 (14:15)

Date and time of the first disclosure of the research report: 11.05.2023 (10:00)

Validity of the target price: until max. 31.12.2023

MEXEDIA S.p.A. - Società Benefit Research Report (Initial Coverage)

Rating: BUY

MEXEDIA S.p.A. - Società Benefit*5a,6a,11

Target price: € 46.50

Current price: € 34.80

08.05.23 14:47

Euronext Growth Paris

Data overview:

ISIN: IT0005450819

WKN: A3C33K

Stock exchange symbol: 41R

Number of shares³: 5.70

Company profile

Industry: Technology & Telecommunications

Focus: TLC Business & Customer-Engagement Business Services

Employees: 39 as of 08.05.2023

Established: 2017

Headquarters: Rome, Italy

Management: Orlando Taddeo (CEO), Paolo Bona (Chief Business Officer), Fabio Focarelli (CFO), Giovanni Man- narino (Sales & Operation Director)

Volume in € thousands

0.5

0.45

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0 Apr/ 22 Jun/ 22 Aug/ 22 Okt/ 22 Dez/ 22 Feb/ 23

€60.00

€50.00

€40.00

€30.00

€20.00

€10.00

€0.00

Marketcap³: 198.36

EnterpriseValue³: 225.06

• in m / in EUR m Free float: 8.1%

Market segment: Euronext Growth (Paris)

Accounting standard:

IFRS

Liquidity provider: Portzampac, BNP Paribas

Financial year: 31.12.

Analysts:

Matthias Greiffenberger [e-mail]

Marcel Schaffer [e-mail]

• Catalog of possible conflicts of interest on page 36

Mexedia is a technology company in the areas customer-management and telecom. Initially focused on international sales of electronic service termination activities (voice and SMS), Mexedia has now evolved into a tech company with a strategic vision to offer advanced technological services and a complete customer experience to its clients. To achieve this objective, Mexedia has developed a Customer eXperience Platform as a Service (CXPaaS) that provides cloud-based services and APIs to companies. The organization is structured vertically and offers a wide range of innovative technologies and tools that are integrated into a technological ecosystem, facilitating all consumer-oriented communications. Mexedia's business model is based on two highly synergistic and complementary business units: namely, the provision of voice and SMS termination services using advanced and innovative technological tools in a consolidated market, and the delivery of new- generation, multi-channel technological services. The integration of these two units creates a powerful cross- selling potential among the services offered.

	P&L in EURm FY-end			30.09.2021			30.09.2022		30.09.2023e			30.09.2024e
	Sales	131.80	140.90	324.11		361.22
	EBITDA	7.05	8.37	16.10		22.15
	EBIT	6.89	8.36	13.90		21.15
	Net income	2.96	4.43	5.53		10.48
	Key figures
	NAV	0.52	0.78	0.97		1.84
	Employees	0.00	0.00	0.00		0.00
	Key figures
	EV/sales	1.71	1.60	0.69		0.62
	EV/EBITDA	31.92	26.89	13.98		10.16
	EV/EBIT	32.66	26.92	16.19		10.64
	KGV	67.06	44.76	35.87		18.93
	KBV				3.17

Financial Calendar		**last research from GBC:
October 2023: H1 Report	Date: Publication / Target price in EUR / Rating
			** Research studies listed above can be viewed at
			www.gbc-ag.deor requested from GBC AG, Halder-
			str. 27, D86150 Augsburg, Germany.

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MEXEDIA S.p.A. - Società Benefit

Research Report (Initial Coverage)

