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Dreamscape NetworksLimited (ASX: DN8)

First Half FY18Results Presentation

22 February 2018

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H1 FY18 overview: a busy 6 months

Revenue up 30% to $29.3m

Bookings up 17% to $29.9m

Adjusted EBITDA down 38% to $3.2m

At 31 December 2017, Dreamscape had cash and undrawn debt capacity of $11.7 million

Crazy Domains grows .au market share and continues to be Australia's #1 domain name brand

Streamlining operations: relocating to Singapore to support South East Asia growth strategy

Acquired Vodien Group, now Singapore's #1 .sg Domain and #1 Hosting provider

Acquired Enetica Group, expanding Dreamscape’s domestic presence

Premium customer care service satisfaction level at 92%, an all-time high

Our core strategy remains as we invest into new

high growth markets in SEA, the

fastest growing internet space in

the world

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Strong Bookings and investing for growth

Shifting to high-margin products• Evolution continues towards operating in higher margin hosting and solution pillars

• Increased Bookings in high-margin hosting pillar by 35% through strategic and bolt on acquisitions

• Improved renewal rates demonstrates stickiness and strong annuity revenue

Investing for long term growth• Underlying Australian business faced challenging domestic conditions given flat Industry trend

• Importantly, Crazy Domains remains Australia’s #1 .au domain brand

• Vodien Group delivering results above expectations (5 month contribution H1FY18) – substantial establishment

savings achieved vs greenfield operation

• Integrating systems, people and infrastructure from domestic acquisitions to deliver significant cost synergies

(Enetica Group acquired 31 Oct 17 / Quadra Hosting acquired 31 Jan 18)

• Investing in customer care to deliver Best in World service to further drive renewals and retentions For

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Adjusted Gross Profit & Adjusted EBITDA

$14.4M $17.0M

H1FY17 H1FY18

$5.2M $3.2M

H1FY17 H1FY18

Australian headwinds• A flat .au domain industry• As Australia's #1 Domain Brand, this affected both the Domain and Hosting

pillars of the business• Coupled with additional investment into new market expansion, we

experienced a reduction in Adjusted EBITDA• We are building for longer term growth and this reinforces and accelerates our

core strategy to move into higher growth markets in South East Asia

Investing for long term value• Sustained marketing efforts in Australia amidst the flat industry trend, to

maintain presence and dominance in the market• Establishing a solid high level marketing team which will develop effective

campaign strategies for each target market• Increased visibility and promotion of Crazy Domains and Vodien brands in Asia

to improve on-boarding, conversions and engagement• Continuous growth of customer care and specialized product teams to keep up

with the increased customer base

Adjusted Gross Profit Adjusted EBITDA

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Total Bookings

$12.1 M $12.6 M

$10.6 M$14.3 M

$2.9 M

$3.0 M

H1FY17 H1FY18

Domains Hosting Solutions

$25.6M

$29.9M

$25.6 M $24.1 M

$4.4 M

$1.5 M

H1FY17 H1FY18

Underlying Business Acquisitions - SEA Acquisitions - Australia

$29.9M

$25.6M

H1 FY18$29.9M

H1 FY17$25.6M

17%

Acquisitions – Australia: Net Logistics (6 months), and Enetica Group (2 months)Acquisitions – SEA: Vodien Group (5 months)

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Domains remains the key on ramp

• Growth coming from acquisitions. Offsetting flat domain industry in Australia

• Remains the first step to getting online

• Introduction to additional online services

Focused on SEA expansion strategy

• New, emerging markets and the move into South East Asia

• Targeted marketing towards the 59% of Australian SMBs without an online

presence


$12.1 M$11.7 M

$0.8 M

$0.2 M

H1FY17 H1FY18


$12.1M

$12.6M

Domain Bookings up 4% to $12.6MF

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Continued focus on Hosting strategy

