FIRSTWAVE CLOUD TECHNOLOGY LIMITED — Investor Presentation 2017

Jul 24, 2017

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Cloud security through cloud gateway intelligence FCT July Update

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Innovate • Create • Execute July 2017

1

AGENDA

Executive Summary – Steve O’Brien, MD Financial & Operational Update – David Kirton, CFO Technology Update – Simon Ryan, CTO International Update – Steve O’Brien, MD

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2

Corporate Overview

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ASX:FCT Share Price since listing
$0.70
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Share price $0.28 Shares on issue 179.8m Cash at bank $1.8m Market capitalisation (undiluted) $52.1m Enterprise value $50.3m Options of issue 23.6m Major shareholders MAREN SUPER FUND A/C 9.10% LIDGETT SUPER FUND A/C 8.95% MR EDWARD KEATING + MRS LINDA KEATING 3.58% MR RICHARD BESWICK 3.20% HSBC CUST NOM AU LTD 13 A/C 2.73% MR SIMON RYAN 2.57%

$- 20/05/16 20/06/16 20/07/16 20/08/16 20/09/16 20/10/16 20/11/16 20/12/16 20/01/17 20/02/17 20/03/17 20/04/17 20/05/17 20/06/17 20/07/17

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3

Introduction To FirstWave

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Australian tech company established in early 2000’s Listed ASX:FCT

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Significant investment in R&D around virtualised Cloud Content Security

| Telstra Unrestricted

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Heritage from Telstra’s Research Labs focusing on SaaS based Cloud Content Security

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Patented, market leading content security technology

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Delivers Multi-Tenanted Multi-Vendor embedded security solutions in private and public cloud environments

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Expanding Internationally via Global Security Vendors and Telco relationships

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4

Highlights

FIRSTWAVE TODAY

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11 102% 44
~100,000
~2,000,000
Operational Growth New Product Scale Scale
Cloud Platforms Recurring Revenue Customer Acquisitions Customer User Customer Users
(Points of Presence) (PCP FY2017) (NGFWs in 2017) Mailboxes Filtered For Web Security
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5

FirstWave Platform

• WHAT IS IT? WHY IS IT IMPORTANT?

• Embedded orchestration platform for Telco/SPs

• Multi-vendor, multi-appliance, multi-cloud

• Centralised control, management & reporting

• Single pane of glass to all services

• Asia/Pac development & support

• • Ability to cohesively add other services

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7

Non Financial Operational Highlights

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Sales & Marketing

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R&D

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Operations
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✓ Telstra GPA (Next Generation Firewall) is live

• ✓ Telstra sales channel enabled

• ✓ Sales - 44 GPA’s

• ✓ Support contract for Australian nodes

• ✓ Accepted on to NSW Govt Procurement Scheme & Fed Govt panel for the Dept of Infrastructure and Regional Development

• ✓ Cisco engagement to explore integrating our email IP

• ✓ Release of R0.4 reference architecture - one-touch management and orchestration including bootstrap technology release

• ✓ Development of public cloud NGFW solution

• ✓ Development and implementation of C- Level email protection filter in Government & Enterprise customers