EXECUTIVE SUMMARY

• Mexedia S.p.A. - Società Benefit (Mexedia) is a technology company that started in the telecom business. Mexedia serves as an intermediary for wholesale SMS and Voice traffic, facilitating interconnections between carriers. In the telecommunications industry, international phone calls and SMS messages are treated as tradeable com- modities that are exchanged wholesale between telcos. Voice traffic pertains to inter- national calls while A2P SMS traffic refers to messages received through apps. Mexe- dia also offers fixed and cost-effectivereal-time liquidity to its partners for voice and SMS services trading. This liquidity is secured against the receivables of insured debt- ors of its partners. To accomplish this, Mexedia conducts auctions of insured receiva- bles from debtors to investors in asset-backed securities and liquidity providers through Mexedia Exchange. This activity generates an arbitrage margin for Mexedia by capi- talizing on the spread gained from advancing money in real-time against the auction of its receivables.
• Mexedia's telecom business has exhibited strong growth and profitability, and is cur- rently in the process of transitioning into a tech company with a focus on offering ad- vanced technological services and a complete customer experience to its clients. To achieve this, Mexedia has developed a Customer eXperience Platform as a Service (CXPaaS) that provides cloud-based services and APIs to companies. Mexedia has a vertical structure and offers a range of innovative technologies and tools that are inte- grated into a technological ecosystem, facilitating all consumer-oriented communica- tions.
• In 2022, the company experienced a 6.9% increase in revenue, reaching € 140.9m (PY: € 131.8m) due to new and better deals in voice and SMS traffic. The majority of revenue was generated by the Irish subsidiary using a classic business model. Despite an increase in expenses, the EBITDA showed a significant improvement with an 18.7% increase to € 8.37m (€ 7.05m). The net result increased by 49.8% to € 4.43m (PY: €
  2.96m).
• An important cornerstone of the growth strategy will be the new Mexedia ON platform, which is the Customer Experience Platform as a Service (CXPaaS) designed for busi- nesses, especially those in the Telephone industry, to improve customer engagement and provide a seamless and consistent experience. The platform offers various fea- tures, including virtual agents and assistants, omnichannel communication, automa- tion, data analysis, and innovative channels like Metaverse and Smart Voice Assis- tance. It also includes an open app store that allows developers and market players to create and sell a wide range of applications for Mexedia ON, such as Sentiment Anal- ysis, Voice Biometrics, Speech Analytics, RPA, VR & AR Experience, Voice Smart Assistants, OTP & 2FA Authentication, and more. The app store also offers services for SMS marketing, lead generation, content marketing, and number masking, among others. Mexedia ON aims to be the most varied and powerful ecosystem of CXPaaS solutions for brands.
• We expect Mexedia to generate € 324.11m revenue in 2023, increasing to € 361.22m in 2024 and € 397.29m in 2025. The company has expanded to the USA, strengthened its position in existing markets, and diversified its client base. It recently acquired Matchcom Telecommunications Inc. and Phonetime Inc. in the US, which are alone expected to bring in an additional € 190m in revenue and € 6m in EBITDA in 2023.
• We expect that Mexedia Ltd, the Irish subsidiary, will remain the key earnings driver for the company, with an estimated EBITDA of € 6.3m in 2023. This figure is projected to increase to € 8m by 2025, reflecting a strong and sustained growth trajectory. We forecast the net result to be € 5.53m in 2023, € 10.48m in 2024, and € 14.49m in 2025.
• Based on our DCF-model we have determined a target price of € 46.50 and due to the high upside potential, we issue a Buy rating.

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MEXEDIA S.p.A. - Società Benefit

Research Report (Initial Coverage)

TABLE OF CONTENTS
Executive summary	2
Company	4
Shareholder structure	4
Business activity	4
Management team	6
Board of Directors	7
Business activity	8
Company history at a glance	8
Business model	10
Voice Traffic and A2P SMS	10
Financing and factoring of Voice Traffic and A2P SMS	11
Mexedia Exchange	11
Market and market environment	14
ESG Analysis	18
ESG / Sustainability Check	18
ESG profile	18
SDG Reference	19
Company-specific contribution to the 17 UN Sustainable Development Goals
(extract)	19
Examples	20
Corporate development	21
Key figures at a glance	21
Business development 2022	22
Revenue development	22
Earnings development	22
Balance sheet and financial situation as of Dec. 31, 2022	24
SWOT analysis	25
Forecast & Valuation	26
Revenue forecast	26
Mexedia ON	28
Mexedia Health	31
Earnings forecast	31
Valuation	33
Model assumptions	33
Determination of the cost of capital	33
Valuation result	33
DCF model	34
Appendix	35

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MEXEDIA S.p.A. - Società Benefit

Research Report (Initial Coverage)

COMPANY

					Heritage Ventures Ltd	8.1%
					3.6%
Shareholder structure
			5.2%
	Shareholders			Share	Bimatics EOOD
Heritage Ventures Ltd	77.7%		5.5%
Bimatics EOOD	5.5%	Orlando Taddeo
Orlando Taddeo	5.2%
Renzo Menarini	3.6%
Other shareholders	8.1%	Renzo Menarini	77.7%
Sources: MEXEDIA S.P.A.; GBC AG

Other shareholders

Business activity

Mexedia is a technology company in the areas customer-management and telecom. Initially focused on international sales of electronic service termination activities (voice and SMS), Mexedia has now evolved into a tech company with a strategic vision of offering advanced technological services and a complete customer experience to its clients. To achieve this objective, Mexedia has developed a Customer eXperience Platform as a Service (CXPaaS) that provides cloud-based services and APIs to companies. The organization is structured vertically and offers a wide range of innovative technologies and tools that are integrated into a technological ecosystem, facilitating all consumer-oriented com- munications. Mexedia's business model is based on two highly synergistic and complementary business units, namely, the provision of voice and SMS termination services using advanced and innovative technological tools in a consolidated market, and the delivery of new-generation,multi-channel technological services. The integration of these two units creates a powerful cross-selling potential among the services offered.

Group structure as of 31.01.2023

Sources: MEXEDIA S.P.A. SOCIETÀ BENEFIT; Mexedia Inc., a subsidiary company of Mexe- dia S.p.A., successfully acquired Phonetime Inc. and Matchcom Telecommunications Inc., both US companies, in January 2023.

TLC Business

TLC Business offers carrier-to-carrier wholesale intermediation of voice and SMS traffic, enabling telecommunication operators to trade efficiently. As a value-added service, TLC also provides toll-free and premium numbers, satellite connectivity, and mobile numbering (MVNO) services. Additionally, Mexedia provides partners with instant fixed and low-cost

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