REG - Windward Ltd. - Half Year Report
20/08/2024 07:00
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RNS Number : 9983A Windward Ltd. 20 August 2024
20 August 2024
Windward Ltd.
("Windward", "the Company")
Half Year Report
Strong growth and continued innovation
Windward (LON: WNWD), a leading Maritime AI company, is pleased to announce
its financial results for the six months ended 30 June 2024 ("HY 24").
Financial Highlights:
- Annual Contract Value (ACV) of $37.2m, up 35% (HY 23: $27.6m)
- Revenue up 37% to $17.6m (HY 23: $12.8m)
- Gross margin for HY 24 up three points and now at 81% (HY 23: 78%)
- EBITDA loss down 66% and now at $1.3m for HY 24 (HY 23: $3.8m loss)
- Cash balance at period end of June 2024 was $13.8m (31 December 2023:
$17.3m), on track to achieve market expectations* for 31 December 2024
- Trading in line with recently upgraded market expectations* on revenue for
FY24, and confident of achieving an adjusted EBITDA(2) break-even run rate
during FY24
Operational Highlights:
- Continued execution of strategic plan against customer growth, innovation and
expanding our go-to-market reach
- Commercial ACV now represents 33% of total ACV (30 June 2023: 32%)
- Launch of MAI Expert™, a generative AI solution for the maritime and
logistics industries, significantly expanding Windward's addressable market
and strengthening its competitive differentiation
- Growth in partnerships to access new markets and customers, including
strengthening of partnerships with the London Stock Exchange Group, AWS and
Rightship
Current Trading and Outlook:
- Strong base of recurring subscription revenues and reduced cash burn
underlines confidence in achieving breakeven adjusted EBITDA run rate during
FY24
Ami Daniel, CEO and Co-Founder of Windward said:
"We delivered another period of growth in line with our expectations with good
momentum across all our financial metrics as we approach adjusted EBITDA
breakeven run rate during the current financial year. Revenue is up 37% year
over year and ACV, a future indicator of revenue growth, is up 35%, reflecting
the underlying demand for our offering. We are expanding our global customer
base as they embrace our portfolio offering to address their varied needs
across global trade."
"Our investments into new products, including our highly innovative MAI
Expert™, are paving the way for new opportunities through an expanded
addressable market. Innovation remains at the core of our focus, and our cash
reserves enable continued self-funded growth across our offering to meet the
needs of our customers across maritime and logistics."
"With a high rate of renewal from existing customers, continued trading
momentum into the second half, a highly competitive and differentiated
offering, and high margin business, we anticipate the opportunity to keep
building the company as the leader in Maritime AI for global trade "
(*) For the purposes of this announcement, Windward believes market consensus
for the financial year ended 31 December 2024 to be revenue of $36.2m,
adjusted EBITDA loss of $1.6m and cash of $16.1m.
((1) ) ACV, as of a given date, is the total of the value of each
contract divided by the total number of years of the contract.
((2) ) EBITDA is earnings before interest, tax, depreciation and
amortisation
((3) ) Adjusted EBITDA is EBITDA before share-based payment charges
and associated employer tax charges
((4) ) All references to $ or USD are in respect of United States
Dollars
For more information, please contact:
Windward Via Alma
Irit Singer, CMO
Canaccord Genuity (Nominated Adviser & Broker) +44(0)20 7523 8000
Simon Bridges / Andrew Potts
Alma Strategic Communications +44(0)20 3405 0205
Caroline Forde / Kieran Breheny / Will Merison
About Windward
Windward (https://windward.ai/) (LSE:WNWD), is a leading Maritime AI™
company, providing an all-in-one platform to accelerate global trade.
Windward's AI-powered decision support and exception management platform
offers a 360° view of the maritime ecosystem and enables stakeholders to make
real time, predictive intelligence-driven decisions to achieve business and
operational readiness.
Windward's Maritime AI supports companies across industries. The company's
clients range from oil supermajors, freight forwarders, cargo owners, to
banks, shippers, insurers, and governmental organizations.
For more information visit: https://windward.ai/ (https://windward.ai/) .
Prior to publication the information communicated in this announcement was
deemed by the Company to constitute inside information for the purposes of
article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by
regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No
2019/310 ('MAR'). With the publication of this announcement, this information
is now considered to be in the public domain.
