Cyviz AS

Earnings Release • Nov 19, 2021

QUARTERLY REPORT

Q3 2021

We transform how people work.

Q3 2021 highlights

• • 63% year-on-year growth in order intake to NOK 92 million, accumulating to a YTD order intake of NOK 288 million (131% year-on-year growth)
• • 16% year-on-year increase in revenue to NOK 64 million
• • Book to bill ratio of 1.4 and an increase in backlog to record high NOK 151 million from NOK 119 million at the end of Q2 2021
• • Working capital reduced with NOK 12 million and break-even operating cash flow in the quarter
• • Continued good progress with Microsoft orders and deliveries

CEO comment

The company is continuing to deliver towards the medium-term targets of average annual revenue growth of more than 30%. Strong indications of the underlying growth rate are the increased order intake of 63% from Q3 2020 (131% YTD) and revenue growth of 16% (40% YTD). Albeit the Q2 revenue being exceptionally strong, the revenue for the quarter is lower than expected, mostly due to 2 Microsoft deals valued at NOK 16 million moved to Q4 increasing our Q4 revenue targets with NOK 16 million. This shortfall in revenue impacted EBITDA in the quarter which ended at NOK -12,3 million.

The company has seen a positive development in inbound order requests during the quarter from both new and existing customers fueling the pipeline for 2022. The slowdown related to Covid restrictions around the world seems to have improved, and we expect a continued positive demand for our solutions through Q4 2021 and into 2022.

We have continued to strengthen the organization through the quarter adding sales and software developer capacity to support the strategic growth plans for the company. The global headcount has now reached 140 and I am proud to see the quality and pace we are able to onboard and recruit.

Cyviz has through the quarter made strategic investments in critical components for our solutions to bridge any potential supply issues in the market. This provides predictability in our ability to deliver on signed and new customer commitments through Q4 2021 and well into 2022.

We have partnered with Google, Capgemini, and Climate Engine in a thought leadership initiative for leveraging advanced new cloud and data visualization technologies. We expect this will lead to interesting market opportunities for Cyviz.

Financial review

Financial highlights (NOK million)	Q3 2021	Q3 2020	YTD 2021	YTD 2020
Total revenue	64.0	55.1	223.0	159.5
Gross profit1	26.5	25.8	96.1	75.4
Gross margin	41.4%	46.8%	43.1%	47.3%
EBITDA2	-12.3	1.3	-12.5	0.4
EBITDA margin	-19.2%	2.4%	-5.6%	0.3%
Cash flow from operations	-0.2	-1.9	-20.3	6.0
Cash and cash equivalents	57.0	3.6	57.0	3.6
Net interest-bearing debt (-) / deposits (+)	47.0	-46.5	47.0	-46.5
Equity-ratio	66.9%	13.6%	66.9%	13.6%
Order intake	91.8	56.2	286.9	124.0
Order backlog	150.5	97.3	150.5	97.3
Book-to-bill ratio3	1.4	1.0	1.3	0.8

¹ Gross profit is defined as revenues less cost of materials, including subcontractor costs

² EBITDA is earnings before depreciation, amortization, interests and tax

³ Book-to-bill ratio is order intake in the period divided by revenue in the same period. A ratio above 1.0 indicates an increased order backlog and vice versa

Revenue and gross margin

Total revenue for Q3 2021 ended at NOK 64.0 million, an increase by 16% from Q3 2020. Q3 revenues were negatively impacted by some delivery delays due to minor supply chain issues which now are rectified. Most significantly, two Microsoft projects which were expected to be delivered end Q3 2021 were moved to early Q4 2021. Microsoft projects represented below 10% of Q3 2021 revenue, compared to more than 60% in the previous quarter. In addition, the time lag from receipt of order to revenue recognition increased from Q2 2021, mainly caused by longer time between order date and requested install date for Microsoft projects.

Gross margin for the quarter ended at 41.4% (46.8%). The lower gross margin in Q3 2021 compared to Q3 2020 was primarily due to one large project in the Middle East with low up-front margin

recognized this quarter, but with a large portion of high margin recurring revenue which will be recognized over the coming quarters.

