Webstep — Investor Presentation 2020

Nov 11, 2020

Q3 2020

Webstep ASA Oslo | 11 November 2020

Arne Norheim (CEO) Liv Annike Kverneland (CFO)

Agenda

• 1. Q3 highlights
• 2. Business review
• 3. Financial review
• 4. Outlook

• Revenue growth of 6.5% in Q3 and 3.7% YTD
• EBIT growth
• Market improving for IT expert services
• Headcount +11 last 12 months
• High focus on recruiting
• Continued growth in Sweden
• Solid financial position
• Dividend distribution for 2019 of NOK 1.60 per share (ex date 15 Oct)

Business review

tomorrow

• 400+ experts covering all relevant tech fields and tech roles
• Experienced consultants generously sharing their knowledge and insights
• Innovative environment mapping complicated problems with uncomplicated solutions

BUSINESS REVIEW Community involvement

• Webstep recognized as thought leader in the industry
• Live-streamed debate with 500 participants in connection with

● Editorial by CEO in Dagens Perspektiv

Matchmaking in the road transportation industry

• Webstep is developing a digital app hosted on the cloud to optimize transportation of goods by truck
• The unique UX-design is attracting users and makes it easier to connect freight carriers and buyers ensuring that more trucks are being filled up with cargo
• Webstep has helped to develop a sustainable solution for an industry that is growing rapidly

Swipload is a start-up company offering a digital platform for optimizing transportation by truck.

Adapting to fast-changing customer demand

• Webstep helped Ambita with migration to Amazon Web Services
• 10X increase in development speed to rapidly innovate and bring new customer pilots to market
• The migration resulted in a decrease in number of servers from 600 to less than half
• Cut in operational costs by 40 percent

Ambita is a Norwegian technology company with specialized expertise in property management information systems.

Cloud and AI solution to detect insurance fraud

• Webstep is developing cloud solution to support detection of insurance fraud
• Webstep is the technical partner in an innovation project led by NCE Finance Innovation
• Cloud based solution making it simple and secure for insurance companies to train their AI based prediction models from a huge pool of shared data

Finance Innovation is a Norwegian fintech cluster aiming to deliver value to members by enabling infrastructure and facilitating collaboration.

Webstep helps relaunch esamverka.se

• Construction of new website through leveraging the SiteVision framework
• A more user-friendly CMS has resulted in a website that is easier to maintain
• Together with design agency Advant we have improved the accessibility

eSam is a member-driven program for collaboration and consists of 28 member organizations in the public sector, which together work for the digitalisation of society.

Business Segment Update

Expert Services

• Expanded expert services into security and SiteVision
• Overall growing demand for expert developers
  • ○ High demand for cloud experts suggesting digitalization / migration to cloud is accelerating
• But...Stavanger and Bergen market weaker in Q3 due to lingering effects from oil price decline and COVID-19

Note: *NOK 1.0 million of total costs relates to development of the cloud-based solution Samla.

Solutions

• High demand for services with several new contract deliveries
• NOK 1 million investment in "Samla", a new software solution for municipalities, recorded as cost

Organization and operations

3

• 418 employees at the end of Q3 2020
  • ○ Up 5% last 12 months
  • ○ Bergen decline due weak market conditions and a restrictive recruiting due to Covid 19
• West coast cities of Stavanger and Bergen impacted by the dual petroleum downturn and Covid-19 slower market and reduced activities
• Digital training across disciplines with heavy focus on cloud certifications driven by demand in the market

Note: Numbers in parentheses refer to year-over-year growth in number of employees.

Skill enhancement in the era of COVID-19

• There has been a major increase in certifications the past few months, and this ensures a relevant mix of competencies in a market where services related to the digital shift, cloud services and change management are in demand.
• Webstep has more than 50 Prosci Change Management certifications and 80 certified cloud professionals covering Amazon Web Services (AWS), Microsoft Azure and Google Cloud.

