q1 2021 and capital markets update

Q1 2021 and Capital Markets Update

20 May 2021

This presentation (the “Presentation") has been prepared by Mercell Holding ASA

(the "Company“ or “Mercell”, and together with its consolidated subsidiaries, the

"Group")

The Presentation contains forward-looking information and statements relating to the

business, financial performance and results of the Company and/or industry and markets

in which it operates. Forward-looking statements concern future circumstances and

results and other statements that are not historical facts, sometimes identified by the

words “aims”, “anticipates”, “ambitions”, “believes”, “estimates”, “expects”, “foresees”,

“intends”, “plans”, “predicts”, “projects”, “targets”, and similar expressions. Any forward-

looking statements and other information contained in this Presentation, including

assumptions, opinions and views of Mercell or cited from third party sources are solely

opinions and forecasts based on the current expectations, estimates and projections of

the Company or assumptions based on information currently available to the Company,

which are subject to risks, uncertainties and other factors that may cause actual events to

differ materially from any anticipated development.

Important factors may lead to actual profits, results and developments deviating

substantially from what has been expressed or implied in such statements. Although

Mercell believes that its expectations and the Presentation are based upon reasonable

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except as required by law, to update any forward-looking statements or to conform these

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reliability or completeness of the Presentation, and neither the Company nor any of its

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The Presentation speaks and reflects prevailing conditions and views as of the date of this

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any implication that there has been no change in the affairs of the Company since such

date.

Disclaimer

Q1 and CMU agenda

3

Q1 2021CFO Fredrik Eeg

Product

strategyCPO Arild Nilsen

Accelerating

our GrowthCEO Terje Wibe

Expanding

through M&AHead of M&A Jacob Møller

Commercial

ViewsCCO Lars Vangen Jordet

Financial

perspectivesCFO Fredrik Eeg

Q1 2021

CFO Fredrik Eeg

▪ Continuing the expansion

− Entered European expansion phase with acquisition of Negometrix in February

− Acquired CTM Solutions and Ibistic in May

− Secured funding through NOK 434 million equity issue in February

▪ High growth

− ARR of NOK 634 million, +170% vs Q1’20

− Organic ARR growth of 28%

− Revenue of NOK 148m, +160%vs. Q1’20

− Organic revenue growth of 18%

Q1 highlights – making strong progress

ARR developmentNOKm

235

299338

552

634

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

▪ Revenue of NOK 148m

▪ 160% growth, fueled by acquisitions

▪ Organic revenue growth of 18%

▪ Positive effect of first full quarter for Mercell Commerce

▪ Adjusted EBITDA of NOK 40m

▪ Adjusted EBITDA-margin of 27%

▪ Reported EBITDA of NOK 35m

Revenue +160%Adjusted EBITDA-margin 27%

6

Revenue and EBITDANOKm

57

148

10

40

7

35

Q1 2020 Q1 2021

Revenue Adjusted EBITDA EBITDA

▪ ARR +NOK 82m in Q1

− Organic growth of NOK 21m

− New sales of NOK 15m

− Upselling NOK 28m

− Churn/contraction –NOK 20m

− Currency/Other NOK -2m

− NOK 61 million from acquisition of Negometrix*

Continuing ARR growth in Q1 2021

7*ARR at time of acquisition

ARR bridge Q1 2021NOKm

552

634

15

28

-20 -2

61

Churn/contraction

ARR Dec’20New sales Upselling ARR Mar’21Currency/Other

Acquired ARR

at time of acquisitionNet retention

▪ M&A cost and special items NOK -5.0m

− M&A cost of NOK 5.3m

− Other special cost items of NOK 9.3mrelating to IFRS conversion and preparations for listing on main exchange

− Offset by positive reversal of accruals of NOK 9.6m

▪ Higher depreciation & amortization reflecting acquisitions and higher R&D

▪ Net financial items boosted by unrealized forex gain

− NOK 86.8m fx gain, mainly due to NOK/SEK effect on SEK 1.1bn bond

▪ Profit before tax of NOK 56.7m (-20.3)

Key figures

8

NOKm Q1’20 Q1’21 % growth

Total revenue 56 973 148 241 160%

Operating costs -47 362 -107 864 127%

M&A cost and special items -2 793 -5 004

EBITDA 6 818 35 373 419%

EBITDA-margin 12 % 24 %

Adjusted EBITDA 9 611 40 377 320%

Adj. EBITDA-margin 17 % 27 %

Depreciation & Amort. -8 305 -38 143

EBIT -1 487 -2 770

Net financial items -18 774 59 497

Profit/loss before tax -20 261 56 727

Profit & Loss Account (unaudited)

