BikeExchange : Quarterly Appendix 4C and Activity Report

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BIKEEXCHANGE (ASX: BEX)

QUARTERLY APPENDIX 4C AND ACTIVITY REPORT

29 July 2022

Melbourne, Australia - BikeExchange Limited (ASX: BEX) ('BikeExchange'), a leading global operator of online cycling marketplaces, announced today its Appendix 4C and activity report for the June 2022 quarter (Q4) and the 12 months to 30 June 2022 (FY2022).

Key Highlights

• 41% increase in lookthrough revenue to $6.8m (FY21: $4.8m) driven by contribution of Kitzuma and Colombia acquisitions, as well as a 15% increase in the BEX core business.
• Successfully raised $6.5 million from institutional and retail investors to support our operations during FY23.
• Organisational restructure and implementation of strategies to deliver annualised cost savings of over $5.5m in FY23, setting a strong foundation for a pathway to proftability during FY24.

KEY METRICS	Q4 FY22 v Q4 FY21	FY22 vs FY21
Lookthrough* total transaction	Up 15% to $9.2m	Up 22% to $31.0m
value (TTV)
Lookthrough* revenue	Up 67% to $2.2m	Up 41% to $6.8m
●	Lookthrough* subscription	Up 15% to $0.7m	Up 18% to $2.5m
	revenue
●	Lookthrough* e-Commerce	Up 7% to $0.6m	Up 9% to $2.0m
	commissions revenue
Transaction volumes	Down 10% to 7,844	Up 1% to 33,940
Average order value	Up 8% to $927	Up 18% to $749
Total active retail accounts	Down 1% to 1,585	Down 1% to 1,585
Average commission rates	Up 0.1% to 8.1%	Up 0.2% to 7.7%

• Lookthrough Total Transaction Value and Revenue includes 50% of BikeExchange Colombia's TTV up to 2 March 2022, and 100% from then on.

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Commenting on the performance, Acting CEO Sam Salter said:

"We fnished the 2022 fnancial year on a positive note, recording robust growth in revenue from our existing operations, bolstered by a full three months contribution from our newly acquired Kitzuma business in North America and the remaining 50% of BikeExchange Colombia we did not already own. Overall, lookthrough revenues increased by 67% in Q4 FY22 on pcp.

"Sellers continue to value BikeExchange's services, demonstrated through an expanding seller network, increased average order value and higher average commission rates. This supported a 22% increase in lookthrough TTV for FY22 compared with FY21.

"We have been working hard to help our retailers expand e-Commerce sales. This involves a program to transition legacy sellers from the current subscription only model, where retailers pay a monthly fee to use the BikeExchange platform to publish and sell their product inventories, to a fully e-Commerce enabled model whereby transactions are completed by consumers entirely online. The e-Commerce frst model reduces friction for consumers and drives sales for retailers by leveraging the power of the BikeExchange marketplace.

"Our operations in the EU delivered a solid quarter with improvement in all key e-Commerce metrics and 18% e-Commerce transaction value growth. North America benefted from the integration of the Kitzuma operations with increased proportions of bikes being sold increasing Average Order Value. In a weaker seasonal quarter, revenue in Australia grew 16% on pcp. The recently acquired Colombian business performed well and is expected to show accelerating growth as payment platform issues are resolved in Q1 FY23.

"Kitzuma recorded its best ever sales month in June, with nearly 800 shipments in the month on the back of strong customer take up of its ready-to-ride bike shipment service. The integration of Kitzuma is now largely complete and with a new warehouse in Salt Lake City to cater for growing demand, we remain positive about the potential of this business' growth trajectory and its impact on BikeExchange's North American operations.

"Our successful $6.5 million capital raising during the quarter highlights the support of our investors, their belief in our long-term vision and BikeExchange's value in the cycling ecosystem. It is pleasing to see we have some new investors joining the stable of existing investors, as well as strong take-up of the entitlement ofer from our key management personnel, creating close alignment between performance and business success.

"We are pleased to have appointed Dominic O'Hanlon as Non-Executive Director in June 2022. Mr O'Hanlon is an experienced technology entrepreneur and professional director with 30 years of experience and we are excited to have his support as we hone our go-to-market strategy.

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"While we focus on revenue growth, we have also made rapid progress on creating a more appropriate operational and cost structure for our business. We have made strong progress on replicating the successful EU model into other regions. The combination of revenue growth and cost efciencies puts us in a better position to achieve proftability during FY24."

