Cyviz AS

Quarterly Report • Aug 31, 2023

QUARTERLY REPORT Q2 2023

Key figures

• • EBITDA of NOK 11.6 million in Q2, up 132% compared to Q2 2022
• • Revenue of NOK 160 million, a growth of 33% compared to Q2 2022
• • Gross profit of NOK 77.8 million, up 43.6% compared to Q2 2022
• • Order intake of NOK 123 million, up 4.8% compared to Q2 2022
• • Operating cash flow of NOK 8.1 million compared to NOK -54.5 million in Q2 2022

Key events

• • Awarded multiple contracts worth USD 3.0 million to refresh and upgrade existing Cyviz solutions for a returning Fortune 500-customer in the corporate vertical
• • Won a USD 3.8 million contract within the energy vertical to standardize 18 high-end meeting rooms at multiple locations in the Middle East
• • Added a new Fortune 100-logo to the Cyviz customer portfolio in the US within the FMCG vertical. The Cyviz solution will be deployed to the customer's innovation center which is home to one of the largest motion-capture systems in the world
• • Signed new contract with Microsoft to upgrade their HoloSuite experience center at their headquarters in the Netherlands. The Cyviz upgrade will enable customers to explore new Microsoft technologies – like Surface and HoloLens – through a 360 degrees fully immersive experience
• • Opened the new Cyviz flagship experience center in Dubai, further strengthening our position in the Middle East. The CEC includes demonstration rooms showing our MTR integration, dynamic control room and our projector technology coupled with an innovative VR solution that is used to model customer spaces
• • Completed a large and very complex control room-project for the US Defense. The Cyviz solutions enable superior situational awareness and decision-making through the support of visualization of high-resolution data content from hundreds of video sources for multiple video walls

CEO comment

Continued growth and gaining market share

We continue to be dedicated to making the world work better by bringing communication, control and interaction together through advanced technology driven by one important thing: people. We help companies worldwide elevate their digital collaboration to the next level, driven by factors such as the decline in business travel, hybrid work, cost control and reduced climate footprint.

The strong growth continues through increased demand across multiple verticals and regions. The diversification of customers, verticals and solutions is a key driver for yet a strong quarter. The quality and speed of delivery and installation have improved through the quarter and are key factors for the strong gross profit in the quarter together with a new process framework across the internal disciplines and with our strategic partners.

The revenue consists of sales to both existing and new customers and is a strong indication of the quality of our solutions as well as an increase in global awareness around what we provide clients.

We continue to report strong growth across all financial KPIs with 33% growth in revenue, 44% growth in gross profit, 4.8% in order intake and EBITDA up from NOK 5 million in Q2 2022 to NOK 11.6 million this quarter.

The rolling 12-month trends continues to improve with 42% in order intake, 80% on gross profit and with NOK 64 million on EBITDA compared to same period last year, supporting the growth strategy we launched in 2021.

Our strong Q2 performance is a testament to our highly dedicated and passionate team, committed to making our customers' lives better by simplifying complexity, making work more immersive, productive, and enjoyable.

Financial review

Financial highlights (NOK million)	Q2 2023	Q2 2022	YTD 2023	YTD 2022
Total revenue	159.7	119.8	296.7	189.3
Gross profit1	77.8	54.2	143.6	83.6
Gross margin	48.7%	45.2%	48.4%	44.2%
EBITDA2	11.6	5.0	14.3	-13.3
EBITDA margin	7.3%	4.2%	4.8%	-7.0%
Cash flow from operations	8.1	-54.5	1.0	-71.0
Cash and cash equivalents	0	9.0	0	9.0
Net interest-bearing debt (-) / deposits (+)	-9.5	-47.0	-9.5	-47.0
Equity-ratio	37.7%	40.8%	37.7%	40.8%
Order intake	122.5	116.9	281.1	237.6
Order backlog	256.2	218.8	256.2	218.8
Book-to-bill ratio3	0.77	0.98	0.95	1.23
FTEs4	161	151	161	151

