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GeoJunxion NV (ticker: GOJXN.AS) - Financial & Business update Q1 FY 2023-24 (July – September 2023)

Capelle aan den IJssel, 16 November 2023, GeoJunxion announces the publication of its financial results for the first three months of the accounting year 2023-24, showing first evidence of slowdown in the business and a decline in the financial results and cash flow.

In the first quarter of FY 2023-24, corresponding to the period 1 July – 30 September 2023, for the first time after continuous growth and very positive results in the last three accounting years, GeoJunxion’s business shows signs of slowdown and a decline in the financial results.

The Recurring Revenue (combined Licenses and Services) is growing by almost 12% in Q1 23/24 (389K Euro) compared with Q1 22/23 (348K Euro). The Non-Recurring Service Revenue, however, was just about 14% (145K Euro) of the exceptional performance in Q1 2022-23 of (over 1M Euro). In August 2022, a very big project was awarded, which had a significant positive impact on the revenue of the first quarter and subsequent periods. This did not happen this year, as our major customers are more hesitant to invest in big projects.

The direct consequence of this slowdown in revenue is reflected in all the financial KPIs for the quarter: a negative Operating Result (-346K Euro in Q1 23/24 vs +644K Euro in Q1 22/23), a Net Loss of 416K Euro compared with a Net Profit of 448K Euro in the same period of the past accounting year and negative Cash Flow of 635K Euro compared with the negative value of 388K Euro of Q1 22/23.

SUMMARY FINANCIALS Q1 FY 2023-24 (July – September 2023)

OUTLOOK FOR THE ACCOUNTING YEAR 2023-2024

While GeoJunxion was only marginally impacted during the last two financial years, a “long-wave effect” of the economic downturn has impacted the company at the start of financial year 2023-24.

In line with the economic climate pictured by the ECB and other economic indicators, the company’s preliminary operational results during the first quarter of the 2023-24 accounting year have been below expectations. Our technology customers have been hesitant to place significant orders for new projects. We have won some smaller project orders and renewed existing recurring service contracts Q1 2023-24, but overall, the order intake to-date has been slow. The automotive mapping market continues to move towards open-source data. With OEMs looking for more cost-effective solutions, map prices are under pressure, and competition between navigation solution providers is becoming increasingly fierce.

Against this background, the company expects a challenging year in 2023-24: With a slow start on order intake, revenue is under pressure and likely to be declining year over year. However, we remain confident in the quality of our products, their relevance in the market, the dedication and diligence of our teams and the trust we have established with our customers to overcome these short- and medium-term challenges and continue executing on our long-term growth strategy.

OPERATIONAL HIGHLIGHTS AND STRATEGY UPDATE

Strategy Update

GeoJunxion’s strategy remains focused on creating “map agnostic” data products: digital geo-localized content, designed to be fully integrated into or overlaid on any commercial or open-source maps, or to be used in developing smart solutions for a large variety of use cases, in different industries and market sectors.

Despite the first signals of a slowdown in revenue generation, we believe that our strategy remains solid as it has delivered year-over-year growth of +40% during the last 36 months. We will therefore continue to diligently execute on this strategy and expand the scope of our existing product portfolio and services, while investing in new research & development capabilities and in the new business sector of the Last Mile Mapping.

GeoJunxion’s activities are directed towards establishing long-term relationships with our customers, through the creation of recurring business models rather than opportunistic one-off contracts. Although the relationship with clients frequently starts with a proof-of-concept or a custom one-off project, most of the Company’s efforts go into building value-added, dynamic content, requiring continuous and frequent updates to maintain and increase their value over time. This means that most of our proof-of-concept and one-off projects are a launch-pad for establishing a service or license contract, converting the initial activities into a recurring, more predictable and sustainable business model.

When executing projects, GeoJunxion typically retains the Intellectual Property and ownership of the newly developed datasets and solutions, for licensing to other customers. Thereby, leveraging the initial investment and creating a virtuous business cycle.

Our mission remains focused on improving navigational safety and enhancing people mobility, contributing to a more sustainable world, reducing the impact on the environment, through intelligent solutions enabling more environmentally conscious decisions through informed choices.

Central to GeoJunxion’s strategy are:

• Cost effective research, sourcing, production, ingestion, and aggregation of geodata;
• Offering flexible licensing models at competitive pricing;
• Direct delivery of dynamic, up-to-date content via APIs;
• Highly flexible solutions and content creation;

Market Developments

We are currently experiencing that our existing and prospect clients are strictly monitoring their expenditures. They are prudent in starting big projects. This has negatively impacted our revenue in the past quarter and will continue to impact the subsequent quarters. Despite the revenue contraction in Q1 23/24, the interest in our Location Intelligence Services and, in particular, in new Last-Mile Mapping Services is evident.

GeoJunxion, like other companies, continues to be impacted by rising inflation rates, caused by raising energy and other raw material prices and supply chain disruptions. This impacts salaries, staff expenses, office costs and other indirect services. However, our OPEX costs remains under control due to diligent monitoring and continuous finetuning of our spending.

The largest market opportunity for GeoJunxion still remains with big Tech Companies, making extensive use of geo-localized data for their business and end-user solutions. In this market segment, we are still dedicating a significant portion of our resources to project execution, however, with the reduced/postponed investments of the big clients, we will have the opportunity to re-invest in developing and extending our premium location-aware products.

We continue to invest in the automotive industry. This is based on a strong interest in cost-effective mapping solutions, with the most up-to-date and relevant content. This increased demand is also linked with the implementation of advanced driver-assistance systems, such as ISA (Intelligent Speed Assistance) and the adoption of geofences for safety and environmentally conscious action in-car. Premium content pertaining to road safety, environmental sustainability and social utility therefore remains a primary focus in our strategy and product development.

In the last months, we started investing more in the new custom Last-Mile-Mapping services. This is a market showing a lot of positivity and dynamism. We are connecting with various potential clients and with particular interest on the sport industry, on museums, theatres, outdoor recreational venues, like camping sites and holiday/amusement parks, as well as on larger projects for municipalities and public administrations.

GeoJunxion also remains active in identifying opportunities in other markets, such as transport & logistics, real estate, geo-marketing, business analysis, travel & tourism and governments.

Business Development

In Q1 FY 2023/24 (July to September), the Location Intelligence Services continued playing an essential role in our business development. At the end of the previous financial year and very beginning of the new one, we’ve been awarded small new contracts for the development of new databases and maintenance of existing database developed in the past for a big Tech Company. Such maintenance project will positively impact the recurring service revenues on a quarterly basis. In addition, we have been and we are tirelessly working on extensions in scope of certain projects awarded during the past financial years and winning new projects, proof-of-concepts with new and existing clients, to guarantee continuity in operations and research and development.

In the last months, Business Development has been focused on new solutions for the last-mile mapping market. In order to secure high quality services in this specific field, we re-enforced and nurtured our operational partnership with WizzyMaps. During the last nine months our capability to deliver state-of-the-art last-mile mapping solutions, increased significantly thanks to this collaboration. This collaboration is now visualized in jointly agreed “partnership logo”:

In Q1 FY 2023/24, our Sales and Business development teams continued to attend trade events. After the Autonomy Mobility World Expo in Paris in March, and polisMobility in Cologne in May, we also attended IAA Mobility 2023 in Munich, in September and the North German Sports trip in October, organized by the Netherlands Business Support Office / NBSO Hamburg. In Q2 2023-24, we will attend the Recreatie Vakbeurs (14-16 November, in Hardenberg, NL) and Festivak België (22-23 November, in Nekkerhal Mechelen, Belgium). Worth mentioning also, the interview of our Sales Manager, Stef van der Helm, at the “Samen slim op weg event 2023”. All these activities gave us the opportunity to meet with partners and clients face-to-face, to promote GeoJunxion’s brand, its products and services.

Product Development

Automotive product developmentR&D is progressing with an updated data cycle for a leading Infotainment System manufacturer. This is expected to be delivered by the end of this year 2023 or very beginning of next. As part of this update cycle R&D is industrializing the processes to make future updates more effective and efficient.

Last Mile MappingR&D is also key in the development of routing algorithms and custom APIs for the Last-Mile-Mapping business. This is expected to be one of the areas of significant expansion during the FY 2023/24.

Eco Alert Zones and School Safety ZonesSmart geofences remains key products in the GeoJunxion’s portfolio. Eco Alert Zones have been kept up to date during the course of this quarter. They are still increasing significantly in number, geographical coverage and in the typologies. School Streets and School Safety Zones are an integral part of our development strategy, and we expect to invest more in the next future, using to Artificial Intelligence and other methods for data creation.

GeoJunxion is also committed to extend the work done on the Satellite Imagery object recognition. While the proof of concept was completed in Q4 2022/23, we expect to continue the investments in Q2 2023/24. This will give us the possibility to further enrich our existing datasets of geofences and create new ones during the coming months.

ORDER INTAKE

After an exceptionally good financial year 2022/23 in terms of order intake and consequent revenues, the order intake for this first quarter Q1 FY 2023/24 was lower than expected. The slowdown is particularly evident if compared with the same period of the previous financial year 2022/23, when GeoJunxion was awarded the biggest Location Intelligence Services project since the rebranding.

REVENUE

GeoJunxion tracks its revenue by product type and by the nature of the underlying contract (recurring versus non-recurring). Recurring service revenue includes the updating services of our Eco Alert Zones product and other data products. The non-recurring service revenue includes tailored research and collection of data sets and creation of geo-located content.

In Q1 2023/24, revenue decreased by 61%, compared to the same period in the accounting year 2022/23.   This is due to a significant slow-down in location intelligence services activities with our major customer (in non-recurring service revenue). In August 2022, we kicked off a major project and generated over €800,000 in revenue in August and September. This year we do not have a similar project to compensate this gap. On the recurring revenue side, we did see a nice year-over-year growth of nearly 12%. This is attributable to the recurring maintenance contract we booked in June 2023, on which we completed the first of 4 quarterly updates.

OPERATING RESULT

The Q1 2023-24 operating result shows a loss of €346.000, compared to an operational profit of €644.000 during the same quarter last year. The three main drivers for this year-over-year change are the following:

• A decrease in revenue of €833.000, mainly in non-recurring services.
• An increase in other operating expenses, due to legal and consultancy fees incurred on realizing the announced transaction of approx. €140.000.
• A reduction in the capitalization of development costs by €62.000 compared to the same quarter last year. This is due to an increased focus on maintenance of our products, which cannot be capitalized under IFRS accounting rules.

ORGANIZATION

GeoJunxion is proud to have achieved the Level 2 certification on Social Entrepreneurship: the Prestatieladder Socialer Ondernemen. This independent assessment showed that GeoJunxion offers high-quality employment to people who have difficulty accessing the labor market and collaborating with organizations which have the same aspirations.

GeoJunxion supports the Dutch Heart Foundation in its Hartstichting program to achieve the goal of “a healthy heart for everyone”. GeoJunxion cares about its employees, their health conditions and encourages all of them to adopt an active and healthy lifestyle.

FINANCIAL POSITION

GeoJunxion is experiencing a slow-down in its order intake and business activities. In the past quarter this has resulted in a lower-than-expected revenue and a higher cash outflow. The Company relies on existing and new orders from customers to meet its obligations. Management is monitoring and managing the company’s liquidity on an on-going basis. Based on our current outlook, the available cash on hand is estimated to be sufficient to cover our operational requirements for the next 6 to 12 months.

INCOME TAXES

The taxable result for the first three months of the accounting year 2023-24 amounted to a loss of approximately €420.000. No deferred tax assets were booked on this taxable loss in the quarter.

CASH FLOW

During the first three months of the financial year 2023/24 we realized a negative cash flow of €635,000. This cash outflow is the result of higher payments of employee costs (regular payroll, bonus payment and payroll taxes on holiday pay), payments related to corporate insurances, legal and consultancy costs linked to the transaction and renewals of data licenses, only partially offset by collections of customer invoices issued during the period. The cash balance per 30 September 2023 amounted to €848.000.

ANNOUNCEMENT SALE OF BUSINESS AND LIQUIDATION

On 27 October 2023, GeoJunxion N.V. announced that it reached a definitive, conditional agreement in the form of a share purchase agreement (SPA) relating to the sale of all issued and outstanding ordinary shares in the share capital of GeoJunxion B.V. its sole operating entity. Under the Proposed Transaction, GeoJunxion B.V. will be sold to Road Runner B.V. at a fixed purchase price of EUR 4,670,795.80. This represents a price of €1.10 per listed share in GeoJunxion N.V.. Road Runner has been established by the Purchaser (Parkland Resources B.V. and Magnus I B.V.) for the sole purpose of the Proposed Transaction. Completion of the transaction under the SPA is subject to, among others, approval by the Shareholders. It is anticipated that GeoJunxion N.V. will, subject to Completion taking place, be dissolved following which GeoJunxion N.V. will liquidate its assets and liabilities and the ordinary shares in the share capital of GeoJunxion will be delisted from Euronext Amsterdam (the Delisting).

We refer to the press release and the Shareholder Circular issued on 27 October 2023 for more information and an in-depth evaluation of the proposed transaction.

RISK MANAGEMENT

Risk management is an integral managerial task. Our risk management and control procedures take into consideration the size of the company and the character of the business to identify the most significant risks which the company is exposed to. The risks identified are discussed on a periodical basis and mitigated or fully resolved, where possible. Such a system cannot provide absolute certainty that objectives will be realized. Neither can it guarantee prevention of potential cases of material mistakes, damage, fraud, or breaches of statutory laws.

The 2022-23 annual report, as published on 27 October 2023, describes the primary strategic, operational, and financial risks. The risks and uncertainties described in the annual report are relevant and are deemed incorporated and repeated by reference in this report. There were no cases of material damage, fraud or breaches of law detected since issuing the Annual Accounts.

Our people are our key assets. We do our utmost to keep them safe, healthy, challenged, engaged and continuously developing their skills & experience.

BOARD OF MANAGEMENT STATEMENT

The Board of Management hereby declares that, to the best of its knowledge, the summarized Q1 2023-24 (July – September) Interim consolidated financial statements, drawn up in accordance with IAS 34 “Interim financial reporting”, represents a faithful rendering of the assets, liabilities, financial position, profit and cash flow of GeoJunxion NV and its subsidiary as stated in the consolidated financial statements, and that the Board Report, as included in this Interim Financial statements, represents a faithful rendering of the information required in relation to item 5:25d subs 8 and 9 of the Dutch Financial Supervision Act.

GROUP STRUCTURE

The GeoJunxion group contains 2 entities: GeoJunxion N.V., (the holding entity, quoted on Euronext Amsterdam) and its 100% operating subsidiary GeoJunxion B.V.

FORWARD-LOOKING STATEMENTS / IMPORTANT NOTICE

This document contains certain forward-looking statements with respect to the financial position and results of GeoJunxion. We have based these forward-looking statements on our current expectations and projections about future events, including assumptions regarding our present and future business strategies, operations, and the environment in which we will operate in the future. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, and you should not place undue reliance on them.

Many of these risks and uncertainties relate to factors that are beyond the company’s ability to control or estimate precisely, such as timing of placement of orders of our customers, exchange-rate and interest-rate fluctuations, labor and other cost inflation, changes in tax rates, regulatory and legal changes, the rate of technological change, the competitive landscape, political developments in countries in which the company operates and the risk of a downturn in the market.

The forward-looking statements contained herein speak only as of the date they are made. We do not assume any obligation to update any public information or forward-looking statement in this document to reflect events or circumstances after the date of this document, except as may be required by applicable laws.

Capelle aan den IJssel, 16 November 2023,Ivo Vleeschouwers – CEO / CFO Francesco Altamura - CBO

This is a public announcement by GeoJunxion N.V., pursuant to article 17, paragraph 1 of the European Market Abuse Regulation (596/2014). This public announcement does not constitute an offer, or solicitation of an offer, to buy or offer securities in GeoJunxion N.V.

Attachment

• 231116 Press Release Financial Results Q1 2023-24 GeoJunxion NV_EN