ADVERITAS LIMITED — Annual Report 2021

Aug 29, 2021

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FY21 Results and Growth Strategy Mathew Ratty Co-Founder & CEO

30 August 2021

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FY21: a busy year delivering on growth strategy

Growth in annualised revenue at 30 June 2021 to $1m, up 111% since December 2020. Further – increase of 41% to $1.4m in August 2021 reflecting successful execution of growth strategy

Cash balance of $3.2m as at 30 June 2021 and no debt.

Significantly penetrated key verticals:

Betting - GVC Australia (Ned & Ladbrokes); Betfred and Betbull added in FY22 YTD

Technology – Lalamove, Neon & Deezer On Demand - GoJek, Rappi

Marketplaces - CARS24 added in FY22 YTD

Successful $3m placement in July 2021 to support an acceleration of growth momentum by further investing in sales and marketing given visible opportunities

Strong renewal rate with GVC Australia, GoJek, Deezer and others renewing their services in FY22

Potential to raise up to $5.5m in October 2021 from 55.5m listed options with 10c exercise price. Circa 30% held by management and board

Freemium subscribers at 30 June 2021 up 400% from 30 June 2020 to circa 2,700. This provides a large base to convert into paying customers, with a strong conversion rate of 15% achieved over FY21

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Delivering on key objectives

Establishing foundations for rapid growth

Objectives:	Expand sales pipeline across key verticals	Expand sales pipeline across key verticals	Convert TrafficGuard trials into paying customers	Convert TrafficGuard trials into paying customers	Invest in the team to scale growth	Invest in the team to scale growth
Achievements:	•	Pipeline across key verticals and geographies	•	Enterprise clients signed across key verticals	•	Appointed Chief Revenue Officer to further expand
		substantially bolstered		(Gaming and tech)		reach in global markets
	•	Several global companies	•	Conversion of Freemium to	•	Recent addition of sales
		undertaking trials and		paying customers		representatives across
		current customers trialling		averaging approximately		Asia and Europe from
		additional services		15% in FY21 vs a global		industry backgrounds
				average of 2-5%1
					•	Strategy has resulted in a
			•	Q1 FY22 has shown		41% uplift in revenue in Q1
				significant growth in clients		FY22 so far
				as recently announced

1 https://hbr.org/2014/05/making-freemium-work

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The industry problem: fraud and invalid online traffic is a massive global issue

The scale of invalid traffic

Invalid traffic is any activity that doesn't come from a real user with genuine interest that you are paying for.

fraud and invalid traffic in 2023 40% of all digital advertising is invalid No channel or business is immune*

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Invalid traffic goes beyond fraud and bots

Accidental engagement

Wrong audience

Navigation via ads

Users accidentally engaging with ads that you pay for

Ads that are shown to the wrong audience

Users that navigate through search ads oblivious to the fact they are clicking on advertising.

Unviewable ads

Engagement without intent

Non-human engagement

Ads that cannot be seen by the user. Ad stacking or impressions not meeting MRC standards

Ads that cannot be seen by the user. Ad stacking or impressions not meeting MRC standards

Advertising engagement that is non-human - caused by bots, crawlers, malware and SDK spoofing

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The solution: TrafficGuard Full funnel. Full potential.

TrafficGuard is the world’s first full funnel measurement, verification and fraud prevention solution for digital advertising.

Operating in real time across all digital channels, TrafficGuard targets invalid traffic before it reaches your ad budget.

Using TrafficGuard, marketers, agencies and ad networks unlock the best advertising performance and protect the integrity of their data used for optimisation.

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The TrafficGuard difference

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Measurement
Legacy Platform TrafficGuard Platforms
Reported Impressions
Rendered and Viewable Impressions
GIVT and SIVT Impressions
Impression Level Protection
Clicks
GIVT and SIVT Clicks
Click Level Protection
Installs
GIVT and SIVT Installs
Fraud Installs
Contribution
Attribution
Real-time attribution verification
Post attribution verification
Full funnel visibility and feedback loop
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Full Feature

Partial Feature

TrafficGuard’s broad industry recognition

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Trusted by top global advertisers, agencies and partners Trusted by Global Brands, Agencies and Partners across both PPC and Mobile advertising spend

Clients

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Partners

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PPC protection

TrafficGuard’s Pay-Per-Click (PPC) Protection drives superior advertising performance by proactively blocking invalid traffic from infiltrating paid campaigns.

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TrafficGuard automatically detects invalid traffic and dynamically updates your IP exclusion list.

Non-human traffic and clicks with a low propensity to convert will be detected and prevented in real time.

