8COMMON LIMITED — Investor Presentation 2019

Sep 5, 2019

Investor Update

September 2019

8common

(ASX:8CO)

This presentation has been produced by 8common Limited and may contain forward looking statements that are based on Management’s current expectations, beliefs and assumptions and are subject to a number of risks and uncertainties. Forward looking statements contained in this presentation are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, the actual outcomes and results may differ from those described. In any forward-looking statement in which 8common Limited expresses an expectation or belief such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result or be achieved or accomplished. We are not under any duty to update forward-looking statements unless required to by law.

This investor presentation is not an offer of securities, and does not form part of any prospectus that has or may be issued. 8common Limited and its directors, employees, associates, affiliates and agents, make no:

a. Representations or warranties, expressed or implied, in relationship to this presentation or the accuracy, reliability or completeness of any information in it or the performance of 8common Limited; and

Disclaimer

b. Accept no responsibility for the accuracy or completeness of this presentation. This presentation is intended to provide information only and does not constitute or form an offer of securities or a solicitation or invitation to buy or apply for

securities, nor it or any part of it form the basis of, or be relied upon in any connection with any contracts or commitment whatsoever. The information in this presentation does not take into account the objectives, financial situation or particular needs of any person. Nothing in this presentation constitutes investment, legal, tax or other advice.

This presentation does not, nor does it purport to, contain all the information prospective investors in 8common Limited would desire or require in reaching an investment decision. To the maximum extent permitted by law, 8common Limited, their officers, directors, employees, associates, affiliates or agents, nor any other person accepts any liability for any loss, claim, damages, costs or expenses of any nature (whether foreseeable or not), including, without limitation, any liability arising from fault or negligence on the part of any of them or any other person, for any loss arising from the use of this presentation or its content or otherwise arising in connection with it or any errors or omissions in it.

The distribution of this presentation in jurisdictions outside of Australia may be restricted by law. This presentation has not been filed, lodged, registered or approved in any jurisdiction and recipients of this presentation should keep themselves informed of and comply with and observe all applicable legal and regulatory requirements. In Australia, this presentation is made only to sophisticated or professional investors under the Corporations Act, but will be released on the ASX.

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8common

8common Limited (ASX:8CO)

Highlights

• Leading position in Government with strong order book

• Compelling opportunities to leverage existing relationships to upsell products and lift ARPU

• Strong multi year revenue growth

• Revenue and cash receipt growth providing clear path towards EBITDA positive and profitability

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21% 117
$3.5m
FY19 Revenue 3 year CAGR Agencies across state
up 32% YoY and federal
Governments
114k $20 $1.0m
Users across our ARPU with further In cash reserves
platform with over 3 potential upside
million transactions
annually
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21% 117
3 year CAGR Agencies across state
and federal
Governments
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8common

8common Limited (ASX:8CO)

Our platform

8Common is a leader in the development of Australian based financial technology solutions

Our technology facilitates the process of employee generated financial transactions

With increasing volume of transactions our fully automated technology solutions provide ease of expense reconciliation

We are a leader in the large enterprise and Government sectors

Two complementary B2B software platforms

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Leading cloud-based platform for employee expense management

Payment gateway providing merchant account services

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Over 3 million transactions processed by 8CO in FY19

$2.7bn transaction value processed since 2003

114,000 Users

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8common

8common Limited (ASX:8CO)

Our business model

• Our software manages employee financial transactions for our customers

• 8CO are exploring new solutions for our customers, Travel and Expense Management (TEM) is our core product offering

• Our software and technology integrates and reconciles to customers’ payroll and ERP software

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8common

8common Limited (ASX:8CO)

Financial Update

8common

8common Limited (ASX:8CO)

Revenue Model

8CO generate revenues through:

$50k to $500k

One-off implementation revenue

1. Implementation revenues

• The initial implementation cost of adding our software

2. Monthly recurring revenue

• Income generated through utilisation of our SaaS technology by our 114,000 customers