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

⁴Full-time equivalent (FTE) is a unit of measurement that indicates the workload of an employed person. An FTE of 1.0 is equivalent to a full-time worker

Revenue and gross profit

Cyviz delivered revenue of NOK 160 million in Q2, up NOK 39.9 million (33%) compared to the same quarter last year. During the first half of 2023, Cyviz had revenue of NOK 297 million which is a growth of NOK 108m (57%) compared to same period in 2022. Looking at the rolling 12-months trend, we are at NOK 593 million after Q2 which is a growth of 68% compared to Q2 2022.

The revenue performance in the quarter was driven by delivery of multiple large projects in the Middle East, and the region made up 63% of total revenue. In North America, we both started and completed several projects within the corporate and government & defense-verticals and in total the region made up 24% of total revenue.

Gross profit for the quarter ended at NOK 77.8 million, which is a growth of 43.6% compared to Q2 last year. The gross margin was 48.7% with accretive effect from operational excellenceinitiatives within procurement, supply chain and inventory optimization. Looking at the first half of 2023, Cyviz delivered a gross profit of NOK 144 million compared to 84 million in 2022. This is a growth of 72% and an increase in absolute figures of NOK 60 million.

The rolling 12-months trend for gross profit is at NOK 280 million after Q2, up 80% compared to the same period last year.

Order intake and order backlog

Order intake ended at NOK 123 million, up NOK 6 million compared to Q2 2022. The quarter started off well with a large contract of USD 3.8m signed early April with a returning customer within the energy vertical. A temporary slow-down in May was followed by a peak in June where 57% of the total order value for Q2 was won the last two weeks of the month.

The performance was driven by the energy and corporate verticals which in total made up 81% of total bookings in the quarter. Portfolio-wize, we were happy to sign a new Fortune 100-logo within the FMCG vertical which further strengthens Cyviz' diversification in terms of what customer segments and needs we are able to serve.

Year-to-date, Cyviz has a total order intake of NOK 281 million compared to NOK 238 million last year, a growth of 18%. Total order backlog is NOK 256 million after Q2, a growth compared to Q2 2022 of NOK 37.4 million. The book-to-bill ratio in Q2 was 0.77 compared to 0.98 same quarter last year, and 1.07 on a rolling 12-months basis.

EBITDA

EBITDA in Q2 ended at NOK 11.6 million with a margin of 7.3%, up NOK 6.6 million (132%) from Q2 2022. The half-year result for EBITDA ended at NOK 14.3 million which is an improvement compared to the same period last year of NOK 27.6 million.

Q2 2023 is the fifth consecutive quarter with positive EBITDA-figures for Cyviz, leading to a rolling 12-months trend of NOK 36.6 million. This is a growth of NOK 64.5 million compared to the same quarter last year.

OPEX for the quarter was NOK 66.2 million, which is higher than usual. This was driven by the negative effect from a weakened NOK versus USD which hit salary and personal expenses with NOK 2.1 million. We also had several one-offs in professional fees for projects related to new ESG strategy and an assessment to make Cyviz compliant with the Norwegian Transparency Act.

Cash flow

Cyviz had a net cash flow from operating activities of NOK 8.1 million in Q2 compared to NOK - 54.5 million last year. Key driver for the positive cash flow is a net profit before tax of NOK 10.5 million and a reduction in inventories of NOK 5.9 million.

The timing of due dates for large receivables was unfavorable this quarter which led to accounts receivable increasing NOK 15.6 million offset by a similar increase in accounts payable of NOK 15.8 million. We expect to collect the lion share of the NOK 147 million receivables during Q3.

Net cash flow from investment activities was NOK 7.7 million in Q2 compared to NOK 6.7 million in Q2 2023. This is in line with the level seen in the last quarters and are to a large extent related to capitalization of R&D and new product development.

