SPACETALK LTD — Interim / Quarterly Report 2021

Feb 15, 2021

==> picture [281 x 46] intentionally omitted <==

H1 FY21 Results Presentation

Spacetalk Ltd. (ASX: SPA) 16 February 2021

Agenda

1 Half year results summary

==> picture [38 x 38] intentionally omitted <==

----- Start of picture text -----

2
----- End of picture text -----

==> picture [164 x 20] intentionally omitted <==

----- Start of picture text -----

Strategy & outlook
----- End of picture text -----

==> picture [111 x 133] intentionally omitted <==

==> picture [125 x 210] intentionally omitted <==

==> picture [215 x 352] intentionally omitted <==

1

Half year results summary

==> picture [173 x 29] intentionally omitted <==

==> picture [477 x 501] intentionally omitted <==

H1 FY21 Financial Highlights

Group: Record performance despite COVID-19 largely attributable to Wearables revenue

Group Revenue: $8.25m

+9% pcp, H1 FY20: $7.6m

• Spacetalk is the market leader in connected kids and seniors wearables

Wearables Revenue Schools Revenue $7.1m $1.0m +13% pcp -22% pcp H1 FY20: $6.3m H1 FY20: $1.3m

Wearables Revenue

54%

Gross Profit Margin:

• Large, growing and global addressable market

• Multi-product offering with launch of new Adventurer for Kids and ranging of Life for Seniors

• New Spacetalk App with expanded suite of functionalities to create a fun, engaging and secure family communication ecosystem

Opex EBITDA $3.8m $0.6m -17% pcp +36% pcp H1 FY20: $4.65m H1 FY20: $0.45m

• Resilient top-line growth attributable to strong half of wearables sales and App revenue. Healthy gross margin. Positive EBITDA supported by opex discipline and government funding for business through COVID-19

Cash at Bank: at 31-Dec-20 $1.6m

• Cash at bank, with no drawn debt

4

==> picture [950 x 533] intentionally omitted <==

----- Start of picture text -----

H1 FY21 Key Achievements
Group: 2 NEW devices, NEW App, NEW partnerships
NEW partnerships
1,120 stores (+44% pcp)
in ANZ and the UK
New
Products
Adventurer v v
Exclusive launch of Kids and Adventurer
Adventurer and Life ranging nationally
App
Life
v v
Selling on monthly Launched on
plans in ANZ amazon.co.uk
5
----- End of picture text -----

H1 FY21 Wearables Summary

Wearables: Record sales, continued strong ARR growth, expanded distribution, lower CAC

Revenue $7.1m +13% pcp Device Revenue: Unit sales: +7% pcp, H1 FY20: $5.8m [$6.3m ] ANZ: +50% pcp, UK: -16% pcp +37% : App Revenue: App ARR[1] +76% pcp, H1 FY20: $0.5m [$0.9m ] +76% pcp, H1 FY20: $1.3m [$2.3m ] # Retail Stores: CAC[2] : $28 +44% pcp, H1 FY20: 777 1,120 -43% pcp, H1 FY20: $48

==> picture [241 x 146] intentionally omitted <==

==> picture [167 x 115] intentionally omitted <==

1. ARR = Annualised Recurring Revenue from Spacetalk App monthly subscriptions.

6

1. CAC = Customer Acquisition Cost = Advertising & Marketing Expenses / Units Sold

H1 FY21 Wearables – Devices

Wearables: Adventurer – step change advancement

• Next generation 4G kids smartphone watch launched in Dec-20

• ✓ Purpose-built kid-tough, IP67 water resistance, strong comfortable straps

• ✓ Eye-catching new design, four on-trend colours, interchangeable straps for personalisation

• ✓ Advanced mobile technology: true 4G; ultra large 750mA battery

• Unit sales exceeded Spacetalk Kids in its first two weeks of sales, prior to the commencement of advertising campaigns

• Accounted for18% of all device unit sales for the half

Adventurer v Kids Business Strategy

• Kids strategically repositioned at lower recommended retail price

• ✓ Engage mass-market appeal

• ✓ Differentiate value proposition from Adventurer

• Strategy working – positive pcp revenue result over Q2 FY21 despite Spacetalk Kids selling at the reduced price point; strong uplift in unit sales

==> picture [446 x 497] intentionally omitted <==

----- Start of picture text -----

Adventurer Kids
4G 3G
$349 $249
Ultra large battery 750mA Standard battery 480mA
IP67 – Tested to 1m water resistance IP54 – Splash water resistance
---
Interchangeable straps
Heart rate and fitness tracker Fitness tracker
---
5MP camera picture and video
Extra high accuracy GPS High accuracy GPS
1.41” OLED extra bright screen 1.3” TFT screen
----- End of picture text -----

