Quarterly report April to June 2019

Strong order intake and order backlog growth.

April to June 2019

• Order Intake increased to 22.8 MSEK (7.6) and Order Backlog to 50.7 MSEK (28.4)

• Net Sales totalling 12.6 MSEK (11.4)

• Gross Margin up to 60% (46%)

• Adjusted EBITDA -27.7 MSEK (-23.5)

• Non-recurring expenses of -2.3 MSEK, related to the reverse takeover in February

• Earnings per share -2.0 SEK

January to June 2019

• Order Intake increased to 39.6 MSEK (27.8) and Order Backlog to 50.7 MSEK (28.4)

• Net Sales for the half 25.3 MSEK (23.8)

• Gross Margin up to 55% (51%)

• Adjusted EBITDA -55.3 MSEK (-44.4)

• Non-recurring expenses in connection with the reverse takeover in February totalling -28.5 MSEK

• Earnings per share -4.7 SEK

Events

• Signed several new customers in a number of verticals including Telecommunications, Automotive, Finance & Banking, United States Government, Retail and Information Technology

• Increased and extended contractual relationships with several long-standing accounts

• Swisscom signed as new Partner to address the Swiss market

• Positive initial response in market following launch of Teneo Fusion and Teneo Developers in previous quarter as it facilitates business scalability

• A directed share issue raised 65.7 MSEK which was closed in the quarter and registered in July 2019

Key figures

CEO STATEMENT

I am pleased to report that one of our most important key indicators to show our progress, Order Intake, has shown strong growth this quarter. The total committed value of contracts signed in the quarter grew by 200% compared to the same quarter last year. This means that Order Intake for the year to date already is 72% of the full year 2018, and we still have 6 months to go. Order Backlog, the value of customers contractual commitments yet to be taken to revenue, grew by 79%, compared to same quarter 2018. These increases are encouraging for the future, and I believe they reflect the growing confidence in the Teneo platform. There is a higher concentration of longer term agreements than seen previously, and these focus on our more profitable License and Usage Revenue streams.

I am also pleased to note the continuation of some other trends in our business; the increasing value and percentage of Usage Revenues, more than doubling to 3.1 MSEK in the quarter and growing by 55% to 4.5 MSEK in the first half of the year. The increasing percentage of revenues delivered through our Partners, 34% compared to 25% in the quarter last year is also in line with our strategy.

As we transform the mix of revenue elements towards the more profitable license and usage, the overall Gross Margin continues to increase from 51% to 55% in this half of the year with the quarter performance itself of 60%.

Positive progress with customers and partners

During the quarter we have continued to sign new-name accounts both directly and with our Partners. Further we have new agreements with a number of new Partners and I was particularly pleased to be able to announce a new Partnership with Switzerland’s leading telecoms company, Swisscom, who plan to create advanced Conversational AI solutions for its employees, customers and enterprise clients. Once again, these new customers represent a crosssection of industries, ranging from a North European Motor manufacturer to a major US Government agency and global software and services vendor. Many of these new customers have established centres of excellence and will perform much of the implementation themselves. These centres have a broad remit with specific market expertise who are looking to source and build solutions to roll out across the group themselves. I am happy about this transition as it underpins our overall strategy of being able to deliver projects via third parties whilst we can focus more upon the more profitable License and Usage revenues.

Successful launch of Teneo Fusion

Last Quarter I reported upon the release of Teneo Fusion and I am delighted to report that this new release has been extremely well received by our customers and prospects, our partners and in the extended community of developers and Systems Integrators who build out conversational solutions. I have seen direct evidence that the easy access to the power of the Teneo platform is shortening sales cycles. We have continued to enhance Teneo Fusion, adding a number of new languages and building out functionality and will continue to do so.

New funding secured

A directed share issue raising a total of 65.7 MSEK before transaction costs was carried out in the quarter. We will use the funds raised to cover operating deficit and provide funding for future growth of Artificial Solutions. I would like to take this opportunity to thank both new and older shareholders for your continued support and I look forward to sharing our progress with you.

For more information:

Lawrence Flynn, CEO, Artificial Solutions

Tel: +44 (0)1635 523267

Email: lawrence.flynn@artificial-solutions.com

This information is such that Artificial Solutions International AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CET on August 14, 2019.

Artificial Solutions International is listed on Nasdaq First North in Stockholm with short name ASAI. Erik Penser Bank is the Company's Certified Adviser (www.penser.se, tfn 08-463 83 00, e-post certifiedadviser@penser.se).

Artificial Solutions® is the leading specialist in enterprise-strength conversational AI, a form of Artificial Intelligence that allows people to communicate with applications, websites and devices in everyday, humanlike natural language via voice, text, touch or gesture input.

Designed for the global enterprise, Artificial Solutions' advanced conversational AI platform, Teneo®, allows business users and developers to collaborate on creating sophisticated, highly intelligent applications that run across 35 languages, multiple platforms and channels in record time. The ability to analyze and make use of the enormous quantities of conversational data is fully integrated within Teneo, delivering unprecedented levels of insight that reveal what customers are truly thinking.

Artificial Solutions' conversational AI technology makes it easy to implement a wide range of natural language applications such as virtual assistants, chatbots, speech-based conversational UIs for smart devices and more. It is already used daily by millions of people across hundreds of private and public sector deployments worldwide. For more information, please visit www.artificial-solutions.com.

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