Net cash flow from financing activities was NOK 0.5 million related to payment of our long-term loan with Innovation Norway.

Financial position

Cyviz' total equity at the end of Q2 2023 was NOK 97.6 million with a corresponding equity ratio of 37.7%, up from 36.6% after Q1 2023.

Interest bearing debt amounted to NOK 8 million which is the long-term loan provided by Innovation Norway. The loan is to be repaid over 7 years with the fourth installment of NOK 0.5 million paid in Q2 2023.

As a result of the continued high level of accounts receivable of NOK 147 million, Cyviz was not able to increase the cash position which is still at zero. Our receivables are a direct consequence of increased commercial and operational activity, and we are confident that this will balance out during the next quarters.

As of 31 March 2023, Cyviz reported an equity ratio of 37.7% which was below the 40% covenant tied to the credit facility we have with DNB. Cyviz received a waiver letter from DNB stating they accepted the breach of the equity covenant, and the covenant structure was changed in June to better represent Cyviz in 2023 and forward. The new covenant structure states that the equity shall be minimum 30% and the rolling 12-months EBITDA at minimum NOK 10 million measured quarterly. Cyviz had used NOK 1.5 million of the credit facility after Q2.

Outlook

Heading into exciting times.

As we look ahead as a company and within our industry, we see a significant growth in demand for advanced collaboration solutions and an expected decline in demand for basic meeting room solutions. These trends strengthen the strategy and position Cyviz has as a global company and adds evidence to the strategy the company have had since 2009.

Solutions that help customers take steps towards Next Level Collaboration are driving a significant part of the growth within our industry, and Cyviz is better positioned than our competitors to deliver on this both locally and globally. Our solutions powered by the Cyviz platform helps customers make the complex simple, ensuring work is more immersive, productive and more enjoyable.

Another key trend we see is the customers need to be able to monitor and have access to remote support and services for all AV, IT, IOT devices and solutions within the facilities. This is a trend we have seen and discussed with our customers over the last 2 years. We have been developing our own new platform with integrated plug-ins, integrations and services to meet the customer demand going forward. This is the most significant and strategic decision the company have made to improve competitiveness, margins and gradually move more of our future business towards a subscription-based platform.

This new Cyviz platform, to meet a large global demand for management services, will be launched this fall with Cyviz core services, integrations and plug-ins. This is key to utilize the value of the core Cyviz legacy in a new business model focusing on subscription and ARR, enabled by a global partner ecosystem to take this out in the marketplace. We have high expectations that this is a key strategic add-on to an already strong product and solution portfolio to continue fueling our profitable global growth.

We continue to reiterate our medium-term target of 30% CAGR on revenue, and 15-20% EBITDA margin.

Consolidated interim financial statements

Consolidated profit and loss accounts

		Unaudited	Unaudited	Unaudited	Unaudited
NOK 1 000	Note	Q2 2023	Q2 2022	YTD 2023	YTD 2022
Operating income
Revenue	7	159 725	119 799	296 705	189 268
Total operating income		159 725	119 799	296 705	189 268
Operating expenses
Cost of materials		81 925	65 622	153 128	105 662
Salary and personnel expenses		49 006	33 483	95 739	67 492
Depreciation	2.3	5 460	4 943	11 286	9 530
Other operating expenses		17 193	15 695	33 514	29 392
Total operating expenses		153 585	119 743	293 666	212 076
OPERATING PROFIT (LOSS)		6 140	57	3 039	-22 808
Financial income and expenses
Interest income		477	21	1 038	89
Net currency gains (losses)		4 903	5 436	6 989	2 849
Interest expenses		-1 046	-312	-1 561	-385
Net financial income and expenses		4 334	5 145	6 465	2 553
PROFIT (LOSS) BEFORE INCOME TAX		10 474	5 201	9 504	-20 255
Income tax	8	219	85	301	-7
NET PROFIT (LOSS) FOR THE PERIOD)		10 255	5 116	9 203	-20 248