Monthly Recurring Revenue

$0.25 – $12.00 $500 – $2,500 per transaction subscription

$5k to $50k*

3. Ad hoc change requests

• Charges for specific alterations, additions, detail changes on transaction reports

Ad hoc change request revenue *based on annual spend expected per agency

Strong orderbook build via the fed DoF (25 agencies) and DIIS (41 new agencies) shared service hub wins

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8common

8common Limited (ASX:8CO)

Growth in key verticals

• Increasing penetration amongst our existing customer base of 114k users could drive revenue to $4.6 million

• Increasing number of users is a key focus of the business

• Significant near term growth drivers with:

• New implementations from Federal Government shared services

• Corporate travel implementation for NSW Gov will move their ARPU from $14 to $30-40 - in line with Federal Government ARPU level

• Longer term drivers include:

• New products in PayHero

• Pre-paid cards for travel allowances, per-diems and grants

• Ability to leverage expense8 platform and client base for card applications and corporate travel

8common

Current ARPU runrate of $20 (up from $18 in May 2019)with 114,000 users delivering an ARR of $2.3m

Upselling all users across platforms at ARPU of $42 could deliver an ARR of $4.8 m

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Expense Credit Card Corporate Travel
Management Application and
Maintenance
$18 ARPU [1] $12 ARPU [2] $12 ARPU [3]
(114k users) (17k users) (9k users)
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Expense8 Platforms @ 100% Wallet Capture Rate ARPU $42

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1 Actual based on unaudited Q3 FY19 Expense8 June 2018 Recurring Revenue and Actual User Count 2 Company estimates based on client transaction patters

3 Actual based on FY18 Corporate Travel revenue from existing customer base

8common Limited (ASX:8CO)

Revenue growth

• Total revenue growth of 32% over the past year to $3.5 million. Adopting the AASB 15 accounting standard resulted in $371,097 in unearned revenue which will be recognised in FY2020.

• FY2019 Revenue growth was driven by:

• Contract wins in Q4 from Service Delivery Office (SDO) of the Department of Finance (DoF) and the Department of Industry, Innovation and Science (DIIS) will deliver further recurring revenue and implementation revenue uplift in FY20

• Implementation revenue lifted in FY19 and expected to move higher in FY20

Quarterly Revenue Growth ($’000)

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305
227
112
$800
122
211
$600 338 99 247 298
86 32 13
75
143
139
136
$400
518
465 464
436 442
$200 384 411 404
$0
Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
Recurring Revenue Other Revenue Implementation Revenue
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$1,000 $800

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8common

Other revenue includes change request revenue, consulting fees and annual license fees

8common Limited (ASX:8CO)

Recurring revenue

• Recurring revenue generated from our SaaS technology has grown 16% over the financial year

• Impact in Q3 due to lower level of travel and active business days over the December-January period

• Annualised 12-month recurring revenue equates to ~$2 million

Quarterly Recurring SaaS Revenue ($’000)

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$500
$400
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518
465 464
442
436
411
404
384
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$300
312
279
259 256
$200
$100
$0
Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
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8common

8common Limited (ASX:8CO)

Cash receipts

• Q4 is a seasonally high cash receipt quarter due to Annual Payments in advance by clients on the legacy on–premise solution

• Q4 increased cash receipts driven by an increase in recurring SaaS revenue and a lift in implementation revenue

• Cash at bank at end of FY19 of over $1 million

• Cash receipts and expenses between Q1 FY18 and Q4 FY18 include Realtors8 which has been divested.

