FIRSTWAVE CLOUD TECHNOLOGY LIMITED — Investor Presentation 2020

Apr 21, 2020

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FirstWave Cloud Technology Market Update April 2020

Disclaimer

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Not an offer

The material contained in this presentation is for information purposes only and is intended to be general background information on FirstWave Cloud Technology Limited ( FCT ) and its activities and is dated 22 April 2020. It is for information purposes only and is not, and should not be considered to be, an invitation, offer or recommendation to acquire shares or any other financial products.

Summary information

The information in this presentation is supplied in summary form, is of a general background nature and does not purport to be complete or to provide all information that an investor should consider when making an investment decision. It should be read in conjunction with FCT’s periodic and continuous disclosure announcements filed with the Australian Securities Exchange, and in particular, FCT’s full year results for the financial year ended 30 June 2019.

Not financial product advice

This presentation is for information purposes only and it is not financial product nor investment advice (nor tax, accounting or legal advice) nor a recommendation to acquire shares and has been prepared without taking into account the objectives, financial situation or needs of recipients of this presentation. It is not intended that it be relied upon as advice to investors or potential investors, who should make their own enquiries and investigations regarding an investment in FCT and in relation to all information in this presentation (including but not limited to the assumptions, uncertainties and contingencies which may affect the future operations of FCT and the value and the impact that different future outcomes may have on FCT) and before making any investment decisions, should consider the appropriateness of the information having regard to their specific investment objectives, financial situation or particular needs and should seek independent professional advice appropriate to their jurisdiction before making an investment decision. Neither this presentation nor anything contained in it forms the basis of any contract or commitment and no agreement to subscribe for securities will be entered into on the basis of this presentation. FCT is not licensed to provide, and this presentation does not constitute the provision of, investment or financial product advice in respect of FCT’s shares. Cooling off rights do not apply to the acquisition of FCT’s shares. An investment in FCT shares is subject to investment and other known and unknown risks, some of which are beyond the control of FCT. FCT does not guarantee any particular rate of return or the performance of FCT, nor does it guarantee the repayment of capital from FCT or any particular tax treatment.

Financial data

All amounts are in Australian Dollars ($ or AUD) unless otherwise indicated. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. Investors should also be aware that certain financial data included in this presentation may contain information that is "non-IFRS financial information” under ASX Regulatory Guide 230 (Disclosing non-IFRS financial information). The non-IFRS financial information financial measures do not have a standardised meaning prescribed by Australian International Financial Reporting Standards ( AIFRS ) and, therefore, may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with AIFRS. Investors are cautioned, therefore, not to place undue reliance on any non-IFRS financial measures included in this presentation.

Future performance Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this presentation and include statements regarding FCT’s intent, belief or current expectations with respect to business and operations, market conditions, results of operations and financial condition, including, without limitation, forecasted economic indicators, performance metric outcomes and the potential impact and duration of the COVID-19 pandemic. This presentation contains words such as ‘will’, ‘may’, ‘expect’, ‘indicative’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘probability’, ‘risk’, ‘forecast’, ‘likely’, ‘estimate’, ‘anticipate’, ‘believe’, or similar words to identify forward-looking statements. Indications of, and guidance or outlook on, future earnings or financial position or performance are also forward-looking statements. These forward-looking statements reflect FCT’s current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond the control of FCT, and have been made based upon FCT’s expectations and beliefs concerning future developments and their potential effect on FCT. There can be no assurance that future developments will be in accordance with FCT’s expectations. A number of important factors could cause FCT's actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements, including but not limited to, general economic conditions in Australia; exchange rates; competition in the markets in which FCT will operate, the inherent regulatory risks in the businesses of FCT and the duration of the COVID-19 pandemic. Assumptions on which forward-looking statements in this presentation are based may or may not prove to be correct and there can be no assurance that actual outcomes will not differ materially from these statements. None of the Associated Persons nor any other person referred to in this presentation makes any representation as to the accuracy or likelihood of fulfilment of the forward-looking statements or any of the assumptions upon which they are based. When relying on forward-looking statements to make decisions with respect to FCT, investors and others should carefully consider such factors and other uncertainties and events. FCT is under no obligation to update any forward-looking statements contained in this presentation, as a result of new information, future events or otherwise, after the date of this presentation. As such, undue reliance should not be placed on any forward-looking statement. Past performance information (including past share price performance of FCT) given in this presentation is given for illustrative purposes only and is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood or achievement or reasonableness of any forward-looking statements, forecast financial information, future share price performance or their forecast. Nothing contained in this presentation nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty, or guarantee as to the past, present or the future performance of FCT.