▪ Strong cash flow from operations of NOK 48.6m

− Including NOK 14.6m cash outflow from M&A cost and special items

▪ Investments mainly reflect Negometrix acquisition and capitalized R&D

▪ Financing mainly reflects share issue and repayment of sellers’ credit related to Visma Commerce

▪ Overall slight increase in cash to NOK 331 million at the end of Q1

Q1 cash flow

9

Cash flow Q1 2021NOKm

▪ Increase in intangible assets reflecting M&A and software development

▪ Strengthened equity position through positive earnings and equity issue

▪ Equity ratio of 53 %

▪ Cash position of NOK 331m

▪ Net IB debt of NOK 764m

▪ In compliance with all loan covenants

Balance sheet

10

AssetsNOKm

599

34843619

Q1'20 YE'20 Q1'21

Current liabilities

Non-current liabilities

Total equity

599

3 4843 619

Q1'20 YE'20 Q1'21

Goodwill Other intangibles

Other non-current Current assets

Cash

Equity and liabilities

Accelerating our growth

Capital Markets Update, 20 May 2021

CEO Terje Wibe

Our Vision

We aim to be the preferred e-tendering and procurement platform in Europe by unleashing the full potential of a user-friendly and trusted marketplace.

We have been a driving force in eTendering and procurement for two decades…

“The preferred eTendering and eProcurement platform in Europe”

2025 →

Expanding into Europe and the US with the acquisition of Negometrix in the Netherlands

Starting the European growth journey

2021 →

Securing growth funding and acquiring Aksess Innkjøp, Tricom, Truelink, Comcare and the Swedish market leader Visma Commerce

Expanding into post-award and acquiring VismaCommerce

2020

Acquisitions of EU-Supply in Sweden and Ethics and Udbudsvagten in Denmark

Acquisitions boosting the growth platform

2019

Nordic software investor Viking Venture becomes lead investor, supporting a strengthening of the management team around the CEO and defines a new growth strategy

New owners, management and growth strategy

2018-19

Providing the public eTendering market with a digital arena

Mercell was established

1999 2000-18

Organic growth and Nordic expansion

Opens offices in 6 new countries and grew organically into number one positions in Norway and Denmark.

0

100

200

300

400

500

600

700

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21

Organic Acquisitions

Annual Recurring Revenue (ARR)

▪ Expanded ARR from NOK 98 million to NOK 634 million in just two years

▪ Acquisitions fueling the growth opportunity

− Acquired nine companies with combined ARR of NOK 406 million at the time of acquisition

− Added ARR of NOK 130 million through organic growth in the legacy business and in the acquired companies

− Strong continued performance in targets show the potential of well-executed M&A, i.e. in EU-supply and Visma Commerce,

…and have grown into becoming one of the largest Nordic B2B SaaS companies

15

Annual Recurring Revenue (ARR)NOK million

Post-awardProcure to pay (P2P)

eProcurement

eCommerce

Invoicing & Payment

Pre-awardSource 2 Contract (S2C)

eTendering

Tender notification

Bid management

We provide workflow solutions for the full procurement life cycle

Spend data analytics for planning of new tenders

Creating value for our customers both before and after the contract award

Contract management

The Mercell marketplace

17

Network effects creating increasing value for all players as the platform grows

A large and growing two-sided marketplace,matching buyers and suppliers

More buyers More suppliers

More bids

More tenders

Buyers Suppliers

▪ Unrivaled market leader in the Nordics

▪ Servicing close to 30,000 companies

▪ One of few platforms servicing both buyers and suppliers and multiple markets

▪ Scalable and profitable business model with multiple growth opportunities

▪ Proven organic and M&A growth ability

▪ Positioned to be a consolidator in European eTendering and eProcurement markets

We have established a unique market position

18

Denmark; 23%

Norway; 23%

Sweden; 35%

Netherlands; 10%

Other; 9%

ARR split Q1’21

Mercell leading player

Mercell foothold

NOK

634mARR

Our Opportunity

Our products and services drive processes that are critical to the society

Public procurement = 10%-20% of GDP

and 20%-40% of government spending

▪ EU: Annual public purchases from >250,000

public authorities amount to >€2 trillion or

14% of GDP

▪ OECD: Public procurement at 12% of

GDP and 29% of government spending

What we do is important!

0204060

19.5

17.8

16.2

15.5

14.6

14.5

14.2

14.1

14.0

13.9

13.8

13.6

13.2

13.0

12.5

12.3

12.0

11.7

11.5

11.3

11.2

10.4

9.6

9.4

9.1

9.1

7.2

0 10 20 30

Netherlands

Finland

Sweden

Germany

Norway

France

Hungary

Belgium

Iceland

Estland

Slovakia

Denmark

Austria

UK

Luxembourg

Czech Rep.