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How TrafficGuard adds value for its clients

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Automated removal of Discovery and Increase in Customer
Invalid Traffic Actionable Insights Value
● Dynamic exclusion list ● Optimise on valid traffic data ● Activate budget previously
● Pre-bid optimisation ● Always on threat analysis wasted on Invalid Traffic to
● Machine learning ● Custom validations drive further conversions
● Fully automated ● Accurate & timely data for all
● Completely transparent stakeholders
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TrafficGuard adoption gaining momentum...

Building a significant Freemium pipeline and investing to convert trials to paying customers

Freemium subscribers

• Rapidly growing Freemium & paying customer base

• Freemium subscribers increased by 414% YoY to 2,690

• Paying customers increased by 1367% YoY to 176

customers

• Sales team enhanced with talented sales representatives – substantially bolstered the sales pipeline across key verticals including gaming, retail and many others

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+414%
YoY
Paying customers
+1367%
YoY
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… and delivering revenue growth

• New contracts signed over FY21 across fintech, sports betting and ondemand applications, contributed to annualised revenue growth

Annualised Revenue ($)

• Total annualised revenue of circa $1m at 30 June

• Over $350k of new annualised revenue in Q4 FY21 alone

• In FY 22, customer base has already expanded significantly, growing

• 41% since 30 June to around $1.4m in annualised revenue

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+199%
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Annualised revenue is a key leading indicator of future revenue

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FY21 financial performance

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Profit & Loss

Profit & Loss
($’000)	FY21	FY20	● FY21 revenue reflects strategic pivot to monthly subscription revenues from Trafficguard, now $1.4m annualised ● FY20 revenue included $309k from Mpi Network, AV1's former performance mar business (business sold in July 2018, rev ceased in Dec 19). ● Growth in employment costs due to expanded sales and customer success as indicated by recent revenue growth FY21 ● Increased marketing costs to grow sale pipeline
Revenue	964	1,227
Other income	1,757	1,600
Employment Costs	(6,030)	(5,506)
Server hosting costs	(2,000)	(2,119)
Marketing costs	(844)	(744)
Other operating costs	(1,737)	(1,681)
Overheads	(10,612)	(10,050)
EBITDA	(8,807)	(9,299)
Loss after income tax	(8,998)	(9,487)

• FY20 revenue included $309k from Mpire Network, AV1's former performance marketing business (business sold in July 2018, revenue, ceased in Dec 19).

• Growth in employment costs due to expanded sales and customer success teams as indicated by recent revenue growth post FY21

• Increased marketing costs to grow sales pipeline

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Balance Sheet

Balance Sheet reflects investment in TrafficGuard’s accelerated growth

($’000)	**30-Jun-21 **	30-Jun-20
Cash and cash equivalents	3,231	8,352
Total Assets	4,317	9,595
Total Liabilities	2,515	2,016
Net Assets	1,802	7,579

• $3.2m cash and no debt at 30 June 2021

• Focused investment in scaling up sales force and marketing activities to drive growth in TrafficGuard subscription revenue

• $3m raised on 19 July 2021 to accelerate sales and marketing activities based on multiple visible growth opportunities - pro forma cash at 30 June 2021 of $6.2m

• Placement was supported by existing and new sophisticated investors, including Pathfinder Asset Management - New Zealand's leading ethical investment fund

• Potential for further $5.5m via 55.5m listed options with a strike price of 10c that expire on 25 October 2021

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TrafficGuard contracts underpinned cash receipts increase

($’000)	**30-Jun-21 **	30-Jun-20
Receipts from customers	946	877
Payments to suppliers and employees	(10,066)	(9,536)
Interest Income	12	16
Other	712	177
Net cash flows from / (used in) operating activities	(7,265)	(7,233)
Net cash flows from / (used in) investing activities	(42)	14
Proceeds from issue of shares	2,393	13,974
Other	-	-
Net cash from / (used in) financing activities	2,258	13,528
Cash and cash equivalents	3,231	8,352

Increase in cash receipts of 8% to $946k

• Reflects initial cash inflows from customers signed to TrafficGuard in FY21

• Increase in payments to suppliers and employees reflects investments made into sales and marketing initiatives to accelerate growth

• $3m raised on 19 Jul 21 to accelerate sales and marketing activities based on multiple visible growth opportunities – pro forma cash at 30 Jun 21 of $6.2m

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Strong growth outlook

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Expanded sales and marketing capabilities to underpin organic growth

Sales staff locations

• Sales reps in 4 key locations with global coverage

• New sales reps with strong track records of

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United Kingdom
Singapore
South America
Australia
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delivering growth joined post 30 June 2021 across Asia and Europe are already contributing to growth

• Implementing an integrated sales and marketing process to drive inbound leads

• Final stages of appointing a Global Chief Marketing Officer to significantly drive our PPC self sign up offering to mass markets

Expanded sales and marketing capabilities to underpin Adveritas’ global scale-up, grow enterprise client numbers, while rapidly growing Freemium and paying customers

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Positive outlook

Strong start to FY22

• New enterprise client wins - Betfred, Betbull, Banco Neon, Cars24 and others

• Annualised revenue increased by 40% ($400k) to $1.4m and growing

• Expanding into new verticals and further penetrating key markets globally

Sales team re-shaped with talented sales representatives across Asia and Europe to underpin global scale-up and new client wins

• $3m placement in July 2021 supports the acceleration of Adveritas’ growth momentum

Several multi billion dollar unicorns are currently trialling TrafficGuard which if converted would support a rapid scale up of our Annualised Revenue in FY22

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Strong push towards mass market PPC self sign up

• Strategic focus to drive mass market traffic towards our Self Sign up portal for both our Freemium offering and PAYG

• Designed for any company spending money on Google pay per click (PPC) advertising

• Low touch point and high margin product

• Built for scale and ready to be deployed

• $147b was spent on Google Ads in 2021[2]

• Further products outside of Google PPC to be deployed in 2022

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2 https://www.cnbc.com/2021/05/18/how-does-google-make-money-advertising-business-breakdown-.html

Easy sign up process

• Signing up is easy and takes on average 12 minutes across the client base

• Customers simply connect to their Google Ads account with one click in TrafficGuard

• TrafficGuard automates the rest of the integration via a certified API with Google to save time and avoid error

• Customers on a free plan get the benefit of fraud detection for up to $2500 of Google Ad spend

• Customers that chose the protection plan (fraud prevention) pay just 2% of their Google Ad spend PAYG

• Multiple triggers in-app and automated messaging prompt and nurture free customers (detection only) to upgrade (prevention)

• Adveritas will market heavily the ppc mass market product through traditional channels such as Facebook, LinkdIn, Google Ads and other traffic sources to drive user uptake

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Investment highlights

• Growing Market: Online ad fraud is estimated to cost advertisers $100bn by 2023

• Built by design: TrafficGuard was built to address the inadequacies of legacy anti fraud solutions

• Validation: Growing list of Billion dollar companies now adopting TrafficGuard across Mobile, display and/or PPC spend

• Growing user base: Strong freemium growth leading to increasing paying customers. Any company that is using PPC advertising is a potential customer

• Growing revenues: Annualised revenue has grown 40% since 30 June 2021 with further growth to come

• Scalable: Substantial opportunity to scale through direct enterprise sales, channel partners and Self sign up PPC

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This presentation has been approved by the Board of Directors of Adveritas Limited.

For more information, please contact:

Mat Ratty

Chief Executive Officer Adveritas Limited (ASX: AV1) P: +61 (8) 9473 2500 E: investor.enquiry@adveritas.com.au

Ronn Bechler – investor relations Executive Chairman Market Eye P: +61 (0)400 009 774 E: ronn.bechler@marketeye.com.au

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Disclaimer

This presentation contains summary information about Adveritas Limited (Adveritas) and is current at 30 August 2021. The information in this presentation is of general background and does not purport to be complete.

This presentation is not investment or financial product advice (nor tax, accounting or legal advice) and is not intended to be used for the basis of making an investment decision. Investors should obtain their own advice before making any investment decision.

This document has been prepared based on information available at the time of preparation. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information, opinions and conclusions contained in this presentation.

Some of the statements appearing in this presentation are in the nature of forward looking statements. You should be aware that such statements are only predictions based on assumptions, and are subject to inherent risks and uncertainties. Those risks and uncertainties include factors and risks specific to the industry in which Adveritas operates as well as general economic conditions, prevailing exchange rates and interest rates and conditions in the financial markets.

Actual events or results may differ materially from the events or results expressed or implied in any forward looking statement. Neither Adveritas, or their officers or any person involved in the preparation of this presentation makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward looking statements in this presentation reflect Adveritas’ views as at the date of this presentation.

To the maximum extent permitted by law, Adveritas and its related bodies corporate (as that term is defined in the Corporations Act) and the officers, directors, employees, advisers and agents of those entities do not accept any responsibility or liability including, without limitation, any liability arising from fault or negligence on the part of any person, for any loss arising from the use of the presentation or its contents or otherwise arising in connection with it.

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