XPON TECHNOLOGIES GROUP LIMITED — Interim / Quarterly Report 2025

Jan 27, 2025

ASX Announcement

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28 January 2025

XPON Q2 FY25 activity report and Appendix 4C[1]

XPON Technologies Group Ltd (ASX: XPN ) ( XPON or the Company ), an AI marketing technology company, releases its quarterly activity report / Appendix 4C quarterly cash flow statement for the three-month period ended 31 December 2024.

Key Highlights

• Martech Revenue of $2.1m, up 2% QoQ. 93% of revenue recurring and in line with previous guidance regarding softer topline revenue YoY as the sales strategy is recalibrated. There is a strong pipeline from customers landed in Q1 and Q2 moving to expansion deals during Q3 and Q4.

• Gross profit of $1.6m, up 6% QoQ and gross margin of 74%, up 3ppts QoQ.

• Annualised Recurring Revenue of $7.3m, down 8% QoQ due to seasonally lower variable usage fees at December exit and timing of low margin license churn from Google resale products that has yet to be replaced by new customers landed but not yet expanded during the reporting period

• Cash balance of $5.5m as at 31 December 2024 including a quarterly cash surplus of $2.1m, aided by usual seasonal uplift in media consumption during October and November and earlier customer payment receipts

• Significant customer wins with 5 new customers landed and expanding relationships with 5 existing customers while maintaining a monthly customer retention rate of 98.9%

• Won Australian 2024 AI Award in the category of “AI Innovation - Media & Communication Services”

• Founder and Group CEO, Matt Forman's video covering the results of this quarters results is available to view here: https://investorhub.xpon.ai/link/6eW5wP

Key Financial Metrics - Q2 FY25 vs Q1 FY25 and Q2 FY24[1 ]

	Q2 FY25	Q1 FY25	+/-	Q2 FY24	+/-
Martech revenue	$2.1m	$2.1m	2%	$2.3m	-8%
Martech gross profit	$1.6m	$1.5m	6%	$1.8m	-15%

1 Unaudited. On a continuing business basis, excluding all revenue and expenses associated with the App Mod business divested in December 2023. The movement % is based on non-rounded actual figures.

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

Martech gross margin	74%	71%	3 ppts	80%	-6 ppts
Annualised Recurring Revenue (ARR)	$7.3m	$7.9m	-8%	$7.9m	-8%

Annualised Recurring Revenue (ARR)

ARR at 31 December 2024 was $7.3m, representing an 8% QoQ decrease. This decline was driven by seasonally lower variable usage fees at December exit and revenue churn from some existing Google licences. Although we secured new customers during the reporting period, their expansions have not yet offset the churn, contributing to the lower ARR.

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XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

Financial Performance

Revenue grew 2% quarter on quarter to $2.1 million as we continue to unearth new organic opportunities in Australia and New Zealand. In line with previous guidance, topline revenue decreased by 8% year on year as we recalibrate our sales strategy to expand our recurring revenue streams.

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XPON grew its gross margin by 3ppts on the previous quarter to 74%, reflecting the efficiency of our operations, and demonstrated strong underlying financial performance, net of public company and corporate costs[2] which were $0.5m in the quarter.

Continued Customer Growth and Strong Customer Retention

XPON continued to demonstrate its strong market position in Q2 FY25, securing 5 new customers and expanding relationships with 5 existing customers. The Company maintained a robust monthly customer retention rate of 98.9%, highlighting the ongoing value we deliver to our clients.

Capital Management and Cash Flow

XPON had a cash balance of $5.5 million at 31 December 2024, up $2.1 million on the previous quarter. The Company is actively managing its capital to ensure financial stability and support future growth initiatives. As announced on 15 January 2025, the Company has extended the convertible note until August 2025 to further strengthen its financial options.

XPON reported net cash flows from operating activities for Q2 FY25 of $2.1 million.

2 Corporate overheads include costs for audit, tax, legal, D&O insurance, company secretarial, ASX, ASIC, corporate software contracts and share registry services in addition to corporate/group/Board roles and their affiliated costs.

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

• Total receipts from customers were $4.6 million for Q2 FY25, up 38% YoY, aided by usual seasonal uplift in media consumption during October and November and earlier customer payment receipts.

• Payments to suppliers, employees and others were $2.4 million for Q2 FY25 down 31% YoY, reflecting the positive impacts of cost reductions and the App Mod divestment.

Building on our strong quarterly cash position and recent customer wins, the company plans to proactively accelerate the payment of aged accounts payables. This strategic step reinforces our focus on strengthening the balance sheet and optimising our financial position.

Although we expect underlying operating cash flow to remain broadly neutral at this stage, the decision to accelerate payables will affect the forecast change in cash for the full year. It is important to note that our revenue, gross margin, and EBITDA forecasts remain unchanged—the only shift is in the timing of our overall cash flow break-even point.

As detailed in item 6.1 of the Appendix 4C, payments to related parties and their associates during the quarter totalled $122k comprising CEO salary, employee associate of CEO and motor vehicle leasing and operating costs for the CEO.