Turkey

Greece

Latvia

Slovenia

Poland

Italy

Spain

Litauen

Switzerland

Portugal

Ireland

% of government spending % of GDP

Public procurement spending, 2017

Mercell leading

positions

Source: OECD, Government at a Glance 2017 20

Need for better governance and higher efficiency drives regulation…

21

OECD: Public procurement is the cornerstone of strategic governance

“Because of the sheer volume it represents, procurement can and must play a major role in fostering public sector efficiency and establishing citizens’ trust”

– OECD, Better policies for better lives

EU: High quality public services depend on modern, well-managed and efficient procurement

“Improving public procurement can yield big savings: even a 1% efficiency gain could save €20 billion per year”

– EU Commission, Public Procurement

EU Commission on ‘Digital procurement’:

▪ The use of electronic tools in public procurement

offers a range of important benefits:

− Significant savings and simpler and shorter processes

− Less ‘red-tape’ and administrative burdens

− Increased transparency and less corruption

− Greater innovation and improved access for SMEs

▪ Authorities that have already made the transition to

eProcurement report savings between 5% and 20%

“Given the size of the total procurement market in the EU, each 5% saved could return around €100 billion to the public purse”– EU Commission, New EU Public procurement rules:

Less bureaucracy, higher efficiency

EU Commission e-Procurement timeline

…and regulations drive digitization

22

Public

procurement

directives

04/2014

European

single

procurement

document

regulation

01/2016

e-Notification

& e-Access

for all contract

authorities

04/2016

COM decision:

Publication of

reference to

e-Invoicing

standard

10/2017

e-Invoicing for

all contract

authorities

with potential

for derogation

for sub central

contract

authorities

04/2019

e-Invoicing

for all Contract

Authorities

04/2020

e-Forms

mandatory use

10/2023

05/2014 04/2016 04/2017 10/2018 10/2019 11/2022

e-Forms

optional

use

e-Invoicing

Directive

COM European

Single Procurement

Document

& e-Certis v2

e-Submission

Central

Purchasing

Bodies

e-Submission

for all Contract

Authorities

e-Forms

implementing

regulation

Sources: https://ec.europa.eu/growth/single-market/public-procurement/digital_en

https://ec.europa.eu/growth/content/new-eu-public-procurement-rules-less-bureaucracy-higher-efficiency-0_en

Source: EU Commission

The Nordics lead continental Europe on public procurement performance

▪ Markets where Mercell has leading positions score high on the EU Single Scoreboard for public procurement

▪ Scored on 12 performance indicators, of which the most important are linked to the core principles of good public procurement:

− Ensure widespread publication

− Increase the number of bidders

− Increase SME participation

“Performance measures whether purchasers get good value for money “– EU Commission

EU procurement performance scoreboard

Mercell markets are the most compliant in Europe

Satisfactory

Average

Unsatisfactory

23Source: https://ec.europa.eu/internal_market/scoreboard/performance_per_policy_area/public_procurement/index_en.htm

Our growth ambitions

Potential to more than double ARR in existing markets by YE 2025

▪ Pre-award: Increasing network effects

from two-sided marketplace

− High remaining growth potential in supplier segment

− Introduce supplier services in the Netherlands

− Grow average revenue per customer through upselling,

price modeling and new products and services

▪ Post-award: Cross-selling potential to

the large pre-award customer base

Roughly 70-75% of growth expected to come

from pre-award and 25-30% from post-award

High organic ARR growth ambitions

High value to capture in existing markets

25

607

2020* Buyers Suppliers Post-award 2025

CAGR+15% - 20%

Pre-award

*2020 ARR including Negometrix YE’20

▪ Opportunity to build similar-sized business in

new European markets as in current markets

▪ Sense of urgency to capture window of

opportunity

▪ Seeking to build 50%+ market share

across our market reach

▪ Following the Mercell ‘playbook’:

− ‘Winner takes all’ mindset

− Consolidate and professionalise the buy-side

− Develop supply-side on two-sided platform

− Upsell post-award products

Expanding the growth journey

Our 2025 ambitions

Build a

similar-

sized

business in

new markets

in Europe

More than

double ARR

in current

markets

26

▪ Large and fragmented public market, with several layers of public procurement in federal, states and counties

▪ ‘Paper-heavy’ procurement processes – the US lags Europe in terms of digitization of tender processes and workflows

▪ Huge potential in applying Nordic ‘best practice’

▪ Mercell established US foothold through the Negometrix acquisition in early 2021

