Verimatrix S.A.

I think we can go. Thank you everyone for participating in the announcement of the 2023 results of Verimatrix. There will be my presentation at the beginning and Jean-François Labadie, our CFO. We will talk either about the results of the fourth quarter of 2023, which is the result of the year of the full year 2023. Before I start the presentation, I wanted to tell you that for the people who followed our story a little bit, in 2021 was the year in which we decided to change the business model, to move from a business model It was a business model that for the clients, our clients, it was capex and we had trimesters not balanced, all focused on the end of the year because it was capex for the clients, especially the telecom clients. We decided over a year of COVID and a little difficult to pass a SaaS model and a subscription model. this transformation, which is a transformation in depth for a company, because we were forced to redevelop a part of the products or adapt the products to a cloud world, and to redevelop the commercial force, to give another elan to the company to communicate to our customers the need to go to subscriptions and a cloud service that could give customers a lot more flexibility, a lot more speed in the information that we give to customers on the pirates, on the fraudsters, all the people who attack the goods of customers. It was a process that made us lower the declared turnover and profitability. But we already see, and Jean-François will give you all the figures for the year 2023, that the decrease in the figures to be made that we experienced in 2021 and 2022, we stopped this decrease in figures to be made. and we started to benefit from the transformation of our perpetual model into a recurring revenue model, on which we exceeded in 2023, 50% of our turnover today is recurring. This will allow us, on the one hand, to have a much more predictable turnover forecast per quarter, And on the other hand, to have continuous customer relations, without shocks or huge changes, quarter by quarter. quite satisfied with the fact that now the situation is stabilized. The team is all motivated to develop and grow in our cybersecurity and anti-piracy business. I wanted to introduce that to give a little bit of the feeling, the situation of our company today, and we will show you the figures for 2023. Who is going to talk tonight, you see on the slide, it's me as Executive Chairman and Jean-François Labadie, our CFO. Next slide. We are going to talk about our position in the cybersecurity market, the transformation of our technological society, which has a long history of strong skills and technologies in the world of security. Our offer is anti-piracy and our offer, defense treaty, which is the protection of application, devices and enterprises. Then there will be the results of 2023 and our vision for 2024, which will be presented by Jean-François. To give you a bit of a dimension of which market we are in, there is this slide from Gartner's source, which shows the world of security and cybersecurity, which has been fragmented into several verticals, and the two verticals in which Verimatrix is present are threat defense, application security, and anti-piracy, or data security. You see that these are markets that have a size of 5 billion, each of these markets, about 5 billion, 4 billion euros, with an annual growth of around 14-16%. These are significant markets and the need for security continues to increase. Today, with artificial intelligence and self-learning even more, we must on the one hand exploit the new software and artificial intelligence capabilities to better protect our customers, but there is also an even greater need to increase security in all areas.

Next.

As I announced, our annual recurring revenue today is more than 50% of our total turnover. Two years ago, when we decided to change the business model of the company, we announced that at the time we had about 30% of recurring revenue and we announced that our goal was to reach 70%. And as you can see, we are in the right direction to reach our final goal of 70%. It's final because we think there will always be customers who would like to keep or buy perpetual licenses and keep the security part in their servers. But it's a great goal that we reached in 2023 and shows that the transformation process has been completed. We, in security, are a company that has more than 25 years of security. We started with security in semiconductors and then we developed all our activity in security software. There are more than 500 million devices in which we have loaded our security software. either to protect applications or to protect data and video requests for customers. 500 million devices in the world have our integrated software. We are 270 people in our 8 offices in the whole world and we have had 153 certified patents in the years. We are a company 50% of the population are software developers and we have a lot of innovation in several countries around the world. Verimatrix has been known for years as a security leader and there are three examples in which we have won awards and we are recognized as a leader in cybersecurity in the whole world. Next. Our management team, here you can see we have eight people in the management, four of the eight people are based in California, in San Diego, because the core of Venimatrix, Venimatrix is made up of two companies, the main company that is Insight Secure, which was founded in Aix-en-Provence 25 years ago, and the social sector of the company is still in France, and we are on the side of France, but a large part of the management activity is in San Diego, which was the city in which Verimatrix was founded, which we bought back in 2019. There is me as executive chairman and general director, and we have Azaf Ashkenazi, based in San Diego, who manages the company every day with his position of Chief Executive Officer. Jean-François Abadie, who is based in Aix-en-Provence, in Paris. Valérie Convert, our VP of Human Resources, is based in Aix, and also often in Paris. Andy Baer is the owner of the anti-piracy business unit, which is based in Glasgow. That's where we bought a company at a time to have the application protection technology. Tom Paulage is based in California and he is the owner of the cybersecurity business. application protection and devices. John Samsell in California as VP marketing director and Kim Vogel, who is the head of research and development. A stable team today. We have had a lot of changes since 2019, 2020, 2021. Today we have a stable team, very well linked, coordinated by Azaf, with a Next. As I told you, we sold our device when I talked about 500 million clients, which are software that goes into the devices to protect the applications, in 500 million devices, but they are present in 120 countries around the world. We have eight offices, especially in Europe, our research and development, our employees, more than half of the employees in Europe in several offices. We have this distribution for two reasons, a reason for skills, a reason for costs and also a reason because we bought during the years companies that were based either in Glasgow or in Helsinki and we still have employees there. San Diego was where the core of Verimatrix was when we bought it, and Mexico is a rental center, and we are present in Mexico and Hungary to have a lower cost on the engineering part. You know that California is quite expensive. We have developed locations to be more competitive from an economic point of view in these countries. Half of our turnover is in the Americas, 35% in Latin America and 15% in North America, and 50% is in EMEA and Asia-Pac. It's 50-50 in our business. Next. In short, this slide is a very important slide because if I focus a little bit on this slide, we can really see who the company is. Even today, 83% of our turnover is in anti-piracy. Anti-piracy is the protection of videos on linear television, by OTT and by all services around video on demand. In the past, the companies that did what we call CAS, conditional access, protected only the video part for the clients. Today, and since 2021, we have developed a complete offer in which we anticipate the attack of the pirates. We can degrade the content, the video, or completely block the pirate that is attacking our customers, no matter in which location, in which place. And we are very, very fast to do all this. And we sell to our customers a monitoring system, that is to say, with screens. No, we don't sell screens, but the software that the customer with the screens can watch in real time all the attacks that the pirates do on their This business that goes from linear television to streaming, we sell it with two business models, a perpetual and a SaaS. We have a very flexible offer that allows us to take market share because our competitors were very late to make a SaaS offer They did not understand at the time that the clients were ready to change from CAPEX to INOPEX and have a much longer-term relationship with subscriptions. On the other hand, there is pure cybersecurity. It is 7% of our turnover, but we must not It's not exactly 7%. With the cybersecurity software, part of our anti-piracy figure is made with this software. That is to say that the cybersecurity part is much more important for us than the 7% that you see on this line. The defense treatment part that is on this slide is the specific part for application protection in different verticals. Our traditional vertical is the OTT distributors, the telecom operators and all the operators that distribute video requests and data. The right part, with the specificity of the defence treaty, has been successful in other vertical markets, in the payment world, with bankers and financial institutions, in health, in automotive, in applications for electric cars, and also in electronic games, gaming, entertainment. And on this side, a strong traction of the vertical markets, which are not our traditional markets, which ask us to protect their applications. And all this is done only with SAS, only with the subscription.