FY25 - FY27 Strategic Roadmap Progress

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Outlook and Priorities

The Company has clear priorities for FY25:

• Continue to monitor and optimise the recalibration of the sales strategy towards high margin long term recurring revenue growth

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

• Capitalise on our leading market position by driving continued AI innovation with Wondaris to accelerate sales cycles and enhance value realisation for customers

• Focus on sustainable profitability by leveraging our relationship with Google for pipeline generation and growing our recurring customer base

• Progress strategic partnering and exploring M&A opportunities to enhance shareholder value while addressing balance sheet and convertible note refinancing to strengthen financial stability

• Ensure XPON sustains a strong corporate culture and maintains high employee engagement and motivation

• Continue to monitor and manage our cost profile in line with business performance. With proactive repayment of aged accounts payable, full year FY25 cash flow break even may be impacted, however targeting cash flow breakeven on an annualised basis by end of FY25.

The announcement has been approved for release by the Board of Directors of XPON Technologies Group Limited ACN 635 810 258

-ENDS-

For further information, please contact:

Rebecca He 1300 400 371 investors@xpon.ai

For media inquiries, please contact:

marketing@xpon.ai

JOIN XPON’S INTERACTIVE INVESTOR HUB Visit https://investorhub.xpon.ai/welcome

About XPON Technologies Group Limited (ASX: XPN)

XPON Technologies Group Limited is a leading AI marketing technology business with operations in Australia, New Zealand and the United Kingdom. We help businesses simplify complex marketing challenges and achieve superior ROI from their customers.

At the heart of our approach is the integration of data and AI, which powers our tools to predict consumer behaviour, automate marketing processes, and drive effective, data-driven decisions.

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

Glossary

Annualised Recurring Revenue (ARR):	represents monthly contracted recurring revenue multiplied by 12. An annualised measure of the revenue that XPON expects to earn from its customers on a repeatable basis. This metric shows the impact of new customer contracts less any churn from customers leaving or downgrading their contracts.
Monthly customer retention rate	the percentage of customers that are retained on a monthly basis and are not lost due to customer churn over the last 12 months (and divided by 12 to get a monthly view).

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

XPON TECHNOLOGIES GROUP LIMITED

ABN

Quarter ended (“current quarter”)

37635810258 31/12/2024

Consolidated statement of cash flows	Current Quarter $A’000	Year to date (6 months) $A’000
1.0 Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	4,568 (65) (586) (73) - (1,123) (541) - 5 (42) - - -	7,080 (145) (1,129) (141) - (2,444) (1,102) - 5 (84) - - -
	2,143	2,040

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

2.0 Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - - - - - - - - - - -	- - 2 - - - - - - - - - - - - -
	0	2
3.0 Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings	- - - - -	- - - - -

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.1 Net cash from / (used in) financing activities	- - - -	- - - -
	-	-
4.0 Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	3,339 2,143 - - (18) 5,464	3,449 2,040 2 - (27) 5,464

5.0 Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current Quarter $A’000		Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		5,464 - - -	3,339 - - -
		5,464	3,339
6.0 Payments to related parties of the entity and their associates		Current Quarter $A'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2		122
		NA

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

Note: Payments in 6.1 relate to Director salaries, employee associate of CEO and motor vehicle leasing and operating costs for the CEO.

7.0 7.1 7.2 7.3 7.4 7.5	Financing facilities Total facility amount at quarter end Amount drawn at quarter end Note: the term “facility’ includes all forms of financing arrangements available to the entity. $A’000 $A’000 Add notes as necessary for an understanding of the sources of finance available to the entity. Loan facilities - - Credit standby arrangements - - Other (please specify) - Convertible Note 1,125 1,125 Total financing facilities 1,125 1,125 Unused financing facilities available at quarter end - Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		1,125	1,125
		1,125	1,125
			-
7.6	As announced to the ASX on 26 February 2024, the Company raised A$1,125 million (before costs) via the issue of 45,000,000 secured convertible notes plus 22,500,000 free warrants. The convertible notes have a 12 month maturity date with the ability to extend by a further 6 months at the noteholders discretion. The convertible notes have a face value of $0.025 per note. 15% per annum simple interest is payable on the face value of the convertible notes, quarterly in arrears from the issue date of 26 February 2024. Further details available in the ASX release of 26 February 2024. As announced on 15 January 2025, the convertible note was extended by a further 6 months (until 26 August 2025) with interest payable at 20% per annum, payable quarterly in arrears, for the 6 month extension period.

8.0 Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (item 1.9) 8.2 Cash and cash equivalents at quarter end (item 4.6) 8.3 Unused finance facilities available at quarter end (item 7.5) 8.4 Total available funding (item 8.2 + item 8.3)	2,143 5,464 -
	5,464
8.5 Estimated quarters of funding available (item 8.4 divided by item 8.1) N/A Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. 8.6 If item 8.5 is less than 2 quarters, please provide answers to the following questions:	N/A

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000

8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

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Answer:
8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to
fund its operations and, if so, what are those steps and how likely does it believe that they will be
successful?
Answer:
8.6.3 Does the entity expect to be able to continue its operations and to meet its business
objectives and, if so, on what basis?
Answer:
Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must
be answered.
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Compliance statement

1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 28 January 2025

Authorised by: The Board of Directors

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

1. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

2. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

XPON Technologies Group Ltd. ACN 635 810 258. Suite 02-115/310 Edward St, Brisbane City QLD 4000