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SmartCraft ASA

Investor Presentation Aug 24, 2023

3745_rns_2023-08-24_53c16f47-8076-4292-b9c3-9d21f04d42b8.pdf

Investor Presentation

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Q2 2023 report

August 24th 2023

Disclaimer

IMPORTANT – You must read the following before continuing. The following applies to this document, the oral presentation of the information in this document by SmartCraft ASA (the "Company") or any person on behalf of the Company, and any question-and-answer session that follows the oral presentation (collectively, the "Information"). In accessing the Information, you agree to be bound by the following terms and conditions.

The Information does not constitute or form part of, and should not be construed as an offer or the solicitation of an offer to subscribe for or purchase shares or other securities of the Company, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, nor does it constitute a recommendation regarding such shares or other securities. Any shares or other securities of the Company may not be offered or sold in the United States or any other jurisdiction where such a registration would be required unless so registered, or an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, or other applicable laws and regulations is available. The Information is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of, or located in, any locality, state, country or other jurisdiction where such distribution or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. The Information is not for publication, release or distribution in any jurisdiction in which offers or sales would be prohibited by applicable law.

The Information has been prepared by the Company, and no other party accepts any responsibility whatsoever, or makes any representation or warranty, express or implied, for the contents of the Information, including its accuracy, completeness or verification or for any other statement made or purported to be made in connection with the Company and nothing in this document or at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future.

The Information contains forward-looking statements. All statements other than statements of historical fact included in the Information are forward-looking statements. Forward-looking statements give the Company's current expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. These statements may include, without limitation, any statements preceded by, followed by or including words such as "target", "ambition", "outlook", "believe", "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "can", "have", "likely", "should", "would", "could" and other words and terms of similar meaning or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the Company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which it will operate in the future. Furthermore, information about past performance given in this Information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.

No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither the Company nor any of its parent or subsidiary undertakings or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. The Information has not been independently verified and will not be updated. The Information, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future results. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to the Information, including any financial data or forward-looking statements, and will not publicly release any revisions it may make to the Information that may result from any change in the Company's expectations, any change in events, conditions or circumstances on which these forward-looking statements are based, or other events or circumstances arising after the date of this document.

This presentation contains statistics, data, statements and other information relating to the group's markets and the industry in which it operates. Where such information has been derived from third-party sources, such sources have been identified herein. In addition, the Company has been named as a source for certain market and industry statements included in this presentation. Such "Company information" reflects the Company's views based on one or more sources available to it (some of which are not publicly available, but can be obtained against payment), including data compiled by professional organisations, consultants and analysts and information otherwise obtained from other third party sources.

By reviewing this Information you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the businesses of the Company. This Information must be read in conjunction with the recent financial reports of the Company and the disclosures therein.

This Information shall be governed by Norwegian law, and any disputes relating to hereto is subject to the sole and exclusive jurisdiction of Norwegian courts.

Agenda

Part 1: Q2 reporting

  • o Operational efficiency
  • o Financial highlights

Part 2: Our solid business model secures strong growth

  • o Marketing and sales excellence
  • o Development strategy
  • o Summary and Q&A

Our solutions provide competitive edge for our construction customers

People

Material

Documentation

  • o Ensure digital flow of information between people
  • o Store and process all data in one place accessible for all
  • o Data in the field is captured with mobile Apps
  • o Total overview of documentation
  • o Revenue and cost control on each project
  • o Supporting sales processes in a competitive environment

Leading position in the Nordics

  • o Consistent and solid growth before and after the IPO in June 2021
  • o Constantly gaining market share
  • o 15 offices in Sweden, Norway and Finland
  • o 200 employees

Q2 2023 highlights

Continued strong growth, record high margins, strong cash flow and low churn

Unique business model creating real customer value

True Software as a Service

Strategic focus

  • o Recurring revenue (ARR)
  • o Target SMEs construction companies
  • o Maintenance, services and upgrade projects
  • o Solutions for energy saving initiatives
  • o Ease documentation requirements

Implemented changes showing results in Finland

  • o Increased focus in 2023 on Renovation
  • o New ARR revenue trending upwards last three quarters
  • o Potential revenue pipeline increased 154% YoY and 73% QoQ
  • o Some large existing customers facing challenges in New Build resulting in downgrades BUT;
  • o Churn stable at 3%
  • o Strong position when market for New Build improves

Congrid ARR pipeline Q2 YoY

Increased momentum in Sweden

  • o Organic recurring revenue growth of 5% vs Q1 2023
  • o Organizational changes and increased sales focus is paying off for Bygglet in Q2
  • o Booked meetings increased by 64% YoY
  • o Sales conversion 60% LTM