CEO statement
OVERVIEW
I am pleased to report on an excellent first half to June 2024 for Windward,
delivering strong financial results and remaining on track against our stated
strategic ambitions for FY24 and beyond. We have built on our existing strong
foundation of recurring revenues by further growing our customer base and
broadened our offering through investment into our platform and our newly
launched generative AI capabilities.
For H1, Windward delivered revenue in line with the Board's expectations for
HY 24. We have maintained our consistently high levels of ACV growth (up 35%
year over year) and revenue growth (up 37% year over year), demonstrating the
attractiveness of our offering and strength of our recurring revenue business
model. We remain on track for our stated target of adjusted EBITDA run rate
break even during FY24. Cash at the period end remains strong at $13.8m (31
December 2023: $17.3m) With revenue accelerating and EBITDA loss decreasing
rapidly (down 66% year over year to $1.3m), our cash on hand provides balance
sheet strength and stability.
A time of structural growth
Our market is seeing structural change - with our core drivers of geopolitical
risk, demand for AI products, decarbonisation and supply chain pressures all
continuously creating more demand, as customers navigate the more challenging
environment.
At the same time, the introduction of generative AI is creating strong demand
across all of our customer base and according to McKinsey, 94% of enterprises
will be investing more into generative AI products in 2024. Our company is
well suited and prepared for generative AI - with the important investments we
have made to date into our AI platform allowing us to scale and expand quickly
into generative AI-first products. Our blue-chip customer base is testament to
the success to date of our core focus of delivering AI-centric, best in class
products for our customers.
The first step in executing this strategy was to launch MAI (Maritime AI)
Expert, a generative AI tool equipped with deep knowledge in maritime
operations and sanctions regulations which can perform comprehensive vessel
risk assessments rapidly. This is the beginning of a comprehensive generative
AI roadmap ahead for the Company. Although generative AI could be a costly
technology to use, MAI Expert is being sold as an add on capability in our
product, and we have seen strong initial interest from both existing and
potential customers to use the product since launch in June.
We are recognised for our expertise in artificial intelligence in the maritime
sector, and generative AI is therefore a natural evolution of our product
roadmap, paving the way for a significantly increased total addressable market
and a competitive differentiation among our peers. We believe generative AI
will benefit companies with strong tech foundations, a blue-chip customer base
and proprietary data, and Windward has all three of these.
Our market
The maritime and logistics environment is beset by regulatory and operational
challenges dictated by sanctions and regulations, bad actors, geopolitics,
natural disasters and supply chain challenges. With around 90% of goods
transported by sea, there is a global imperative for all stakeholders to
embrace the right technology for their needs to meet these challenges.
Key events in 2024 such as attacks in the Red Sea, which have resulted in a
significant decline in shipping routes in an area that would typically serve
30% of the world's container traffic, and drought in the Panama Canal have
significantly impacted supply chains, transit times and routes, and security
for shippers. Container prices and insurance costs have soared in line with
these delays and challenges, underlining the ongoing need for a range of
maritime stakeholders, including shipping companies, freight forwarders and
oil traders to maintain the best possible oversight of their operations and
ensure efficiency of time and costs.
The sanctions environment continues to dictate the everyday operations of
stakeholders, ensuring compliance across local and international law. The EU's
14(th) Sanctions package and new UK government sanctions, both introduced in
June 2024, have further targeted Russian oil and gas exports and present a new
wave of compliance procedures and due diligence required for stakeholders.
At the same time, governments and port authorities require the utmost
visibility of maritime operations to ensure control over their territories and
prevent illegal activity. These concerns around maritime security underline
demand for our products across all public sector clients, with conflicts on
the rise in Europe, Middle East and potentially Asia Pacific.
Within this complex and changeable environment, Windward has established
itself as a core partner to commercial and government organisations of all
sizes to address their day-to-day challenges within global trade across the
key areas of sanctions and regulations, supply chains and security.
Strong level of customer renewals and new customer growth
Our portfolio offering is delivering a range of data streams, APIs and
AI-powered insights to our customers. Commercial customer acquisition has
continued to be strong, with 32 new customers signed in HY 24, and ending the
period with a total of 219 customers. As a result of continued focus on large
enterprises, there was a small amount of churn from some smaller customers,
despite overall customer churn marginally declining. As a result, the average
ACV per commercial customer has grown 12% from $63,300 at 30 June 2023 to
$70,700 at 30 June 2024. The recurring SaaS revenues from this enlarged
customer base provide us with improved visibility of revenues. At the same
time, this presents the opportunity for expansion of the customer base to
further drive revenue growth.