• Our highest margin pillar

• Bookings increase resulting from bolt on acquisitions in Australia and

Vodien in Singapore

• Launching our dedicated hosting brand Vodien into Australia & NZ in FY19

• Utilising Marketing, Sales and Hosting transfer teams to drive growth within

existing customer database

Hosting Bookings up to 35% to $14.3M


$10.6 M$9.6 M

$3.4 M

$1.3 M

H1FY17 H1FY18


$10.6M

$14.3M

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$2.9 M $2.9 M

$0.1 M

H1FY17 H1FY18


Significant opportunity to increase Solutions pillar

• As the life time of a customer increases, they generally engage in additional

products and services

• Leveraging cross-sell and up-sell opportunities within customer base

• Dedicated and personalized business development specialists to partner with

customers to deliver customized solutions

• Helping our customers achieve their online goals

New products and bundling to drive increased engagement

• Prioritized introduction of new products and services

• Expanding Solutions offering to enter new product markets

• Simplification and personalization of our product offerings to cater towards

customers needs

$2.9M

$3.0M

Solutions Bookings up to 3% to $3.0M


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Cost of Doing Business

$5.5 M

$8.0 M

$1.2 M

$2.6 M

$2.5 M

$3.1 M

H1FY17 H1FY18Personnel costs Marketing costs Administrative costs

$9.2M

$13.7M

$9.2 M $9.1M

$4.6M

H1FY17 H1FY18Existing business Expansion SEA - Vodien

$9.2M

$13.7M

H1 FY17• Cost structure based on being a private

company

• No provision for ASX listed company costs

• Low level of marketing spend focus was customer care

• Expansion of employee head count for growth in all business areas had not commenced

H1 FY18• ASX listed company structure… static

costs going forward

• ASX listed costs normalised

• Marketing costs in line with internal budgets but include spending for long term brand growth in South East Asia

• Head count expanded in Customer Care, Marketing (for SEA)


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Strategic acquisitions consistent with growth plans

Enetica Group(31 October 2017)

• Singapore’s #1 .sg Domain and #1 Hosting provider• Accelerates growth through Singapore• EPS accretive from first full year of ownership• Vodien founders continue as key senior management

• Potential for significant cost synergies• Expands DN8’s hosting footprint in Australia• Expected to be EPS accretive in FY18, with full benefits realised in FY19

Vodien Group(31 July 2017)

Strong revenue generationVodien Group, Enetica Group and Net Logistics generated revenue in total of $6 million (includes revenue for six months of Net Logistics, five months of Vodien Group and two months of Enetica Group)

Quadra Group(31 January 2018)

• Potential for significant cost synergies• Expands DN8’s hosting footprint in Australia• Expected to be EPS accretive in FY18, with full benefits realised in FY19

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Successfully integrating acquisitions to generate shareholder value

Enetica Group(31 October 2017)

• Integration of new HQ in Singapore, combining Vodien and Dreamscape, to be completed by 30 June 2018

• “Ready to go” land and expand platform, saving the Company at least three years in establishing a stand-alone operation at an estimated cost to DN8 of +AUD $13 million over the same period.

• Dedicated Hosting brand consolidation to Vodien to be completed by 30 June 2018.

• Launch of Vodien into Australia & NZ

• Cost synergies to be realised by FY18 to benefit from FY19• Closure of data centre• Reduction in head count• Eliminate other duplicated services• Annualised cost synergies estimated at $350,000

Vodien Group(31 July 2017)

Quadra Hosting(31 January 2018)

• Cost synergies to be realised by FY18 to benefit from FY19• Closure of data centre• Reduction in head count• Eliminate other duplicated services• Annualised cost synergies estimated at $150,000

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South East Asia is a growth market

19 24 29 3748

5868 75 80

111127

148166

186

219

246

330

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Overtook Japan # Internet Users

Source: WorldBank, Google, Temasek Report, Intranet Live StatsCourtesy of Catcha Group

SEA # Internet Users (2001-2017)

Overtook combined # InternetUsers Of Germany, UK and France

Overtook USA # Internet Users

330M

460M

2017 Est 2019

Internet Population in SEA

Number of internet users in SEA increased by ~ 17x since2001 – overtaking major developed countries

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Key SEA metrics:

• Estimated continued growth of 39% forecast in the next two years• Huge ecommerce potential – Alibaba recently acquired Lazada for

U$1 billion• Untapped potential – online retail as a percentage of overall retail

remains relatively low• Lack of infrastructure and limited retail GFA (gross floor area) per

capita are expected to lead to rapid e-commerce growth• SEA has some of the highest penetration of social networks usage

among internet users of anywhere is the world

$10 $13 $17

$22 $29

$38

$51

$67

$88

2017 2018 2019 2020 2021 2022 2023 2024 2025

Size of SEA’s E-Commerce marketIn Billions, USD

Source: Google, Temasek Holdings, 2016

South East Asia is a growth marketF

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Key initiatives for H2 FY18

Key actions for half year• Closure of Perth and Dubai operating offices• Relocation of functions and staff to new integrated HQ with Vodien Group in Singapore• Consolidation of Dreamscape and Vodien teams in the Philippines into our new technical support centre by June 30,

2018• Closure of Net Logistics Indian Support Centre and fully integrated into Dreamscape customer care operations in the

Philippines by June 30, 2018;• Closure of Enetica Group data centre and migration to Dreamscape’s Sydney Facility;• Closure of Quadra data centre and migration to Dreamscape’s Sydney Facility;• Focus on forming strategic partnerships in SEA to accelerate market entry and on-boarding.