Stable and strong situation in Norway

  • o Continued strong organic YoY recurring revenue growth of 18% in Q2
  • o Increased Sales focus paid off especially for Cordel in Q2
  • 119% increase in booked meetings YoY
  • Potential revenue pipeline at all time high with 36% growth QoQ

Cordel ARR pipeline Q2 QoQ

Solid growth in all segments

  • o Organic recurring revenue +18%
  • o El-Verdi and Inprog acquired in 2022
  • o Increased ARPC driven by CPI adjustments and upsales
  • o Strong and improved pipeline for H2'23

  • o Organic recurring revenue +12%

  • o Increased ARPC driven by CPI adjustments and upsales
  • o Strong and improved pipeline for H2'23

  • o Organic recurring revenue +10%

  • o Exposure to large customers in "new build" construction
  • o Stable and low churn of 3%, but fewer initiated projects affect growth
  • o Moved focus to renovation
  • o Strong and improved pipeline for H2'23

Continued growth in revenue and increasingly strong profitability

  • o Maintaining high recurring revenue share
  • o 15% organic growth in recurring revenue

  • o Agile business model to scale costs in a more demanding business climate

  • o Ability to increase margin both short-term and long-term
  • o Increasing EBITDA-capex margin by 3pp

  • o Development of SmartCraft Core and integrations for cross sale and upsales

  • o Expecting ~10-11% FY'23 (updated) from higher share of resources allocated to revenue generating R&D

Solid financial position and strong cash flow

- to support growth strategy and M&A activity

  • o Cash positive all quarters (seasonally strong Q1)
  • o Cash generated from operations enables strategic investments and M&A

  • o Net cash positive

  • o Negative net working capital driven by customer prepayments
  • o Acquired 1,46% (~2,5m) shares , per mid-august

High growth in recurring revenue as basis for success

o 21% growth in ARR

  • o 15% organic growth
  • o Additionally, acquisition of ELinn (October 2022) and FX changes
  • o Improved pipeline for H2'23

Quarterly ARR growth history, mNOK

Quarterly currency adjustments not displayed in chart

YoY organic growth

ARR bridge QoQ, mNOK

ARR development, mNOK

Coredination AB

Our 10th aquisition

  • o Complementary Swedish SaaS solution
  • o Workforce management
  • o Machine rental
  • o Fleet management
  • o Great cross-sell and up-sell opportunities
  • o 10 employees
  • o Located in Stockholm
  • o Purchase price SEK 25m
  • o Acquired July 2023

o 200+ customers o 3000+ users

2022 : o SEK 10m revenue

YTD June :

  • o 18% growth
  • o 12% cash EBITDA
  • o 90% ARR
  • o 6% churn

Strong ability to extract revenue synergies and drive margin improvement post acquisition

Proven track-record:

  • o Focus in increasing recurring revenue
  • o Reduce complexity
  • o Make solution easy to buy
  • o Seek cross-selling opportunities
  • o Utilize SmartCraft's processes
Post-acquisition performance
Revenue
CAGR
9.6% 27.4% 23.3% 14.9% 29.1% 20.8%
Adjusted
EBITDA
margin
expansion
+11.1pp +33.6pp +35.8pp +15.9pp +42.0pp +31.7pp

Key focus to ensure continued profitable growth Medium-term financial targets remain unchanged

  • o Capitalize on solid new customer pipeline
  • o Customer centric business model
  • o Improved coordination of marketing and sales teams
  • o Sales automation & self service
  • o Use our flexible business model to be prudent on costs
  • o Further scale our cloud environments
  • o Value accretive M&A

Margin expected to increase due to scalability of the business

Short-term considerations: Impact from acquired companies last 12 months

Marketing and sales excellence

Multiple attractive levers to drive organic growth

Clear growth levers to be driven by a strong commercial organisation and proven go-to-market model

What the market says about digitalization

  • Prepeak of our findings 2023

  • o Yearly market survey about digitalization in the construction industry

  • o Analysis conducted by 3rd party consultant
  • o 680 respondents in the Swedish market
  • o 2023 results to be released in September

More than 78% of respondents will increase or maintain investments in digital tools What is your intention when it comes to

  • o Strong figures despite unstable economic climate indicating great awareness of digitalization benefits
  • o 20% have not yet decided on their investments

business investments in digital tools the next 12 months?

Significant potential for operational improvements through digital investments

In what areas do you see improvements by digital investments?