Consolidated balance sheet

30.06.2022
35 246
15 908
51 155
7 405
7 405
58 559
32 587
119 261
18 405
137 666
9 006
179 258
237 818

Consolidated balance sheet

		Unaudited	Audited	Unaudited
NOK 1 000	Note	30.06.2023	31.12.2022	30.06.2022
EQUITY AND LIABILITIES
Equity
Paid-in capital
Share capital	4	14 174	14 174	14 174
Share premium		83 429	84 474	82 829
Other paid-in equity				0
Total paid-in capital		97 603	98 648	97 003
Retained earnings
Other equity		0	0	0
Total retained earnings		0	0	0
Total equity	5	97 603	98 648	97 003
Liabilities
Non-current liabilities
Provisions		5 136	4 779	4 989
Long-term interest-bearing loans	6	8 000	9 000	10 000
Total non-current liabilities		13 136	13 779	14 989
Current liabilities
Overdraft facility	6	1 450	0	45 961
Contract liabilities		35 864	38 726	4 319
Accounts payable		72 948	74 136	45 392
Public duties payable		8 175	5 906	10 284
Other current liabilities		29 921	28 649	19 869
Total current liabilities		148 359	147 417	125 826
Total liabilities		161 495	161 195	140 814
TOTAL EQUITY AND LIABILITIES		259 097	259 843	237 818

Consolidated cash flow statement

		Unaudited	Unaudited	Unaudited	Unaudited
NOK 1 000	Note	Q2 2023	Q2 2022	YTD 2023	YTD 2022
Cash flow from operating activities
Profit (loss) before tax		10 474	5 201	9 504	-20 255
Option expense		232	106	480	166
Income tax paid		-219	-85	-301	7
Depreciation, amortization and impairment	2,3	5 460	4 943	11 286	9 530
Change in accounts receivable		-15 639	-40 000	-10 265	-41 034
Change in inventories		5 878	-6 904	-2 802	-9 473
Change in accounts payable		15 788	-6 629	-1 188	-1 330
Change in other accruals and prepayments		-13 903	-11 154	-5 699	-8 578
Net cash flow from operating activities		8 071	-54 522	1 015	-70 967
Cash flow from investment activities
Purchase of fixed assets	2,3	-7 731	-6 687	-15 092	-14 501
Net cash flow from investment activities		-7 731	-6 687	-15 092	-14 501
Cash flow from financing activities
Additions to equity		0	0	0	0
Repayment of long-term loans		-500	0	-1 000	0
Net change in overdraft facility		206	45 961	1 450	45 961
Net cash flow from financing activities		-294	45 961	450	45 961
Currency effects		-46	-56	-117	3
Net changes to cash and cash equivalents		0	-15 304	-13 744	-39 504
Cash and cash equivalents at beginning of
period		0	24 310	13 744	48 510
Cash and cash equivalents at end of period		0	9 006	0	9 006

Notes to Q2 2023 interim consolidated statements

Note 1 – General information and accounting policies

Basis for preparation and consistency with latest annual report

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. These interim financial statements have been prepared in accordance with NRS 11 Interim financial reporting (NRS 11 Delårsregnskap). 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,
	development	patents etc.	Total
Cost at beginning of period	166 447	25 264	191 712
Additions	3 672	616	4 287
Cost at end of period	170 119	25 880	195 999
Accumulated depreciation at beginning of period	124 777	8 883	133 660
Depreciations for the period	2 600	2 041	4 641
Accumulated depreciation at end of period	127 377	10 924	138 301
Book value at end of period	42 741	14 956	57 697
Economic useful life	5 years	5 years
Depreciation schedule	Linear	Linear

Note 3 – Property, plant & equipment

Specification of property, plant & equipment

Cost at beginning of period	80 629
Additions	3 444
Cost at end of period	84 073
Accumulated depreciation at beginning of period	72 246
Depreciations for the period	819
Accumulated depreciation at end of period	73 065
Currency translation effects
Book value at end of period	11 009
Economic useful life	3-10 years

Note 4 – Share capital and shareholder information

Share capital per 30.06.2023	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 372 300 options outstanding (as further described in the latest annual report).