Middle East was the largest revenue contributor in Q3 2021 and "Government and Defence" the largest industry with several large government deals in the Middle East.

Order intake and order backlog

Order intake in Q3 2021 increased by 63% from Q3 2020, driven by further orders from Microsoft, Accenture and federal customers in US and the Middle East.

The book to bill ratio of 1.4 in the quarter led to a significant increase in the order backlog from NOK 119 million at the end of Q2 2021 to NOK 151 million at the end of Q3 2021. Normal average time from receipt of order to revenue recognition is currently approximately 5 months.

EBITDA and EBIT

EBITDA in Q3 2021 ended at NOK -12.3 million compared to NOK 1.3 million in Q3 2020 (which was positively impacted by Covid-related furloughs and government subsidies). The main driver for the negative EBITDA is low revenue in the quarter due to a couple of large projects moved to Q4 2021 and the mix of up-front vs recurring revenue on one large Middle East project. We continue to invest for growth and operating costs, mainly personnel expenses, increased by NOK 1.3 million from the previous quarter. Reported EBIT ended at NOK -16.3 million after depreciations and amortizations of NOK 4.0 million.

Cash flow

Cyviz had an operational cash flow of NOK -0.2 million in the quarter (-1.9 million). Net working capital was reduced by NOK 11.6 million despite a planned increase in inventories of NOK 5 million to secure long lead items for upcoming deliveries. Investments in fixed assets amounted to NOK 5.2 million in the quarter (mainly R&D and new ERP system). Total cash flow in the quarter was NOK- 6.2 million leaving the company with a cash balance of NOK 57.0 million by the end of the period.

Financial position

The company's total equity at the end of Q3 2021 was NOK 131.2 million, corresponding to an equity ratio of 66.9%. The equity ratio at the end of Q3 2020 was 13.6%.

Interest bearing debt amounted to NOK 10 million at the end of the quarter compared to NOK 50.2 million at the end of Q3 2020.

As of September 30, 2021, Cyviz had a cash position of NOK 57.0 million. In addition, the company has a NOK 50 million credit facility available for working capital financing.

Subsequent events

In November 2021 Cyviz received a contract for Microsoft Technology Centers (MTC) in North America valued at NOK 51 million, increasing the total number of MTC to be equipped with Cyviz technology to 24 and the total order value to NOK 176 million. The solutions will be delivered during first half year of 2022.

In October 2021 Cyviz' CFO Erik Fausa Olsen, who has been with the company since 2017, gave notice that he will leave the company to pursue other career opportunities. He will continue in his current role until the end of 2021 and assist the company to secure a good transition. Cyviz has initiated a process to recruit Olsen's replacement.

Outlook

Our business climate is gradually returning to its traditional pattern. However, we are experiencing significant shifts in client and consumer behaviour in favour of the Cyviz business which we believe will be permanent. During the pandemic we have experienced and registered changes that will impact the sector for the next 5+ years. This includes more profound digital transformation that is making collaboration tools more important than ever. Developing and delivering solutions that provide inclusion of people joining from outside, will be crucial to enhance and improve collaboration going forward.

Forward thinking organisations are realising the benefits of guiding their collaboration infrastructure, both for employee satisfaction and net profit. Engagement and productivity can be positively influenced by technology with employees reducing their travel time for meetings and conducting these "online" without any penalty in quality for remote attendance. Supporting this, the effect on the environment and the development of sustainable business practices is high on the agenda of many industries.

We continue to see the need for our technology with inbound requests from new customers and those with traditional legacy AV installations. This effect is continuing to drive our growth and product development, utilising the cloud and AI in our product roadmap. In addition, the expansion of our software development operations and customer success teams is ensuring we keep apace of the demand.

Our route to market and partnerships model is also experiencing growth with the addition of distribution offerings and support programs. We also see the consolidation within the industry as a positive and a platform for our expansion and diversification for our transactional and "as a service offering". The World Expo tradeshow in Dubai opened Q4 2021, with Cyviz participating through its partnership with Accenture to engage with existing and new clients to strengthen our position in the region.

