Safeture : Strong Recurring Revenue and Zero Churn Drive Growth

'The third quarter was stronger than expected. Customer churn was zero and the recurring revenue jumped 30 percent from the second quarter, while revenue increased 35 percent from third quarter last year.' Magnus Hultman, CEO Safeture comments.

Conclusions

• Annual Recurring Revenue (ARR) by the end of the third quarter was 22,5 MSEK, which represents a +45% year-on-year growth.
• Core business revenue for the third quarter grows 35% to 5,6 MSEK of which 85% derives from recurring revenue.
• Churn for Q3 back at 0%.
• Loss after financials and minority share for the group amounted to -3 308 (-4 522) TSEK, an improvement of +1 214 TSEK (+27%) vs Q3 last year.
• Safeture teams with U.S.-based Exlog Global and signed a contract worth 225 TUSD over the next three years with a renowned research hospital.
• Safeture announced signing a three-year partnership extension with Special Projects and Services Limited (SPS). In the last year, the partnership has earned Safeture 650 TUSD. The partnership began in early 2020 and has been extended to 2026.

Summary of Interim Report

The Group

First nine months (2020-01-01 to 2020-09-30)

• Net turnover amounted to 15 163 (11 131) TSEK, an increase of +36,2% compared to the same period last year. (Last year's sales figures have been adjusted with 5 001 TSEK to reflect the divestment of Travelogix Ltd in Q3 2019.)
• Net turnover before adjusting for the divestment amounted to 15 163 (16 132) TSEK, a decrease of -6,0% compared to the same period last year.
• Loss after financials and minority share amounted to -16 844 (-13 528) TSEK. (Last year's result have been adjusted with -2 307 TSEK to deduct the profit from the divestment of Travelogix Ltd in Q3 2019.)
• Loss after financials and minority share before adjusting for the divestment amounted to -16 844 (-11 221) TSEK.
• Loss per share* before dilution amounted to -0,69 (-0,48) SEK.
• Loss per share* after dilution amounted to -0,63 (-0,44) SEK.

Third quarter (2020-07-01 to 2020-09-30)

• Net turnover amounted to 5 607 (4 276) TSEK, an increase +31,2% compared to the same period last year. (Last year's sales figures have been adjusted with 1 334 TSEK to reflect the divestment of Travelogix Ltd in Q3 2019.)
• Net turnover before adjusting for the divestment amounted to 5 607 (5 610) TSEK, a decrease of 0% compared to the same period last year.
• Loss after financials and minority share amounted to -3 308 (-4 522) TSEK. (Last year's result has been adjusted with -2 307 to deduct the profit from the divestment of Travelogix Ltd in Q3 2019.)
• Loss after financials and minority share before adjusting for the divestment amounted to -3 308 (-2 215) TSEK.

• Loss per share* before dilution amounted to -0,13 (-0,10) SEK.
• Loss per share* after dilution amounted to -0,12 (-0,09) SEK.

The solidity** amounted to 52,3 (48,9) %.

'Parent company' or 'Safeture', comprises of Safeture AB with company number 556776-4674, without subsidiaries. 'The Group' comprises the Parent company, including subsidiaries. On June 30th, 2020, the Parent company owned 100% of the shares in GWS Production (Singapore) Pte Ltd, 99,99% of the shares in GWS do Brasil Solucões e Sistemas Tecnológicos em Seguranca Ltda and 35% of the shares in Carefindy AB (minority interest).

Amounts within brackets regard the corresponding period last year.

*Result per share: The result is divided by the average number of shares (after dilution includes average number of share options).

**Solidity: Equity divided by total assets.

Growing SaaS Traction

Third quarter (2020-07-01 to 2020-09-30)

• Recurring revenue amounted to 4 802 (3 889) TSEK, which represents 85% (93%) of the Parent company quarterly revenue.
• Annual recurring revenue (ARR) at the end of Q3 2020 was 22 517 (15 557) TSEK, an increase of +45% compared to Q3 2019.
• Churn for the quarter was 0%.

Significant events during the third quarter, 2020.

• Safeture teamed with U.S.-based Exlog Global, leading risk management and crisis response company, to provide its cloud-based risk management platform as part of an integrated solution for Exlog's clients. The co-operative team responded to a competitive request for proposal for travel risk services from a renowned research hospital and was awarded a multi-year contract. The contract value for Safeture is 225 TUSD over the next three years.
• Safeture announced signing a three-year partnership extension with Special Projects and Services Limited (SPS), a leading independent security and risk management consultancy, headquartered in the UK. The partnership provides a joining of services where clients can continue benefiting from leading technology powered by Safeture AB, with the option of incorporating physical monitoring and response services from SPS. This provides our clients with the added value of direct access to the SPS Global Response Centre, management of the Safeture platform, pro-active monitoring, incident management, a virtual crisis room, and as a Lloyds of London approved evacuation provider, global evacuation capabilities. In the last year, the partnership has earned Safeture 650 TUSD. The partnership began in early 2020 and has been extended to 2026.
• Safeture announced a collaboration with MAX Security, a world-leading company within the area of risk analysis.
• Safeture added a new tool to its openupforbusiness.com website. The new tool help travelers to easily determine if their planned business destination is safe to visit and which potential risks exist.
• During Q3 Safeture has continued strengthening the sales organization. The recruitment of Filip Bengtsson and James Tomlin was announced in September as part of the company's focus on increasing sales. Filip Bengtsson, with a recent background as Head of Sales at the fast-growing SaaS-company Inyett AB, is an expert in providing cloud-based services mitigating risks to both the private and public sectors. James Tomlin has a background in business development within global mobility and travel. For more than 13 years, he has been advising HR leaders on global workforces, specializing in the last three years, building partnerships with several leading consultancies and big 4 advisories.