Significant shareholders per 30.06.2023

	Shares	Ownership
Investinor Direkte As	4 911 267	38.1 %
Karbon Invest As	1 919 367	14.9 %
Silvercoin Industries As	626 649	4.9 %
Spinoza As	464 173	3.6 %
Camaca As	424 999	3.3 %
Sakk As	302 921	2.4 %
Dnb Markets Aksjehandel/-Analyse	269 718	2.1 %
Muen Invest As	248 100	1.9 %
Lin As	217 278	1.7 %
K.A. Fem As	200 000	1.6 %
Solan Capital As	197 842	1.5 %
Norport As	194 399	1.5 %
J.P. Morgan Se	140 000	1.1 %
Citibank, N.A.	121 488	0.9 %
Godthåb Holding As	108 695	0.8 %
Inma Invest As	97 426	0.8 %
Cat Invest 1 As	96 701	0.8 %
Cime As	89 485	0.7 %
Nordnet Livsforsikring As	78 215	0.6 %
Fredriksen	74 188	0.6 %
Total (20 largest shareholders)	10 782 911	83.7 %
Other shareholders	2 102 686	16.3 %
Total	12 885 597	100.0 %

Specification of equity

		Share	Other paid-in
	Share capital	premium	equity	Sum
Equity as per 31.12.2022	14 174	84 474	0	98 648
Net profit (loss)		9 203	-480	8 723
Capital increase				0
Share-based compensation			480	480
Currency translation differences		-10 248		-10 728
Equity as per 30.06.2023	14 174	83 429	0	97 603

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 30% and the rolling 12-months EBITDA at minimum NOK 10 million measured quarterly.

As of 31 March 2023, the Group reported an equity ratio of 37%, which was slightly below the 40% requirement in the facility agreement. Cyviz received a waiver letter from DNB stating they accepted breach of the equity covenant, and the covenant structure was changed in June to the one mentioned in the section above.

Innovation Norway

The loan is to be repaid over 7 years, with the first installment in August 2022. The loan carries an annual interest rate, currently at 4.2 % for the first NOK 3m and 4.45% for the last NOK 5m.

Pledged assets

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

Specification of interest bearing loans

	30.06.2023	31.12.2022
Innovation Norway	8 000	9 000
Overdraft facility	1 450	0
Total interest bearing loans	9 450	9 000
Long-term	6 000	9 000
Short-term	3 450	0

Note 7 – Revenues
Revenues by geography
	Q2 2023	Q2 2022	YTD 2023	YTD 2022
Europe, Middle East and Africa (EMEA)	105 999	56 258	185 543	78 413
North America	38 766	54 353	86 896	100 116
Other	14 960	9 188	24 266	10 738
Total	159 725	119 799	296 705	189 267

Note 8 – Income tax

Deferred tax assets are not recognized.

Note 9 – Related parties

There are no related party transactions in Q2 2023

Note 10 – Events after the reporting period

No events to report

Oslo, 31 August 2023

Cyviz AS

Contact:

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

CFO: Marius Skagen: +47 986 44 846: marius.skagen@cyviz.com

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

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About Cyviz Cyviz is a global technology provider for comprehensive conference and control rooms as well as command and experience centers. Since 1998, we have created next level collaboration spaces, assuring inclusive meeting experiences for in person and remote attendance.

Cyviz serves global enterprises and governments with the highest requirements for usability, security, and quality. The cross-platform experience Cyviz delivers to manage and control systems and resources across the enterprise, makes Cyviz the preferred choice for customers with complex needs.

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

Cyviz is listed on Euronext Growth at the Oslo Stock Exchange (ticker: CYVIZ).