• ✓ Accreditation of latest Palo Alto Networks Operating System

• ✓ Development of Telstra Government Cloud Portal

• ✓ Telstra G-Cloud platform delivered and IRAP certified

• ✓ First Cloud product tested and ready for market

• ✓ Successful platform build in Telstra next generation cloud infrastructure

• ✓ State Government dedicated platform deployment commenced

• ✓ ISO2700/9001 certification

• ✓ Accreditation of independent security penetration testing by Telstra

8

• Finance & Operational Update

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9

• FirstWave FY2017- Finance and Operational

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Quarterly Half Yearly Annually Executive Alignment
Revenue Quarterly Data Quarterly Data  Metrics aligned and
 Monthly (MRR) plus plus integrated into FY18
 Annualised (AMRR) Operating Metrics Operating Metrics Corporate Plan
 Professional Services % of  No of FTE  No of FTE
MRR  No of Nodes/Platforms  No of Nodes/Platforms  Accountability assigned
 Capital & Overhead  Capital & Overhead from the Board through the
Sales Expenditure Expenditure Managing Director to
 Total Contract Value of Closed Functional Executive
Sales in the Quarter Audited Statutory Reporting Audited Statutory Reporting
 Profit and Loss  Profit and Loss  Functional Executive
Cash Flow  Balance Sheet  Balance Sheet variable compensation
 Operating  Cash Flow Reporting  Cash Flow Reporting aligned to tabled metrics
 Investing / Financing  Remuneration Report
 Cash and Cash Equivalents Segment Reporting  Performance reviewed
 Customer Order No’s Segment Reporting monthly by Managing
 Enterprise (MRR > $3,200)  Customer Order No’s Director and CFO with
 SME (MRR > $1,200 <  Enterprise (MRR > $3,200) Functional Executives and
$3,200)  SME (MRR > $1,200 < by the Board with Managing
 Other (MRR < $1,200) $3,200) Director and CFO
 Other (MRR < $1,200)
 Quarterly review with
Investor Community
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“these metrics will become part of the suite we will use on a periodic basis to measure performance whether geographic or segment as FirstWave grows” …

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10

• FirstWave FY2017 – Finance and Operational MRR

• MONTHLY RECURRING REVENUE (MRR)

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$749
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Monthly Recurring Revenue (MRR) (000’s)

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$700
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$525
$425
$370
$350
$320
$300
$175
$0
Q4'15 Q2'16 Q4'16 Q2'17 Q4'17
NOTE:
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 MRR +102% year-on-year to $749k
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 FY17 work package revenue associated with deploying newly launched NGFW, Email and Web services grew to 13% of recurring revenue (from FY16 zero base)

• FY17 closing MRR base includes $22k of services which will commence billing in Q1 FY18

• Q4 FY17 includes new channel revenues of $36k MRR

• Growth achieved from soft market launches in sales channels

• Volume sales channel market launches are planned for Q1 FY18

• MRR represents contracted recurring revenue, plus monthly professional services revenues supporting MRR

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1. Operating Metrics and KPI’s are subject to audit validation

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• FirstWave FY2017 – Finance and Operational ANNUALISED MONTHLY RECURRING REVENUE (AMRR)

Annualised Monthly Recurring Revenue (AMRR) (000’s)

$11,250

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$8,993
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$9,000
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$6,750
$5,100
$4,440
$4,500
$3,840
$3,601
$2,250
$0
Q4'15 Q2'16 Q4'16 Q2'17 Q4'17
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AMRR
 AMRR +102% year-on-year to $8,993k
 Enterprise AMRR and volume is tracking
to expectation
 Soft market launches in volume sales
channels have resulted in a revenue lag
on SME growth opportunity - particularly
Email
 FY18 focus on sales channel
diversification
 Compounding AMRR growth is a key
priority for FW
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NOTE:

1. AMRR is MRR multiplied by 12

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12

1. Operating Metrics and KPI’s are subject to audit validation

2. FirstWave FY2017 – Finance and Operational CHANNEL CUSTOMER ORDER NO. GROWTH (TELSTRA)

No of Customers Orders (MRR > $3,200)

No of Customer Orders

50

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200 188
175 45
160 161
40
150 40
38
37
35
35
100
30
38 - 22%
50
35 - 22% 37 - 23%
25
0 20
Q1'17 Q2'17 Q3'17 Q4'17 Q1'17 Q2'17 Q3'17 44 - 25%Q4'17
34 - 21%
33 - 20%
No of Customer Orders (MRR > $1,200 < $3,200) No of Customer Orders (MRR < $1,200)
60 100
54 98
55
95 94
93
50
92
93
44 90
45
92 - 58% 90 90 - 56% 93 - 53%
40 88
34 85
35 33
83
30
80
25
78
20 75
Q1'17 Q2'17 Q3'17 Q4'17 Q1'17 Q2'17 Q3'17 Q4'17
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Customer Order No’s

• Total No of customer order’s billing on a monthly basis has grown 27 in the second half of FY17

• Enterprise customer volumes (Customer’s with MRR of > $3,200) have

• 40 - 21% been relatively stable growing by 5 off Q1 FY17 base

• Growth in NGFW volumes is reflected in

• 54 - 29% SME customer growth (Customer’s with MRR of > $1,200, < $3,200) of 21 to 54

• Up-Sell opportunity in FY18 in both Enterprise and SME with the launch of value added services

94 - 50%

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1. Operating Metrics and KPI’s are subject to audit validation

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• FirstWave FY2017 – Finance and Operational

