TextMagic : 2023 6 months consolidated unaudited interim report

TextMagic
Company Announcement TextMagic AS 2023 6 months consolidated unaudited interim report

TextMagic Group's revenue grew 6% in the first half of 2023 compared to the same period last year. TextMagic's SMS platform revenue growth rate has slowed significantly in 2023 due to a combination of factors. Our primary market, the US, is undergoing significant changes to SMS regulations, resulting in restrictions on SMS campaigns. Demand, which increased during the peak of the Covid pandemic, has now come to an end. Rising interest rates, inflation and the impact of the economic environment have had a negative impact on our customer portfolio, resulting in a decline in business volumes.

At the end of May we changed the price list for the TextMagic SMS platform. In June, we launched a regulatory development on the TextMagic SMS platform to simplify the process for customers to register campaigns and brands. As of July, mobile apps with enhanced functionality and a new logo are available for both Android and iOS users. We plan to launch a version with a new user interface in the third quarter.

The development of the Touchpoint customer service platform is on schedule and the product will be launched in the fourth quarter of 2023. As a result, we have been proactively engaged in marketing activities. In the first half of the year, much attention was paid to the integration of artificial intelligence (AI) technologies. In the third quarter of 2023, Touchpoint customer support modules will be piloted across the Group, marking an important step in our product development.

The second quarter was an important milestone in TextMagic's strategy to develop, acquire and manage software solutions for business customers. On June 1, Voog, a website and e-commerce management platform, was acquired for EUR 1.1 million. As part of the acquisition, 100% of the shares in Edicy OÜ were acquired from 16 shareholders.

Group sales results for 6 months of 2023

The unaudited consolidated total revenues of the group for the first half year of 2023 amounted to EUR 6,779 thousand (H1 2022: EUR 6,404 thousand). The financial results of the Voog platform have been consolidated from the date of acquisition and the impact on the group's revenues was EUR 60 thousand.

TextMagic SMS platform's sales results

	H1 2023	H1 2022	Change
Unaudited revenue (thousand)	€6,719	€6,404	+5 %
Volume of SMS messages (thousands)	136,409	137,029	0 %
Active users*	32,611	30,699	+6 %
Average revenue per user (ARPU)**	€206	€209	-1 %

* An active user is any unique paying customer who has used TextMagic SMS platform services during the reporting period.

**ARPU is calculated as Unaudited revenue / Active users.

TextMagic Group's adjusted prognosis for 2023

Due to the changes in the SMS regulations and the impact of the general economic environment, we have revised our forecasts for 2023. Profitability is impacted more than previously forecast by additional development and marketing activities to support growth. In addition, general price increases have impacted the cost base more than originally forecast. The revised forecasts also include the impact of the Voog platform on the Group's results.

• Revenue: 14.74 M € (+6.6%*)
• Investments to software products (capitalized development costs): 6.43 M € (+45.1%*)
• EBITDA (operating profit plus amortization and depreciation): 5.28 M € (-18.3%*)
• Net profit: 1.26 M € (-53.5%*)

*Compared to 2022 results

TextMagic AS's consolidated unaudited interim report for the 6 months of 2023 is attached to the release in PDF format.

CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS FOR 6 MONTHS OF 2023

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in thousands of euros)	30.06.2023	31.12.2022	30.06.2022
Non-current assets
Property, plant and equipment	172	191	150
Intangible assets and goodwill	54,641	51,944	51,085
Total non-current assets	54,813	52,135	51,235
Current assets
Trade and other receivables	24	1	2
Prepayments	157	130	107
Cash and cash equivalents	5,569	9,145	7,555
Total current assets	5,750	9,276	7,664
TOTAL ASSETS	60,653	61,411	58,899
Liabilities
Current tax liabilities	196	102	151
Trade and other payables	810	890	564
Payables to shareholders	0	2,550	0
Contract Liabilities	1,737	1,546	1,428
Total current liabilities	2,743	5,088	2,143
Total liabilities	2,743	5,088	2,143
Equity
Share capital	850	850	850
Share premium	51,242	51,242	53,792
Other reserve	2,236	1,651	884
Foreign currency translation reserve	(16)	(35)	4
Retained earnings	2,703	1,226	(93)
Current year profit/loss	805	1,389	1,319
Total equity attributable to owners of the parent	57,820	56,323	56,756
Total equity	57,820	56,323	56,756
TOTAL EQUITY AND LIABILITIES	60,563	61,411	58,899

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(in thousands of euros)	01.01.2023 - 30.06.2023	01.01.2022 - 30.06.2022
Revenue	6,779	6,404
Other income	40	268
Work performed by the entity and capitalized	3,061	1,653
Goods, raw materials and services	(2,231)	(2,104)
Other operating expenses	(867)	(687)
Employee expenses	(4,123)	(2,407)
Depreciation, amortization and impairment of non-current assets	(1,777)	(1,744)
Other expenses	(88)	(58)
Operating profit	794	1,325
	16	0
Profit before tax	810	1,325
Income tax	(5)	(6)
Profit for the period	805	1,319
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
Foreign currency translation differences	(20)	(10)
Other comprehensive income for the period, net of tax	(20)	(10)
Total comprehensive income for the period	785	1,309

CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands of euros)	01.01.2023 - 30.06.2023	01.01.2022 - 30.06.2022
Cash flows from operating activities
Profit for the period	805	1,319
Adjustments for:		0
Financial income	(16)	0
Depreciation and amortization	1,777	1,744
Other adjustments	263	275
Total adjustments	2,024	2,019
Changes in trade and other receivables	(25)	75
Changes in contract liabilities	(18)	(30)
Changes in prepayments	(28)	22
Changes in trade and other payables	(49)	(590)
Net cash from operating activities	2,709	2,815
Cash flows from investing activities
Payments for acquisition of subsidiary, net of cash acquired	(1,100)	0
Payments for property, plant and equipment	(12)	(91)
Payments for software development costs	(2,643)	(1,192)
Net cash used in investing activities	(3,755)	(1,283)
Cash flows from financing activities
Payments to shareholders	(2,550)	0
Net cash from financing activities	(2,550)	0
TOTAL CASH FLOWS	(3,596)	1,532
Cash and cash equivalents at the beginning	9,145	6,035
Effect of movements in exchange rates on cash held	20	(12)
Cash and cash equivalents at the end	5,569	7,555

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands of euros)	Share Capital	Share premium	Other reserves	Unrealized exchange rate differences	Retained earnings	Total equity
Balance as of 31.12.2021	850	53,792	153	14	(94)	54,715
Profit of the period	0	0	0	0	1,319	1,319
Other comprehensive income for the period	0	0	0	(10)	0	(10)
Other changes in equity	0	0	731	0	1	732
Balance as of 30.06.2022	850	53,792	884	4	1,226	56,756
Profit of the period	0	0	0	0	1,389	1,389
Other comprehensive income for the period	0	0	0	(39)	0	(39)
Other changes in equity	0	(2,550)	767	0	0	(1,783)
Balance as of 31.12.2022	850	51,242	1,651	(35)	2,615	56,323
Profit of the period	0	0	0	0	805	805
Other comprehensive income for the period	0	0	0	19	0	19
Other changes in equity	0	0	585	0	88	673
Balance as of 30.06.2023	850	51,242	2,236	(16)	3,508	57,820

Additional information:
Priit Vaikmaa
TextMagic AS, CEO
[e-mail]
https://investor.textmagic.com/

Attachments:
TextMagic AS_2023. aasta 6 kuu konsolideeritud auditeerimata vahearuanne.pdf
TextMagic AS_2023 6 months consolidated unaudited interim report.pdf