New customers signed in the commercial segment in HY 24 included Bernhard
Schulte Shipmanagement, Berge Logistics and Ceedbox Limited.
Both the US Federal market and ROW Government segment are historically H2
weighted in terms of new customer acquisition. We are pleased to report high
renewal rates for both segments in HY 24 and we look forward to meaningful
growth in both segments in H2 24.
Market-leading innovation
Our data platform combines public, commercial, private and Windward-generated
data. All these data sources are being fused, injected and provided to
customers via our platform for constant engagement and feedback - thus
creating a cycle of a constant feedback loop which supports our proprietary
data.
During HY 24, we have expanded all of these four data sources, strengthened
our data curation team, and worked with our customers in listening to their
needs. This customer-led approach allows us to further build new products to
expand within our existing customers.
Building on our comprehensive platform through market-leading innovation and
products is a key tenet of the Group's growth strategy. Through continual
upgrade of our data and technology, we are able to deliver better, faster, and
more powerful solutions for customers, as well as enabling access to new
markets.
In June 2024, we announced our landmark launch of MAI Expert™, a generative
AI-powered virtual agent for the maritime and logistics industries. Launched
in collaboration with AWS, the virtual agent provides comprehensive and rapid
vessel risk assessment, leveraging Amazon's high-performing foundation models
and set apart by our proprietary data and 14+ years in artificial
intelligence.
Through standardising and streamlining the risk management process, MAI
Expert™ reduces screening times by about 20 minutes per screening, enabling
customers to better manage their costs and deliver an improved customer
service. We believe that the rapid and increased productivity achieved by MAI
Expert™ provides a tangible return on investment for customers, ranging from
5x for small organisations to 88x for large ones with significant screening
volumes.
With the launch of our generative AI solution, we expect to expand our total
addressable market and provide competitive differentiation among our peers
through our proprietary data and insights. At the same time, we expect this
enhancement to produce an uplift in our ACV per customer as more organisations
embrace generative AI to solve issues.
Continuing our track record of product innovation, during the period we also
announced the launch of Organization Defined Risk (ODR). ODR is a fully
configurable risk management tool within the platform to enable commercial
organisations as well as governments and intelligence agencies to
independently define and configure risk and behavioural indicators that fit
their unique business and risk requirements.
These are the first steps in evolving our company to be a generative AI first
platform across all of our business lines.
Key partnerships to drive our expansion
Alongside direct sales, strategic partnerships with other commercial
organisations through the "Windward Inside" programme enable the Company to
expand its market reach by accessing new customers and markets.
We signed a number of partnerships during the period. In January, we were
delighted to announce an extension to our existing partnership with the London
Stock Exchange Group (LSEG). Through this partnership, Windward now provides
comprehensive compliance and risk management solutions to LSEG users beyond
the maritime domain.
We also established a partnership with Rightship, a leading shipping ESG
provider, paving the way for further adoption of Windward's technology
platform in the commercial sector. As previously announced, we have already
seen two leading mining companies sign up to our platform through this
partnership.
Post-period, as part of the launch of MAI Expert, we were delighted to
announce our participation in the AWS ISV Accelerate programme, strengthening
our existing partnership established in 2023. This collaboration sees Windward
leverage Amazon Bedrock for its MAI Expert solution to improve risk management
for the shipping, logistics, and public sectors.
CURRENT TRADING AND OUTLOOK
We are pleased to report that the strong trading we experienced in the first
half has continued into the second half. As stated, we remain firmly on track
with our goal of reaching an adjusted EBITDA breakeven run rate during FY24.
Our healthy renewal rate and subscription revenues provides us with a good
level of visibility going forward, and we expect to maintain our customer
growth into H2. We have an exciting plan of product releases in H2 which we
expect to keep driving growth with both existing and new customers.
Ami Daniel
Chief Executive Officer
FINANCIAL REVIEW
Windward management and Board regularly review metrics, including the
following KPIs, to assess its performance, identify trends, develop financial
projections and make strategic decisions. For a review of the key financial
metrics, see below.
A KEY DRIVER OF FUTURE REVENUE IS ANNUAL CONTRACT VALUE (ACV)
ACV is a non-IFRS measure defined as the sum of all ACV for customers as of
the measurement date. The ACV for each customer is the annual committed
subscription value of each order booked for which Windward will be entitled to
recognise revenue. For example, a contract for $1m with a committed
contractual term of two years would have ACV of $0.5m, making the assumption
for any period that the customer renews under the same terms and conditions.