QUARTERLY CASH FLOW

		Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 FY17 Q1 FY18 Actual Actual Actual Actual Actual Forecast
CASH P&L Working Capital Movements
		(458,040) (1,020,704) (755,562) (978,652) (3,212,959) (663,375)
		(111,376) (136,318) 471,784 688,981 913,071 1,232,612
Cash Flow from Operations		(569,417) (1,157,022) (283,778) (289,671) (2,299,888) 569,237
Investing Cash Outflows		37 - 23% 35 - 22% 38 - 22% (466,734) (237,140) (295,865) (418,178) (1,417,917) (431,400)
Financing Cash Outflows		(95,081) (78,197) (69,474) (49,971) (292,723) (50,266)
		33 - 20% 34 - 21% 44 - 25%
Total Cash Flow		(1,131,232) (1,472,359) (649,117) (757,820) (4,010,529) 87,571
Closing Cash Balance		4,641,184 3,168,824 2,519,707 1,761,887 1,761,887 1,849,458
Monthly Cash Burn		92 - 58% 90 - 56% 93 - 53% (377,077) (490,786) (216,372) (252,607) (334,211) 29,190
- Operating		(189,806) (385,674) (94,593) (96,557) (191,657) 189,746
- Investing		(155,578) (79,047) (98,622) (139,393) (118,160) (143,800)

Cash Flow

• Cash outflow in FY17 was $4m

• Strong working capital management offsets operating cash losses in year

• FirstWave continues to invest in platform 40 - 21% and product development

• Continued working capital optimisation anticipated into Q1 FY18 54 - 29%

• Further scaling and working capital to support the International business will be assessed on a contractual success basis

94 - 50%

NOTE:

Working capital optimisation will enable the domestic business to achieve scale

1. Cash-flow numbers for Q1 and Q2 align with audited first half results

2. Q3 and Q4 cash-flow numbers are subject to audit review

3. Q1 FY18 Cash forecast is aligned to Q4 FY17 4C statement, 4C statement is not subject to audit validation

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14

Technology Update

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15

Ecosystem

CLOUD CONTENT SECURITY PARTNERS

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FirstWave continues to expand its cloud content security ecosystem into public cloud providers and added new global security vendor offerings including Fortinet who have a major presence in Asia.

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Platform

• CLOUD SECURITY GATEWAYS AND PLATFORM DEVELOPMENT

• FirstWave team highly regarded and embraced by Global Security Vendors (GSV’s) - Cisco, Palo Alto Networks and Fortinet (mutual software and configuration accreditations)

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New GSVs and additional offerings (Fortinet relationship added in 2017)

• Inclusion of platform and services delivery via public clouds such as AWS, Azure, and Softlayer in 2017

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• Develop advanced solutions for cloud based SaaS email solutions such as Office 365, Gmail, etc.

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Introduction of public clouds in 2017

• Ongoing development of World Class Email Security to address serious threats such as ‘Ransomware’ (platform as a service can readily adopt best of breed innovations)

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Advancement of Management and Orchestration platform capabilities (Bootstrapping capability, etc.)

FirstWave developed capability provides enterprise grade security solutions affordable to the volume SMB market (enhanced in 2017)

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Global Security Vendors

• FirstWave has high visibility at the corporate level of the GSVs

• There is a high and mutual level of trust between GSV engineering and FirstWave’s CTO office

• Formal and mutual accreditation of GSVs and associated services

• FirstWave attends and contributes at GSV ‘Global Technical Advisory Boards’ and customer sessions in APAC and EMEA

• GSV’s continue to invite FirstWave to face to face meetings with their Telco customers in multiple international jurisdictions

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Tailored Portal

• APPS FOR SECURITY STATUS, CONTROLS & REPORTING

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Email Basic
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Web Basic

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Live

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Offline Reports

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Trace

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Security

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Image Control

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Content Control

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Reports

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Web Management

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Mail Management

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Threat Insight

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Control and reporting panels as viewed by customer administrators or Managed Service Provider 19

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Resource Growth

SKILLS ACQUISITION

Skills Mix

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Technical
Junior
Writer
Developer
2 Core
Developers
Automation, 2
Test
Automation
11
13
12
10
9
Nov Dec Jan Feb Mar Apr May June
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Management, 1
Architecture, 2
Development, 4
Documetation, 1
Testing, 3
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2017 team structure will split into two separate teams sharing common testing, automation and documentation resources supporting both domestic and international efforts

