Expert.ai — Growth in focus areas

Expert.ai (MI: EXAI)

Last close As at 12/07/2024

1.51

−0.10 (−6.21%)

Market capitalisation

79m

More on this equity

Research: TMT

Expert.ai — Growth in focus areas

Expert.ai reported 11% y-o-y revenue growth in H121, and as a result of the focus on product development and strengthening the sales and marketing function the EBITDA loss widened to €7.0m from €4.6m in H120. We maintain our forecasts for FY21, which assume similar seasonality to previous years. The planned shift in listing from AIM Italia to Borsa Italiana should widen the potential investor audience for expert.ai and improve liquidity.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

Expert.ai

Growth in focus areas

H121 results

Software & comp services

5 October 2021

Price

€2.38

Market cap

€123m

Net cash (€m) at end H121

13.3

Shares in issue

51.5m

Free float

73.5%

Code

EXAI

Primary exchange

AIM Italia

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(15.0)

(19.2)

(6.2)

Rel (local)

(12.7)

(19.8)

(20.6)

52-week high/low

€3.4

€2.0

Business description

Expert.ai has developed and patented an AI-based technology platform that extracts useful information from unstructured text using a unique mix of natural language understanding and machine learning algorithms and applies it to verticals such as enterprise search, customer experience management and big data analytics.

Next events

Shareholders’ meeting

14/15 October

Analysts

Katherine Thompson

+44 (0)20 3077 5730

Expert.ai is a research client of Edison Investment Research Limited

Expert.ai reported 11% y-o-y revenue growth in H121, and as a result of the focus on product development and strengthening the sales and marketing function the EBITDA loss widened to €7.0m from €4.6m in H120. We maintain our forecasts for FY21, which assume similar seasonality to previous years. The planned shift in listing from AIM Italia to Borsa Italiana should widen the potential investor audience for expert.ai and improve liquidity.

Year end

Revenue (€m)

EBITDA*
(€m)

EPS*
(c)

DPS
(€)

P/E
(x)

EV/sales
(x)

12/19

33.7

5.5

(1.6)

0.0

N/A

3.2

12/20

30.6

(1.9)

(20.2)

0.0

N/A

3.6

12/21e

32.4

(7.2)

(26.7)

0.0

N/A

3.4

12/22e

45.5

(2.9)

(20.5)

0.0

N/A

2.4

12/23e

64.5

5.7

(7.8)

0.0

N/A

1.7

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

H121: Building capacity and launching the platform

Expert.ai focused on the launch of its end-to-end hybrid natural language processing (NLP) SaaS platform during H121, with a beta version available from March and the platform commercially available from the end of June. The company also bolstered its sales and marketing team, particularly in the United States, with sales headcount up 52% y-o-y. H121 total revenue grew 11% y-o-y, with good performance in focus areas: subscription licences grew by 102% and revenue via channel partners by 133%. The company announced that it plans to move to the Borsa Italiana, and as part of the exchange’s requirements, will start to report financials according to IFRS rather than Italian accounting standards.

Estimates maintained for FY21

Management expects revenue to follow a similar pattern to previous years, with one-third of revenue typically generated in H1. Our revenue forecasts are substantially unchanged, assuming a near doubling in revenue in H221 versus H121 and stronger growth in FY22 as the recently hired salespeople start to generate new business. As indications that the sales engine is building momentum, the company noted that it had seen 23% month-on-month lead generation growth during H121 and a 40% increase in the new business funnel. Reflecting the acceleration in sales hiring in H121, we have increased our forecasts for staff costs in FY21–23, which reduces our EBITDA forecasts for FY22 and FY23.

Valuation: Considerable upside if executed well

Expert.ai currently trades at a discount to peers on an EV/sales basis in FY21 and FY22. As the full SaaS platform has only just been launched, it is unlikely to drive material revenue growth until FY22. Based on a discounted cash flow (DCF) valuation, we estimate that successful execution of the plan could see the stock valued in the region of €4.9 per share. To monitor progress towards the revenue inflection, we look to track the rate of new customer acquisition, net dollar retention and contribution from channel partners and North America.