All these factors will contribute to a positive increase in interest for the Cyviz proposition, not only in the traditional corporate environments, but with the same use cases and operational benefits transferring directly to many room applications including cyber security, dynamic control rooms and new opportunities such as climate change operation centres.

This change in working practices means Cyviz is perfectly placed to deliver solutions for Decision Intelligence, for critical and distributed teams.

Continued growth through clear strategic goals and actions

• • Continue expanding the Go-To-Market organization, with focus on building a platform for further growth in 2022.
• • The product and partner organization are uncovering new opportunities for solutions and product packaging and new Go-To-Market models.
• • Our planned launch of single tenant cloud in Q4 2021 is the first step towards the launch of our full multi-tenant cloud-based management platform.
• • Through cloud based packaged solutions, increased software sales and M&A we are further increasing recurring revenue.
• • With increased scale and operational excellence, we reiterate the targets of average annual revenue growth of 30% and an EBITDA-margin of 15-20% in a medium-term perspective.

Consolidated financial statements

Consolidated profit and loss accounts

		Unaudited	Unaudited	Unaudited	Unaudited
NOK 1 000	Note	Q3 2021	Q3 2020	YTD 2021	YTD 2020
Operating income
Revenue	7	63 974	55 073	222 995	159 479
Total operating income		63 974	55 073	222 995	159 479
Operating costs
Cost of materials		37 509	29 267	126 887	84 076
Salary and personnel expenses		29 879	16 734	82 215	50 614
Depreciation	2, 3	3 965	4 308	12 494	12 506
Other operating expenses		8 879	7 719	26 419	24 356
Total operating costs		80 232	58 028	248 015	171 552
OPERATING PROFIT (LOSS)		-16 258	-2 955	-25 020	-12 073
Financial income and expenses
Interest income		30	51	161	44
Net currency gains (losses)		566	-2 421	2 977	-3 550
Interest expenses		-79	-3 760	-651	-6 797
Net financial income and expenses		517	-6 130	2 488	-10 304
PROFIT (LOSS) BEFORE INCOME TAX		-15 471	-9 085	-22 532	-22 377
Income tax expense	8	18	37	241	179
NET PROFIT (LOSS) FOR THE PERIOD		-15 759	-9 122	-22 773	-22 556

Consolidated balance sheet

Note NOK 1 000 30.09.2021 30.06.2021 31.12.2020 ASSETS Non-current assets Intangible assets Research and development 29 989 28 611 25 945 Licenses, patents, other 11 272 10 844 8 481 Total intangible fixed assets 2 41 261 39 455 34 426 Tangible fixed assets Property, plant & equipment 3, 6 9 280 9 782 10 524 Total tangible fixed assets 9 280 9 782 10 524 Total non-current assets 50 541 49 237 44 950 Current assets Inventories 6 22 468 17 473 15 855 Receivables Accounts receivables 6 55 381 86 862 55 584 Other receivables 10 783 19 523 9 479 Total receivables 66 164 106 385 65 063 Cash and cash equivalents 56 978 63 155 47 444 Total current assets 145 610 187 013 128 362		Unaudited	Unaudited	Audited
	TOTAL ASSETS	196 151	236 250	173 312

Consolidated balance sheet

		Unaudited	Unaudited	Audited
NOK 1 000	Note	30.09.2021	30.06.2021	31.12.2020
EQUITY AND LIABILITIES
EQUITY
Contributed equity
Share capital	4	14 174	14 174	12 909
Share premium		140 576	140 576	93 346
Other paid-in equity		64	79	0
Total contributed equity		154 814	154 829	106 255
Retained earnings
Other equity		-23 603	-6 893	0
Total retained earnings	5	-23 603	-6 893	0
TOTAL EQUITY		131 211	147 936	106 255
LIABILITIES
Non-current liabilities
Provisions		3 599	3 392	2 987
Long-term interest bearing loans	6	10 000	10 000	10 000
Total non-current liabilities		13 599	13 392	12 987
Current liabilities
Contract liabilities		10 998	15 384	4 891
Accounts payable		25 958	39 783	24 288
Public duties payable		4 431	5 323	8 583
Other current liabilities		9 954	14 433	16 308
Total current liabilities		51 341	74 922	54 070
TOTAL LIABILITES		64 940	88 315	67 057
TOTAL EQUITY AND LIABILITIES		196 151	236 250	173 312