− Significant organic growth potential

− Exploring M&A opportunities to accelerate growth

Established US foothold through Negometrix

US market offers additional growth potential

27

Negometrix customer presence

“Negometrix is the future of procurement in the United States“

– Mike Thornton, CPPO - City of Leesburg Florida

“After half a year of using the Negometrix Platform, our agency has realized tremendous cost savings, an increase of 150% in supplier participation, and have left a greener footprint by eliminating paper from our procurement process“

– Dean Mealy, CPPO - Town of Palm Beach, Florida

Three-part M&A strategy

▪ Acquired ~NOK 200m of ARR annually the last two years

▪ Ambition to continue M&A activities at the same pace for the next three years

Our ambitions will require continued high M&A activity

28

Expand European presence

Consolidate existing markets

Add products and customers

What we do is important!Our products and services drive processes that are critical to society

29

High value to capture in

existing marketsOrganic growth ambition of

15-20% to more than double

ARR by the end of 2025

Build similar-sized business

in new European marketsSeeking 50%+ market share


Continued high

M&A activitySense of urgency to capture

window of opportunity

USA represents

additional upside potentialExciting early market opportunity

Long-term outlook

30

Baseline Long-term ambitions

NOK 634m

>2x in existing markets by 2025

Build similar size in new European markets

Explore US opportunity

ARR

27% Q1’21 40%+EBITDA

margins

Added ARR of

~NOK 200m per year

(average last 2 years)

Continuing at same pace

for the next three yearsM&A

Commercial views

CCOLars Vangen Jordet

Our Vision


At a glance

10

Office presence in countries

4.6

Average tenureYears

270

Commercial staff

29,300

Customers

634m

ARRNOK

Buyer proposition Supplier proposition

Clear value proposition to buy- and supply-side customers

34

Efficient tender process

Fully digital and efficient process that

saves time and increases quality

Access to many suppliers

Increased competition for the

tenders

Compliance with regulations

Tendering process in compliance with

EU-regulations for public procurement

e-Tender platform

Efficient tendering process

Less administration with end-to-end

workflow tool to manage and deliver bids

New business opportunities

Full overview and access to

the large public sector market

Access to unique content

Valuable content enabling unique

competitor and market insight

We have a large and growing customer base

35

26,300+

YE’18 Q1’21

~9,000

~600

YE’18 Q1’21

2,600+

# buy-side

customers# supply-side

customers

Self-reinforcing growth with synergies across business segments

More

suppliersMore

buyers

~5x

~3x

e-Tender platform

Industry diversification Customer distributionShare of ARR (%)

Diversified across industries with low concentration risk

36

Utilities

Construction

Consumer

TMT

Services

Pre-award buyersPre-award

suppliersPost-awardIndustry

GovernmentTop 10 customers

< 5% of ARR

#1 customer

< 1.3% of ARR

~29,300 customers

▪ 26,300+ supply-side customers: By far the largest segment in terms of ARR, and holds the majority of Mercell’s clients

− Large share of private sector companies

− Heavy use of Tender Alert product

▪ 2,600+ buy-side customers: Majority of customers are public entities using the Tender Manager platform

▪ 400+ post-award customers: Mix of private and public sector customers

− Opportunity to cross sell to our existing buy side customers

− Potential to acquire new customers with a procurement system need

Share of ARR1) per segment

We are serving three segments with separate needs

37

13%

33%54%

Post award

Buy-sideSupply-side

NOK

634mQ1 2021

1) 2020 ARR including Negometrix

Post-award modules offers a unique selling point to existing customers

38

Post-awardProcure to pay

(P2P)

eProcurement

eCommerce

Invoicing & Payment

Pre-awardSource to Contract

(S2C)

eTendering

Tender notification

Bid management

Spend data analytics for planning of new

tenders

Contract management

▪ Modular offering enables customers to pick and choosethe set of tools serving their specific needs

▪ Further strengthening product stickiness and customer loyalty

▪ Large upselling potential with a complete eProcurement offering

Existing

customers

Pre-sales New salesCustomer

success

New customers

Focus on

marketing

generating

warm leads

+trials

Active calls to

leads, focus on

“landing” the

right customer

Renewals,

upsell, cross-

sale, retention

New sales process implemented in Norway from 2019

ARR1) in Norway 2015-2020NOKm1)

Rolling-out proven sales process to new markets

39

2015 2017 20182016 2019 2020

Phases

Functions

Key

objective

1) Excluding EU-supply contribution to ARR

+61

%

+99

%

Attracting new customers-Network effects deliver leads at zero cost

40

▪ Tender processes on our

platform attract both paying

and non-paying suppliers

− Example: Tenders in Norway

attract hundreds of non-paying

companies with 3,000-4,000

users (leads) monthly

▪ Our systems automatically

follow-up on potential new

customers for free trials,

webinars, etc.