As at 30 June 2024, Windward increased its ACV by 35% over 30 June 2023 to
$37.2m, driven primarily by the increase in customers from 174 to 219 over
the same period, and to a lesser extent by an increase in upsells to existing
customers made possible by expansion of the number of users or the product
set. Growth in ACV has been in all of our market segments.
KEY PERFORMANCE INDICATORS ("KPIS") ($ IN THOUSANDS)
ACV H1-2024 ($'000) H1-2023($'000) % change
ROW Gov 16,606 11,888 39.7%
USA Gov 8,255 6,940 18.9%
Commercial 12,301 8,735 40.8%
Total 37,162 27,563 34.8%
Revenues
ROW Gov 8,067 5,549 45.4%
USA Gov 4,111 3,594 14.4%
Commercial 5,436 3,704 46.8%
Total 17,614 12,847 37.1%
Number of Customers Count Count
ROW Gov 30 20 50.0%
USA Gov 15 16 -6.3%
Commercial 174 138 26.1%
Total 219 174 25.9%
We separate our Government customers into two market segments: Government
outside USA (ROW) and USA Government. We do this as the buying cycle and
pricing for each segment is different. For Government ROW, in most cases,
Windward is responding to a Request for Proposal ("RFP") process which can
take between 9 to 18 months to conclude. For the USA Government, Windward
typically sells a subscription-based solution on a price per user basis.
Historically most of the annual awards from the U.S. Government agencies are
linked to the U.S. Federal budget cycle which typically concludes annually at
the end of September.
At the end of June 2024 our largest customer was at 7.7% of ACV (June
2023: 10.1%) and the next 5 biggest customers together were 19.1% of ACV
(June 2023: 25.5%).
The annual ACV churn rate is defined as the value of contracts lost from the
existing customer base one year prior to the measurement date, as a proportion
of the total ACV value of that existing customer base. The churn rate reflects
customer losses and contractions but not any customer expansions of existing
contracts.
Churn in H1 2024 was 3.2% compared to 4.7% in H1 2023. We target churn to be
below 10%.
FINANCIAL OVERVIEW as of 30 June:
H1-2024 ($'000) H1-2023($'000) Change %
Revenues 17,614 12,847 37.1%
Cost of revenues 3,432 2,838 20.9%
Gross Profit 14,182 10,009 41.7%
Gross Margin 81% 78%
R&D 6,454 5,676 13.7%
S&M 7,989 6,701 19.2%
G&A 3,297 3,086 6.8%
Total operating expenses 17,740 15,463 14.7%
Operating loss (3,558) (5,454) -34.7%
Adjusted Operating loss (1,654) (4,177) -60.4%
Adjusted EBITDA loss (1,320) (3,849) -65.7%
REVENUE
Revenue increased by 37.1% to $17.6m (2023: $12.8m). This increase was driven
by 46% growth in both Gov ROW and Commercial and by 14% growth in our US
Government segments mostly from the additional 45 new customers adopting our
solution.
Gross margin
Gross margin increased to 81% in 2024 (78% in 2023), mostly as a result of the
increase in revenue. We expect margins to stay above 80% over time.
R&D
Research and development increased from $5.7m in 2023 to $6.5m in 2024 mainly
due to a higher number of employees and wage increases. All R&D costs are
expensed as they occur, we do not capitalise R&D costs.
S&M
Sales and marketing increased from $6.7m in 2023 to $8.0m in 2024. The main
reason for the increase was the hiring of additional sales managers in Europe
and USA and an increase in marketing costs.
G&A
General and administrative expenses increased slightly from $3.1m in 2023 to
$3.3m in 2024 reflecting the increased level of business activity, mainly
additional office space.
Total expenses increased by 15% to $21.1m (HY 23: $18.3m), including non-cash
share based compensation of $1.9m (HY 23: $1.3m), significantly lower than the
37.1% increase in revenues.
Taxes
The Company paid $0.2m income tax in its subsidiaries.
CURRENCY EFFECT
Approximately 60% of the annual operating expenses are incurred in New Israeli
Shekels (NIS). Most of the revenue is invoiced in USD and consequently the
Company reports in USD. The average exchange rate between NIS and $ increased
by 2.8% in HY 2024 versus HY 2023.
EBITDA
Adjusted EBITDA is a non-IFRS financial measure defined as (profit before
depreciation, amortisation, interest, tax and share-based payment charges and
associated employer tax charges). Reconciling EBITDA to adjusted EBITDA for HY
24, the Company added back $1.9m (HY 23: $1.3m) of stock based compensation
expenses.
Statement of financial position
CASH AND CASH EQUIVALENTS
Windward had cash, cash equivalents and short term deposits at 30 June 2024
of $13.8m, a decrease of $3.5m from 31 December 2023.
CASH FLOW
Windward used $2.6m to finance operating activities in 2024, a 35% decrease
from the $4m used in 2023. The decrease was mainly the result of reduced
operating losses.
Ofer Segev
Chief Financial Officer
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2024 and 2023
Six months ended
June-30
Note Unaudited Unaudited
2024 2023
U.S. dollars in thousands
REVENUES 6 17,614 12,847
COST OF REVENUES 3,432 2,838
GROSS PROFIT 14,182 10,009
OPERATING EXPENSES:
Research and development 6,454 5,676
Sales and marketing 7,989 6,701
General and administration 3,297 3,086
TOTAL OPERATING EXPENSES 17,740 15,463
OPERATING LOSS (3,558) (5,454)
FINANCIAL EXPENSES
Financial expenses 569 539
Financial income 135 249
Total financial expenses, net 434 290
LOSS BEFORE INCOME TAX (3,992) (5,744)
Income tax expense 209 109
LOSS FOR THE PERIOD (4,201) (5,853)
Loss per share attributable to the ordinary equity holders of the Company:
Basic and diluted loss per share (0.05) (0.07)
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As of 30 June 2024, and 2023
June 30 December 31
2024 2023
Unaudited Audited
U.S. dollars in thousands
Assets
CURRENT ASSETS:
Cash and cash equivalents 13,778 17,317
Trade receivables 3,100 2,502
Other receivables 4,108 4,254
TOTAL CURRENT ASSETS 20,986 24,073
NON-CURRENT ASSETS:
Restricted deposit 1,475 1,558
Property and equipment, net 613 646
Intangible asset 972 495
Right-of-Use asset 1,445 1,619
4,505 4,318
TOTAL ASSETS 25,491 28,391
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Trade payable 1,350 969
Current maturities of lease liabilities 369 330
Other payable 3,761 4,364
Deferred revenues 11,253 12,734
TOTAL CURRENT LIABILITIES 16,733 18,397
NON-CURRENT LIABILITIES:
Deferred revenues 4,061 2,791
Liability for employee rights upon retirement, net 53 55
Lease liability 1,149 1,392
TOTAL NON-CURRENT LIABILITIES 5,263 4,238
TOTAL LIABILITIES 21,996 22,635
SHAREHOLDERS' EQUITY:
Ordinary Shares with no par value - -
Additional paid-in capital 85,237 83,297
Accumulated deficit (81,742) (77,541)
TOTAL SHAREHOLDERS' EQUITY 3,495 5,756
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 25,491 28,391
The accompanying notes are an integral part of the condensed consolidated
interim financial information.
UNAUDITED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
As of 30 June 2024, and 2023
Ordinary shares Additional paid-in capital Accumulated deficit Total
U.S. dollars in thousands
BALANCE AS OF JANUARY 1, 2024 (Audited) - 83,297 (77,541) 5,756
Exercise of options by employees - 36 - 36
Share based compensation - 1,904 - 1,904
Loss for the period - - (4,201) (4,201)
BALANCE AS OF JUNE 30, 2024 (Unaudited) 85,237 (81,742) 3,495
Ordinary shares Additional paid-in capital Accumulated deficit Total
U.S. dollars in thousands
BALANCE AS OF JANUARY 1, 2023 (Audited) 27 80,858 (68,550) 12,335
Exercise of options by employees - 17 - 17
Share based compensation - 1,278 - 1,278
Loss for the period - - (5,853) (5,853)
BALANCE AS OF JUNE 30, 2023 (Unaudited) 27 82,153 (74,403) 7,777
Represents an amount lower than 1 thousand U.S dollar (*)
The accompanying notes are an integral part of the condensed consolidated
interim financial information
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2024 and 2023
Six months ended
June-30
2024 2023
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITIES: U.S. dollars in thousands
Loss for the period (4,201) (5,853)
Adjustments to reconcile loss for the period to net cash used in
operating activities:
Depreciation 334 328
Share based compensation expenses 1,904 1,278
Effect of exchange rate 165 (146)
Finance (income) expenses of lease liabilities 24 -
Changes in asset and liability items:
Decrease (increase) in trade receivables (599) 807
Increase in other receivables 146 (814)
Increase (decrease) in trade payables 381 (43)
Decrease in other payables and accruals (603) (890)
Increase in deferred revenues (211) 1,348
Decrease in liability for employee right upon retirement, net (2) (3)
Net cash used in operating activities (2,662) (3,988)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (98) (48)
Purchase of intangible assets (477) -
Interest received 127 -
Increase in bank deposits - (980)
Net cash used in investing activities (448) (1,028)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 36 17
Principal elements of lease payments (169) (130)
Interest paid (89) -
Net cash used in financing activities (222) (113)
DECREASE IN CASH AND CASH EQUIVALENTS (3,332) (5,129)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 17,317 22,141
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (207) 65
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD. 13,778 17,077
The accompanying notes are an integral part of the condensed consolidated
interim financial information
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
INFORMATION
NOTE 1- GENERAL INFORMATION
Windward Ltd. (the "Company" or and its subsidiaries the "Group") was
incorporated in Israel and commenced its operations in January 2010. The
registered office of the Company is Ha-Shlosha St 2, Tel Aviv-Yafo, Israel.
Windward is a b2b SaaS technology company, focusing on the combination of
maritime domain expertise and AI. The Company provide access to a
best-in-class, Maritime AI-powered, Predictive Intelligence Platform for the
250,000 target customers which are involved in maritime trade, including
governments, shipping companies, financial institutions, freight forwarders,
beneficial cargo owners and many more.
On 6 December 2021, the Company completed a process of listing its existing
shares and issuing new shares on the AIM market of the London Stock Exchange
(the IPO).
In October 2023, in response to Hamas' attack on Israel from the Gaza Strip,
Israel declared war on Hamas. Despite the ongoing war, the Company has
continued to operate its business and serve its customers around the world
and, to date, its ability to support customers has not been materially
impacted. At this time, less than 10% of the Company's Israeli workforce have
been called to military reserve duty and the Company has contingencies in
place to cover impacted roles and responsibilities.
The situation in the region remains highly uncertain and there is the
possibility that the conflict could worsen or expand which could, in turn,
further impact economic conditions in Israel and in the broader region. At of
this report, it is difficult to assess the impact the war may have on the
Company's results of operations. Any further escalation, expansion, or
prolonged continuation of the ongoing conflict has the potential to impact the
Company's operations locally as well as the broader global economy and may
have a material effect on the Company's results of operations.
Since the establishment of the company, the company has accumulated continuous
losses from its business activities, and it had negative cash flows.
As of June 30, 2024, the company had a cash in the amount of approximately
13.8 million dollars.
The continuation of the company's activity in the coming year is supported by
its cash balances as well as the realization of the management's plans for
growth and an increase in the revenues. These funding sources allow the
company's management to assess its continued activity for a period of more
than 12 months starting from the date of approval of these financial
statements.
NOTE 2 - BASIS OF PREPARATION
a. These condensed consolidated interim financial information for the
six-month period ended 30 June 2024 have been prepared in accordance with IAS
34 - 'Interim financial reporting' as issued by the International Accounting
Standards Board. The condensed consolidated interim financial information
should be read in conjunction with the annual financial statements for the
year ended 31 December 2023, which have been prepared in accordance with IFRS.
This condensed consolidated interim financial information are reviewed and not
audited.
b. The accounting policies adopted are consistent with those of the previous
financial year.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
a. General
The preparation of financial information in accordance with IFRS requires the
use of estimates and assumptions to be made in applying the accounting
policies that affect the reported amounts of assets, liabilities, revenue and
expenses and the disclosure of contingent assets and liabilities.
The estimates and related assumptions are based on previous experiences and
other factors considered reasonable under the circumstances, the results of
which form the basis for making the assumptions about the carrying values of
assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
Significant accounting policies and computation methods used in preparing the
condensed consolidated interim financial information are consistent with those
used in preparing the 2023 annual financial statements.
b. New international financial reporting standards, amendments to standards
and new interpretations
IFRS 18, Presentation and Disclosure in the Financial Statements
This standard replaces the international accounting standard IAS 1,
"Presentation of Financial Statements." As part of the new disclosure
requirements, companies will be required to present new defined subtotals in
the statements of income, as follows: (1) operating profit and (2) profit
before financing and tax. In addition, income statement items will be
classified into three defined categories: operating, investment and financing.