Consolidated cash flow statement

		Unaudited	Unaudited	Unaudited	Unaudited
NOK 1 000	Note	Q3 2021	Q3 2020	YTD 2021	YTD 2020
Cash flow from operating activities
Profit (loss) before tax		-15 741	-9 085	-22 532	-22 377
Option expense		-34	67	45	185
Income tax paid	8	-18	-39	-241	-181
Depreciation, amortization and impairment	2, 3	3 965	4 255	12 493	12 450
Change in accounts receivable		31 481	5 215	203	26 768
Change in inventories		-4 995	-3 439	-6 613	-3 476
Change in accounts payable		-13 825	-9 512	1 669	-19 712
Change in other accruals and prepayments		-1 012	10 634	-5 293	12 353
Net cash flow from operating activities		-179	-1 904	-20 269	6 010
Cash flow from investing activities
Purchase of fixed assets	2, 3	-5 166	-4 779	-17 956	-13 404
Net cash flow from investing activities		-5 166	-4 779	-17 956	-13 404
Cash flow from financing activities
Additions to equity		0	0	48 495	40 000
Proceeds from issuance long term debt		0	0	0	5 000
Net change in overdraft facility		0	2 543	0	-41 904
Net cash flow from financing activities			2 543	48 495	3 096
Currency effects		-830	483	-736	333
Net change in cash and cash equivalents		-6 175	-3 657	9 534	-3 965
Cash and cash equivalents at beginning of period	6	63 153	7 320	47 444	7 628
Cash and cash equivalents at end of period		56 978	3 663	56 978	3 663

Notes to Q3 2021 interim consolidated statements

Note 1 Accounting policies and basis for preparation

The interim consolidated financial statements comprise interim consolidated income statement, interim consolidated statement of financial position, interim consolidated statement of cash flows and selected notes. All amounts are presented in thousands of NOK (TNOK), unless otherwise clearly stated.

Recognition and measurement in the interim financial statements are based on the requirements of the Norwegian Accounting Act and generally accepted accounting principles in Norway and are otherwise consistent with the principles applied in the latest annual report. The interim financial statements have been prepared on the going concern basis.

The interim financial statements are unaudited and do not include a complete set of financial statement disclosures, thus they should be read together with the latest annual report.

Note 2 Intangible assets

Specification of intangible assets

	Research and	Licenses, patents,
(amounts in NOK 1 000)	development	other	Total
Cost at beginning of period	133 941	14 908	148 849
Additions	4 037	428	4 465
Cost at end of period	137 978	15 336	153 314
Accumulated depreciation at beginning of period	105 330	4 063	109 393
Depreciation for the period	2 659	0	2 659
Accumulated depreciation at end of period	107 989	4 063	112 052
Book value at end of period	29 989	11 272	41 261
Economic useful life	5 years	5 years
Depreciation schedule	Linear	Linear

Note 3 Property, plant & equipment

Specification of property, plant & equipment
(amounts in NOK 1 000)
Cost at beginning of period	71 990
Additions	701
Cost at end of period	72 691
Accumulated depreciation at beginning of period	62 486
Depreciations for the period	1 306
Accumulated depreciation at end of period	63 792
Currency translation effects	381
Book value at end of period	9 280
Economic useful life	3-10 years
Depreciation schedule	Linear

Note 4 Share capital and shareholder information

Share capital per 30.09.21	Shares	Par value (NOK)	Share capital (NOK 1 000)
Ordinary shares	12 885 597	1.10	14 174
Total	12 885 597		14 174

All shares have equal voting and dividend rights.

In addition to the currently outstanding shares, Cyviz AS also has 229 300 options outstanding (as further described in the latest annual report).