Review of H121 results

For the first time, expert.ai published H121 results according to both Italian GAAP and IFRS. As our forecasts are according to Italian GAAP, we discuss the H121 performance with respect to H120 on that basis. We also include the results on an IFRS basis for information purposes. We discuss in more detail the key changes to reporting once moving to IFRS on page 4.

Exhibit 1: H121 results highlights

€m

Italian GAAP

IFRS

H121

H120

y-o-y

H121

H120

y-o-y

Sales

10.8

9.6

13%

10.8

9.6

13%

Grants and other income

1.0

1.1

-6%

1.0

1.1

-6%

Total revenue

11.8

10.7

11%

11.8

10.7

11%

Capitalised development costs

4.3

3.1

40%

4.3

3.1

40%

Changes in WIP

0.0

0.0

-79%

0.0

0.0

-79%

Total production value

16.2

13.7

18%

16.2

13.7

18%

Staff costs

(15.8)

(10.9)

45%

(15.8)

(10.9)

45%

Other costs

(7.3)

(7.4)

-1%

(6.9)

(7.1)

-3%

Adjusted EBITDA

(7.0)

(4.6)

54%

(6.5)

(4.2)

54%

EBITDA margin

Depreciation & amortisation - in-house

(3.1)

(2.8)

12%

(3.4)

(3.1)

10%

Normalised EBIT

(10.2)

(7.4)

38%

(9.9)

(7.4)

35%

Normalised EBIT margin

Depreciation & amortisation - acquired

0

(0.5)

N/A

0

0

N/A

Share-based payments

0

0

N/A

(1.6)

(1.7)

N/A

EBIT

(10.2)

(7.8)

30%

(11.5)

(9.1)

27%

Net income

(9.9)

(3.1)

224%

(11.0)

(4.3)

155%

Net cash

13.3

3.8

250%

11.2

N/A

N/A

Source: expert.ai

Expert.ai reported an 11% y-o-y increase in revenue in H121. The EBITDA loss widened to €7.0m reflecting an acceleration in hiring, which can be seen in the 45% increase in staff costs over the period, while other costs reduced slightly. The company ended H121 with net cash of €13.3m, made up of a cash position of €44.6m and debt of €31.3m. The table below shows the breakdown of revenue:

Exhibit 2: Revenue breakdown

€m

H121

H120

y-o-y

Recurring licences

4.5

2.2

102%

Maintenance

1.7

2.2

-23%

Perpetual licences

0.7

0.7

0%

Professional services

3.5

4.1

-15%

Hosting

0.3

0.3

0%

Total sales

10.8

9.6

13%

Other income (grants)

1.0

1.1

-6%

Total revenue

11.8

10.7

11%

Subscription licences/total licences

87%

76%

Recurring revenue/total revenue

52%

41%

Partner channel sales

2.0

0.9

133%

As % of total revenue

17%

8%

Source: expert.ai

Recurring licence sales increased 102% y-o-y, more than compensating for the decline in maintenance and professional services revenue. As the company is focused on growing the partner channel and has worked to standardise software so that it is not so complicated to install, we would not expect professional service revenue to grow at the same rate as group revenue. Revenue from the partner channel increased 133% y-o-y and made up 17% of total revenue in H121. In H121, the company signed up two new global partners and 23 projects were delivered by partners.

Recurring revenue (recurring licences plus maintenance) now makes up more than half of total revenue. As a reminder, the company is targeting group revenue of €100m by FY24 and expects c 80% to be generated from subscription licences. The company only made its NLP platform available at the end of June, so H121 revenue does not include any benefit from that. The company noted that revenue from existing customers increased 5% y-o-y (ie net dollar retention of 105%).

