DADA : Press Release Results FY 2016

Press release pursuant to CONSOB Regulation 11971/1999, as subsequently amended

(€62.2 MN IN 2015)

(€10.5 MN IN 2015)

(€3.2 MN IN 2015)

(-€0.9 MN IN 2015, NET OF CAPITAL GAIN OF €2.2 MN)

FOLLOWING ACQUISITION OF SFERA FOR €3.2 MN

(-€27.9 MN AT 31/12/2015)

**

1 The changes to the scope of operations regard: the disposal of ProAdv, which had contributed €1.2 million to revenue in 1H15, the consolidation of the results of Etinet S.r.l. as from 1 July 2015, which contributed €0.7 million to revenue in 1H16, and the consolidation of the results of Sfera Networks as from 1 July 2016, which contributed €1.1 million in 2H16.

2 EBITDA is gross of impairment losses and non-recurring items

NB: for the sake of clarity, changes in percentage and absolute terms appearing in this Press Release have been calculated using exact amounts.

Claudio Corbetta, CEO of DADA: "2016 was a positive year in which we accomplished significant results despite a persistently challenging market environment. The measures to drive growth allowed us to strengthen our market shares in our main geographies of operation, while the customer base grew by 13% to over 630,000, maintaining high retention rates. Our priority is to become the trusted "One Stop Shop" for European SMEs in their digitization process, continuing to provide them with first-class products, highly customized solutions and a best in class level of service."

Lorenzo Lepri, General Manager and CFO of DADA: "We are extremely satisfied with the results achieved in 2016, which increase YoY and are in line with the guidance disclosed to the market. Revenue grew, in organic terms, by 6% to reach €63.7 million, while we reported a sharp improvement in operating profit in the fourth quarter, triggering a positive trend we expect to continue in 2017. For the current year, we expect to remain on this virtuous path of growth, and we aim to achieve a mid-single digit increase in revenue with a further improvement in operating profit."

CHANGES IN THE SCOPE OF CONSOLIDATION

In order to compare figures for the two years more properly, mention should be made that in 2015 the DADA Group completed the focusing process on the core business of online presence and visibility services for SMEs. 2015 and the first nine months of 2016 saw the completion of the following extraordinary transactions, which changed the Group's structure:

• on 23 March 2015, DADA S.p.A. sold to Italiaonline S.p.A. the entire share capital of Moqu Adv S.r.l. As a result, the Performance Advertising segment had required the application of IFRS 5 "Non-current assets held for sale and discontinued operations";

• on 30 June 2015, the DADA Group completed the transfer of the ProAdv BU to 4W MarketPlace S.r.l., acquiring 25% of the transferee's share capital;

• on 8 July 2015, through its subsidiary Register.it S.p.A., DADA completed the acquisition of 100% of the share capital of Etinet S.r.l., a company that provides digital communication services to SMEs. This investment is fully consolidated in the DADA Group's financial statements as from 1 July 2015. Conversely, 1H15 had no financial benefit from this company;

• on 6 July 2016, through its subsidiary Register.it S.p.A., DADA S.p.A. acquired 100% of Sfera Networks S.r.l., specialized in Virtual Hosting and Network & Private Cloud services. The investment is fully consolidated as from 1 July 2016; as a result, 2015 had no financial benefit from this company.

All the following comments and analysis on income statement and cash flow figures in this press release stem from the abovementioned new Group structure.

GROUP RESULTS IN 2016

The DADA Group ended 2016 with consolidated revenue of €63.7 million, up by +2.5%

versus €62.2 million in 2015.

The revenue performance specifically reflects the adverse trend of the appreciation of the Euro against the British Pound, which had a negative effect of approximately €2.8 million versus 2015, as well as the following changes in the business scope:

• the disposal of the ProAdv BU as from 1 July 2015, which had contributed €1.2 million

  to revenue in 1H15;

• the consolidation of the results of Etinet S.r.l. as from 1 July 2015, which contributed

  €0.7 million to revenue in 1H16;

• the consolidation of the results of Sfera Networks S.r.l. as from 1 July 2016, which

contributed €1.1 million to revenue in 2H16.