Significant shareholders per 30.09.2021	Shares	%
Investinor Direkte AS	4 911 267	38.1 %
Karbon Invest AS	1 919 367	14.9 %
Spinoza AS	464 173	3.6 %
Silvercoin Industries AS	455 021	3.5 %
Corporate Investment Consulting AS	251 200	1.9 %
Camaca AS	239 677	1.9 %
Norport AS	222 568	1.7 %
Lin AS	217 278	1.7 %
Thabo Energy AS	215 000	1.7 %
K.A. Fem AS	200 000	1.6 %
Six-Seven AS	170 673	1.3 %
Haakon Morten Sæter	146 804	1.1 %
Citibank. N.A.	121 488	0.9 %
Saxo Bank A/S	121 156	0.9 %
Nordnet Livsforsikring AS	110 741	0.9 %
Skagenkaien Venture AS	102 426	0.8 %
Torstein Ingvald Tvenge	100 000	0.8 %
Solan Capital AS	100 000	0.8 %
Cat Invest 1 AS	96 701	0.8 %
Cime AS	89 485	0.7 %
Total (20 largest shareholders)	10 255 025	79.6 %
Other shareholders	2 630 572	20.4 %
Total	12 885 597	100.0%

Note 5 Equity

Specification of equity

(amounts in NOK 1 000)	Share capital	Share premium	Other paid-in equity	Other equity	Sum
Equity as of 31.12.2020	12 909	93 346			106 255
Net profit (loss) for the period				-22 773	-22 773
Capital increase	1 265	47 230			48 495
Shared based compensation			64		64
Translation difference				-830	-830
Equity as of 30.09.2021	14 174	140 576	64	-23 603	131 211

Note 6 Interest bearing loans

Overdraft facility

Cyviz has established an overdraft facility with a limit of NOK 50 million. The main lending term is that the drawn amount shall not exceed sum of 60% of accounts receivables. 50% of inventory and a base of NOK 2.5 million. In addition, the equity ratio shall be minimum 40% measured quarterly.

Innovation Norway

For the loan from Innovation Norway. an interest and installment exemption applies until November 2021 and November 2022. respectively. The loan is to be repaid over 7 years. with the first installment in November 2022. The loan carries an annual interest rate. currently at 4.1 %.

Pledged assets

Accounts receivable. fixed assets and inventories are pledged as security for the overdraft facility and the loan from Innovation Norway.

30.09.2021	30.06.2021	31.12.2020
10 000	10 000	10 000
10 000	10 000	10 000
10 000	10 000	10 000
0	0	0

Note 7 Revenues

Geographical distribution

(amounts in NOK 1 000)	Q3 2021	Q3 2020	YTD 2021	YTD 2020
Europe. Middle East and Africa (EMEA)	47 509	30 712	110 750	76 474
Americas	13 115	23 263	86 238	70 303
Other	3 350	1 098	26 007	12 702
Total	63 974	55 073	222 995	159 479

Note 8 Income tax

Deferred tax assets are not recognized. The income tax expense in this period is primarily related to withholding tax outside Norway.

Note 9 Transactions with related parties

There are no related party transactions in Q3 2021.

Note 10 Events after the balance sheet date

No events to report.

Sandnes. November 18, 2021

Board of Directors

Cyviz AS

Contact:

CEO: Espen Gylvik: +47 913 30 644: espen.gylvik@cyviz.com

CFO: Erik Fausa Olsen: +47 907 38 944: erik.fausa.olsen@cyviz.com

https://www.cyviz.com/investor-relations/

About Cyviz Cyviz is a global technology provider for standardized conference rooms, control rooms and experience centers. Since 1998, Cyviz has empowered the digital workforce to connect, visualize, and collaborate on their critical data. The IT-driven turnkey solutions are easy to deploy, manage and support. Cyviz serves global enterprises and governments with the highest requirements for usability, security and quality, that engage people, encourage collaboration, and accelerate decision-making.

Find out more on www.cyviz.com or visit one of our Cyviz Experience Centers in Atlanta, Dubai, Jakarta, Houston, London, Oslo, Riyadh, Singapore, Stavanger, or Washington DC.