Moving to the Borsa Italiana

The company is planning to shift its listing (translist) from AIM Italia to Borsa Italiana MTA (mercato telematico azionario) and hopes to complete this by the end of this year (subject to approval by shareholders). One of the Borsa Italiana requirements is for companies to report according to IFRS, which has prompted the company to publish its first set of results on that basis. This move should open up a wider investor audience for expert.ai, as not all investors are able to invest on AIM Italia. The higher level of reporting requirements is also likely to give investors more confidence. This move will not be done in conjunction with a capital raise, as the company currently has more than sufficient cash resources to fund growth, although to maintain financial flexibility, the company is seeking approval at the upcoming shareholders’ meeting for the ability to issue shares or convertible bonds without pre-emption rights up to the value of €10m.

Outlook and changes to forecasts

The company has not yet made any changes to its 2020–24 strategic plan, although it is currently reviewing it. Management highlighted that seasonality is likely to be similar this year to previous years, that is one-third of revenue is generated in H1. On that basis, our FY21 target looks achievable.

Until FY20 results are fully available on an IFRS basis, we maintain our forecasts based on Italian GAAP. We expect to switch to IFRS-based forecasts once expert.ai reports FY21 results; see below for discussion of the likely impact on forecasts.

While our revenue forecasts are substantially unchanged for all three years, we have adjusted the mix of revenue to reflect faster growth of subscription licences and a faster decline in maintenance revenue. As the company hired at a more rapid rate than originally planned in H121, we have revised our cost estimates to reflect higher staff costs in H221 and FY22/23 while we have reduced other operating expenses. Overall, our EBITDA forecast is unchanged in FY21 and reduces by €1.6m in FY22 and €1.9m in FY23. We assume a slightly higher rate of capitalisation of development costs in FY21, reflecting higher headcount, which translates to slightly higher amortisation in FY21.

Exhibit 3: Changes to forecasts

€m

Italian GAAP

FY21e old

FY21e new

Change

y-o-y

FY22e old

FY22e new

Change

y-o-y

FY23e old

FY23e new

Change

y-o-y

Sales

30.7

30.7

0.1%

9.4%

44.0

44.0

(0.1%)

43.0%

63.0

63.0

(0.1%)

43.2%

Other income & grants

1.5

1.7

13.3%

(32.5%)

1.5

1.5

0.0%

(11.8%)

1.5

1.5

0.0%

0.0%

Total revenues

32.2

32.4

0.7%

6.0%

45.5

45.5

(0.1%)

40.2%

64.5

64.5

(0.1%)

41.8%

Capitalised development costs & changes in WIP

8.0

8.2

2.7%

19.9%

10.3

10.3

0.0%

26.1%

12.0

12.0

(0.0%)

15.9%

Production value

40.2

40.6

1.1%

8.5%

55.9

55.8

(0.1%)

37.3%

76.5

76.4

(0.1%)

37.0%

EBITDA

(7.2)

(7.2)

0.1%

275.7%

(1.3)

(2.9)

124.4%

(60.4%)

7.6

5.7

(24.9%)

N/A

EBITDA margin

-22.4%

-22.2%

0.1%

(16.0%)

-2.8%

-6.3%

(3.5%)

15.9%

11.8%

8.8%

(2.9%)

15.1%

D&A

(7.1)

(7.2)

1.6%

(8.1)

(8.2)

1.4%

(9.5)

(9.6)

1.2%

Normalised/reported operating profit

(14.3)

(14.4)

0.8%

67.3%

(9.3)

(11.0)

18.1%

(23.5%)

(1.9)

(3.9)

107.4%

(64.9%)

Normalised/reported net income

(13.5)

(13.6)

0.6%

N/A

(9.0)

(10.4)

15.5%

(23.3%)

(2.3)

(4.0)

72.9%

(61.9%)

Diluted normalised EPS (c)

(26.6)

(26.7)

0.6%

(32.2%)

(17.8)

(20.5)

15.5%

(23.3%)

(4.5)

(7.8)

72.9%

(61.9%)

Net debt/(cash)

(5.3)

(5.1)

-2.9%

(75.5%)

6.6

8.3

25.0%

(262.6%)

10.2

13.6

33.5%

63.8%

Source: Edison Investment Research

Transition to IFRS reporting

We summarise below the key changes to financials from moving to IFRS reporting and the impact on our forecasts when we eventually switch to an IFRS basis.