Disclaimer

No representation or warranty, express or implied, is made as to the accuracy, completeness, reliability or fairness of the information, opinions and conclusions contained in this presentation. Any information in this presentation is made only at the date of this presentation, and opinions expressed reflect FCT's position at the date of this presentation, and are subject to change. FCT is under no obligation to update this presentation. Neither FCT, its related bodies corporate, shareholders or affiliates, nor any of their officers, directors, employees, affiliates, agents, contractors, advisers or any other associated persons (collectively, “ Associated Persons ”) represents or warrants in any way, express or implied, that the information, opinions, conclusions or other information contained in this presentation, any of which may change without notice, is fair, accurate, complete, reliable, up to date or correct. FCT does not represent or warrant that this presentation is complete or that it contains all material information about FCT or which a prospective investor or purchaser may require in evaluating a possible investment in FCT or an acquisition or other dealing in FCT shares. To the maximum extent permitted by law, FCT and its Associated Persons each expressly disclaims and excludes all direct, indirect, consequential or contingent loss, damage or liability (including, without limitation, any liability arising from fault or negligence) that may arise from, or is connected to, this presentation, or the use of this presentation, or any other written or oral information provided by or on behalf of FCT. 2 2

Agenda

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John Grant

Executive Chairman

Chairman’s Update

COO Update

• COVID-19

• Path to Revenue Momentum

• Platforms Deployed

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Neil Pollock Chief Operating Officer

• Partner Progress

• Line of Sight

• Remote Worker Cyber Security Offer

• Q3 FY20 Financials

Prospects Summary

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Preparedness meets Opportunity

Chairman’s Update

Executive Chairman John Grant

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Chairman’s Update – a formula for success

A very large global addressable market

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A world class product

Committed partners in a leveraged channel model – one to many to many more – that can drive exponential growth

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A global delivery platform

Time and money

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Chairman’s Update – a formula for success

A very large global addressable market

Now $1.88b with line of sight to $60m ARR

A world class product

A world class product as independent Proofs of Value (PoV) are demonstrating

Committed partners in a leveraged channel model – one to many to many more – that can drive exponential growth

130 partners with 26 billing

A global delivery platform

A global delivery platform is now in place

Time and money

Time and money still needed

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it can be a global success

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Preparedness meets Opportunity

COO Update

Chief Operating Officer Neil Pollock

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The COVID-19 situation - Preparedness meets Opportunity

Our leveraged channel model is positioned to drive EXPONENTIAL GROWTH

• Partners progressing on the path to revenue: 130 up from 108

• Billing partners has doubled from 13 to 26

• Immediate sales opportunities 55 (up from 45)

• Our partners are more committed and hungrier for new revenue

The OPPORTUNITY is growing in the COVID-19 world

• The market opportunity has expanded to $1.88b

• Our line of sight has increased up to $60m ARR (up from $45m)

• We have more to sell to a bigger market

• Material revenue targets are within reach

Product

Partners

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COVID-19 Cyber Crime
Massive, Complex, Evolving
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Market

Financials

We were PREPARED and DELIVERING

• Our product offering is in demand

• 11 Cloud Content Security Platforms are operational globally meeting partner needs

• Our Remote Worker Cyber Security (RWCS) launch is the right product at the right time in the right place