Financial review

FINANCIAL REVIEW

Key figures - Group

	Q3	Q3	Y/Y %	YTD	YTD	Y/Y %
NOK million	2020	2019	change	2020	2019	change
Sales revenues	146.2	137.2	6.5%	501.6	483.7	3.7%
EBITDA	6.4	4.1	55.3%	49.6	48.4	2.4%
EBITDA margin	4.3%	3.0%	1.3 pts	9.9%	10.0%	(0.1 pts)
EBIT	2.8	1.5	85.8%	39.1	41.3	(5.3%)
EBIT margin	1.9%	1.1%	0.8 pts	7.8%	8.5%	(0.7 pts)
Net profit	1.7	0.6	173.4%	28.9	30.8	(6.2%)
Net cash flow	2.6	3.2	18.8%	27.9	(24.6)	213.3%
Earnings per share (NOK)	0.06	0.02	211.5%	1.08	1.16	(6.5%)
Earnings per share. fully diluted (NOK)	0.06	0.02	211.5%	1.08	1.16	(6.5%)
Equity ratio	68.3%	68.1%	0.2 pts	68.3%	68.1%	0.2 pts
Cash and cash equivalents	53.3	8.9		53.3	8.9
Number of employees, average (FTE)	415	395	4.9%	412	395	4.3%
Number of employees, end of period	418	407	2.7%	418	407	2.7%
EBITDA per FTE (NOK thousand)	15.3	10.4	47.5%	120.3	122.5	(1.8%)
EBIT per FTE (NOK thousand)	6.7	3.8	77.1%	94.9	104.5	(9.2%)

• Revenue growth from own consultants driven by headcount and hourly rates partly offset by lower utilization
  • ○ Q3 NOK 129.7 million (+9.6%)
  • ○ YTD NOK 443.7 million (+5.8%)
• Reduced revenue from subcontractors
  • ○ Q3 NOK 16.5 million (-12.7%)
  • ○ YTD NOK 57.9 million (-10.1%)
• EBIT impacted by
  • Increased personnel cost from COVID-19 salary program and sales-/management personnel
  • Offset by cost savings
• YTD net cash flow positively affected by extended payment terms for taxes (NOK 8.6 million)
• Dividend of NOK 1.60 per share distributed in October (NOK 42.7 million) 15

FINANCIAL REVIEW

Key figures - Norway

NOK million	Q3 2020	Q3 2019	Y/Y % change	YTD 2020	YTD 2019	Y/Y % change
Sales revenues	124.3	118.1	5.3%	425.4	418.1	1.7%
EBIT	1.7	1.6	9.5%	32.8	39.8	(17.5%)
EBIT margin	1.4%	1.4%	-	7.7%	9.5%	(1.8 pts)
Number of employees, average (FTE)	353	335	5.3%	350	334	4.7%
Number of employees, end of period	357	345	3.5%	357	345	3.5%
Number of work days, excl. vacation	66	66		189	187
EBIT per FTE (NOK thousand)	5.0	4.8	3.9%	93.9	119.1	(21.2%)
Revenue breakdown
	Q3	Q3	Y/Y %	YTD	YTD	Y/Y %
NOK million	2020	2019	change	2020	2019	change
Oslo	43.2	44.3	(2.5%)	151.1	173.8	(13.1%)
Regional offices	66.6	61.7	8.0%	228.0	200.3	13.8%
Subcontractors	11.1	12.1	(8.5%)	39.5	44.0	(10.1%)
Solutions	3.4	-	-	6.8	-	-
Total	124.3	118.1	5.3%	425.4	418.1	1.7%

• Revenue growth from own consultants driven by headcount and hourly rates partly offset by lower utilization
  • ○ Q3 NOK 113.3 million (+6.9%)
  • ○ YTD NOK 385.9 million (+3.1%)
• Reduced revenue from use of subcontractors
  • ○ Q3 NOK 11.1 million (-8.5%)
  • ○ YTD NOK 39.5 million (-10.1%)
• Strong growth in regional offices, lead by the Trondheim and Sørlandet offices
• EBIT impacted by
  • COVID-19 salary program combined with lower utilization
  • Sales and management personnel
  • Offset by COVID-19 related cost savings

FINANCIAL REVIEW

Key figures - Sweden

	Q3	Q3	Y/Y %	YTD	YTD	Y/Y %
NOK million	2020	2019	change	2020	2019	change
Sales revenues	21.8	19.1	14.0%	76.2	65.6	16.2%
EBIT	1.0	(0.1)	1085.6%	6.3	1.5	314.6%
EBIT margin	4.7%	(0.5%)	5.2 pts	8.2%	2.3%	5.9 pts
Number of employees, average (FTE)	62	60	2.8%	63	60	4.7%
Number of employees, end of period	61	62	(1.6%)	61	62	(1.6%)
Number of work days, excl. vacation	66	66		189	189
EBIT per FTE (NOK thousand)	16.6	(1.7)	1058.4%	99.8	25.2	296.1%