In 2016, consolidated EBITDA came to €10.7 million, with an approximately 17% margin on revenue, up by +2% versus 2015 (€10.5 million, 17% margin).

The EBITDA performance, as for revenue, reflects the adverse trend of the appreciation of the Euro against the British Pound, which accounted for approximately -€0.6 million versus 2015, as well as the following changes in the business scope:

• the disposal of the ProAdv BU as from 1 July 2015, which had contributed €35 thousand

  to EBITDA in 1H15;

• the consolidation of the results of Etinet S.r.l. as from 1 July 2015, which contributed

  €0.2 million to the results in 1H16;

• the consolidation of the results of Sfera Networks S.r.l. as from 1 July 2016, which

  contributed €0.3 million to the results in 2H16.

  Net of these effects, EBITDA would have grown by +2.7% in 2016 versus 2015. Looking at the impact of the main aggregates on each line of the income statement:
• service costs in 2016 amounted to €35.4 million, down by 1% versus €35.7 million in

2015, representing 56% of revenue from 57%. Specifically, mention should be made of the benefits arising from the full operation of the new Datacenter in the UK and from the disposal of the French datacenters (with a total reduction of €0.6 million, or 15% less than in 2015), and the reduction in outsourcing costs of customer care and phone

support services in Italy and in other countries (over €0.3 million, or 28% less than in

2015);

• payroll costs in 2016 amounted to €19.8 million, up by +9% versus €18.2 million in 2015, representing 31% of revenue from 29%. The trend of this item is mainly ascribable to the increase in staff (445 units at 31 December 2016 versus 398 at end 2015), due to the consolidation of Sfera Networks S.r.l. and to the insourcing of customer care and phone support services in Italy and in other countries, an increase aimed at supporting both the expansion of the customer base and at maintaining high customer service levels;

• "Change in inventories and increase in own work capitalized", amounting in 2016 to

€2.2 million, down to 3.5% of consolidated revenue (3.6% in 2015), consists of the portion of payroll costs incurred in the development of solutions and proprietary platforms needed to launch and manage the services provided by the DADA Group.

As mentioned in the Interim Report at 30 September 2016, product margins, especially in the first half of the year, were affected by the initial offering sales strategies, which are based on promotional offers over a specific time period and tend to squeeze average revenue (ARPU) in the short term, though implying direct costs basically proportional to the increase in volumes, since the full contribution to revenue is made in the event the customer renews the service, which is generally at full price. In 4Q16, the trend of the first renewals of the abovementioned initial offering sales strategies propelled EBITDA, which grew by +24% YoY in the last quarter.

Consolidated EBIT at 31 December 2016 amounted to €4.0 million, with a 6% margin on revenue, up by +26% versus 2015 (€3.2 million, 5% margin).

In addition to the EBITDA trend, EBIT's performance reflects the following elements:

- depreciation and amortization, amounting to €6.3 million (10% of revenue), €2.9 million of which for tangible assets and €3.4 million for intangible assets; the overall figure dropped by 8% versus 2015 (€6.9 million, 11% margin on revenue), a reduction that affected almost equally tangible and intangible assets;

- EBIT was impacted by impairment losses, provisions and other non-recurring income/charges of €0.34 million versus €0.44 million in 2015, referring mostly to impairment losses and to severance from the efficiency measures on the organizational structure.

Consolidated Financial activities in 2016 (the difference between financial income and charges, including the income statement effects of forex movements) came to -€2.8 million versus -€2.5 million in 2015. The trend of this aggregate was impacted by the effects of forex fluctuations, especially those regarding the Euro/British Pound exchange rate, bringing a negative contribution of €0.2 million in 2016 versus the positive contribution of

€0.3 million in 2015. Mention should be made that the financial effects of these exchange rate movements were partly mitigated by non-speculative hedging made, where possible, in the reporting period as well. Overall financial charges, net of exchange losses, improved