Beeks Financial Cloud : Interim Results 2023

Commercial in confidence

The above highlights are based on underlying results. Reconciliations between underlying and statutory results are contained within the financial information. The statutory equivalents of the above results are as follows:

• Loss before tax of £0.76m (H1 2022: loss of £0.27m)
• Basic earnings per share of a loss of 0.73p (H1 2022: loss of 0.42p)

The largest reconciling item is the consistent add back of the non-cash share based payment charge.

Gordon McArthur, CEO of Beeks Financial Cloud commented:

"With our proven track record and well-established reputation as a provider of technology to the financial markets, we retain strong confidence in continued success for Beeks. Our principal focus for the second half will be to convert our substantial pipeline of opportunities across the newly launched Exchange Cloud offering.

"While the macro environment presents challenges to all businesses, we believe the shift of the financial services sector to cloud computing will continue at pace. Our pipeline of business with both existing and potential new customers provides us with a considerable runway of visible revenue and our balance sheet strength has enabled us to continue to make substantial investment into product, people and stock capacity to capitalise on this pipeline and considerable market opportunity."

The Directors of the Company are responsible for the contents of this announcement.

ABOUT BEEKS FINANCIAL CLOUD

Beeks Financial Cloud is a leading cloud computing, connectivity and analytics provider for financial services. Our cloud-basedInfrastructure-as-a-Service (IaaS) model allows financial organisations the flexibility and agility to deploy and connect to a variety of exchanges, trading venues and cloud service providers at a fraction of the cost of building their own networks and infrastructure. Based in the UK with an international network of 27 datacentres, Beeks supports its global customers at scale in the leading financial centres.

For more information, visit: www.beeksfinancialcloud.com

Commercial in confidence

Chief Executive Officer's Review

Our vision is simple: Build. Connect. Analyse. Providing end to end outsourcing of financial services compute environments.

I am pleased to report on continued strong trading, delivering significant growth in revenue, EBITDA and ACMRR and making good progress with the substantial opportunities in our new business pipeline.

Since our IPO in FY 2018, we have been focused on extending our offering to meet the needs of the world's largest financial services organisations, investing in our product set and team. These investments have resulted in the launch of Proximity Cloud in August 2021, a pre-builtlow-latency private cloud delivered to site for financial services organisations, and Exchange Cloud in June 2022, an evolution of our Proximity Cloud offering, explicitly designed for global financial exchanges.

We believe Exchange Cloud represents a transformative opportunity for Beeks, as the end-user compute market within exchange data centres is considerable. There is no comparable offering on the market and we have secured notable early endorsements of the product.

Our confidence in the Exchange Cloud offering is underpinned by our record pipeline of opportunities and while dealing with organisations of this size naturally takes time, we are confident in our ability to continue capitalising on the significant opportunity. We are currently in final contractual negotiations with two material Exchange Cloud clients following 12 and 18 month sales cycles and proofs of concept.

Financial Performance

Revenue in the period grew by 35% to £10.40m (H1 2022: £7.72m), resulting in an increase in

underlying EBITDA of 48% to £3.59m (H1 2022: £2.43m). Beeks continues to have a strong recurring revenue profile , and customer retention remained within target. Our ACMRR grew 35% to £21.3m at 31 December 2022 (H1 2022: £15.8m).

Investment during the period was primarily into the evolution of Exchange Cloud and our strong balance sheet provides us with the resources to continue exploiting the market opportunity of our Exchange, Proximity and Private Cloud offerings.

Operating margins have remained stable during the period, in line with the Board's expectations.

Operational Expansion

This was another period of investment across the business, in which we expanded our offering and team in order to strengthen our position in the rapidly growing cloud computing market. Headcount in the first half increased to 106, up from 89 as at 30 June 2022. Our main priority during the period was to further build out our software development team in to support the roll out and evolution of Exchange Cloud. We now have approximately one third of our total headcount within our internal software development function which largely completes our investment into this team.

Although we are not immune to well-documented macroeconomic issues such as inflationary pressure and supply chain disruption, we continue to manage the situation well. Appropriate price increases have been introduced in response to elevated energy prices, and whilst supply chain issues do persist, lead times are now easing and we are optimistic of a slowly improving picture. Having additional balance sheet strength has enabled us to front load capacity in order to reduce the impact of lead time delays and fulfil customer orders. We remain confident in our ability to offset the impact of macroeconomic challenges.

We increased our data centre presence in the first half, with a focus on existing locations. We were pleased to open another data centre in Toronto, as well as significantly expanding in London. We now have data centres in 15 locations and will continue with our approach of expanding into areas where we already have customer demand.

Commercial in confidence

Product Roadmap

We remain focused on building out the functionality of Exchange and Proximity Cloud. Areas of development in the period included extending the feature set to provide richer functionality, adding additional network features and developing additional business analysis functions that will assist customers in understanding their networks and support their end client billing. We have also improved the automation of provisioning of new compute items for our customers through a change to the virtualisation platform. Ultimately these new virtualisation features will reduce our cost base and support faster time to market.

We have a fully funded product roadmap that extends out for the next couple of years and see significant opportunity through investing resources in our two major product lines: our Private/Public and our Proximity/Exchange Cloud offerings.

Future Growth and Outlook

With our proven track record and well-established reputation as a provider of technology to the financial markets, we retain strong confidence in continued success for the Group. Our principal focus for the second half will be to convert our substantial pipeline of opportunities across the newly launched Exchange Cloud offering with two material contracts at the final negotiation stage.

While the macro environment presents challenges to all businesses, we believe the shift of the financial services sector to cloud computing will continue at pace and our pipeline of business with both existing and potential new customers provides us with a considerable runway of visible revenue, reinforcing the Board's confidence in achieving results for the year in line with current market expectations.

Gordon McArthur

CEO

27 February 2023

Commercial in confidence

Chief Financial Officer's Review

Financial Review

We are pleased to report on another strong set of financial results for the first half of the year where we have continued to invest but also significantly grown the top line during another period of sales growth.

Group revenues grew by 35% to £10.40m (H1 2022: £7.72m) primarily driven by the expansion of our Tier 1 customer base as we execute on our land and expand strategy. During the period we have grown our existing Tier 1 contract values and signed additional Tier 1 customers which now represent 50% (H1 2022: 30%) of our total revenue.

Our core Private Cloud offering has continued to grow and has largely driven the sales increase, whilst our sales pipeline for Proximity and Exchange remains strong, as referenced earlier in this report.

Gross profit in the period increased by 47% to £4.35m (H1 2022: £2.97m) with gross margin up at 41%

(H1 2022: 37%). Gross margins in the period have been helped by the recurring element of Proximity Cloud sales during the second half of the previous year as we start to see a return on our investment made. As with prior year trends, as we deliver material signed contracts over the second half of the year, we expect gross margins to increase in percentage terms as part of the cost of up-front infrastructure investment has already been made.

Underlying EBITDA increased by 48% to £3.59m (H1 2022: £2.43m) with underlying EBITDA margins

at 35% (H1 2022: 31%). Underlying operating profit increased by 39% to £0.85m (H1 2022: £0.61m). Underlying operating profit is defined as operating profit excluding grant income, amortisation on acquired intangibles, share based payments and exceptional non-recurring costs.

Underlying EBITDA, underlying operating profit, underlying profit before tax and underlying earnings per share are alternative performance measures, considered by the Board to be a better reflection of true business performance than statutory measures only.

Key performance indicator review

*All references to margins are as a percentage of revenue.