  • o Great potential to improve all parts of the business
  • o Top 3 related to people, materials and documentation of quality assurance and safety

Digital tools already crucial to prove competitive position Estimate on a scale 1-4 how your business

  • o Improvements when handling all key tasks in the company ensure higher productivity!
  • o Improvements regarding document handling is ranked highest
  • o Major impact on turnover and revenue will make users of digital tools competitive

has improved by using digital tools

Use of digital tools create market winners

  • o Less mistakes and greater transparency lead to a better working climate
  • o Customer satisfaction is improved with less misunderstandings.

Do you think a digital tool creates a better working climate ?

Do you think a digital tool is improving customer satisfaction?

New matrix sales and marketing organization established to optimize sales efforts

Key measures identified to exploit the strong market fundamentals

Current sales strategy

  • Build the brand
  • Convince our lead

  • Purchase push and pull

  • Deliver the brand promise

Focus areas for continuous improvement

Increase Customer Acquisition Rate

  • o Expand awareness
  • o Streamline purchase
  • o Simplify onboarding

Increase Customer Lifetime Value

  • o Up-sell strategies
  • o Cross-sell strategies
  • o Increase Usage

Highly effective go-to market strategy

Best in class sales engine with broad reach and highly effective lead conversion

Highly efficient sales process2

Customer acquisition cost

Lifetime customer value

Note:

  1. Metrics for H1 2023;

  2. Calculated as weighted average of CLTV and CAC based on the products and solutions sold over the last 6 months. 6-month period ending in June 2023

More focused marketing efforts resulting in increased customer awareness

Established SmartCraft brands have significant shares of search

Successful online strategy improving market position and sales leads

Extensive use of digital tools to illustrate efficiency gains with SmartCraft solutions

User friendly tool to create understanding of

benefits of digitalization "Every month we handle 50 projects at the same time, which without a digital tool probably would require 30 people and also affect our profitability. Instead we are only 5 people handling the full administration of our projects and the company, A prerequisite for us being able to grow is that we have

Digitalization means a profitable business!

225 720 SEK/yr

...and 564 hours. And still our calculations are moderate!

Our long experience help us estimate how many hours businesses can save using our tools. Thus, this tool helps you estimate the gains of your particular business. Keep in mind that the estimates are simplified and moderate, because we do not keep customers over time by using too optimistic figures. Probably the gains in reality are much higher – not the least counting in a more enjoyable working climate.

Based on your calculation we are suggesting Bygglet Total.

Read more about our packages

Read more about our calculation

Book a demo Recalculate

Development strategy

Consolidating solutions for electricians to optimize customer benefit and growth

Benefits of the SmartCraft Core consolidation for electro

  • o Unified Experience: Long-term ambition to have a cohesive solution, a more intuitive user experience.
  • o Enhanced Efficiency: Seamless transition between tasks, reducing redundancies and increasing productivity.
  • o Future-Ready: SmartCraft Core is our most advanced platform ensuring that our tools for electricians will remain cutting edge
  • o Cost-Effective: Streamlined maintenance and updates leading to cost savings

SmartCraft Calculation coming to a laptop near you!

Thousands of products to choose from

  • Difficult to assess time and material
  • Need to be able to manage many versions
  • Maintaining quality and profitability in each calculation

Sending bids in short time frames to have better win rate

Thousands of products to choose from

Difficult to assess time and material

  • Need to be able to manage many versions
  • Maintaining quality and profitability in each calculation
  • Sending bids in short time frames to have better win rate

Difficult to assess time and material

Need to be able to manage many versions

  • Maintaining quality and profitability in each calculation
  • Sending bids in short time frames to have better win rate

Thousands of products to choose from

Difficult to assess time and material

Need to be able to manage many versions

Maintaining quality and profitability in each calculation

Sending bids in short time frames to have better win rate

Thousands of products to choose from

Difficult to assess time and material

Need to be able to manage many versions

Maintaining quality and profitability in each calculation

Sending bids in short time frames to have better win rate

SmartCraft calculation

  • o Personalized calculation tool crafted specifically for plumbers and electricians
  • o SmartCraft has a long history of delivering calculation software
  • o Designed with user experience in mind
  • o Opening for new customer groups and segments
  • o First launch to plumbers
  • o Expanding the tool to accommodate electricians

DEMO

Bring AI to our users

  • o H1 2023 Using AI tools to boost productivity in our R&D department
  • o H2 2023 Integrating AI tools directly into our products
  • o Areas involve
  • Speed up onboarding
  • Customer success modules
  • Tailored training
  • Contextual search

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