Modena, September 25, 2015
– Expert System continues path of international growth to strengthen its position as a global leader specializing in semantic technology for cognitive computing
Consolidated financial results for June 30, 2015:
- Revenues of €5.5 million, up 59% (€3.5 million in the first half of 2014* ), with 41% foreign market share, a significant increase compared to 16% in 1H 2014*;
- Foreign revenues of €2.3 million (€0.6 in 1H 2014 *), with + 285% growth in the US market, which increased from €0.5 million to €1.9 million;
- Negative EBITDA of €1.5 million (compared to negative €0.4 million in 1H 2014*);
- Negative net result of €2.1 million (compared to €1.0 in 1H 2014*);
- Negative net financial position of €2.3 million (positive €1.3 million for December 31, 2014) with €7.7 million in cash
Expert System (EXSY.MI), the leader in multilingual semantic intelligence technology for the effective management of unstructured and open source information, today announced that Expert System Board of Directorsapproved the financial results for the period ending June 30, 2015. Please note that this interim report is not subject to audit, and that the June 30, 2014 results are of a managerial nature, and therefore used for comparative purposes only.
Stefano Spaggiari, CEO, Expert System, commented:
“In the first half of 2015, our Group achieved the first important results of our internationalization process, in which we continue to invest, with revenue growth generated by foreign sales, which quadrupled over the same period one year ago. Our recent acquisition of TEMIS will play a key role in our strengthening process, bringing significant growth, with pro-forma revenues that will exceed €20 million in 2015. From a profitability point of view, the period saw additional expenses incurred to support the strengthening of foreign commercial resources, that, together with the contractual timing of some orders, will produce results in the second half of the year. In addition to the consolidation of commercial agreements already in place, we have closed new contracts with one of the largest, most prestigious global publisher, which demonstrates the excellence of semantic analysis solutions for big data, based on our Cogito platform. Historically, the second half of the year sees the fruits of investments made in the previous six months, as was true in 2014. The process of expansion that started with our listing on the AIM Italia continues both organically, with new foreign investment opportunities, and not excluding other international acquisitions, and enables us today to affirm our position as the multi-national leader of reference in cognitive computing and artificial intelligence.“
Consolidated financial results for June 30, 2015
The scope of consolidation for the June 30, 2015 results includes, in addition to the parent company Expert System S.p.A., the following subsidiaries: Expert System Cogito Ltd (100% owned), Expert System USA Inc (100% owned) and Expert System IBERIA SLU (100% owned).
Strong foreign revenue growth
Revenues of €5.5 million show significant growth: +59% over June 30, 2014 (€3.5 million in Q1 2014*). In particular, revenues from foreign markets of €2.3 million show the major impact of US revenues, which amounted to €1.9 million, compared to €0.50 million in the first half of 2014*, thus registering +285% growth over the first half of 2014.
Licensing revenues also increased from 28% to 37% of total revenues.
Negative EBITDA of €1.5 million compared to negative EBITDA of €0.4 million for June 30, 2014* reflects the significant costs related to international development, and the development of new products and technologies, as well as the postponement of some major orders to the second half of the year in the domestic market. The differences in margin are also due to the decrease of WIP inventory of ongoing activities, while a positive trend of increased orders is replenishing the commercial pipeline, the effects of which will be seen in the second half of 2015 and in 2016.
EBIT is negative at €2.5 million compared to negative EBIT of €1.1 million at June 30, 2014.*
The net result is negative at €2.1 million compared to a negative net result of €1.0 million at June 30, 2014.*
The Net Financial Position is negative and amounted to €2.3 million (compared to positive €1.3 million at December 31, 2014); available liquidity amounted to €7.7 million.
Consolidated Financial Pro-Forma Results for June 30, 2015, including contribution from the TEMIS acquisition
The acquisition of TEMIS S.A., concluded on September 23, 2015, resulted in a significant increase for the Group’s growth that consolidated its position as a market leader in the field of semantic technology for cognitive computing. Retroactively applying the results of the acquisition, the consolidated pro-forma financial results for June 30, 2015 that include the June 30, 2015 results of TEMIS S.A.** are shown below:
Revenues of €9.1 million, 65% of which from foreign markets;
Negative EBITDA of €1.3 million;
Negative EBIT of €2.6 million;
Negative net result of €1.9 million;
Negative net financial position of €2.3 million.
Significant events in the first half of 2015
February 15: Expert System joins the Google for Work Partner Program as a Google Cloud Platform Technology Partner; the Cogito semantic technology will be extended in the Google Cloud Platform.
March 24: Expert System partners with MongoDB, the American next-generation database provider
Significant events after the closing of the first half of 2015
July 31: Expert System announces a €5 million bond issue with 4% fixed annual interest rate, maturing in 2024; It is aimed at enhancing commercial activities in Europe and the US where the recent TEMIS acquisition strengthens the company’s market position
September 16: Expert System successfully concludes €2.16 million capital increase for Expert System Group subsidiary ADmantX, the market leader in online advertising technology
September 23: Expert System completes the acquisition of TEMIS, strengthening its position on all Western markets
Business outlook
In 2015, the Group expects to reach a production value between €28 and 30 million, a strong increase compared to 2014 results of €17 million, and positions the group as an industry leader at the international level. The results of major investments already in place will begin to be realized in fiscal 2016 and 2017 when the synergies, and the commercial and operational efficiencies created as a result, can be fully exploited and implemented.
The consolidated interim financial report for June 30, 2015 will be made available In Italian to the public in accordance with the terms of the AIM Italia Issuers’ Regulations, as well as on the company’s website at expertsystem.com/it in the section Investor Relations – Financial Reports.
- Consolidated Income Statement as of June 30, 2015
- Consolidated Financial Statement as of June 30, 2015
- Consolidated Net Financial Position as of June 30, 2015
*Footnotes
1 Management accounts included for comparative purposes only
5 Pro-forma management accounts and therefore not subject to audit.
