IQGeo : Interim results for six months ended 30 June 2022

IQGeo Group plc

(the "Company" or the "Group")

Interim results for the six months ended 30 June 2022

Continued success in orders and revenue growth

IQGeo Group plc (AIM: IQG), a market leading provider of geospatial productivity and collaboration software for the telecoms and utility network industries, is pleased to announce its interim results for the six months ended 30 June 2022.

Operational highlights:

• Global top 5 telecom operator added as a new logo, with IQGeo solutions playing a key role on one of the largest fibre and 5G build outs in the US market
• Completed the acquisition of Comsof N.V. ("Comsof") on 11 August 2022 for a total consideration of up to €13.0 million. The acquisition expands IQGeo's product capabilities with a market-leading automated fibre optic network planning and design software as well as adding a continental European operations hub and adding c.100 customers to the Group. Comsof is anticipated to accelerate net profitability in 2023 and beyond.

Group financial highlights:

• Recurring revenue growth of 75% to £4.5 million (H1 2021: £2.6 million) representing an increasing proportion of H1
  revenue (H1 2022: 49% vs H1 2021: 40%)
• Total revenue has grown by 44% to £9.2 million (H1 2021: £6.4 million), all of which is organic
• Exit ARR* increased by 56% to £10.3 million (H1 2021: £6.6 million)
• Positive adjusted EBITDA** of £0.2 million (H1 2021: loss of £0.4 million)
• A considerably reduced PBT loss for the period of £0.3 million (H1 2021: £1.0 million)
• Net cash balance of £11.1 million as at 30 June 2022 (31 December 2021: £11.5 million, 30 June 2021: £12.1 million)
• Heavily over-subscribed fundraising from new and existing investors of £3.5m at 125p in August 2022 to part fund the acquisition of Comsof

*Exit ARR is defined as the current go forward run rate of annually renewable subscription and M&S agreements

**Adjusted EBITDA excludes amortisation, depreciation, share option expense, foreign exchange gains/losses on intercompany trading balances and non-recurring items and is reported as it reflects the performance of the Group

Richard Petti, Chief Executive Officer, said:

"The IQGeo business performed very well in the first half of the year notwithstanding the uncertain global backdrop. This success reflects sustained investment in network modernisation from both telecommunication and utility operators worldwide, and the success of our investments in our products and organisation. We continue to expand our customer base through direct organic sales and our strategy of M&A driven market growth. The successful acquisition of Comsof NV gives us a strong list of new customers and industry-leading network planning technology, both of which will increase our market momentum.

This performance and the platform that we have established gives us the confidence in achieving our expectations for this year. We remain very positive about the outlook for our target markets in the telecommunication and utility industries."

Notes to Editors

About IQGeo

IQGeo™ (AIM: IQG), delivers award-winning geospatial software solutions to telecommunication and utility network operators around the world ranging from large multinationals to smaller regional providers. The IQGeo software suite improves productivity and collaboration across enterprise planning, design, construction, maintenance, and sales processes reducing costs and operational risks while enhancing customer satisfaction. Our mobile-first,cloud-native software helps companies create and maintain an accurate view of their increasingly complex network assets that is easily accessible by anyone, wherever and whenever needed. Whether using our Enterprise IQGeo Platform or targeted OSPInsight fiber planning and design software, we enable a "System of Action" that breaks down information silos, improves data quality and accelerates decision making. Headquartered in Cambridge, with offices in Denver, Salt Lake City, Frankfurt and Tokyo, we work with some of the largest network infrastructure operators in the world. For more information visit: www.iqgeo.com/

Chief Executive Officer's statement

Overview

We are very pleased with performance for the first 6 months of the year, most notably the 44% organic revenue growth, the 56% increase in exit ARR and our first reported positive adjusted EBITDA figure of £0.2 million. With the IQGeo global operations expanding, we have invested further by increasing headcount across the organisation in all of our key regions of North America, Europe and Japan. Additionally, we have strengthened our senior management team by making several key appointments.

Comsof acquisition

On 11 August 2022, IQGeo acquired Comsof, a Belgian company that builds and licenses fibre optic network planning and design software, for an initial consideration of €10 million, in addition to earn-out consideration of up to €3.0 million. We were very pleased by the high level of support shown by new and existing investors in an associated fundraising which part-funded the acquisition.