• Constant currency revenue growth Y/Y:
  • Increase 1.1% in Q3
  • Increase 5.0 % YTD
• Increased revenue from own consultants:
  • Q3 SEK 15.7 million (+ 17.7%)
  • YTD SEK 56.5 million (+ 15.9%)
• Reduced revenue from subcontractors
  • ○ Q3 SEK 5.2 million (- 29.3%)
  • ○ YTD SEK 18.0 million (- 18.6%)
• Improved EBIT margins from increased revenues from consultants and cost savings

Cash flow and net debt

Q3 highlights

• Operating cash flow decrease from NOK 36.0 million in Q3 2019 to NOK 5.7 million in 2020
• Capex relates to office equipment
• Undrawn credit line of NOK 110 million in Norway and SEK 5 million in Sweden per end of quarter
• Dividend of NOK 1.60 per share distributed in October (NOK 42.7 million)

	30 Sep
NOK million	2020
Cash and cash equivalents*	(53.3)
Restricted cash	1.6
Debt to credit institutions	0.0
Net interest bearing debt (NIBD)	(51.7)
NIBD/EBITDA (rolling 12 months)	(0.84)

18

Outlook

Outlook

• Positive market outlook, despite new "lock-down" in Norway and Sweden
• Continued focus on retainment and recruitment:
  • ○ Recruitment drive ongoing in all locations
  • ○ Q4 headcount expected to be higher than Q4 2019, but flat compared to Q3 due to paused recruitment activities in Q2
  • ○ COVID-19 salary programme for consultants through October
  • ○ Continued home office for most employees
• Organic growth in existing locations through recruitment and utilization is the main focus in the coming quarters

Appendix

APPENDIX

Top 20 shareholders at 9 November 2020

Shareholder name	Shares	%	Type	Country
EMBRO EIENDOM AS	7,608,735	28.6%	Ordinary	Norway
Virtus KAR International Small-Cap	3,119,279	11.6%	Ordinary	United States
VERDIPAPIRFONDET ALFRED BERG GAMBA	1,556,645	5.8%	Ordinary	Norway
JAKOB HATTELAND HOLDING AS	1,000,000	3.7%	Ordinary	Norway
SALT VALUE AS	930,429	3.5%	Ordinary	Norway
PARK LANE FAMILY OFFICE AS	905,581	3.4%	Ordinary	Norway
VERDIPAPIRFONDET NORDEA NORGE VERD	689,991	2.6%	Ordinary	Norway
Goldman Sachs International	583,058	2.2%	Nominee	United Kingdom
Danske Invest Norge Vekst	542,000	2.0%	Ordinary	Norway
J.P. Morgan Bank Luxembourg S.A.	454,628	1.7%	Nominee	Finland
INTERTRADE SHIPPING AS	400,000	1.5%	Ordinary	Norway
HOLMEN SPESIALFOND	368,566	1.4%	Ordinary	Norway
VIOLA AS	330,000	1.2%	Ordinary	Norway
Taaleri Nordic Value Equity Fund	320,000	1.2%	Ordinary	Finland
WEBSTEP ASA	293,633	1.1%	Ordinary	Norway
VIRTUS TACTICAL ALLOCATION FUND	282,917	1.0%	Ordinary	United States
ESPEDAL & CO AS	261,111	1.0%	Ordinary	Norway
Nordnet Bank AB	243,416	0.9%	Nominee	Sweden
EMPLOYEES RETIR SYSTEM OF TEXAS	225,741	0.8%	Ordinary	United States
VERDIPAPIRFONDET NORDEA AVKASTNING	225,383	0.8%	Ordinary	Norway
Top 20 shareholders	20,341,113	75.4%
Other	6,625,904	24.6%
Total share outstanding	26,967,017	100.0%

APPENDIX

A diversified customer base

Top 10 customers represent 32.0% of total revenues – up from 23.9% in Q3 2019

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Webstep ASA and Webstep ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Webstep ASA. Although Webstep ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Webstep ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Webstep ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.