Skyfii : Quarterly Business Review and Appendix 4C

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ASX: SKF | 27th July 2022

RECORD REVENUE QUARTER AS INVESTMENT FOR GROWTH DELIVERS MOMENTUM INTO FY23

Q4 FY22 Highlights

• Total Operating Revenues for Q4 FY22 of $6.9m, up 40% on pcp
• Recurring Revenues for Q4 FY22 of $3.8m, up 13% on pcp
• Quarterly Cash Receipts from customers of $6.5m up 4% on Q3 FY22
• c.$1.6m in outstanding project receipts, due to supply chain issues, expected to be received during 1H FY23
• Company secured a $1.8m project fnancing facility with Export Finance Australia
• $5.7m in Total Contract Value1 converted during the quarter
• Rolling 12 month pipeline includes over $33m of advanced stage deals

FY22 Highlights

• Total Operating Revenues of $23.6m, up 49% vs FY21
• Recurring Revenues of $14.6m, up 24% vs FY21
• Recurring revenue accounted for 62% of total revenue (74% in FY21) due to a greater proportion of project and implementation work conducted in FY22 which will lead to recurring revenue generation in FY23 and beyond
• Proforma Annualised Recurring Revenue (ARR) exited FY22 at $16.0m2
• Operating EBITDA loss of $1.8m and net cash outfow from operating activities of $1.7m refecting the Company's stated investment for growth program conducted in FY22
• Strong balance sheet with total available cash funds of $5.1m3

Outlook

• Increasing adoption of advanced behavioural intelligence technology solutions such as LiDAR continues to drive a strong pipeline across all regions
• Costs rationalisation and efciency initiatives are underway, including ofshoring of talent, to deliver material cost savings and strengthen margins
• Operating cash fow is expected to improve signifcantly during 1H FY23 and the Company re-confrms expectations to achieve a sustainable cash fow breakeven position during 2H FY23

• Total Contract Value (TCV) refers to the entire revenue generated from a contract and is inclusive of both recurring and non-recurring revenues. Skyfi's typical contract term is ~36 months.

• Annual Recurring Revenue (ARR) based on contracted recurring revenues as at June 2022 including suspension of services
  3 Cash available includes $4.2m of cash at bank and a drawdown of $0.9m from the $1.8m Export Finance Facility

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ASX: SKF | 27th July 2022

Commenting on the June quarter, Skyfi CEO and Managing Director Wayne Arthur said:

"Skyfi has executed a deliberate strategy to drive growth and scale via a strategic acquisition and the allocation of capital in FY22 specifcally targeted to build our sales, business development and service delivery capability. These growth initiatives have helped us to expand our customer footprint, driven our ARR to over $16 million and resulted in a strong revenue outlook for FY23.

Public venues such as malls, stadiums, train stations and airports across the globe are increasingly relying on crowd analytics and occupancy management solutions to deliver real time data to drive their decision making processes and improve the customer experience through their venues. The long term and sustainable value provided by our technology solutions is refected in our customer retention rate of >96%.

Our sales pipeline currently includes some of the world's most iconic airports, commercial properties, QSR brands, municipalities and stadiums throughout the world. We expect another year of strong sales conversion, ARR growth and importantly through our cost rationalisation initiatives expect to show genuine operating leverage during FY23. Our 3 year outlook looks very encouraging and we are excited to be on track to deliver strong shareholder value during this period".

Key Performance Metrics (FY19 - FY22)

• True Gross Margin is inclusive of both cost of sales and project delivery team labour costs

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ASX: SKF | 27th July 2022

Q4 FY22 Performance

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ASX: SKF | 27th July 2022

Strong Quarter of New Contract Wins

The Company delivered a number of contract wins in the quarter across a range of geographies5 and verticals, delivering a Total Contract Value (TCV) of over $5.7m.

Highlights:

• >50% of new contract wins secured in the Americas
• Primary verticals of retail, retail property and airports driving new contract wins
• Recurring revenue represented 48% of the $5.7m
• 65% of deals closed won were created in the last 6 months, representing an improved sales cycle

Cash Position

The Company reported $5.1m of cash as at 30 June 2022 ($5.0m at 31 March 2022).

In order to provide additional balance sheet fexibility and working capital cover as cost out initiatives are implemented, the Company has secured a $1.8m project fnancing facility with Export Finance Australia.

The facility will be largely utilised for our international project pipeline delivery and has been secured for an initial 1 year term and can be renewed each anniversary for a further 1 year term.

The undrawn portion of the Export Finance Australia facility, coupled with c.$5.1m of cash at bank will provide the Company with sufcient capital fexibility to execute on our stated growth initiatives, including sufcient runway to achieve sustainable positive cash fow in the second half of FY23.

• EMEA - Europe, Middle East & Africa; Americas - North and South America; APAC - Asia-Pacific

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ASX: SKF | 27th July 2022

Net Cash Flow from Operating Activities

In Q4 FY22 the Company generated cash fow from operating activities of $0.84m, which was inclusive of the impacts of capitalisation of employee, contractor and other expenditure attributable to software development. Other key areas of business operations that infuenced cash fow during the quarter included:

1. Settlement of CrowdVision Acquisition - During the quarter a fnal $70k payment for the acquisition of CrowdVision as previously disclosed was completed. As part of the completion of the CrowdVision acquisition, a total of $3.1m in non-recurring payments were required to settle CrowdVision's legacy net debts (including aged payables). The $3.1m cost was ofset against the total purchase price paid to the vendors of CrowdVision. However, under the accounting standards, these payments were required to be classifed as cash outfows from operating activities. The outfows of $3.1m have to date been settled/paid as follows: $1.3m in Q4 FY21, $1.3m in Q1 FY22, $220k in Q2 FY22 and $210k in Q3 FY22 and a fnal payment of $70k in Q4 FY22.
2. Project delivery delays - The company experienced a number of challenges in our operations, including the impacts of wage infation, a global talent shortage, supply chain cost increases and delays with the delivery of key hardware items, which have collectively delayed our ability to fnalise a number of technology implementation projects. The delay in the closure of these projects has extended the invoicing cycle, impacting both revenue recognition and cash fow generation in 2H FY22. The Company is working through a range of initiatives to fast track the closure of these projects in 1H FY23, which will drive the commencement of ongoing SaaS recurring revenue and improve cash fow generation.

5 P: [phone] | E:[e-mail]| W:www.skyfi.io| Ward Avenue, Potts Point, NSW, 2011