Comsof is headquartered in Belgium, with over 50 staff in Ghent, making it an ideal base of operations for Continental Europe where COMSOF has a significant customer base in the Benelux region, Germany, UK and Scandinavia. By investing in its European sales and marketing capabilities IQGeo anticipates it will further accelerate sales of an integrated product suite throughout the region. Comsof also has an office in Toronto, Canada, with 10 staff based there which will enable the selling of Comsof's market leading fibre planning software into IQGeo's North America customer base.

Its flagship product is COMSOF Fiber, which has been used to design fibre networks covering more than 100 million homes. The software is used by customers to aid in the design, construction, and maintenance of fibre optic networks. The software allows customers to combine their network data with third-party Geographic Information System (GIS) technology to provide location-based insights to customers. More recently Comsof has expanded into the utilities market with Comsof Heat, planning and design software for district heating and cooling networks.

We believe that none of IQGeo's global competitors offer our customers automated design and planning capabilities natively within their geospatial suites for telecoms or utilities. Typically, these capabilities are offered via partnerships or white labelling and IQGeo believe that the acquisition of Comsof will provide IQGeo a significant competitive advantage in being able to offer customers a full end-to-end solution within a single product stack.

During the first half of 2021 IQGeo completed the full integration of its OSPI acquisition, completed in December 2020. During 2021 under IQGeo's ownership, the run rate of new ARR won by the OSPI business more than doubled to £1.1 million and the new customer logos won by OSPI increased to 54. Our track record of integration and improving performance of acquired businesses can now be applied to Comsof's financial performance over the coming year. We anticipate that the Comsof business will be fully integrated into IQGeo operations by the end of 2022.

Strategic Priorities

The strategic priorities of the Group remain consistent with those identified within our 2021 Annual report which was published in March 2022. Since then, the Group has achieved continued progress against our strategic objectives in the first half and this positive performance is reflected in our first half results.

• Regional Growth: The Group has added 33 new customer logos during the first six months of the year, with market share being expanded in North America, Europe and Japan.
• Building Recurring Revenues: The combination of new customers and expansion orders from existing customers has added £1.9 million of Annual Recurring Revenues ('ARR') through subscription and M&S arrangements to our exit
  ARR, which stands at £10.3 million as at 30 June 2022.
• Product Innovation: IQGeo has continued to grow investment in the IQGeo product stack with product releases expanding functionality in a number of our core products.

Current trading and outlook

The Board anticipates continued organic growth through achieving positive net retention of its existing customer base and the continued addition of new customers. Additionally, the acquisition of Comsof is expected to accelerate sales in fibre optic design planning and design tools in high value markets where nation-wide fibre optic networks are being rolled out such as North America, UK and Germany among others. Comsof adds a global customer base of c.100 active customers to the IQGeo Group, providing a materially enlarged and loyal user base with potential to increase cross-selling of IQGeo software products.

Our financial performance remains in-line with Board expectations, and we remain very positive about the outlook for our target markets in the telecommunication and utility industries.

Richard Petti

Chief Executive Officer

Financial Review

Principal events and overview

The Group continues to focus on increasing Annual Recurring Revenue ("ARR") which arises from both subscription-based software sales and also maintenance and support arrangements from perpetual licence sales. During the period, the Group has been successful in the markets in which it operates, continuing to grow Exit ARR which stands at £10.3 million as at 30 June 2022 (£6.6 million as at 30 June 2021).

The organic growth achieved by IQGeo is reflected in the Group KPIs below:

Annual recurring revenues

During the first half of 2022, ARR order intake has increased by 28% to £1.9 million (H1 2021: £1.5 million). This has been achieved through winning 33 new customer logos combined with expansion sales to existing customers. During the period, the Group continues to record a positive net retention rate of 103% (H1 2021: 109%). Recurring revenue as a % of total revenue has increased to 49% (H1 2021: 40%).

In addition to recurring revenue, revenue is derived from consultancy services on own IP products and also consultancy services connected to third-party products. Revenues from third-party product services are consistent with the prior period but are still expected to decline in future periods as the Group focuses on growing recurring revenues connected with its own intellectual property.

Orders

Bookings of total orders have increased by over 100% to £14.7 million during H1 2022 (H1 2021: £7.1 million) with new customers being added in all three of our key markets (North America, Europe and Japan).

Total order backlog (orders won, revenue not recognised) as of 30 June 2022 was £21.7 million (H1 2021: £9.8 million) with the growth being due to increased order intake.

Revenue

Revenue composition by revenue stream is summarised in the table below: