• Snare product experiencing higher churn and softness in sales, primarily in the US
• Implementing initiatives to reduce Snare churn and boost sales pipeline conversion
• Expecting revenue growth and financial performance to be impacted in FY2026

Prophecy International Holdings Ltd (Prophecy or the Company) has undertaken a review of the Company's business performance and outlook in light of recent developments in the early part of the 2026 financial year (FY2026). The review has primarily focused on Snare, for which the Company has recently observed higher churn than it has historically, coupled with a softness in current sales activity, primarily in the US. The Company is implementing a strict focus on reducing the churn factor along with the promotion of the latest Snare releases, which it expects will allow for a return to improved sales pipeline conversion. However, the developments in Snare churn and sales activity have prompted the Company to assume a temporarily more conservative position for pipeline conversion for Snare in FY2026. Accordingly, the Board and management now expect the Company's revenue growth and financial performance to be impacted in FY2026, which will result in operational cash outflows persisting for longer than the Company had previously anticipated. In addition to addressing Snare's performance, the Prophecy Board has determined that further operating cost efficiency measures are warranted, principally in personnel, which it estimates will save the Company approximately $3.2 million per annum. These cost savings are in addition to the previously announced re-architecting project of the emite application that will further reduce COGS once this project is completed and customers have been migrated to the new platform. The channel partnerships acquired by the Snare team, including Securonix, hold significant future revenue potential, and the Company is also exploring additional partnerships at various stages of the sales process. The long-term prospects for Snare and the market in which it operates remain strong, with the global observability tools and platforms market forecast to grow from US$2.4 billion in 2023 to US$4.1 billion by 2028, at a CAGR of 11.7%.

The Company is implementing initiatives to reduce Snare churn and boost sales pipeline conversion, which it expects will allow for a return to improved sales performance. The long-term prospects for Snare and the market in which it operates remain strong, with the global observability tools and platforms market forecast to grow significantly in the coming years.