7

H1 FY21 Wearables – Devices

Devices: Market leading kids flagship devices, with new B2B2C model for seniors device

• Strong device revenue growth attributable to:

• ✓ ANZ revenue +17% pcp to $5.4m

• ✓ Highest ever unit sales for original Kids device pcp

• ✓ Strong launch of Adventurer for Kids in December 2020, accounting for 18% of all unit sales for the half

• Diversified revenue mix - revenue contribution of Kids expected to be overtaken by Adventurer going forward

• UK continues to suffer from COVID-19 decline in consumer sentiment

• Life transitioning to B2B2C model with strong interest from aged care and home care providers

==> picture [534 x 367] intentionally omitted <==

----- Start of picture text -----

Leader in Australia
Unit sales
UK COVID-19 lockdown impacted
Kids Adventurer Life ANZ UK
100% 5% $7.0
18% $6.0 $0.9m
80%
$5.0 $1.2m
60% $4.0
$5.4m
100% 77% $3.0
$4.6m
40%
$2.0
$1.0
20%
$0.0
H1 FY20 H1 FY21
0%
H1 FY20 H1 FY21
• Adventurer for Kids: launched in Dec-20 4% pcp 40%pcp
exclusively via JB Hi-Fi
• Life for Seniors: ranging for sales from Jul-
$5.35m $0.95m
20 (e-com, then retailer)
Retail+MNO [1] partners Company e-com
----- End of picture text -----

8

Footnote 1: MNO = Mobile Network Operators

H1 FY21 Wearables – App

==> picture [220 x 314] intentionally omitted <==

App: continued strong growth in ARR, greater user engagement, new and enhanced features

==> picture [669 x 330] intentionally omitted <==

----- Start of picture text -----

Annualised Recurrent Revenue (ARR) App
New Users
+76%
(paying) pcp • NEW App launched in Dec-20
CAGR [1] : 42%
2.3 ✓ Replaced AllMyTribe App
Active Devices [2] +202% ✓ iOS and Android compatible
pcp
1.7 •
NEW
1.5 1.5 controls
1.3
Avg Usage [3]
+189% ✓ Family Chat (with picture, video
(per day) pcp
0.9 and audio sharing)
0.8
0.7 ✓ Fitness, health and wellbeing
Store Views [4]
+147%
0.3 pcp counter, GPS, movement sensor
0.1
•
FREE for all connections except
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 controlling App
$Millions
----- End of picture text -----

• ✓ iOS and Android compatible

• NEW functionalities beyond parental controls

• ✓ Family Chat (with picture, video and audio sharing)

• ✓ Fitness, health and wellbeing tracking - heart rate monitor, step counter, GPS, movement sensor

4.4 user satisfaction rating

• FREE for all connections except controlling App

4.1 user satisfaction rating

9

Footnote 1: CAGR = Compound Annual Growth Rate. | Footnote 2: Peak active devices in Dec-20. | Footnote 3:Total user sessions over half. | Footnote 4: Product page views.

H1 FY21 Schools Summary

MGM Schools: Stable and steady growth business

Revenue $1.0m -22% pcp

SINCE 2002

• High margin, subscription business with recurring revenue

• ✓ 9.3m (+25% pcp) messages delivered in H1 FY21

• ✓ Supporting families and schools communicate through COVID-19

• Half year revenue impacted by change in date of annual billing cycle of a software license fee relating to a large State Government education department contract

Trusted by over

1,200 schools

• ✓ Payment forwarded to 2H FY21

• Stable, multi-year contract terms - 3 year average length

• Continues to grow steadily, with several significant value creation options with investment

100m+ messages

safely delivered to parents and teachers since inception in 2002

10

Consolidated Group

Half- Year Ended

H1 FY21 Profit & Loss

Group: Business settings for top-line growth

• Group’s best ever half of revenue

• ✓ Spacetalk Wearables division up +8% pcp to $6.3m

• Reduced Gross Profit primarily due to:

• Repositioning original Spacetalk Kids device at a lower price point on the launch of Adventurer

• Deferred revenue of Schools business to H2 FY21

• To lesser extent, higher COGS of Adventurer

• Gross Profit Margin strong at 54%

• Positive EBITDA of $0.61 (+36% pcp)

• ✓ Lower operating expenses of $3.8m (-17% pcp)

• COVID-19 government support packages

• ✓ JobKeeper of $499,500 - reported as a reduction to the associated employee costs