Lease accounting: capitalise operating leases and create a related financial liability. This reduces other operating expenses (by the value of the operating leases), increases depreciation and increases net interest costs. This will benefit EBITDA but will have limited impact at the operating profit level.

Share-based payments: charge the cost of stock option and stock grants to the income statement. As Edison normalised profitability metrics exclude share-based payments, this will have no impact on our normalised forecasts but will reduce reported profitability metrics.

Intangible assets: expert.ai has amortised goodwill from the acquisition of Temis since 2015. This will be reversed and no longer charged to the income statement. We already excluded this from our normalised profitability metrics, but it will improve reported profitability metrics. Expert.ai capitalised certain start-up and expansion costs that are not deemed to constitute intangible assets according to IFRS. This intangible has been written down to zero and the costs will be charged directly to the income statement. This has limited impact at the operating profit level but will slightly reduce EBITDA.

Derivatives: interest rate hedges are reclassified as a financial liability. This will have a small impact on tax.

Severance provision: the method of calculating defined benefits, particularly for severance pay, is different and results in a higher provision. This has been taken through equity and has limited impact on the income statement.

Valuation

The table below shows Expert’s valuation and financial metrics compared to three different peer groups:

software companies providing natural language understanding, big data analytics, enterprise search and/or information management applications;

software companies selling on a SaaS or subscription basis; and

Italy-listed companies providing software and/or IT services.

As Expert is a loss-making company, we look at EV/sales metrics and sales growth rates as the primary metrics for comparison. Based on the average EV/sales multiple for the first group (most relevant due to the applications), Expert is trading at a large discount to peers. Over the two-year forecast period, its average sales growth of 23% compares to 20% for the peer group. Expert also trades at a discount to subscription software companies, which are growing at an average of 21% over the next two years, and Italian peers, growing at an average of 18%. As evidence emerges that the company is tracking the revenue growth and margins targeted in the five-year plan, we would expect the valuation to move more in the direction of the first two peer groups.

DCF valuation

We have performed a DCF analysis based on our forecasts to FY24 (which essentially follow the company’s plan) and for the following six years, trending revenue growth down to 5% by FY30, trending EBITDA margins up to 30% (which results in an EBIT margin of 20%) and reducing capex/sales to 9% by FY30 (compared to 24% in FY20 and 15% in FY24). We have included the FY20–23 share grant and option grant plans, which add 4.4m additional shares to the existing 51.5m outstanding shares.

Using a WACC of 9% and a long-term growth rate of 3%, we arrive at a per share value of €4.86. We note that this valuation assumes perfect execution of the plan, and we would expect the share price to move towards this value as progress according to the plan becomes evident. This valuation would equate to an EV/sales multiple of 2.7x and an EV/EBITDA multiple of 12.2x in FY24. A 1pp increase in the WACC results in a per share value of €3.95, while a 1pp decrease results in a value of €6.17/share.

Exhibit 4: Peer financial and valuation metrics

Market

cap (m)

Quote

ccy

EV/sales

EV/EBITDA

P/E

EBIT margin

EBITDA margin

Sales growth

EPS growth

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

Expert System

122

EUR

3.4

2.4

N/A

N/A

N/A

N/A

-44.4%

-24.2%

-22.2%

-6.3%

6.0%

40.2%

N/A

N/A

Natural Language Understanding, Big Data Analytics, Enterprise Search & Info Management

