Questback Group AS — Interim / Quarterly Report 2021

Mar 30, 2022

Interim Q4 and FY 2021 Presentation

Q4 2021 OPERATIONAL HIGHLIGHTS

	EXPANSION SALES	GROSS MARGIN	ARR INFLECTION POINT
Q4	4.6 MNOK	88 %	+1.2% QoQ
2021	+24% YoY	88% Q4 2020	Up from –4%
	EXPANSION SALES	GROSS MARGIN	ARR INFLECTION POINT
FY	10.8 MNOK	91 %	+0.5% YoY
2021	+31% YoY	91% FY 2020	Up from –10%

Note:

ARR calculated using constant currency exchange rates to exclude any effects of currency exchange rate fluctuations, and excluding revenue from reseller and brokerage agreements. Core business, , i.e., excluding revenue from resellers and brokerage agreements.

THE IMPACT OF CUSTOMER AND EMPLOYEE EXPERIENCE MANAGEMENT

With closed ears, there are consequences

81%

of customers say they change supplier following poor experiences Source: Oracle

bad experiences with others Source: Gartner

of customers have been influenced by an online review when making a buying decision Source: ThinkJar Source: Zendesk

of customers who are unsatisfied with the service leave without warning

Companies that invest in EX

as

profitable

x2 average revenue

smaller, suggesting higher productivity and innovation

Source: HBR

25%

Disengagement costs money

of all employees are actively disengaged

Source: Gallup

GÄVLE KOMMUN CUSTOMER CASE

GÄVLE MUNICIPALITY DECREASES BULLYING BY 40% WITH THE HELP OF QUESTBACK

Every semester, once in the fall and once in the spring, a survey is sent out to the students at the schools through Questback. The anonymous student survey helps the schools produce a safety index that contains information like "Your school/class has X students that most likely are being bullied". The results helps the schools identify areas and times that have a higher risk of bullying, information that can be used in future prevention efforts.

"The Gävle Model increased the engagement among our employees by making systematic measuring of our activities possible and, we've seen a strong improvement in results as a result. We used to go on gut feel – now we get reliable data from Questback that shows the true impact of our activities," says Mårten Sohlberg, vice-principal at Prolympiaskolan in Gävle.

OUTCOME:

The number of victims of bullying in Gävle was down to 5.2%, 41% better than the national average.

EXPERIENCE MANAGEMENT FEEDBACK SOFTWARE FOR CUSTOMER AND EMPLOYEE INSIGHTS

QUESTBACK KEY HIGHLIGHTS

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1

STRONG NORDIC POSITION WITH EUROPEAN AMBITIONS

• Leading position in the Nordics
• The strategic platform of choice for employee and customer experience data for a highly diversified customer base of c. 1,600
• Sector agnostic and scalable software supporting growth both across industries and geographies

GROWING MARKET SUPPORTED BY STRUCTURAL TRENDS

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• Large addressable market growing at double-digit percentage rates • Business model supported by
• structural trends: (i) increased customer & employee expectations; (ii) remote work; and (iii) increased consumerization of software as a service.

ROBUST AND SCALABLE SAAS BUSINESS MODEL

• Questback's platform is offered as a SaaS solution yielding high revenue visibility as well as crossand up-sell opportunities • Long contracts per customers as each contract is typically a
• minimum 12 months, with the vast majority extending beyond this period

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ATTRACTIVE FINANCIAL METRICS

• Customers pay upfront for their subscription, positive effect on our working capital
• 96 % of revenue is recurring revenue, creating strong predictability
• The average lifetime for existing customers is +8 years

GO-TO-MARKET HIGHLIGHTS

Q4 - Total New ARR

Total new ARR + 12 % Y-o-Y Q4

Total new ARR + 23 % Y-o-Y full year

OVERALL ARR GROWTH IN Q4

.

CORE ARR IS GROWING

• Continued growth in Core ARR
• Effect of focus on expansion of existing customer base pays off
• New customer sales contribute to overall growth
• Positive contribution from our efforts related to our European expansion

Calculated using constant currency exchange rates to exclude any effects of currency exchange rate fluctuations Core ARR excluding revenue from reseller and brokerage agreements. New Core ARR: revenue from Questback customers previously managed by third party.

OVERALL ARR GROWTH IN 2021 (FULL YEAR)

CORE ARR IS GROWING

Year over year show positive growth in ARR

Expansion sales shows that we can both retain our customers and monetize on existing base

Calculated using constant currency exchange rates to exclude any effects of currency exchange rate fluctuations. Core ARR excluding revenue from reseller and brokerage agreements. New Core ARR: revenue from Questback customers previously managed by third party.

Notes:

OUR #1 KEY METRIC IS GROWING ARR Y-O-Y COMPARISON

Achieved Y/Y growth in our total Annual Recurring Revenue (ARR) from our core

Notes: Calculated using constant currency exchange rates to exclude any effects of currency exchange rate fluctuations Core ARR excluding revenue from reseller and brokerage agreements.

