Dreamscape Networks Limited (DN8) · Others 4.3 3.9 -9% Prepaid marketing costs in 1H 2016 for...

Dreamscape Networks Limited

Dreamscape Networks

Limited (DN8)

First half FY17

Results Presentation

23 February 2017

A record result across all key metrics

Our Vision

Providing simple, innovative and affordable

online solutions that change lives

FY17 First half snapshot

Strong growth in financials1

• Total Bookings up 9% to $25.6m – growth across all Pillars

• ABPU up 9% to $144

• Adjusted EBITDA2 up 58% to $5.2m

• Net Profit After Tax3 up 220% to $1.6m

• Cash flow from operating activities up 37% to $6.3m

1. H1 FY17 compared to H1 FY16

2. Reconciliation of Statutory to Adjusted EBITDA on slide 17

3. Before forgiveness of advances to related parties pursuant to the Share Sale

Agreement (see Appendix 4D and Half Year Financial report disclosure)

A record result across all key metrics…

Delivering to plan

• Growing across all key Bookings drivers

• Entered new high-growth markets

• Targeted marketing to SMBs progressing strongly

• Evaluating potential acquisitions of new businesses / products

• Developing / refreshing existing products

… reaffirms FY17 Prospectus forecasts

3 ASX: DN8 | H1 FY17 results | February 2017

H1 FY17 > H1 FY16 across all P&L metrics


Bookings

Revenue

Adjusted Gross Profit

Adjusted EBITDA

($m) H1 FY16 H1 FY17

9%

6%

17%

58%

25.6

22.5

14.4

5.2

23.5

21.3

12.3

3.3

Total Bookings up 9% to $25.6m


$11.8m $12.1m

$9.1m$10.6m

$2.6m

$2.9m

1H16a 1H17a

Domains Hosting Solutions

$23.5m

$25.6m

Total Bookings – a lead indicator of growth

• Total Bookings represent cash receipts in advance

• Subscriptions of 1 to 10 years with the norm at 2 years

Bookings growth driven by higher margin pillars

• Hosting pillar Bookings up 16% to $10.6m primarily from web and

e-mail Hosting products

• Growth continues through strong renewal and retention

• Expecting additional growth from rolling-out new products and

improving infrastructure

Domain Bookings up 3% to $12.1m


$11.8m$12.1m

1H16a 1H17a

1H16 vs 1H17 Evolving from a domain provider to online solutions provider

• Growth in line with Australian industry

• Bookings growth supported by improved technical support and customer care

Focused on Global expansion strategy

• Domains growth from focusing on new, emerging markets across five major English-

speaking Asian countries

• Targeted marketing towards the 63% of Australian SMBs without an online presence

Hosting Bookings up 16% to $10.6m


1H16a 1H17a

$9.1m

$10.6m

1H16a 1H17a

1H16 vs 1H17 Focus on becoming a renowned Hosting provider

• Bookings increase showing early signs of success in strategy towards

Hosting

• Improved EBIDTA contribution leveraging our highest margin pillar

Continued focus on Hosting strategy

• Effective marketing campaigns targeted to attract new Hosting customers

• Utilising Sales and Hosting transfer teams to drive growth within existing

customer database

Solutions Bookings up 12% to $2.9m


Growth reflects transition to an online Solutions provider

• Leveraging cross-sell and up-sell opportunities within customer base

• Dedicated and personalised business development specialists to partner

with customers to deliver customised solutions

New products and bundling to drive increased engagement

• Prioritised introduction of new products and services

• Expanding Solutions offering to enter new product markets

• Targeted bundling of product suite to cater towards customer needs

$2.6m

$2.9m

1H16a 1H17a

1H16 vs 1H17

Earnings


Shift towards high-margin products

• Evolution towards operating as a renowned online Solutions provider

• Increased Bookings in high-margin Hosting and Solutions pillar by 16% and

12%, respectively

$3.3m

$5.2m

1H16a 1H17a

Adjusted EBITDAContinued execution of growth strategies

• Focus on leveraging the higher margin pillars

• Expansion of product offering to increase engagement and enter new product

markets

• Best in World Customer Care to drive renewals and retention

$12.3

$14.4

1H16a 1H17a

Adjusted Gross Profit

Strong balance sheet with $17.5m cash and no debt


($m) 30 Jun 201631 Dec

2016Change Overview

Cash 4.5 17.5 289%Increase from net proceeds of capital raising and

positive cash flows generated from operations

Due from related parties 11.2 - -100% Forgiven in accordance with share sale agreement

Others 4.3 3.9 -9%Prepaid marketing costs in 1H 2016 for brand re-

launch

Current Assets 20.0 21.4 7%

Non-current assets 3.3 4.5 36%

Total Assets 23.3 25.9 11%

Current liabilities 20.5 22.1 8%Includes $17.7m of income in advance ($17m for

FY16)

Non-current liabilities 10.1 12.0 19%Consistent with increase in Bookings for products

with longer terms

Total liabilities 30.6 34.1 12%

Equity (7.3) (8.2) 14%

Operating cash flow up 36% to $6.3m


($m) H1 FY16 H1 FY17 Overview

Cash flow from operating activities 4.6 6.3 As a result of improvements in Bookings

Capital expenditures (0.5) (0.9)