− Example: More than 1,000

registrations and 750-800

attendees to our March webinar

‘A gold mine of possibilities”

More

buyers

More

suppliers

More bids

More tenders

Buyers Suppliers

41

New salesOptimizing packaging and price models

▪ Example: Repackaging our supply-side product in Denmark

▪ Agile implementation

▪ ARPA increase of 15-20%

▪ Reduced time spent to close sales by 10-15%

Retain and build existing customersProven ability to increase ARR through upselling

42

Upsell of modules and users Upsell of modules and users

Pre-award suppliersSogn og Fjordane Energi (buyer) Telia Norge (supplier)

ARR development since initiationARR development since initiation ▪ Strong customer journeys with both buyers and sellers

▪ Natural customer progression to more products and additional users

▪ Proven ability to upsell shows that Mercell adds value to both suppliers and buyers

3.8x 4.6x

Retain and build existing customersProven ability to increase ARR through cross-selling

43

Upsell of marketplace, contract

management and spend analysis

Ballerup municipality (buyer)

ARR development since initiation

7.4x

▪ Post-award is a unique selling point!

▪ Further strengthens value proposition, upsell potential and synergies to the buyer segment

▪ Increases product stickiness and customer loyalty

▪ Visma Commerce acquired Q4 2020

− The “Mercell way of sales” is part of our post-merger integration strategy

− Applying our playbook to the local business

− Transferring knowledge from our central organization to the acquired company

▪ Seeing renewed growth in a business with historically moderate growth rate

ARR development in Sweden

Our ‘best practice’ model already gives ARR growth in Sweden

44

Q4’20Q1’20 Q2’20 Q1’21Q3’20

~6%

~2%

29,300customers

Customer

success

Continued

ARR growth

New products will continue to fuel growth

45

+ + =

▪ Driving network effects to create self

reinforcing growth

▪ Introducing our dual business model by

launching supplier products in the

Netherlands

▪ Introducing our post-award products to

Norway, Sweden and the Netherlands

Establishing our dual business model and post-award in all markets

46

Applying ‘best practice’ solutions

across all our markets

▪ Highly scalable business model with self-

reinforcing growth driven by network effects

between buyers and suppliers

▪ Building on a large and growing customer base

− Diversified, low concentration, long-lasting relations

▪ Applying proven sales process to new markets

− Retaining and building existing customers through upselling and cross-selling

▪ Expanding product portfolio across borders

− Establish supply-side business where we have strong buy-side positions

− Establish post-award in all markets

Targeting organic growth of 15%-20% p.a.

47*2020 ARR including Negometrix YE’20

607


CAGR+15% - 20%

Pre-award

High organic ARR growth ambitions

Product strategy

CPO Arild Nilsen

A comprehensive product suite covering the entire source-to-pay value chain

49

Source to contract (pre-award)

Identify

tender area

Sourcing and

plan tender

Create &

publish

tender

Evaluate &

award

contract

Procurement

& goods

handling

Invoice

approval &

automation

Payment

(ERP)

Spend

Management

Purchase to pay (post-award)

Contract

management

Mercell Tender Notification

System

New tender

Tender Management

for buyers & suppliers

Contract lifecycle

Management

Purchase items and services.

Automated invoice handling.

Automatic controlling

and spend management

New tender

Submitted

Submitted

Our product strategy is a clear response to our vision

50


Consolidate the industry to

finance the development of the

best products

Build the leading marketplace for

public tenders and procurement

Build scalable products with a

minimum of bespoke development

Involve customers in our product

development to ensure we build

products that our customers love

Fragmented market – many players with limited scale

51

Industry dynamics makes it increasingly challenging to be sub-scale

▪ Mostly smaller niche players focused on public buyers

▪ Many tailor-made solutions with limited scalability

▪ Regulatory changes continue to increase complexity

▪ Limited capacity and ability to invest in product development

Scale Scale enables Mercell

to attract top talent and

to outpace the

competition in product

and tech development

Workflow buyer Workflow supplier

Mercell is a marketplace where the core of our value proposition is to match buyers with suppliers

52

In addition to delivering workflow solution, Mercell enables buyers and suppliers to meet and transact

Evaluate bids

Create tender

Publish tender

Conclude tender

Purchase to Pay

Bid creation and delivery

Find relevant tenders

Evaluate and decide

Award

Catalogue to invoice

management

More bids

More tenders

SuppliersBuyers

The problem: Friction in public eTendering processes

1) OTP 22, Norwegian Parliament

2) Mercell data, Konkurrensverket Sweden report on Competition and Litigation in Swedish Public Procurement 53