Message from the CEO Magnus Hultman

Strong Recurring Revenue and Zero Churn Drive Growth

After a second quarter highly effected by Covid-19 that led to both increased awareness of business continuity and employee safety, but also caused a temporary increase in churn and higher economic uncertainty, I'm pleased to say we are back on track and excited for the future.

Three things make us optimistic about business going forward:

Financials

The third quarter was stronger than expected. Customer churn was zero and the recurring revenue jumped 30 percent from the second quarter, while revenue increased 35 percent from the third quarter last year.

The recurring revenue - our single most important metric - highlights our resilience in turbulent times, our long average contract length and low historic churn clearly show the way forward. The investments we have made in sales and marketing over the past year, which almost tripled, is already showing results where we can see big increases in both marketing reach and a growing pipeline of leads. Rule of thumb for Software as a Service (SaaS) business is to have at least 5x in pipe compared to revenue. We are way over that and it is increasing. What will decide the outcome in actual orders and revenue is the lead times and average deal size. Even though lead times are still longer due to the Covid-19 situation we believe we can off-set them with a more diversified pipeline of potential deals.

Corporate Relevance

Business continuity and protecting your most valuable assets, the employees, are now board room decisions. Safeture is perfectly positioned to benefit from these trends with our world leading employee safety platform. Today we have users in 200 countries and 3,500 companies use our technology to make sure their employees stay safe.

As a pure technology provider, we rely on effective marketing, an effective sales organization, and strong partners. As mentioned, we have invested heavily in sales and marketing but also in building up a strong partner network with leading providers in medical assistance, risk intelligence, security assistance, travel risk management, and with other relevant partners where our technology strengthens their offer and their services strengthen our platform and help us create traction with new customer segments.

Platform Strategy

Our three focus areas, communication, information, and location are the very fabric of the Safeture employee safety platform and we will continue to invest in these areas. Another key way to reach our goal of being the best employee safety platform is by having an open platform that other relevant third-party technology providers can integrate with. We want to be even more relevant to our customers and their needs. We identified four segments as key and will focus on them over the coming quarters as well as bringing in third parties to strengthen our overall offer.

1. Medical/Security assistance: They are primarily service providers but with assisting technology that must work with our critical information.
2. Risk intelligence providers: In Q2 we signed an agreement with the highly recognized Israeli firm MAX Security. Additional providers are identified.
3. eLearning: Digitalization and the current work-from-home status puts increased emphasis on providing employees with digital ways of training employees in safety related matters
4. Hospitality: Our data show that traveling is increasing again and to be able to assist in these uncertain times impacted by Covid-19 there is an increased need to make services around employees traveling even safer.

The third quarter is a quarter to be proud of. Among the new customers, we signed are Swedish broadcaster TV4, US hospital group St Jude and UK investment firm Triton. Our focus is still Europe as 90 percent of all customers are outside of Sweden and about 20 percent are outside of Europe. The US is both a significant market opportunity and a more mature market than Europe. A milestone would be to get a tier-one US-based customer. It would show our ability to be truly global, handle the toughest customer requirements, and also be a steppingstone for increased activity.

Covid-19 Is still out there, stay safe, and feel free to use our free service www.openupforbusiness.com to stay informed.

Thanks for following us at Safeture,

Magnus Hultman, CEO of Safeture

Lund, October 2020

About Safeture AB

Safeture offers a complete cloud-based SaaS platform designed to manage risk, safety and crises involving employees wherever they are.

The Safeture Enterprise cloud-based SaaS platform gives larger corporations the ability to effectively automate safety and security processes. Today's employees are constantly on the move, and companies demand a flexible software solution that seamlessly integrates with their own internal systems.

Modern companies' operations are closely tied to the employees and mobile technology enables them to work everywhere; at home, at airports, at café's or at suppliers. With globalization driving increased mobility, companies need new tools to safeguard both their employees and their operations. Safeture Enterprise creates a virtual security sphere around each employee wherever they are. The most common usage of the platform is Travel Risk Management for business travelers.

The Safeture Enterprise platform has a vast number of functions and components that can be used off-the-shelf, such as mobile apps, travel tracking, flight updates, global real time alerts, e-learning, bulk messaging, country and medical information, all in the same tool. It is an open platform, which allows clients to adopt specific internal processes and integrate it with external suppliers, such as assistance providers or other software, including internal employment databases or intranets.

The proven Safeture TRM (Travel Risk Management) software is a part of the Enterprise platform and is also available separately for smaller companies. The TRM software has been popular with many customers for years and is often a starting point for a new customer before they evolve to use other tools on the platform.

The Safeture share is listed on NASDAQ First North Growth Market Stockholm (ticker: SFTR). Erik Penser Bank AB is the Certified Adviser. Ph: [phone] E-mail: [e-mail].

This press release is information that Safeture AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 am CET on 2020-10-20.