ALL WHILE REMAINING PROFITABLE

HIGHLY PROFITABLE BUSINESS

• Investment in growth having expected impact on EBITDA margin
• Gross margin stable at ~90%

Q4 FINANCIAL INFORMATION

KEY FIGURES: CONDENSED STATEMENT OF P&L

	Q4 2021	Q4 2020	YTD 2021	YTD 2020
All amounts in million NOK	Unaudited	Unaudited Pro forma	Unaudited	Audited Pro forma
Revenues:
Core Business
New Recurring Sales	5,5	5,0	13,9	11,6
Renewals	28,3	28,6	83,5	87,5
Total Subscription Sales, Core Business	33,8	33,7	97,4	99,0
Non-Core Sales	8,2	10,7	28,1	36,5
Total Sales	42,0	44,4	125,5	135,5
Revenue deferrals	(11,3)	(9,6)	(0,4)	5,5
Total revenues	30,8	34,7	124,1	141,2
Cost of goods sold	3,8	4,3	10,7	13,2
Salary and personell costs	16,8	11,7	45,4	43,5
Other operating costs	13,2	2,0	32,0	14,8
EBITDA	(3,0)	17,0	36,0	69,8
Special items	7,6	-	15,2	-
Adjusted EBITDA*	4,6	17,0	51,2	69,8
Depreciations and amortisation	2,3	2,6	9,1	13,2
Operating profit	(4,6)	14,4	26,9	56,6
Net financial items	(9,9)	2,9	(56,3)	(49,7)
Profit before tax	(15,2)	17,3	(29,3)	6,9

Note: Adjustments to EBITDA are one-offs and special items related to the restructuring, refinancing and listing-processes 14

• Slowing, stopping and turning the leakage of revenue
• Core revenue growing in Q4 and Q3, showing "turn of the tide". Will have full impact on topline in 2022
• COGS correlate with sales, maintaining a gross margin of ~90 %. Strong profitability on the product
• A year with major changes in number of FTEs and mix reflects the investments in future growth we are undertaking
• Solid EBITDA (adjusted) even through major turnaround year

KEY FIGURES: CONDENSED BALANCE SHEET

Assets	31.12.2021	31.12.2020
All amounts in million NOK	Unaudited	Audited Pro forma
Non-current assets
Total non-current assets	379,0	393,5
Current assets
Trade receivables	23,8	17,4
Other receivables	8,7	5,4
Cash and cash equivalents	27,4	24,8
Total current assets	59,9	47,6
TOTAL ASSETS	439,0	441,1
Equity and liabilities
Total Equity	16,9	32,3
Other long-term liabilities
Interest-bearing loans and borrowings	272,8	-
Long-term lease liabilities	22,6	25,2
Deferred tax liabilities	2,0	2,6
Total long-term liabilities	297,1	27,8
Total short-term liabilities	125,1	381,0
TOTAL LIABILITIES	422,3	408,8
TOTAL EQUITY AND LIABILITIES	439,0	441,1

• Asset light balance sheet – low cap-ex needs
• Non-current assets represents mostly Goodwill
• Current assets reflects high level of activity towards year-end (increase of trade receivables) and strong cash collection
• Solid debt financing with strong lender in AnaCap.
• Short term liabilities mostly deferred revenue – does not represent cash payments

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SUMMARY & OUTLOOK

We will leverage our strong position in the Nordics as springboard in our path to become a European leader

Our growth journey is evident in our performance for the quarter, as well as in our ambitions for the future:

Summary Q4:

• 24 % growth in new recurring revenue from existing customer base, demonstrating the potential in our existing customer base
• Positive Y/Y growth of our key metric, Total Annual Recurring Revenue (ARR), for the second subsequent quarter, ever
• Q4 LTM Net Retention Rate NRR 95% (92%)
• Strengthened offering by release of several new analytical functionalities

We will continue our focus on growth by:

• Further penetration in existing markets
• Continue to expand our go-to-market capabilities in new markets; Germany, Netherlands and UK
• Continue our transition from a one-product to a multi-product company
• Based on current momentum, we expect a positive year-over-year growth in total revenue, in the second half of 2022

Long term target:

• Double our Core ARR, from ~100 mNOK to +200 mNOK, organically, within 4 years
• Adjusted EBITDA margin of +20 %

Alternative performance measures (APM)

This section includes information about Alternative Performance Measures (APM) applied by the Group. These Alternative Performance Measures are shown to improve the ability of stakeholders to evaluate the Group's financial performance. These should not be viewed as a substitute for any IFRS financial measures. The Group applies the following APMs;

Annual recurring revenue (ARR)

The sum of contracted revenue at each period end using end of period currency rate. Main principles for recognition of ARR changes are as follows:

• New sales ARR - when recognised as ARR

• Net upsell ARR includes expansion and price increases. Price increases is recognised when the price changes takes effect. Expansion follows the same principle as new sales ARR.

• Churn ARR is recognised when the licence period ends.

• Currency effect is the difference between ARR end of period less ARR changes (based on average exchange rates in the month they are recognised) and ARR in previous period.

Gross Retention Rate (GRR)

Retained revenue from existing customers not including expansion and/or price increases.

Net Retention Rate (NRR)

Overall impact on the revenue generation from existing customers

EBITDA and Adjusted EBITDA

Earnings before interest, taxes, deprecation and amortization. Adjusted EBITDA - EBITDA excluding non-recurring /special items .

Non-recurring / special items are revenues/cost that are non-recurring in nature and/or not relating to normal operations

YOUR FEEDBACK IS WELCOME!

Thank you for being curious about Questback. If you made it this far, you could probably guess what's next.

We want to hear the opinions and feedback of our readers, so we can continue to improve.

Please open your iPhone camera (or a QR code reader on other phones), move it over the QR code and answer the short survey that pops up in your browser.

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THANK YOU!

Saeid Mirzaie CEO, Questback AS saeid.mirzaie@questback.com