High average transaction costsAvg. cost per tender in Norway1) (kNOK)

~100

11%

23%31%

SwedenMercell Sourcing SolutionNorway and Denmark

52%

Finland

45%

61%

No bidsTwo or less bids

Many tenders with two or less bidsShare of tenders2)

Buyer

~300

~400

Supplier

~100

▪ We start with the customers in everything we do, solving important customer problems in a user-friendly manner

▪ Dedicated teams improving the value proposition through continuous innovation

▪ Iterative product development process driven by experienced user experience (UX) professionals

▪ Significant risk reduction compared to traditional product development processes

Customer centric, goal driven, iterative product development

54

How we work: ‘Prototype, validate and repeat’

Validate

and get

feedback

Learn and

improve

Building next generation tender and procurement solutions

55

From multiple platforms to common pre- and post-award platform - driving new revenue growth, extracting synergies and enabling future product innovation

Pre-award

Building new common platform reusing existing functionality where possible

TendSign

CA/CLM

Post-award

Building a best-of-breed platform by reusing existing modules

Consolidating to a common modular platform

Rebuilding and consolidating our pre- and post award platforms

56

eTendering buy-side workflow solutions

eTendering marketplace and supply-side workflow solutions

Procure-to-pay solutions to buyers and suppliers

Three focus areas for product and platform

development

Building buy-side eTendering platform on Negometrix NX4

57

▪ The NX4 platform offers a solid starting point to build a new common e-Tendering platform

− Significant risk reduction compared to building a new platform from scratch

▪ Aiming to start gradual customer migration by YE’21

− Step-by-step approach, starting in Denmark

− Continuous, iterative product development to make the platform available to customers with increasingly complex needs across additional countries

Several workstreams: iterative platform roll-out and customer migration

Customer migration by

segment

Localisation

Denmark

Customer migration

by segment

Localisation

Norway

Customer migration

by segment

Localisation

Sweden

Customer migration

of new segment

New feature

development

Customer migration

of new segment

New feature

development

Customer migration

of new segment

New feature

development

Technical enhancements

Localisation

Features

Modularisation, new front end, non-functional requirements, etc.

First secure feature parity to existing platforms, then focus on innovation

Languages, local legislation, etc.

Improving the e-Tendering marketplaceand supply-side workflow solutions

58

Bid creation

and delivery

Find relevant

tenders

Evaluate and

decide

Award

Makes it easier to

find relevant tenders

Simplifies bid delivery

process

Buyers Suppliers

Building a workflow solution supporting the bid journey of the suppliers

Addressing the frictions in the eTendering process to improve the network effects

Launching next generation tender search products

https://discover.mercell.com/nb 59

Bid creation and

delivery

Find relevant

tenders

Evaluate and

decide

Award

From predefined search profiles and daily emails to ‘Google-like’ search, filtering and notification

Collaboration tool simplifies the project management process for suppliers

60

New product based on our analysis of customer needs: The service fills a gap in our user journey. To be soft launched in Norway in Q3´21

Collaboration

Bid creation and

delivery

Find relevant

tenders

Evaluate and

decide

Award

Bid creation and

delivery

Find relevant

tenders

Evaluate and

decide

Award

Simplifying the bid delivery process

61

Initially being introduced on the Mercell Sourcing Service platform (MSS)

Rebuilding the supply-side e-Tendering platform

62

▪ The new platform also drive new value propositions from common components:

− Online sales: Enabling self service sales initially towards the supply side

− Soft launched in Norway with new search and discovery product

− Authentication service: Seamless user journey across products and platforms

− Currently being rolled out across our platforms

▪ Plan to sunset existing supply side platforms as the new services become mature

− Ambition to sunset the tender alert parts of the Mercell Tender Service (Norway) and the Udbudsvagten (Denmark) platforms during 2021

Bid DeliverySearch result

distribution

Data

Collection &

Publication

Search &

Discovery

Collaboration

Online Sales

HubSpot (CRM)

Authentication service

Platform

elements

New supply-side platform architecture

Products

Payment

Modular products developed to serve specific post award value chain needs

63

Purchase-to-Pay value chain

Contract management

Invoice & match

Catalogue Workflow

Integrations

Procurement

Analysis & EnrichmentScale Each module in the

Purchase-to-Pay

product suite can be

sold individually

Procurement & goods handling

Invoice approval & automation

Payment (ERP)