• ✓ Cashflow Boost of $100,000 - recognised as revenue

Notes Revenue Cost of sales Gross Profit Interest expense Amortisation & depreciation Issue of options 4 Corporate and administration Advertising and marketing Employee costs (Loss)/ Gain on foreign exchange Loss before tax Income tax benefit Net loss for the period attributable to owners of the Company Other comprehensive income, net of income tax Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Other comprehensive income for the period (net of tax) Total comprehensive income for the period attributable to owners of the Company Earnings per share Basic (cents per share) Diluted (cents per share)	31/12/2020 31/12/2019 $ $ 8,250,907 7,601,633 (3,804,707) (2,496,606) 4,446,200 5,105,027 (2,024) (49,991) (1,337,641) (1,171,691) (110,752) (2,389,964) (1,437,205) (2,068,867) (948,333) (1,209,553) (1,432,004) (1,430,516) (14,876) 58,100
	(836,635) (3,157,455) 214,194 452,032
	(622,441) (2,705,423) (10,880) 4,030
	(10,880) 4,030
	(633,321) (2,701,393)
	(2.73) (2.1) (1.82) (2.0)

11

H1 FY21 Cash Investment Settings

Group: Resilient through COVID-19

• In July 2020, the Company undertook a $2.5m Share Purchase Plan (“SPP”)

• ✓ In excess of $5m applications received, exceeding original target of $1.5m by 236%

• ✓ Use of proceeds – inventory, development of Adventurer, Spacetalk App and working capital

• Operating cash $(2.3)m with positive non-cash working capital movement of $3.2m

• $1.5m capitalised product development

• Cash balance of $1.6m at 31-Dec-20

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Tax benefits Interest and other costs of finance Government subsidies Net cash provided by operating activities Cash flows from investing activities Payments for plant and equipment Payment for research and development Net cash (used in)/provided by investing activities Cash flows from financing activities Proceeds from issue of shares Share issue costs Options issued Issue of convertible note Payment of lease liabilities Net cash (used in)/provided by financing activities Net increase / decrease in cash held Cash and cash equivalents at 1 July Effect of exchange rate changes Cash at the end of the year

12 Consolidated Group Half-Year Ended 31/12/2020 31/12/2019 $ $ 4,041,723 4,315,464 (6,982,551) (5,640,717) - 532,018 (2,024) (49,991) 599,500 - (2,343,352) (843,226) (17,567) (33,450) (1,526,018) (1,264,286) (1,543,585) (1,297,736) 2,495,047 5,500,003 (35,278) (378,371) - 14,000 - 500,000 (119,605) (94,458) 2,340,164 5,541,174 (1,546,773) 3,400,212 3,165,125 1,635,872 (10,880) 4,030 1,607,472 5,040,114

H1 FY21 Balance Sheet

Group: Healthy Balance Sheet

• Positive working capital $5.6m, up $1.6m from June

• ✓ Low inventory value of $184k

• ✓ $1.4m in prepayments of outstanding inventory

• ✓ R&D tax incentive of $0.6m

• ✓ $4.0m in receivables

• Net cash with no drawn debt

Notes ASSETS Current Assets Cash and cash equivalents Trade and other receivables 6 Inventories Other current assets Total Current Assets Non-Current Assets Property, plant and equipment Intangibles 7 Right-of-use assets 8 Deferred tax assets Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Provision Lease liabilities 8 Income tax liabilities Total Current Liabilities Non-Current Liabilities Lease liabilities Deferred Tax Liabilities Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Issued capital 3 Reserves Accumulated losses Total Equity	Consolidated Group As at 31/12/2020 30/06/2020 $ $ 1,607,472 3,165,125 4,036,554 1,049,580 184,447 977,851 2,561,138 1,061,566
	8,389,611 6,254,122
	187,805 182,731 4,032,536 3,713,004 15,450 134,111 458,488 458,488
	4,694,279 4,488,334
	13,083,890 10,742,456
	2,251,381 2,084,841 402,919 208,790 16,036 135,642 163,170 -
	2,833,506 2,429,273
	- - - -
	- -
	2,833,507 2,429,273
	10,250,383 8,313,183
	18,648,386 16,124,617 6,221,589 6,185,717 (14,619,592) (13,997,151)
	10,250,383 8,313,183

13

H1 FY21 Key Takeaways

Scorecard: Record revenue and improved returns through more products and new channels, with continued high customer satisfaction

==> picture [58 x 58] intentionally omitted <==

==> picture [58 x 58] intentionally omitted <==

Record revenue, More products High customer Quality strong ARR growth and channels satisfaction management