Gain from accident settlement (0.4) - One-off income recorded in 1H 2016

Cash Generated from Operations 3.7 5.4

Delivering on strategy


Marketing

Strategic marketing

strategies aimed at new

emerging markets as well

as underserved SMB

segment

Acquisitions

Acquisitions of

complementary

businesses and products

Sales Team

Further training and development

of the new in-house sales team

for up-selling, cross-selling and

new product marketing

Customer Care

Maintain high levels of

customer care (at least 90%

positive feedback rate) to

increase retention, renewals

and word of mouth referrals

Product Development

Accelerate development of

new and refreshed

products

International Expansion

Focus on higher growth markets,

in particular English speaking

Asian countries Singapore, Hong

Kong, Indonesia, Malaysia and

Philippines

Targeted Global Expansion Strategy


• Places us on the global map

• Gateway to EU

(7 of top 10 domain markets)

• Targeted localised marketing & sales

• Potential acquisitions

• Increase market share

Pre

sen

ce Market Size

(Domains)10.5m

Members 106k

• Low competition

• Utilise ATL Marketing

• Increase brand equity, improve market

share and retention

• Improved product offering

Pre

sen

ce Market Size

(Domains)670k

Members 68k

• 63% SMB without web presence

• Utilise sales/service team to grow

customers, improve retention and

increase ARPU

• Improved product offering

• Targeted Hosting & Solutions strategy

Pre

sen

ce Market Size

(Domains)3m

Members 1.2m

• Targeting 5 English speaking markets

• Low competition

• High growth – Truly emerging markets

• Targeted localised marketing & sales

• Potential acquisitions

Op

po

rtu

nit

y

390m Population 63%* Internet Usage

Domain Growth 18%*

Existing Members 25k

• 6th Largest Domain Provider

Pre

sen

ce Market Size

(Domains)2.2m

Members 110k

* Averaged across the chosen markets

United Kingdom

Australia

New Zealand

Asia

India

In summary

H1 FY17 delivered against plan

• Successful IPO

• Strong growth in Bookings, earnings and cash flows

• Cash of $17.5m and no debt

• Operational initiatives delivering against strategy

Well positioned to deliver strong growth

Sustainable long term growth strategy

• Expanding in high growth English speaking Asian markets

• Improving engagement, ABPU and lifetime value

• Successfully delivering new products and services

• Successfully integrated acquisitions, with full year benefits to flow

• All backed by Best in World Customer Care

…and deliver FY17 Prospectus forecast

s 14 ASX: DN8 | H1 FY17 results | February 2017


Questions?

Appendices


H1 FY17: Reconciliation of statutory to adjusted EBITDA


($m) H1 FY16 H1 FY17 Notes

Statutory EBITDA* 1.5 2.9

Adjustments to calculate Adjusted EBITDA

1. Change in deferred revenue (Nett) 1.8 2.1Due to adoption of accrual accounting in accordance

with accounting standards

2. Equity based compensation expense - 0.2Share options issued to management following the

completion of the IPO

Adjusted EBITDA 3.3 5.2

*Before forgiveness of advances to related parties pursuant to the Share Sale Agreement

(see Appendix 4D and Half Year Financial report disclosure)

Terminology & calculations


Item Description

Average Customer LifeLifetime of members in years. 1 divided by churned rate, divided by 12. Churned members within month divided by total active start of month. A member is

logged as churned when they no longer have a product or domain set to ‘Registered’, ‘Pending Setup’, ‘Renewal Due’, ‘Pending fraud’ and ‘Further Info’.

Average Bookings Per User (ABPU) Total Bookings within previous 12 months divided by unique Active Members who had a product and made a payment within that same period.

Renewal Rate ‘Due for renewal’ status divided by domains/products renewed.

Cost Per Acquisition Marketing costs divided by new active members.

Active Members Active Members are members who have a domain, product or service that’s current and has been paid for.

Total Members Members with cleansed and verified contact details within our database.

Adjusted EBITDAA measure of our performance aligning our Bookings and operating expenditures. It is used as a focus of management to evaluate the profitability of our

business.

Cash Generated from Operations Cash generated from operations is a measure of our performance calculated as Adjusted EBITDA less capital expenditures and acquisitions of intangibles.

BookingsTotal Bookings represents cash receipts from the sale of products to customers in a given period before effecting adjustments for net refunds granted within

the period. This provides valuable insight into the sales of our products and the performance of our business since we typically collect payment at the time of

sale.

IFRS International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board.

Lifetime value Average lifetime of members multiplied by ABPU. Indicates potential Bookings of average member.

ATL Above the Line – Marketing that is delivered in a mass media format such as TV, Radio, Billboards and Newspaper

Disclaimer


This presentation was not prepared for and should not be relied upon to provide all necessary information for investment decisions. Some of the information contained

in this presentation contains “forward-looking statements” which may not directly or exclusively relate to historical facts. Although great care & diligence has been taken

to ensure the accuracy of this presentation, Dreamscape Networks Limited gives no warranties in relation to the statements and information contained herein and

disclaims all liability arising from persons acting on the information and statements in this presentation.

Due to the dynamics and changing risk profiles of investment markets, Dreamscape Networks Limited reserves the right to change its opinion at any time. All investors

are strongly advised to consult professional financial advisors whose role it is to provide professional financial advice, taking into account an individual investor’s

investment objectives, financial situations and particular needs.

Dreamscape Networks Limited (DN8) · Others 4.3 3.9 -9% Prepaid marketing costs in 1H 2016 for...

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