C3Ai

4,725

USD

14.7

11.0

N/A

N/A

N/A

N/A

-45.7%

-33.3%

-43.3%

-29.8%

N/A

34.1%

N/A

-14%

Commvault Systems

3,527

USD

4.1

3.8

17.7

15.3

29.8

25.3

21.8%

23.7%

23.2%

25.1%

6.4%

7.0%

22%

18%

Elastic

13,563

USD

16.1

12.8

N/A

1020

N/A

N/A

-3.4%

-1.0%

-0.7%

1.3%

33.7%

26.3%

562%

-45%

Livechat Software

2,697

PLN

11.2

9.9

18.5

15.9

21.8

19.7

57.8%

58.1%

60.9%

62.2%

28.5%

13.9%

22%

11%

Nuance Communications

17,299

USD

13.0

12.1

46.0

41.6

71.7

64.7

26.2%

26.8%

28.4%

29.2%

-6.9%

7.4%

-8%

11%

Open Text

16,996

CAD

4.4

4.4

11.6

11.2

14.3

13.9

35.2%

32.5%

38.2%

38.8%

1.7%

2.2%

1%

3%

Splunk

22,224

USD

8.8

7.4

N/A

N/A

N/A

-127.5

-15.0%

-7.2%

-11.4%

-3.6%

15.5%

20.0%

261%

-46%

Teradata

6,174

USD

3.2

3.1

14.4

13.5

28.8

31.5

17.4%

15.5%

22.0%

23.1%

4.4%

2.2%

50%

-8%

Veritone

765

USD

6.5

3.8

N/A

211

N/A

88.6

-7.3%

7.8%

1.8%

72.9%

71.4%

-70%

N/A

Average

9.1

7.6

21.6

189.9

33.3

31.0

9.7%

13.7%

14.7%

16.4%

19.5%

20.5%

105%

N/A

SaaS/subscription software companies

Adobe

275,216

USD

17.4

15.1

34.5

30.3

46.3

40.6

45.9%

45.7%

50.4%

49.7%

22.5%

15.2%

23%

14%

Atlassian

97,643

USD

17.4

15.1

149.9

117.0

239.1

183.2

23.3%

24.9%

25.5%

26.4%

21.5%

23.5%

16%

31%

Salesforce.Com

264,820

USD

38.2

31.0

33.9

27.8

61.2

58.4

18.6%

19.9%

29.9%

30.2%

23.8%

20.8%

-10%

5%

Workday

61,878

USD

10.2

8.4

42.7

39.1

68.2

70.1

21.1%

18.8%

27.7%

25.4%

18.2%

19.3%

25%

-3%

Average

20.8

17.4

65.3

53.6

103.7

88.1

27.2%

27.3%

33.4%

32.9%

21.5%

19.7%

13%

12%

Italian software & services

TXT e solutions

114

EUR

1.1

1.0

8.6

7.4

17.3

13.8

8.7%

10.0%

13.1%

13.6%

0.6%

32.3%

32%

26%

Piteco

232

EUR

7.0

6.5

14.8

13.5

24.3

20.7

30.3%

32.7%

47.5%

48.4%

0.6%

50.9%

N/A

17%

Reply

5,932

EUR

3.9

3.5

23.2

20.9

41.1

36.5

13.7%

13.8%

16.9%

16.8%

4.3%

17.2%

16%

12%

Average

4.0

3.7

15.5

13.9

27.6

23.7

17.6%

18.8%

25.8%

26.2%

1.8%

33.5%

24%

18%

Source: Edison Investment Research, Refinitiv (as at 30 September)


Exhibit 5: Financial summary

€'000s

2017

2018

2019

2020

2021e

2022e

2023e

31-December

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

IT GAAP

PROFIT & LOSS

Revenue

 

 

27,783

30,457

33,712

30,617

32,446

45,479

64,469

EBITDA

 

 

1,711

4,638

5,459

(1,919)

(7,210)

(2,856)

5,700

Operating Profit (before amort. and except.)

(3,189)

(662)

(358)

(8,610)

(14,406)

(11,022)

(3,866)

Intangible Amortisation

(2,608)

(2,567)

(2,520)

(902)

0

0

0

Exceptionals

(700)

0

0

0

0

0

0

Other

0

0

0

0

0

0

0

Operating Profit

(6,496)

(3,229)

(2,878)

(9,511)

(14,406)

(11,022)

(3,866)

Net Interest

(2,191)

97

(123)

(2,011)

(548)

(548)

(548)

Profit Before Tax (norm)

 

 

(5,380)

(565)

(481)

(10,621)

(14,953)

(11,570)

(4,414)

Profit Before Tax (reported)