Poised for global growth

• Despite COVID-19 resilient revenue and strong ARR growth

• More devices sold this half than any prior period

• Cementing position as the market leader in our niche

• Adventurer is ANZ’s #1 selling device

• B2B2C represents a large opportunity for Life

• New App ’s stronger network effect

• Onboarding of tier-1 new retail and MNOs

• Strong customer retention

• Lowered CAC with increasing scale and mass-market brand recognition

• Growing recognition of the practical benefits our products deliver to users

• Attracting high quality talent globally

• Recognition of product leadership and global market opportunity

• Key hires made at senior leadership and operational roles

• Growing consumer confidence as COVID19 vaccines rolled out

• Network effect enhanced with new App and Family Chat

• New UK channel partners and USA goto market imminent

• Strong Balance Sheet

14

2

Strategy & outlook

==> picture [394 x 438] intentionally omitted <==

==> picture [173 x 29] intentionally omitted <==

Market for Spacetalk App: Everyone! Network Effect

Market and Business Model

==> picture [468 x 445] intentionally omitted <==

----- Start of picture text -----

Global Kid 1
Niche
Kid 2
Adventurer Life
Kids Seniors
12yo 60yo
App AGE
Large
Addressable population
Grandpa
(ANZ, UK, USA)
• Kids – 60m; Seniors – 85m
• Smartwatch penetration for adults is c.12.5%,
kids currently c.5%;
seniors lower
• Wearables growth forecast at 15% pa CAGR
over next 5 years; watch wearables are the
fastest growing category
POPULATION
Market for Spacetalk Device Sales
----- End of picture text -----

==> picture [433 x 439] intentionally omitted <==

----- Start of picture text -----

Cousin 1 Cousin 2
Aunty 1 Friend 3
Friend 2
Dad
Friend 1
Uncle 1
Mum
Grandma
(Control App)
Device sales enable Family Chat creates
the App’s Family Chat connected networks
Connected networks
drive new device sales
----- End of picture text -----

16

Business Objectives and KPIs

The Company is committed to the following objectives

1. Growing the top-line with our expanded product suite – original Kids, Adventurer and Life – and channels – bricks and mortar retail, MNO and new geographies

2. Expanding Spacetalk Life for seniors distribution to a B2B2C model, where we are seeing strong interest from aged care and home care providers

3. Advancing our App and leveraging the ecosystem’s network effect to enhance user engagement and grow both device sales and ARR

4. Focusing on our global market penetration, in the UK with our new Country Head progressing a bricks and mortar launch as well as onboarding new MNOs, and in the USA with an exciting go-to-market planned for CY21

5. Improving operating cost efficiencies as we grow, with the aim of acquiring new customers at a lower cost as we scale in ANZ and take a disciplined approach to capital management with our international expansion

17

Trading Update

H2 FY21 has started strong

• Unit sales in the first 5 weeks of Q3 FY21 up 44% on the whole of Q3 FY20

• Adventurer is the market’s #1 selling kids device in the category

• Advanced conversations with aged care and home care providers in relation to Life

• Highest ever quarter of Spacetalk device sales through the 2020 Christmas period (Q2 FY21) is expected to lead to a material increase in App user adoption through 2021

• In UK, advanced dialogues for bricks & mortar retail launch, and with new MNOs; led by new UK Country Head

• Launch in the USA on track, with partner discussions and go-to-market planning

18

==> picture [253 x 104] intentionally omitted <==

==> picture [124 x 210] intentionally omitted <==

==> picture [239 x 104] intentionally omitted <==

==> picture [214 x 349] intentionally omitted <==

Connecting families | safe | engaging | reliable

19

Important Notice

This presentation has been prepared by Spacetalk Limited (“Spacetalk,” or “Group,” or “Company,” or “SPA”).

Information contained in this presentation:

• is intended to be general background information only, and is not intended that it be relied upon as advice to investors or potential investors and is not an offer or invitation for subscription, purchase, or recommendation of securities in Spacetalk

• should be read in conjunction with Spacetalk's financial reports and market releases on ASX

• includes forward-looking statements about Spacetalk and the environment in which Spacetalk operates, which are subject to significant uncertainties and contingencies, many of which are outside the control of Spacetalk – as such undue reliance should not be placed on any forward-looking statements as actual results or performance may differ materially from these statements

• includes statements relating to past performance, which should not be regarded as a reliable guide to future performance

• includes certain financial information which Spacetalk considers useful to assist in evaluating Spacetalk’s performance, however, all information has not been subject to audit or review in accordance with Australian Auditing Standards.

All dollar values are in Australian dollars (A$) unless otherwise stated.

Definitions:

• FY = financial year ended 30 June

• H1 = half year ended 31 December

20

==> picture [196 x 196] intentionally omitted <==

spacetalkwatch.com

Vivek Miranda

Investor Relations & Corporate Development VMiranda@spacetalkwatch.com