Quarterly Cash Receipts and Net Operating Cash ($’000)

1,600 1,400

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1,517
1,400
1,200
1,212
1,000 1,060 1,066
1,015
904
800
808
751
600
393
400
200
60
$-
(43)
(72) (170)
(212) (209)
(200)
(287)
(400)
Q1FY18 Q2FY18 Q3FY18 Q4FY18 Q1FY19 Q2FY19 Q3FY19 Q4FY19
Cash Receipts Net Operating Cash
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8common

8common Limited (ASX:8CO)

Summary Financials

	($’000) FY19 FY18	($’000) FY19 FY18	($’000) FY19 FY18
	Profit and Loss Revenue	3,474.2	2,638.4
	Normalised EBITDA*	(390.3)	(515.1)
	EBITDA	(889.9)	(515.1)
	Profit Before Tax	(1,224.9)	(1,153.9)
	Net Profit / (Loss) After Tax	(1,239.0)	(1,290.5)
	Cashflow
	Cash at end of year	1,033.4	533.6
	Cash flow from operating activities	(130.5)	(503.8)
	Cash flow from investing activities	30.4	200.8
	Cash flow from financing activities	599.9	469.6
	Balance Sheet
	Cash	1,033.4	533.6
	Current Assets	1,384.9	4,106.8
	Current Liabilities	1,522.8	1,343.3
	Shareholder Equity	6,161.1	6,040.3

*Normalised EBITDA excludes impairment losses and non cash share based payments

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8common

8common Limited (ASX:8CO)

Operational review

8common

8common Limited (ASX:8CO)

‘000s

m

3.0

2.5

1.5 1.0

Growth in user base

• $700

• 4x growth between 2016 to 2019 in $ value of expenses managed

• $2.7bn in expenses managed since 2003, $607m in the last 12 months

$2.7Bn transaction value managed through the platform since 2003

• $600

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617
509
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$500
509
managed through the
platform since 2003
$400
$300
290
$200
172
144
136
129
$100
$0
FY13 FY14 FY15 FY16 FY17 FY18 FY19
Annual transaction value (LHS) Number of transactions processed annually (RHS)
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2.0
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0.5
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0.0
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8common

8common Limited (ASX:8CO)

Expense8 ready to scale

• 8CO are positioned as a proven industry leading platform with a solid client base

• We are now looking at growth focussed on:

1. Develop Industry leading platform

2. Implement & operate to target market

• Increasing users through new client wins

• Driving higher ARPU

• Leveraging existing platform to sell our PayHero capabilities

• Scale distribution via partners

3. Scale distribution via partners and cross sell PayHero

• Grow Expense8 government coverage

Increase ARPU, recurring and transaction fees

• Leverage BlueChip Corporate Client Base of Expense8 to cross-sell PAYHERO payment gateway solution (% clip of transaction volume)

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8common

8common Limited (ASX:8CO)

PayHero market opportunity

• Pay Hero has a large addressable market

• Processing Federal, NSW and Northern Territory Government procurement payments were c.$80b based on the FY2017 reported annual procurement spend.

• Industry GDV to revenue average of between 30-100bps.

• Annual Transaction Revenue .

• opportunity of between $24-80m

8common

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30-100bps
$80b
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Federal, NSW & NT Government Annual Procurement Budget and RBA Benchmark Transaction Fee

Source:

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https://www.afr.com/technology/nsw-government-looks-to-microsoft-artificial-intelligence-to-cut-10m-costs-20180607-h112nu https://www.finance.gov.au/procurement/statistics-on-commonwealth-purchasing-contracts/ https://nt.gov.au/industry/government/sell-my-goods-and-services-to-government/buy-local-plan

8common Limited (ASX:8CO)

Outlook

8common

8common Limited (ASX:8CO)

Macro economic drivers of growth

• Usage of Credit cards (CC) going up (replacing the PO process)

• Cost of CC transactions (interchange) is going down making it more affordable to use CC

• Volume of transactions are going up so there is a clear need to automate

• Accountability and regulation tightening so organisations need systems in place to provide transparency and efficiency.

