Datagate Investor Update 13 April 2023

April 13
th
, 2023

Dear Datagate Shareholders,
Firstly, I would like to thank you for your ongoing support of our business, and hope that you are faring
well in these ongoing turbulent times.
I am pleased to report that Datagate is continuing to be successful, grow and make substantial progress
in the United States and other countries that we operate in. We now have almost 400 telecom resellers
using Datagate, who are in 35 of the 50 States of America, as well as Canada, Australia, New Zealand,
Europe, and the United Kingdom.
At the end of March 2023, we reached $3M ARR (Annual Recurring Revenue), and despite the
challenging state of the world economy, we are still seeing strong demand for our product “Datagate
Telecom Billing”. Our Year-on-Year ARR growth rate for the March 31
st
, 2023 fiscal year was 37% and
this growth would have been significantly higher if not for delays incurred in implementing some of our
largest new clients (delays that were beyond Datagate’s control).
Partners and indirect Sales Channel
We are continuing to build our indirect sales channel which now desirably returns significantly more
Datagate sales than our own direct sales activity. SkySwitch (a US-based white label wholesale VoIP
provider) is our most successful partner, and they are now owned by BCM One, a large acquisitive
telecom group. SkySwitch are selling up to ten Datagate systems per month. BCM One group continues
to acquire new telecom providers, which in turn leads to increased scale for our SkySwitch partnership.
This month BCM One announced that they have acquired “Pure IP” a global telecom provider that has
significant presence in all the countries that Datagate operates in.
This year we’ve also very successfully partnered with Intuit and their QuickBooks Online accounting
system. This is by far the most popular accounting system for our target market in America. The boost
in profile we’ve achieved through the QuickBooks partnership and their marketing clout has resulted in
a big increase in sales opportunities for Datagate, and we are now able to bundle QuickBooks Online in
with Datagate offerings.
Other new partnerships that are showing a lot of promise are AT&T in America and HaloPSA in the UK,
US, Australia & New Zealand. These new partnerships open Datagate to new channels of potential
customers.
Datagate was formally certified with Xero earlier this year. This is a boost to Datagate (in a similar way
to QuickBooks) because Xero is the most popular accounting system for Datagate customers outside
America.

New Sales Presence in Dubai and Virtual Sales Office in London
Since our last update, we’ve transferred a senior sales consultant from New Zealand to Dubai. Dubai
offers excellent time-zone overlap for the United Kingdom, Europe, Australia, and New Zealand.
Furthermore, he has good flight access to the UK for conferences and sales meetings. We have already
attended Connectwise’s “IT Nation” conference in London last month, which generated a good number
of sales leads for us in the UK.
We’ve also opened a UK virtual office, to give us a visible point of presence and an address in London.
Datagate’s web site now shows all six offices we have around the world (Jacksonville, Vancouver,
Auckland, Sydney, Dubai and London).
Product Enhancements
Since our last investor update, we’ve added some major product enhancements, based on customer
demand and competitor activity. The most significant of these enhancements are:
1. Automatic Billing. This “set and forget” mode was previously a unique feature of our main
American competitor and has always been a very popular feature with our MSP target market.
As a result of adding this feature. Datagate is winning significantly more deals against them.
2. HaloPSA Integration. HaloPSA is a popular British PSA system that is now being marketed to
MSPs in all the countries that Datagate operates in. We are sharing sales prospects with them in
the UK, the US, Canada, Australia and New Zealand. This integration adds to our portfolio,
which includes ConnectWise, AutoTask, Kaseya, QuickBooks, Xero and others. Each integration
opens market access to thousands of MSPs.
3. Multi-Language. Datagate now has the capability to being translated to operate in almost any
language. Our first translations are British-English and American-English, so that we can offer
the correct spelling in each of those markets. We are also working on a French-Canadian
translation for the many Canadian prospects, and we will add further translations as we identify
demand.
4. Scalability enhancements. Significant work has gone into upgrading Datagate’s efficiency and
scalability. This has resulted in an increase in operating speeds and a reduction in hosting costs.
5. Refactoring for Public API. Work is well underway with structural changes to our underlying
system to prepare it for the release of our Public API later this year. The Public API will make
Datagate more appealing to larger clients who have their own software developers, that will be
able to build their own integrations for Datagate to connect to their other in-house systems.
This is a large piece of work which will present massive growth opportunities.
Datagate Staff
This year we are not planning make any significant changes to the Datagate team.
Our team is spread around the world, in the US, Canada, Europe, Dubai, Australia and New Zealand.
Everyone works from home, and we are not using physical offices.

Datagate Sales and Revenue Growth
Here are graphs that illustrate Datagate’s position at the end of the March 31 fiscal year.
The NZD MRR (monthly recurring
revenue) graph is subject to
volatility due to large movements
in the NZD/USD cross rate. Most of
our revenue (72%) is from US
customers in USD while only 12% is
derived in NZ. This data also
illustrates the predominance of the
US market as our main growth
driver. Our goal for the next two
years is to significantly grow the UK
contribution, while continuing to
accelerate growth in the US.
The middle graph shows the spread
of our customers between the
various countries. This further
confirms that most of our business
is in the United States.
The bottom graph shows the split
between direct sales (sold directly
by our sales team) versus indirect
sales (sold by our indirect channel).
The growth is higher in indirect
sales, so by next year we will have
more indirect customers than
direct.
In most cases, we target larger
customers for direct sales and refer
smaller customers to our
distribution partners.

Plan to break-even in 2023
Our plan for the new fiscal year is to reach break-even point by Q4 this calendar year. To achieve that
we will maintain our current revenue growth while holding overall costs at a constant level.
Rule of 40
The "Rule of 40" is a popular metric used in the SaaS industry to evaluate the health and growth
potential of a SaaS company. The rule states that the sum of a SaaS company's growth rate and
profitability margin should be at least 40%.
Our goal for Datagate this year is to reach 40% by the “Rule of 40” formula to ensure that Datagate
becomes more desirable to investors and acquirers in the current economic climate.
Exit Possibilities
There are several parties that have interest or potential interest in acquiring Datagate. One is a large
competitor that has directly approached us, others have approached us through intermediaries and yet
others are large businesses that we partner with and are becoming reliant on our services. We intend to
work with these potential acquirers this fiscal year aiming for a liquidity event at an above market
valuation.
We are confident our break-even/Rule of 40 strategy will encourage investors or acquirers to present
valuations above the current market lows.
This is a pivotal year for Datagate, during which our goal is to transition to profitability, while continuing
to build revenue, build partnerships, expand our world coverage and potentially find an exit opportunity
at an attractive multiple.
Thank you again for your ongoing support of Datagate. If you have any questions about Datagate, please
contact me at mark.loveys@datagate-i.com

Thanks & Regards

Mark Loveys, CEO
Datagate Innovation Limited
mark.loveys@datagate-i.com