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Business outlook and FY18 guidance

Key expectations• Vodien will show strong growth in South East Asia, the fastest growing internet space in the world

• The Australian market will remain flat and show limited activity

• The Crazy Domains brand will continue to maintain its market share

• Our dedicated hosting brand Vodien, will launch into Australia & NZ

Savings due to Costs Synergies• Closure of Enetica and Quadra data centres and migration to Dreamscape’s Sydney facility

• Closure of Net Logistics Indian support centre

• Closure of the Perth office

• Closure of the Dubai office

• Consolidation of Dreamscape and Vodien teams in the Philippines into new technical support centreFor

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Business outlook and FY18 guidance

FY18 Bookings and Adjusted EBITDA guidance• Adjusted EBITDA expected to be in the range of $7.2M to $7.6M

• Excludes one time provision for restructuring for offices, staff, relocation etc. of $1.0M

million to be taken in FY18

Growth Strategy• Continued investment into South East Asia as a key part of our long term growth strategy

• Optimising and streamlining operational efficiencies to deliver on our strategic initiatives

• Focus on short term cost synergies and bedding down acquisitions

• Further enhancement of marketing activities to leverage higher margin pillars

• The Company will continue to pursue earnings accretive businesses

• Strategic partnerships through Australia and SEA

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Appendices

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Reconciliation for Adjusted EBITDA

($m) H1FY18

Statutory EBITDA $2.0

Adjustments to calculate Adjusted EBITDA

- Changes in deferred revenue movement net ($0.4)

+ Equity-based compensation $0.4

+ Foreign exchange loss – unrealised $0.6

+ Acquisition-related costs $0.2

+ Loan related costs $0.2

+ Restructuring costs $0.2

Adjusted EBITDA $3.2

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Terminology and Calculations

Item DescriptionActive Members Active Members are members who have a domain, product or service that’s current and has been paid for.

Adjusted EBITDAA Non-IFRS cash-based financial measure of DN8’s performance that aligns with the Group’s Bookings and operating expenditures to evaluate the core operating profitability of the Group’s business. Adjusted EBITDA is calculated using the Statutory EBITDA calculation, primarily adjusted for the change in deferred revenue so as to include total Bookings, the change in the deferred costs associated with the Total Bookings, and excluding the non-cash equity-based expenses including share-based compensation and Unrealised Foreign currency exchange losses/gains and transaction expenses and non-core one off expenses.

ATL Above the Line – Marketing that is delivered in a mass media format such as TV, Radio, Billboards and Newspaper

Average Bookings Per User (ABPU) Total Bookings within previous 12 months divided by unique Active Members who had a product and made a payment within that same period.

Average Customer Life Lifetime of members in years. 1 divided by churned rate, divided by 12. Churned members within month divided by total active start of month. A member is logged as churned when they no longer have a product or domain set to ‘Registered’, ‘Pending Setup’, ‘Renewal Due’, ‘Pending fraud’ or ‘Further Info’.

Bookings Total Bookings represents cash receipts from the sale of products to customers in a given period before effecting adjustments for net refunds granted within the period. This provides valuable insight into the sales of our products and the performance of our business since we typically collect payment at the time of sale.

Cash Generated from Operations Cash generated from operations is a measure of our performance calculated as Adjusted EBITDA less capital expenditures and acquisitions of intangibles.

Cost Per Acquisition Marketing costs divided by new active members.

IFRS International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board.

Lifetime value Average lifetime of members multiplied by ABPU. Indicates potential Bookings of average member.

Renewal Rate ‘Due for renewal’ status divided by domains/products renewed.

TLD Top Level Domain. E.g. .com, .net, .org, .info, .au

Total Members Members with cleansed and verified contact details within our database.

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Disclaimer

This presentation was not prepared for and should not be relied upon to provide all necessary information for investment

decisions. Some of the information contained in this presentation contains “forward-looking statements” which may not

directly or exclusively relate to historical facts. Although great care & diligence has been taken to ensure the accuracy of this

presentation, Dreamscape Networks Limited gives no warranties in relation to the statements and information contained

herein and disclaims all liability arising from persons acting on the information and statements in this presentation.

Due to the dynamics and changing risk profiles of investment markets, Dreamscape Networks Limited reserves the right to

change its opinion at any time. All investors are strongly advised to consult professional financial advisors whose role it is to

provide professional financial advice, taking into account an individual investor’s investment objectives, financial situations

and particular needs.

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