Existing Employee Expense Report Submission Method

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13%
63%
21%
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Paper receipts are mailed to the AP department

Employees use a combination a combination of spreadsheets and scanned receipts

Employees use a dedicated expense software tool

Source: Q1, 2018 Travel and Expense Management Report, Paystream Advisors

Biggest benefits achieved through TEM automation

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Improved visibility over spend 61%
Quicker reimbursement of employee
58%
expenses
Better ability to enforce travel policies 48%
Lower processing costs 41%
Improved employee satisfaction 34%
Improved ability to detect and prevent
34%
fraud
Increased corporate card usage and
20%
rebates
Better compliance with regulatory
18%
requirements (SOX,FASB)
Ability to negotitate volume discounts
15%
with vendors
0% 20% 40% 60% 80%
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8common

8common Limited (ASX:8CO)

The Outlook

8CO’s industry leading position amongst our foundation partners provides a platform for growth

The focus of our business will be to

1. Grow organic revenue through new agency wins, uplift in users and increase of ARPU

2. Leverage existing relationships to cross sell products

3. Expand PayHero to deliver in the fast growing expense card market

4. Develop partner ecosystem to scale distribution to new markets

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8common

8common Limited (ASX:8CO)

APPENDIX

8common

8common Limited (ASX:8CO)

Board & Management

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Nic Lim

Founder & Executive Chairman

Founder, investor and Board member of various technology companies over the last 20 years. Founded 8common in 2013. Co-Founded Catcha in 1999, leaving an operational role in 2003 and remained a shareholder. Since 2007, Catcha has since spun out various Public Listed companies including iProperty (ASX:IPP), iCarAsia (ASX:ICQ), and Rev Asia (BURSA:REV);

Was in banking with Morgan Stanley, Credit Suisse and UBS until 2012.

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John Du Bois

Independent, Non-Executive Director

Mr John Du Bois has had a very accomplished career. This includes 9 years at SAP culminating in the role of EVP and Managing Director South West Asia which was extended to Australia and New Zealand (AsiaPacific and Japan) and more than 6 years at Senetas Limited (SEN:ASX) as Chairman and CEO, a leading Security Software company with a strong Federal Government client footprint

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Adrian Bunter

Independent, Non-Executive Director

Adrian is an executive director of Venture Advisory, a specialist telecommunications, media and technology (TMT) financial advisory firm operating out of Australia and Asia. He has over 20 years’ experience in accounting, audit, and finance, as well as a broad range of corporate advisory roles ranging from debt/equity raisings, mergers and acquisitions, divestments of business and strategy development and execution, including over 16 years with PricewaterhouseCoopers

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Larry Gan Non-independent, Non-Executive Director

Larry has built a reputation based on extraordinary work ethic, strategic thinking and visionary ability. During his 26 years

with Accenture, he held many global leadership roles. Since 2013, Larry been the Group Chief Executive Officer and Managing Director of Formis Resources Berhad. He is a Fellow of Association of Certified Chartered Accountants and Certified Management Consultant.

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Andrew Bond

Chief Executive Officer

Andrew joined 8common in August 2015 and is a highly regarded and well respected leader. Prior to 8common, Andrew has held several roles in Woolworths Limited, Satori Group and AMP Limited. Andrew brings over 10 years’ experience in the technology sector leading sales and marketing and technology teams.

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8common

8common Limited (ASX:8CO)

Corporate snapshot

Capital Structure

Share price (5-Sep-19) A$0.095

Shares on issue 156,385,222

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15.58%
Remaining Float 26.26%
Directors & Management
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Undiluted Market A$14.8m Capitalisation

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58.16%
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Cash (30-June-19) A$1.0m

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Rest of Top 20
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Shares in Cloudaron Bhd A$3.5m Bloomberg (CLOUD:MK)

Listed Options at $0.035 27,627,177 (expiry 20 Feb 2020)

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8common

8common Limited (ASX:8CO)

Investor Relations Craig Sainsbury e: craig.sainsbury@marketeye.com.au 8common

Stephanie Ottens e: stephanie.ottens@marketeye.com.au

Nic Lim Executive Chairman e: nic@8common.com

8common Limited (ASX:8CO)