Datagate Investor Update June 2023

July 28
th
, 2023

Dear Datagate Shareholders,
Datagate has just completed another successful quarter, and I’m pleased to report that our plan to
break even and transition to profitability this year is on track.
At the end of the quarter, ending June 30
th
, 2023, we reached $3.3M ARR, and our EBITDA loss for June
was only $9K, which is our best bottom-line result so far. We are achieving this ongoing improvement
by holding our costs down as
much as we can, while
continuing to grow our
recurring revenue at a rate
that is currently 36% year on
year.
A further positive sign we saw
this quarter, in terms of how
close we are to break even,
was that we achieved our first
cashflow-positive month in
May.
We have around $600K in the
bank and we expect this to be
sufficient to get us through to
being fully cash-flow positive
and self-funding.
The NZD/USD cross rate has
been volatile during the
quarter and given that about
70% of our revenue comes
from the US market, it causes
our NZD revenue results to
surge or decline somewhat,
independent of what is
happening within the Datagate
business.
We have some particularly
large clients that are currently
in the implementation stage
that we expect will give a
significant boost to our

recurring revenue in the
coming months when they go
live on Datagate billing.
By the end of June, we had
signed up a total of 412 clients,
of which 226 (55%) were
signed directly to Datagate and
185 (45%) were signed
indirectly through our
distribution partner channel.
In terms of geographic
breakdown, 288 (70%) were in
the US, 46 (11%) in Australia,
32 (8%) in New Zealand, 25
(6%) in the UK, 19 (5%) in
Canada, and 2 in Continental
Europe.
To date, we are tracking 4%
ahead of our revenue budget
and are still experiencing
strong sales demand for our
product, with no signs of any
slow-down.
We have had no staff churn
over the last 12 months and
extremely low customer
churn. I feel that this low
churn of staff and customers,
combined with a positive company culture, contributes to Datagate’s efficiency and high performance.
Datagate Product Enhancements
We are constantly improving and enhancing the Datagate product to make it more competitive, more
scalable, easier to use and implement, and more appealing & compelling for our target audience.
Over the last quarter, we’ve completed a major refactoring project to make Datagate fully accessible via
public API, which in turn makes Datagate more attractive to large corporate clients and partners who
want to build their own billing integrations to Datagate. This refactoring also enables us to better
manage and migrate the data of customers or tenants to specific geographic data centre locations.
Overall, the new changes make Datagate easier to grow and manage as a truly global application that
can be managed across multiple geographies, time zones, tax jurisdictions and languages.

Datagate is now proven to be successful in competing with the local telecom billing solution competitors
in the United States, Canada, United Kingdom, Australia, and New Zealand (although it should be noted
that we have no real competition in New Zealand!).
Audit Costs
In our drive to reach profitability as soon as possible, we have been reviewing all our costs, and have
identified that we think we are spending too much money on auditing. We are currently paying for two
sets of audits, one specifically to meet the requirements of our largest shareholder, Enprise Group - who
are a public NZX listed company, and the other as a requirement of our shareholder agreement. We will
be in contact with you shortly to request that you approve that we not have the second audit (which
costs about $25,000) and thereby rely on the audit by Enprise’s auditor (which is not able to be waived).
We require 100% shareholder approval to make this change, and I hope that you will agree with us that
two audits are not necessary and approve the change.
Exit Strategies
As reported previously, we are in conversations with numerous potential acquirers and/or major
investors. Given that we no longer need to raise capital each year to maintain our high growth rate, as
we did previously, we are now in a position where we can take whatever time is necessary to seek the
best deal possible for current Datagate shareholders.

Thank you 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