The standard also includes a requirement to provide a separate disclosure in
the financial statements regarding the use of management-defined performance
measures ("non-GAAP measures"), and specific instructions were added for the
grouping and splitting of items in the financial statements and in the notes
to the financial statements. IFRS 18 is effective for annual reporting periods
beginning on or after January 1, 2027, with an option for early adoption.
NOTE 4 - FINANCIAL INSTRUMENTS - FAIR VALUE
The management believes that the carrying amount of cash, trade receivables,
restricted deposits trade payables and other current liabilities approximate
their fair value due to the short-term maturities of these instruments or the
sensitivity of the instruments for change in the interest rate.
NOTE 5 - SHARE BASED COMPENSATION
1. During February 2024, the Company granted in total 1,154,698 RSUs to its
employees. The total fair value of the 1,154,698 RSUs is approximately $1,633
thousand. 917,500 of the RSUs vest over four years period: 25% will vest at
the first anniversary of the grant date and 6.25% will vest at the end of each
quarter during the second, third and fourth years from the date of grant. The
rest of the RSUs will vest at the end of March 2025 if the performance
condonation that stipulated in the RSUs grants are met.
2. During April 2024, the Company granted in total 283,248 RSUs to its
employees. The total fair value of the 283,248 RSUs is approximately $361
thousand. 30,000 RSUs will vest at the end of 2024 and the rest of the RSUs
will vest at the end of March 2025 if the performance condonation that
stipulated in the RSUs grants are meet.
3. During May 2024, the Company granted in total 177,274 RSUs to its
chairman and non-executive directors. The total fair value of the 177,274 RSUs
is approximately $223 thousand. All RSUs vest at the end of 2024.
4. During May 2024, the Company granted in total 1,893,375 RSUs to its CEO
and CFO. The total fair value of the 1,893,375 RSUs is approximately
$1,340 thousand. 126,755 of the RSUs vest at the end of March 2025 if the
performance condonation that stipulated in the RSUs grants are met.
441,655 of the RSUs will vest at the end of 2027 if the performance
condonation that stipulated in the RSUs grants are met.
1,324,965 of the RSUs vest at the end of 2027 if the market conditions (share
price target) that stipulated in the RSUs grants are met. The fair value of
the RSUs granted, after taking into account the market conditions is
approximately GBP 0.3718 ($0.472) per RSUs. The fair value of RSUs granted was
estimated using the Monte-Carlo simulation model. The parameters used in the
model was time until the vesting test 4 years, stock volatility 50%, risk free
3.4465%, base share price GBP 0.81.
5. During May 2024, the Company granted in total 2,944,366 RSUs to its
employees. The total fair value of the 2,944,366 RSUs is approximately $2,385
thousand. 706,647 of the RSUs vest over four years period: 25% will vest at
the first anniversary of the grant date and 6.25% will vest at the end of each
quarter during the second, third and fourth years from the date of grant.
559,428 of the RSUs will vest at the end of 2027 if the performance
condonation that stipulated in the RSUs grants are met.
1,678,291 of the RSUs vest at the end of 2027 if the market conditions (share
price target) that stipulated in the RSUs grants are met. The fair value of
the RSUs granted, after taking into account the market conditions is
approximately GBP 0.3718 ($0.472) per RSUs. The fair value of RSUs granted
was estimated using the Monte-Carlo simulation model. The parameters used in
the model was time until the vesting test 4 years, stock volatility 50%, risk
free 3.4465%, base share price GBP 0.81.
NOTE 6 - REVENUES FROM CONTRACT WITH CUSTOMERS:
The Group derives revenue from providing Software as a Service (SaaS) over
time for the following major customer types and geographical regions:
Six months ended
Jun-30
2024 2023
U.S. dollars in thousands
a. Customer types:
Governments 12,178 9,143
Commercials 5,436 3,704
17,614 12,847
b. Geographical regions:
Israel 303 265
North America 6,797 4,316
APAC 1,397 1,372
Europe 6,063 4,867
Gulf Cooperation Council (GCC) & Africa 2,711 1,638
South/Latin America 342 389
17,614 12,847
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