• We launched RWCS globally in 10 days from inception – responding to partner demand

COVID-19 has flattened FY20 revenue

trajectory BUT

• Underlying momentum continues

• International Annualised Recurring Revenue grew to $265k from $232k (in the two months from 31 Jan to 31 Mar 2020)

• $2m pa cost out on plan with additional cost out in planning

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Path to Revenue Momentum Continues

✓ Cisco OEM Agreement

✓ International Partners

• 3 new DWS partners on boarded and selling

• There are 20 active opportunities in the pipeline

• Line of sight to over 2.8m email ▪ NTT Data (UK) has launched seats RWCS – first orders provisioned

• SHELT on-boarded 3 new partners

✓ Platforms deployed

• 11 CCSP platforms provide global coverage to meet partner needs

• Billing or test traffic now flowing across all platforms

• First sovereign platform deployment due in Q4 FY20

✓ Telstra growth

• SOHO/Micro/Small business cyber security bundle launched, and first orders received

• Solid demand for email and firewall upgrades including cyber security posture evaluation

• Subscription revenue model secures baseline annuity revenue streams in the COVID-19 environment

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We continue to generate solid partner progress along the path to revenue across the globe

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11 CCSP Platforms Servicing Global Need

Platforms (6)

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Partner Growth Continues

Platforms Level 1 Partners (6) Level 2 Partners New Level 2 Partners

Both opportunity pipeline and billing partners continue to grow globally

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Line of Sight Now ~$60m ARR – up from $45m

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Billing
Partners
Q3 FY20 10,000’s of
Level 2 Partner
Enterprise/SMB
Accessibility
$1.88b global market customers
Q3 FY20
opportunity 4
Level 1
24
Partner
10,000s of
FCT
Enterprise/SMB
3 customers
9
84 10,000s of
7
Enterprise/SMB
customers
13
1
1,000s of
2
Enterprise/SMB
customers
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As our partner ecosystem and product offerings expand, so does our addressable market

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New Remote Worker Cyber Security offer Right Time Right Place

World hit by COVID-19 storm….some clouds have a silver lining…

Remote working has exposed businesses more than ever before

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• ❖ Cyber security vulnerabilities exposed through less secure home wireless and public networks

• ❖ Cyber attacks on email and endpoint devices grew six-fold in March 2020 alone

Remote Worker Cyber Security (RWCS) bundle

• ✓ Protects end-users doing business from home or remote locations

• ✓ Bundles Cisco email and web, Trend Micro endpoint, and Cisco Duo multi-factor authentication

• ✓ From inception to global release in 10 days - indicative of the power and flexibility of CCSP

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• ✓ Launched with NTT Data, DWS (UK) and Scicom (Asia)- other partners to follow

• ✓ Pay per use or freemium offer with opt in/opt out

• ✓ Indicative retail price AU$3-$5 per user per month

• ✓ First orders received and provisioned

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Q3 FY20 Financial Summary

	Q3 FY19 (000)’s	Q2 FY20# (000)’s	Q3 FY20# (000)’s
REVENUE	$2,093	$1,975	$1,976
CoGS	($940)	($869)	($946)
Gross Margin	$1,153	$1,106	$1,030
GM %	55%	56%	52%
Operating Expenses	($3,559)	($3,830)	($3,675)
Other Income, D&A, Int	($292)	($535)	($633)
NPAT	($2,698)	($3,259)	($3,278)
Capitalised costs	$427	$873	$824
~~# FY20 numbers are unaudited~~
Cash at bank	$857	$4,197	$5,779
Shares on Issue	253,134	316,037	316,037

• Despite COVID-19 impacting from mid-Feb 2020, QoQ revenues held flat

• YoY decline was flagged at the AGM and is a result of churn of larger accounts and end of life of web product in the domestic market