Q4'22 Update & Regional Performance Highlights

• Europe (EU), BikeExchange's largest region, continues to perform well in the current climate with 17% TTV growth for Q4 FY22 vs pcp.
• • May was the strongest ever e-commerce transaction value month on record with continued demand for bikes increasing Average Order Value in the quarter by 14% on pcp.
• North America (NA)delivered 37% TTV growth in the quarter and a 305% revenue increase in Q4 FY22, driven by the addition of Kitzuma revenue.
• • e-commercetrading improved with strong commission rates achieved and Average Order Volume (AOV) increasing 41% on pcp in the quarter to $1,313 with more bikes being sold.
  • Kitzuma delivered record shipments in June with 26% month-on-month growth.
  • Annualised shipment run rate based on Q4 FY22 is equivalent to over 8,000 annual shipments.
  • Demonstrating positive impacts from brand partnerships on e-Commerce of bikes in BikeExchange NA business.
• Australia (AU)recorded a 19% decline in TTV vs pcp in a weaker seasonal quarter but revenue increased by 16% on pcp.
• • Revenue increase refected stronger commission rates, subscription revenues up 10% on pcp and a small contribution from the sale of owned stock.
• Colombiarecorded lookthrough TTV up 36% for Q4 FY22 refecting the full frst quarter of ownership of 100% of the Colombian operations.
• • Underlying e-Commerce was hampered by stock availability issues and payment gateway problems, with a new payment gateway provider alleviating the issue in Q1 FY23.
• Q4 website trafc globally is down by 27% vs pcp as post Covid trafc normalises to prior levels. This is countered by e-commerce trafc conversion increasing to 0.18% for Q4 FY22 (FY21: 0.14%), driven mainly by stock availability, implementation of customer experience improvements and performance marketing.

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• While Group transaction volumes for Q4 FY22 are down on pcp, AOV is up 10% to $927 globally, driven by the focus on bikes.

QUARTERLY CASHFLOW REPORT

Cash receipts from customers (inclusive of taxes) of $12,509k in the quarter were up 24% on Q3 FY22 and represented 143% of Total Transaction Value, slightly up on 132% in Q3 FY22. This refects positive working capital infows on the seasonally higher period for European e-Commerce and Kitzuma, and the inclusion of Colombia for a full quarter.

Product Manufacturing and Operating cash outfows (payments to retailers for fulflment of completed e-Commerce orders and Kitzuma's costs of sale) were $11,982k in the quarter, up 52% from Q3 FY22 principally refecting the seasonality of gross e-Commerce transaction value and Kitzuma in Q4 in the northern hemisphere summer. Overall, net e-Commerce related cash movements refected an adverse movement in working capital in the quarter as the summer seasonal uplift reduced in June.

Payments for staf costs were $2,610k for the quarter, up 1% on Q3 FY22 refecting the addition of Colombia employees for a full quarter in Q3 FY22 and non-recurring restructuring costs incurred, partly ofset by reduced overall employment costs post restructuring.

Administration and corporate cash costs were $1,801k for the quarter, down 7% on Q3 FY22 refecting the inclusion of Colombia overheads for a full quarter, the timing of technology and other corporate cost payments, and reductions in non-recurring M&A related costs for the acquisitions of Kitzuma and Colombian business incurred in Q3.

Share capital raised $5,183k in the quarter, with an additional $1.1m net of costs being received post balance sheet in July 2022.

Payments to related parties and their associates during the quarter totalled $467k, comprising Directors' fees and expenses as well as Key Management Personnel's base remuneration for Q4 FY22. Also included were payments to Marketplacer Pty Ltd under the business services agreements to provide the platform services for the Group's network of marketplaces.

BikeExchange has a cash and equivalents balance of $4.9 million as at 30 June 2022.

The Group expects reduced operating cash outfows for the September quarter, after accounting for signifcant one-time restructuring costs. The Group expects the programme of growth initiatives and cost efciencies will further reduce operating cash

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outfows over FY23 and the Group is planning to have sufcient cash reserves to continue its operations and meet business objectives for FY23.

USE OF FUNDS STATEMENT

	Total use of funds	Expenditure in Q4	Total expenditure
Uses of funds	included in BEX	post admission to
FY22 ($'000)
	prospectus ($'000)	the ASX ($'000)
Brand and
customer	6,000	812	2,933
acquisition
marketing
Working capital	5,000	789	4,204
Product
development and	3,000	27	2,252
technology
Investment in
resources to scale	3,000	1,237	3,856
the business
Costs of the ofer	3,000	-	2,943
and listing
Total	20,000	2,865	16,188

Outlook

During FY23, we will remain focused on our four strategic pillars:

1. EU model replication: The success of BikeExchange's e-Commerce frst model in the EU has been demonstrated over the last two years across all seasons. We will continue to work with retailers to convert enquiry-only leads to transactions. The European team has largely centralised the operations for the Group improving quality, consistency and reducing duplication of activities across the Group.
2. Integrate Kitzuma into operations to drive growth: Further integrate the Kitzuma team into BikeExchange North America and focus on the same brand, seller and merchant accounts to achieve synergies, drive e-Commerce transactions and ready to ride delivery volumes. With nearly 800 shipments per month in June 2022, up 26% month on month, we expect to signifcantly improve gross margin in H1 Fy23.