Spend Management

Contract management

Modular product offering

New pre-accounting product release improving value proposition in Procure to Pay

▪ AI-powered Pre-Accounting™ ensures automatic, efficient and correct accounting of all organizational spend

− Incoming invoices are automatically analysed and accounted

− Based on AI-algorithm continuously learning from user actions

▪ Developed by Mercell in cooperation with the Danish Government

− Analysing tens of millions of invoices across more than 300 accounting plans and 600 public organizations

▪ Can be applied for both public and private customers

64

‘By applying the solution from Mercell the Danish Government anticipates to save millions DKK in manual invoice management every year’

Carina Sørensen, Department Head, Financial Ministry

Engaging in a stepwise post-award platform consolidation

65

Feature parity to existing Mercell platforms

Localisation effortse.g.anguage, local legilations

Customer migration

Feature enhancements

Time

Technical enhancements to post-award platformIntegration to Mercell: New front end, non-functional requirements, etc.

Our product strategy is a clear response to our vision

66


Consolidate the industry to

finance the development of the

best products

Build the leading marketplace for

public tenders and procurement

Build scalable products with a

minimum of bespoke development

Involve customers in our product

development to ensure we build

products that our customers love

Expanding through M&A

Head of M&AJacob Møller

Proven ability to execute on M&A- 11 acquisitions in two years

▪ Completed three acquisitions in 2019

▪ Strengthened Nordic presence and established foothold in Europe

68

▪ Five acquisitions during 2020

▪ Fortified the Nordic position and broadened scope into post-award

▪ Three acquisitions to date in 2021

▪ Expanding European footprint

2019 2020 2021

M&A strategy derived from corporate strategy & vision

More tenders

More bids

More

suppliers

▪ We aim to be the preferred e-tendering and procurement platform in Europe by unleashing the full potential of a user-friendly and trusted marketplace

▪ Key ambitions

− Become a European leader

− Grow our dual marketplace

− Cross-sell our post-award products

Buyers SuppliersMore

buyers

▪ Enter new geographical markets

▪ Strengthen market positions in the existing markets

▪ Attract new customer bases who can benefit from our offering

▪ Broaden and deepen product and services range

▪ Strengthen technology base and development capacity

Positioning Mercell to scale through programmatic M&A

70

Expand European presence

Consolidate existing markets

Add products and customers

Acquisitions serving multiple purposes

M&A is key to expand Mercell’s European presence

71

▪ Strategic starting point for expansion is built on buy-side customers in the pre-award market

▪ Mercell enters new markets with focus on M&A targets that can give a leading position in the public buy-side market

▪ Strong public buy-side positions enables expansion into the supply-side supply establishing a dual marketplace

Example: Negometrix

Bu

ye

rsS

up

plie

rs

Post-awardPre-award

• eProcurement

• eCommerce

• Invoicing, payment

and accounting

• Spend analysis

• Tender search and

discovery

• Bid creation and

delivery

#1 Netherlands

Fortify existing market positions through consolidation

72

▪ Clear market leading positions is essential to create desired network effects

▪ Mercell pursues in-market consolidations to strengthened market leading position in existing markets

▪ Consolidation can take place both horizontally to post-award markets and vertically to supply-side markets

Example: Visma Commerce

Ma

rket le

ad

ers

Con

so

lida

tion

SwedenNorway

+

#1

#2

#1

#2

#1 in Norway and Sweden

Commerce

Commerce

Consolidate existing markets to strengthen dual presence

73

▪ Consolidated both the buyer-side and supplier-side in Denmark through several acquisitions

▪ M&A accelerated the establishment of dual platforms creating two-sided network effects