• Product investment maintained and directly targeted at revenue

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FY20 numbers are unaudited

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Q3 FY20 Revenue

	Q3 FY19 (000)’s	Q2 FY20# (000)’s	Q3 FY20# (000)’s
Domestic	$2,086	$1,923	$1,914
- Recurring Revenue	$2,030	$1,766	$1,796
- Non-Recurring Revenue	$56	$157	$118
International	$7	$52	$62
- Recurring Revenue	$2	$48	$61
- Non-Recurring Revenue	$5	$3	$1
Total Revenue	$2,093	$1,975	$1,976

Domestic

• First revenues from SOHO/Micro/Small cyber security initiative received

International

• COVID-19 flattened revenue growth from mid-February

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FY20 numbers are unaudited

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Operating Expenditure Reducing in Line with AGM advice*

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$4.5m
$4.0m
$4.0m
$3.8m
$3.7m
$3.5m
$3.3m
$3.0m
$2.5m
$2.0m
Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 (FC)
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• Q3 includes $138k termination costs

• Corporate Headcount further reduced

• Salary exchanged for equity being planned in Q4 FY20

• Global platform investment now substantially complete

*AGM advice was in year reduction in opex of $1.3m and $2m annualised

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Cash Outflow

$7.0m $6.0m $5.0m $4.0m $3.0m $2.0m $1.0m $0.0m

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$6.4m
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CoGSCoGS
$5.6m
Expenses $5.3m
CoGS $5.0m
CoGS CoGS
Expenses
Expenses
Expenses
Q1 FY20 Q2 FY20 Q3 FY20 Q4 FY20 (FC)
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• Q3 FY20 $0.6m reduction includes $0.2m deferral of Telstra CoGS payment to Q4 FY20 to align with cash receipt from Telstra

• Q4 FY20 CoGS estimate higher due to the timing impact of annual prepaid product purchases

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Initiatives to Extend the Cash Runway

Cash to equity remuneration

• A new Share Appreciation Rights Plan allowing Board/Executives/Leadership Team to exchange ~$1.7M in fees and remuneration for shares in the Company will be approved by shareholders

Non-labor cost reductions

• Initiatives to reduce costs by $97k pm (23%)

• These additional cost reduction initiatives have kept in mind the following objectives:

• Ensuing we are ready when business gets back to business

• Technology - Retain all IP and key staff to ensure we protect our IP and remain market-leading

• Sales – Engage partners to ensures we can continue to scale globally – at lower cost

• Operations – ensure the highest level of service from onboarding to daily operations to retain customers

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Preparedness meets Opportunity

Prospects

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Prospects

Background:

• COVID-19 has disrupted the global economy

• Recovery timeframe and market conditions post COVID-19 are uncertain

: Assumptions

• Business will return to pre-COVID levels in Q2 FY21 i.e. from October 2020

• Partners will apply their resources to taking CCSP to market as they did pre-COVID-19

• Cisco in particular remains as committed to FCT as it was pre-COVID-19

• FCT’s level and location of resources will remain as they are now

• A new Share Appreciation Rights Plan allowing Board/Executives/Leadership Team to exchange ~$1.7M in fees and remuneration for shares in the Company will be approved by shareholders

• Required funding available

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Note:

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• The detail provided is not a forecast or guidance, rather it is the Company’s best judgement to quantify the potential conversion of the line of sight revenue to booked revenue in the short term in an uncertain market

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QoQ Prospective Revenue

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COVID-19 Post COVID-19
$8m
$7m
$6m
$5m
$4m
$3m
$2m
$1m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FY20 FY21 FY22
Domestic Recurring Revenue International Recurring Revenue In Year Recurring Revenue Total Revenue
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FY20E

• Revenue of $8.3m 6% down on pcp

• • Exit June 2020 IARR of $875K

FY21

• Revenue of $11.4m up 37% on pcp

• • Exit June 2021 IARR of $12m

FY22

• Revenue of $26m up 134% on pcp

• • Exit June 2022 IARR of $22m

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Summary – Key Take-Outs

• FirstWave’s CCSP alleviates end user security concerns that COVID-19 has amplified