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Staying Ahead Of The Game

• Virtualisation and SDN technology is rapidly moving along a path that further enables volume scalability

• FirstWave focus is on remaining agile and trend agnostic to keep us in the steps ahead position

• FirstWave is enabling vendors to take their virtualised offerings to telco one touch readiness

• FirstWave is leveraging our strong Network Function Orchestration with Agnostic layers to provide normalised service views

•

• FirstWave provides Cloud First orchestration in a way that embraces migration out of existing on-prem

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International Update

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Cloud Security Market

• OUR ADDRESSABLE MARKET IS WORTH $8B USD GLOBALLY

Our focus is the Asia Pac market which will grow 44% over the next 5 years to $3.3B in 2021. FirstWave has products designed to target 89% of that opportunity

Market Revenue Breakdown

	2014	2021
Content security	48%	51%
Managed firewall	28%	25%
DDos mitigation	8%	9%
IDS/IPS	1%	2%
Other security services	15%	13%

2016 Security Service Revenue Share by Region

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CALA
6%
EMEA
22%
North America
41%
Asia Pacific
31%
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IHS Technology Research, Cloud and CPE Managed Security Services Annual Worldwide and Regional Market Size and Forecasts: 2017

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Cloud Security Market

ASIA PACIFIC

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• The Cloud Based Security Service market is forecast to grow 43% leading up to 2021*. The Asia Pacific Cloud Security Market is

• expected to expand at a rapid pace in the coming years, fueled by the rising trend of CYOD and BYOD policies.**

• *IHS Technology Research, Cloud and CPE Managed Security Services Annual Worldwide and Regional Market Size and Forecasts: 2017

** 2015 Transparency M arket Research: Cloud Security Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2022

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International Strategy

TWO PHASED APPROACH

Opportunities being led by FirstWave’s Singapore based International Sales Manager

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FirstWave’s excellence in cloud security technology has led our Global Security Vendors to open up their Global Partner distribution network

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International Expansion

• FIRSTWAVE ASIA PACIFIC ENGAGEMENT

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• Technical deep dive complete

• Project Scoping

• MoU exchanged

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• Technical deep dive complete

• • Project scoping

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• Technical deep dive complete

• • Project scope complete

• • MoU Signed

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• MOU signed

• Nxtra restructure complete

• Project engagement

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• Engagement commenced

• • Technical deep dive complete

• • Project scoping

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• Technical deep dive underway

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International Expansion

GLOBAL SECURITY VENDOR PARTNER NETWORK

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EMEA
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ASIA
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• GSV sponsored introductions

• GSV supporting FirstWave activity

• 7 Telco engagements in jurisdictions

• 6 Telco engagements in jurisdiction

• Large Government and End User opportunities

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AMERICAS
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• FirstWave driven opportunity

• Two Telco engagements (multi jurisdiction)

• Local telco opportunities

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International Expansion

COMMERCIAL MODEL

Product Email Web Load NGFW WAF DNS Filtering Filtering Balancing Modules FirstWave CCSG Platform Core Platform and included ✓ BSS ✓ Orchestrator ✓ Log Proc ✓ Portal & Apps✓ Data Control✓ Subscriptions Modules ✓ Wavemaster ✓ Provisioning ✓ SEIM Feed ✓ Service View ✓ VIM ✓ Support ✓ MANO ✓ Catalogue ✓ VSFs ✓ Enablement ✓ VSF Manager Telco Cloud Platform Integration Modules Integration Integration Integration Cloud Platform Ordering/Ticketing Billing

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Model Characteristics:

• Modular approach – minimum viable platform entry level

• Platform as a Service + Security as a Service

• Opex model – Monthly recurring revenue

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Focus

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Company Focus FY18

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Profitable International
Continue to Build Innovate improving
Australian expansion offshore customer experience
Annualised Monthly
Operations
Recurring Revenue
Operationalise Bharti Airtel Data mining of vendor agnostic
(Nxtra Data) eco-system
Continue development of Broaden capability to embrace more
opportunities with targeted of Cloud Security Service
international Telcos requirements
Continue the exploration of FCT IP
with global security vendors
Investing and improvements in
platform
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Innovate • Create • Execute

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