 

 

(8,687)

(3,131)

(780)

(6,373)

(14,953)

(11,570)

(4,414)

Tax

348

(650)

(203)

948

1,384

1,157

441

Profit After Tax (norm)

(5,164)

(508)

(607)

(9,041)

(13,570)

(10,413)

(3,973)

Profit After Tax (reported)

(8,339)

(3,781)

(983)

(5,424)

(13,570)

(10,413)

(3,973)

Average Number of Shares Outstanding (m)

28.1

35.8

38.6

44.7

50.8

50.8

50.8

EPS - normalised (c)

 

 

(18.3)

(1.4)

(1.6)

(20.2)

(26.7)

(20.5)

(7.8)

EPS - normalised and fully diluted (c)

 

(18.3)

(1.4)

(1.6)

(20.2)

(26.7)

(20.5)

(7.8)

EPS - (IFRS) (c)

 

 

(29.6)

(10.6)

(2.5)

(12.1)

(26.7)

(20.5)

(7.8)

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

0.0

0.0

EBITDA Margin (%)

6.2

15.2

16.2

-6.3

-22.2

-6.3

8.8

Adj Operating Margin (%)

-11.5

-2.2

-1.1

-28.1

-44.4

-24.2

-6.0

BALANCE SHEET

Fixed Assets

 

 

18,864

16,655

14,761

14,598

16,103

18,767

21,671

Intangible Assets

16,944

14,734

13,092

13,635

15,147

17,832

20,773

Tangible Assets

792

715

702

719

712

690

654

Investments

1,128

1,206

968

244

244

244

244

Current Assets

 

 

37,634

38,004

51,442

83,621

69,383

60,690

59,987

Stocks

99

109

59

11

11

11

11

Debtors

12,384

15,792

20,447

20,861

20,861

24,407

28,556

Cash

11,235

7,883

21,647

53,978

38,245

24,849

19,555

Other

13,916

14,220

9,289

8,771

10,267

11,424

11,865

Current Liabilities

 

 

(19,480)

(21,170)

(22,839)

(21,748)

(22,584)

(26,968)

(33,142)

Creditors

(14,104)

(15,511)

(16,945)

(16,280)

(17,116)

(21,500)

(27,673)

Short term borrowings

(5,376)

(5,659)

(5,893)

(5,469)

(5,469)

(5,469)

(5,469)

Long Term Liabilities

 

 

(17,742)

(18,411)

(22,464)

(31,902)

(31,902)

(31,902)

(31,902)

Long term borrowings

(14,683)

(14,811)

(18,588)

(27,675)

(27,675)

(27,675)

(27,675)

Other long term liabilities

(3,060)

(3,600)

(3,876)

(4,227)

(4,227)

(4,227)

(4,227)

Net Assets

 

 

19,276

15,077

20,901

44,570

31,000

20,587

16,615

CASH FLOW

Operating Cash Flow

 

 

(1,921)

2,583

2,479

(1,934)

(6,485)

(2,019)

7,725

Net Interest

(626)

(441)

(558)

(456)

(548)

(548)

(548)

Tax

0

0

0

0

0

0

0

Capex

(6,321)

(5,830)

(6,749)

(8,059)

(8,700)

(10,830)

(12,470)

Acquisitions/disposals

1,275

(76)

7,496

5,889

0

0

0

Financing

11,178

0

7,084

28,228

0

0

0

Dividends

0

0

0

0

0

0

0

Net Cash Flow

3,585

(3,764)

9,753

23,669

(15,733)

(13,397)

(5,293)

Opening net debt/(cash)

 

 

12,408

8,824

12,587

2,834

(20,835)

(5,102)

8,295

HP finance leases initiated

0

0

0

0

0

0

0

Other

0

0

0

0

0

0

(0)

Closing net debt/(cash)

 

 

8,824

12,587

2,834

(20,835)

(5,102)

8,295

13,588

Source: expert.ai, Edison Investment Research


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Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Expert.ai and prepared and issued by Edison, in consideration of a fee payable by Expert.ai. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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