DADA : 3Q17 consolidated results approved and other resolutions

Press release pursuant to CONSOB Regulation 11971/1999, as subsequently amended

***

(€47.7 MN IN 9M16)

(€8.2 MN AND 17% IN 9M16)

(€0.2 MN IN 9M16)

(-€29.5 MN AT 31/12/2016)

***

CHANGES IN THE SCOPE OF CONSOLIDATION

1 On 06 July 2016, DADA S.p.A., through its subsidiary Register S.p.A., acquired Sfera Networks S.r.l.. The investment is fully consolidated as from 1 July 2016. In 1H17, Sfera contributed €1.4 million to consolidated revenue and €0.4 million to consolidated EBITDA. Revenue and EBITDA in 1H17, on a like-for-like basis and at constant exchange rates, grew by +6% and +5% respectively.

2 EBITDA is gross of impairment losses and non-recurring items

NB: for the sake of clarity, changes in percentage and absolute terms appearing in this Press Release have been calculated using exact amounts.

To offer a clearer picture of period figures between the two years, mention should be made that on 6 July 2016, through its subsidiary Register.it S.p.A., DADA S.p.A. acquired 100% of Sfera Networks S.r.l., specialized in virtual hosting and network & private cloud services. The investment in Sfera is fully consolidated as from 1 July 2016; as a result, 1H16 had no financial benefit from this company.

All the following comments and analysis on income statement and cash flow figures in this press release stem from the abovementioned new Group scope.

GROUP RESULTS IN 9M17

The DADA Group ended 9M17 with consolidated revenue of €50.9 million, up by 7% versus

€47.7 million in 9M16.

The revenue performance in the period reflects, in addition to the organic growth of business, on the one hand, the appreciation trend of the Euro against the British Pound, which produced a negative impact in 9M17 of approximately €2.0 million versus 9M16 and, on the other, the consolidation of the results of Sfera as from 1 July 2016, which contributes €1.4 million to revenue in 9M17.

Net of these effects, consolidated revenue would have grown by 8% versus 9M16.

In 9M17, consolidated EBITDA came to a positive €9.8 million, with a 19% margin on consolidated revenue. The item grew by 19% versus €8.2 million in 9M16 (17% margin).

The EBITDA performance, as for revenue, reflects the adverse trend of the appreciation of the Euro against the British Pound, which produced a negative impact of approximately €0.4 million versus 9M16, as well as the consolidation of the results of Sfera Networks S.r.l. as from 1 July 2016, which contributed €0.4 million.

Looking at the impact of the main items on each line of the income statement:

• service costs in 9M17 amounted to €27.5 million, up by 3% versus €26.6 million in 9M16, representing 54% of revenue (from 56%). Specifically, the cost of goods sold increased, due to the consolidation of Sfera Networks S.r.l. and to the promotional campaigns launched to offset the reduction in marketing costs; - Payroll costs amounted to €15.2 million, up by 4% versus €14.6 million in 9M16, accounting for 30% of revenue versus 31%. The trend is mainly attributable to the

  increase in staff in the first part of the year, and to the consolidation of Sfera Networks S.r.l.;

• "Change in inventories and increase in own work capitalized", amounting in 9M17 to

Consolidated EBIT at 30 September 2017 amounted to €5.0 million, with a 10% margin on revenue, up by 57% versus 9M16 (€3.2 million, 7% margin).

In addition to the EBITDA trend, EBIT's performance reflects the following elements:

• depreciation and amortization amounted to €4.4 million, accounting for 9% of revenue, down by 7% versus 9M16 (€4.7 million and 10% of revenue).

  The lower impact of depreciation and amortization over the period is attributable mainly to the implementation of the investments made in the construction of the Datacenter and in the development of the proprietary platforms.

• impairment losses, provisions and other non-recurring income/charges in the reporting period amounted to €0.3 million, in line with 9M16, and mainly included charges related to the efficiency of the organizational structure.

The trend of this item in the period was also affected by the impact of forex fluctuations, especially those regarding the Euro/British Pound exchange rate for the amount of €0.2 million, which had produced a negative impact of €0.3 million in 9M16.

The consolidated tax burden in 9M17 amounted to -€1.1 million (-€0.7 million in 9M16) and reflects: (i) current taxes of -€0.7 million (-€0.6 million in 9M16), thanks to the higher taxable income in countries where the Group makes use of tax losses, (ii) deferred tax assets of -€0.4 million (-€0.1 million in 9M16).

The consolidated Net Profit at 30 September 2017 came to a positive €2.1 million, up versus the positive €0.2 million in 9M16.

GROUP BALANCE SHEET AND FINANCIAL POSITION AT 30 SEPTEMBER 2017

The consolidated Net Financial Position at 30 September 2017 came to

30 September 2016), €1.7 million of which for tangible investments in technology (€2.7 million in 9M16), and €1.5 million of which for intangible assets (€1.8 million in 9M16), consisting mainly of costs for the development of the processes and proprietary platforms. The prior year had reported a net negative effect of €1 million, attributable to the acquisition of Sfera (-€2 million) and to the cash-in of the earn-out of Moqu (+€1 million).

The DADA Group's Net Working Capital came to -€13.2 million at 30 September 2017 versus -

€12.2 million at 31 December 2016 and -€13.2 million at 30 September 2016. It should be noted that the trend of this item over the four quarters of the year is tied to business operations, which typically report higher cash-ins in the first quarter for service revenue than in subsequent quarters; part of this revenue is subsequently recognized over the full year as deferred income on a pro-rata basis. The abovementioned deferred income (€13.9 million at 30 September 2017 versus €14.1 million at 31 December 2016) is included in other payables, but will not entail future financial outlays, rather the recognition of revenue in the income statement.

The DADA Group's Equity amounted to €54.1 million at 30 September 2017 versus €52.9 million at 31 December 2016; the change is explained mainly by the positive contribution of net profit for the period of €2.1 million, and the rest by the negative effects of the translation reserve.

Effects related to the change in accounting standards

Mention should be made of the effectiveness, beginning from 1 January 2018, of the new accounting standard IFRS 15 Revenue from Contracts with Customers. The standard will establish a single model to determine if, when and to what extent revenue is recognized. In this context, the DADA Group launched a preliminary analysis to identify the impacts on the Consolidated Financial Statements from the first-time adoption. The analysis shows that the adoption of the new standard may have, to date, negative effects on consolidated equity of up to 5%, offset against deferred income.

BUSINESS PERFORMANCE IN 9M17

In 9M17, the DADA Group continued to strengthen its position in the European market of services for the online presence, visibility and business development of SMEs, with a net expansion of its customer base, adding new tailor-made services to its suite of products, such as website building and IT managed solutions.

• The reporting period witnessed the continued effects of the growth strategies focused mainly on initial offering campaigns aimed at acquiring further customer segments, which contributed to the strong expansion of the customer base, to the consolidation of the market shares in the major geographies, and to the strengthening of future operating profit;

• Against an increasingly challenging backdrop, DADA continued to expand its customer base, reaching the 650,000 mark and reporting a 6% increase YoY. In 9M17, the number of new clients continued to grow, increasing by approximately 7% versus 9M16;

• On the domains front, the stock of domains under management was approximately 1.85 million at 30 September 2017, basically in line with the same period last year, allowing the Group brands to consolidate their position in the main geographies of operation. New registered domains dropped by 15% versus 9M16, due also to the customer acquisition