Example: Denmark

Bu

ye

rsS

up

plie

rs

ConsolidationPre-award: Denmark

Strengthened

dual presence

+

Leveraging product portfolio Leveraging customer base

Adding products and customers through acquisitions

74

Strengthen product portfolio offered to Mercell’s customer base

Product sunsetting

New customers

Adding new customers to Mercell’s existing product portfolio

New products

New customers

Existing

products

Existing

customers

Large opportunity in fragmented European market

75

▪ Digitally maturing markets

▪ High level of adherence to public procurement regulations

▪ Open to private service providers

▪ Favorable competitive environment

▪ Potential cross-border synergies

Target market characteristics

Fragmented

European market

Existing core markets

New markets

Mapped >10 markets

Screened >100 companies

Continuing M&A activity at high pace

76

Average ARR from M&A activities

of ~NOK 200m last two years

Ambition to

continue M&A

activities at

the same pace for

the next three years 0

100

200

300

400

500

600

700

Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21

Organic Acquisitions

ARR, NOKm

Financial perspectives

Chief Financial OfficerFredrik Eeg

Our Vision


▪ We have tripled ARR in 15 months

▪ Strong new sales performance

▪ Positive net retention

− Upselling and price modeling outpacing churn and contraction

▪ Strong positive effect of acquisitions

Building scale through organic growth and M&A

79

210

634

52

84 63

336

Churn/contraction

ARR Dec’19

New sales Upselling

15

ARR Mar’21

Acquired ARR

at time of acquisition

Other/currency

Net retention

+202

%

ARR bridge YE’19 to Q1’21NOK million

Build similar size in new markets in Europe

80

Build a

similar-sized

business in

new markets

in Europe

607


*2020 ARR including Negometrix YE’20

ARR in existing markets >2x by YE 2025

More than

double ARR in

current

markets

Pre-award

High ambitions for long-term growth

Improving profitability

81

Revenue and adj. EBITDA marginNOKm, %

57 68 78 109 148

17%

28%

22%

17%

27%

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021

Revenue Adj. EBITDA margin

Long-term target of 40%+

▪ Already established margin level in Norway and Sweden

▪ Dual platform creating increasing network effects

▪ Increasing scale yields high operational leverage

▪ Non-linear path to margin target

− New product launches

− Cost efficiency initiatives

− M&A

17 %27 %

>40 %

Q1 2020 Q1 2021 Target

COGS Personnel Other OPEX Adj. EBITDA

Operational leverage set to increase

82* Excluding M&A costs and special items

▪ Adj. EBITDA-margin +10%-points in Q1’21

▪ Cost ratio declining from 83% to 73%

− Personnel cost >2x to NOK 66m

but declined from 56% to 44% of revenue

▪ Increasing operational leverage over time

− Significant cost potential in more efficient

operation on larger and fewer platforms

Moving towards our 40%+ EBITDA-target

▪ Rapid pace of innovation and new product launches

▪ Increasing software development cost

− NOK 34m in Q1’21, up from NOK 10m

− 23% of revenue, up from 17%

▪ Planning for NOK 160-180m in 2021

▪ Increased R&D spending supports long-term cost efficiency and our EBITDA-margin targets

Capitalized software developmentNOKm

Higher R&D intensity

83

10

3454

160-180

Q1 2020 Q1 2021 2020 2021

▪ Acquired ARR of ~NOK 200 million per year over the last two years

▪ Seeking to continue M&A at same high pace

− Sense of urgency to capture growth potential and market shares

▪ Wide valuation range, depending on maturity, scale and growth opportunities

− Historic valuations at EV of ~3-10x ARR

− Large funnel of acquisition opportunities in attractive markets

− See room for accretive acquisitions measured on EV/ARR

Planning for M&A to continue at same pace the next three years

*Ibistic and CTM Solutions acquired in May 2021 84

▪ EU-Supply strengthened Nordic position and established a foothold in EU-market

▪ Multiple levers accelerated growth and generated higher margins

− Strengthened sales function under a common sales management

− Sharpened focus on upselling with more value-adding products

− Optimised price structuresdependent on functionality

− Converted one-off transactions to recurring revenue

Case example: Strong development for EU-Supply after acquisition

85

EU-supply:

High ARR growth and EBITDA marginNOK million

~0% 35%

EBITDA

margin

EBITDA

margin

50

78

Q1’21Q2’20Q4’19Q2’19 Q1’20Q3’19 Q3’20 Q4’20

+55

%

▪ Strong and growing cash flow from operations

▪ Unutilized bond tap option of ~SEK 900m

− SEK 1.1bn senior secured bondfacility maturing in 2025

▪ Potential to increase leverage over time

− Increasing scale and profitability

− Continued high cash conversion

▪ Share-based acquisition opportunities

− At accretive EV/ARR valuations

Several funding sourcesavailable to support growth

86

NOK

764mNIBD

53%Equity ratio

NOK

331mCash Q1’21

NOK

63mQ1 CFFO

adjusted for M&A and

special items

What we do is important!Our products and services drive processes that are critical to society

87

High value to capture in

existing marketsOrganic growth ambition of

15-20% to more than double

ARR by the end of 2025

Build similar-sized business

in new European marketsSeeking 50%+ market share


Continued high

M&A activitySense of urgency to capture

window of opportunity

USA represents

additional upside potentialExciting early market opportunity

Long-term outlook

88

Baseline Long-term ambitions

NOK 634m

>2x in existing markets by 2025

Build similar size in new European markets

Explore US opportunity

ARR

27% Q1’21 40%+EBITDA

margins

Added ARR of

~NOK 200m per year

(average last 2 years)

Continuing at same pace

next three yearsM&A

q1 2021 and capital markets update

Documents