• COVID-19 has impacted our partners’ revenue and reprioritised FirstWave’s CCSP

• Newly released RWCS is gaining traction – preparedness meets opportunity

• Pipeline and partner path to revenue continues to build strongly

• FY21 has prospective revenue increasing 37% to $11.4m with ARR exiting June ‘21 of ~$20m (IARR ~$12m)

• We are operating at the lowest viable cost without compromising the business' ability to capitalise on its global growth opportunities

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Appendix

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Experienced Management Team to Execute

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John Grant

Chairman

Australian industry leader

MD of Data#3 (ASX:DTL) for c. 20 years

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Neil Pollock

COO

Global Business Leader with 27 years of ICT, telco and energy sector experience across Asia Pacific, the Middle East and India

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Roger Carvosso

Director – Product & Innovation

Product professional with more than 20 years of experience in the global telco industry

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Simon Ryan

CTO

Globally recognised leader and innovator in cloud technology with more than 12 years in AI, machine learning and data mining

Inaugural chair of Australian Rugby League

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Addressable market is $1.88b

Email, Web, Firewall (‘EWF’)

TAM: TOTAL ADDRESSABLE MARKET - Worldwide MSS/Cloud-Based Firewall & Content Security (Telco/SP-served)

SAM: SERVICEABLE ADDRESSABLE MARKET - Portion of Total Enterprises served < 200 employees in size (target end customer profile)

SOM: SERVICEABLE OBTAINABLE MARKET - Proportion of worldwide Telco/SPs accessible (Geos/ Partner reach), FCT wholesale revenue

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‘EWF’

‘EPP’

+

Endpoint (‘EPP’)

TAM : $11.7b

TAM : $14b

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TAM - Worldwide Enterprise Endpoint Security Market

SMB + % Medium Businesses (<200 employees) only

SMB + % Medium Businesses (<200 employees) only

SAM: SMB Portion of TAM (<200 employees)

SAM = 37% * TAM = $5.2b

SAM = 12% * TAM = $1.4b

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• Accessible Markets & Telco/SPs via FCT Channel Partners (40%)

• Accessible Geo Markets & Telco/SPs via (Current) FCT Channel Partners (75%)

SOM: Accessible market via Telco/SPs, ‘switchable’ spend, FCT resale rev. share

• ‘Switchable’ % of EPP customer buyer base per annum (30%)

• Adjustment of Telco/SP retail revenues to FCT wholesale /resale level (*45%)

• Adjustment of Telco/SP retail revenues to FCT resale level (*45%)

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SOM = 75% * 45% of SAM = $1.8b SOM = 40%30%45% of SAM = $0.076b

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A Simple Guide to Acronyms in our Presentation

Definitions for the Path to Revenue model

• ‘Level 1’ Partner– this is a GSV or GSI partner of FCT (leveraged partner model)

• ‘Level 2’ Partner– this is a customer of a ‘Level 1’ Partner (leveraged go-to-market model) or a direct customer of FCT e.g Telstra

• –

• ‘Level 1’ / ‘Level 2’ PoC/PoV ‘Level 1’ Partner or ‘Level 2’ Partner starts full trial on the platform that if successful will then provide the confidence for the respective ‘Level 1’ Partner or ‘Level 2’ Partner to on-sell to their customers

• ‘Level 1’ Partner OEM/Reseller Agreement - this is a collective term for an agreement between FCT and a ‘Level 1’ Partner

• OEM Agreement – this is an OEM agreement between FCT and a ‘Level 1’ Partner being a Global Security Vendor (GSV)

• ‘Level 2’ Partner MSA / Reseller Agreement – This is a master services agreement between FCT and a ‘Level 2’ Partner with approved pricing and service definitions

• FCT Platform Certification – This is a technical certification by the ‘Level 1’ Partner or ‘Level 2’ Partner that allows their customers to be provisioned onto the platform

• Sales/Support Enablement – All ‘Level 1’ Partner and/or ‘Level 2’ Partner sales teams have been trained on and provided with FCT product and service information

• GTM Launch – When the ‘Level 1’ Partner and/or ‘Level 2’ Partner launches the FCT CCSP-enabled service to their customers

• PoV (Proof of Value) for End Customer – End customer full trial on the platform that if successful is then provides catalyst to sign order

• PoC (Proof of Concept) for Partner – Partner customer full trial on the platform that if successful is then provides catalyst to sign agreements

• End Customer Order & On-boarding – End customer orders FCT solution from ‘Level 2’ Partner is on on-boarded to the service

• End Customer Bill – End customer is billed by ‘Level 2’ Partner which allows FCT to bill ‘Level 1’ Partner or ‘Level 2’ Partner

• Products X-Sell/Upsell – ‘Level 2’ Partner sales teams cross-sell and up-sell other FCT– enabled solutions

• SAM – Serviceable Addressable Market

• SMB – Small to Medium Business (sometimes also called a ‘SME’ or Small to Medium Enterprise)

• SOM – Serviceable Obtainable Market

• TAM – Total Addressable Market

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A Simple Guide to Acronyms in our Presentation

FirstWave plays in a highly technical world so here are some definitions to help you navigate terminology

• BDM – Business Development Manager – sales executive

• CCSP – Cloud Content Security Platform

• Content Security – a product market category that comprises email security and web security

• CWS – Cloud Web Security - a cloud-based Secure Web Gateway service offering from Cisco (ex-Scansafe, a company acquired by Cisco)

• • EMEA – Europe, Middle East & Africa

• EWF – A FCT-conceived abbreviation for an Email + Web + Firewall solution package or offer bundle from a Telco/SP to an Enterprise/SMB customer

• Exit revenue – Annualised Monthly Recurring Revenues (AMRR) as at June 30 of the corresponding fiscal year

• GSI – Global Systems Integrator

• GSV – Global Security Vendor – e.g. Cisco, Palo Alto Networks, Fortinet

• MRR – Monthly Recurring Revenue

• MSS – Managed Security Services

• MSSP – Managed Security Service Provider – e.g. a Telco/SP that offers MSS to its enterprise/SMB

• OEM – Original Equipment Manufacturer - a company that produces equipment , marketed and sold by another manufacturer – e.g. what FirstWave does with Cisco

• OSS/BSS – Operational Support System / Business Support System (Telco/SP core IT systems)

• SaaS – Security as a Service

• SWG – Secure Web Gateway – a category of content security product or technology that inspects user web traffic for security and content control purposes

• SP – Service Provider – a term used for a Telco or a network services provider or communications service provider

• Telco – a telecommunications company , whether a fixed network or mobile network operator or both

• Umbrella – Cisco Umbrella - a cloud-based Secure Internet Gateway (SIG) offering from Cisco

• WSA – Cisco Web Security Appliance - a proxy-based Secure Web Gateway (SWG) product from Cisco

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Explaining the CCSP Architecture

• Hosting Infrastructure consists of the physical compute and networking resources. This is owned and or

• operated by public cloud providers such as AWS or by private data centre operators within Telcos Government facilities.

• The Hypervisor layer abstracts the physical resources into virtual compute and software defined networking (SDN).

• AWS, VMware and OpenStack allow for control over the lifecycle of virtual machines via an API (Application Programming Interface). Using APIs to create Virtual machines means that FirstWave can create new resources and provision services onto them in a fully software defined manner. Creation of resources with this level of automation is important as FirstWave scales services and expands capacity onto many platforms globally.

• The Operating Environment the software runs in consists of the Linux operating system. This provides the process control to maintain the many distributed components of the platform. As FirstWave supports the coexistence of virtual machines, vendor virtual appliances and containerised components, Docker and Kubernetes are also leveraged to support some deployments.

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