Investor Presentation 2018 M A Y

Transcription

1 Investor Presentation 2018 M A Y

2 Safe Harbor Statement Any statements contained in this presentation and the accompanying oral presentation that do not describe historical facts may constitute forwardlooking statements as that term is defined in the Private Securities Litigation Reform Act of Any such statements, including but not limited to those relating to results of operations, contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: risks associated with fluctuations in quarterly operating results due, among other factors, to the long sales cycle with enterprise customers and the size and timing of large customer orders; risks associated with acquisitions; the risk that our goodwill resulting from acquisitions may become impaired and require a write-down; limitations on the effectiveness of internal controls; rapid technological change; Datawatch s dependence on the introduction of new products and product enhancements and possible delays in those introductions; competition in the software industry generally, and in the markets for next generation analytics in particular; Datawatch's dependence on its principal products, proprietary software technology and software licensed from third parties; Datawatch s concentration of customers in the financial sector; risks associated with international sales and operations; risks associated with indirect distribution channels and co-marketing arrangements, many of which were only recently established; the adequacy of Datawatch s sales returns reserve; risks associated with a subscription sales model; Datawatch s dependence on its ability to hire and retain skilled personnel; disruption or failure of Datawatch s technology systems that may result from a natural disaster, cyber-attack, security breach or other catastrophic event; risks related to the actions of activist stockholders, including the amount of related costs incurred by Datawatch and the disruption caused to Datawatch s business activities by these actions; and uncertainty and additional costs that may result from evolving regulation of corporate governance and public disclosure. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange Commission, including but not limited to, those appearing in the Company's Annual Report on Form 10-K for the year ended September 30, 2017 and its subsequently filed 10-Q reports Datawatch Corporation. Datawatch and the Datawatch logo are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies. 2

3 Investment highlights Dynamic Market Differentiated Products Business Momentum Impressive Execution Healthy Financials Fast-growing segment of business analytics market Data preparation recognized as a fundamental element of a modern analytics stack Trend towards unified data managements and analytics New Monarch selfservice data preparation released in 2016; 2,000+ customers Cloud-ready Monarch platform termed visionary and ahead of the market by industry analyst Unique ability to prepare data from multi-structured data formats Pioneer in data preparation and analytics; 14,000+ customers $50M+ in Non- GAAP revenue in FY18; high teens growth Angoss provides end-to-end predictive analytics solution, cross-sell opportunities and blue chip customers New sales leadership (2016) drives discipline, efficiency and multiple consecutive quarters of marketbeating performance 100%+ increase in sales productivity since beginning of FY17 Attractive high margin partner opportunity driven by new team and Monarch cloud platform 16% TTM top line growth and 26% TTM license growth 50%+ growth in subscription and recurring revenue; favorable renewal rates 90%+ gross margins; profitable 3

4 Data intelligence platform A RECORD OF STRONG INNOVATION Pioneer and innovation leader in self-service data preparation DATA CAPTURE DATA PREPARATION ANALYSIS & RECOMMENDATION ENGINES ENGAGE AND ACT Relational Data Cleansing Advanced Analysis Real-Time Visualization Hybrid cloud deployment model for maximum flexibility Big Data Desktop Files Data Blending Data Profiling Predictive Data Mining Interactive Dashboards Monitoring Document-based Content PDFs Governed/Lineage Social Collaboration Anomaly Detection Statistical Analysis Industry Compliant Scoreboards Complete end-to-end capabilities for predictive and real-time visual analytics Cloud-born Data Streaming Network Web Automated Re-Usable Models Data Stewardship ML Smart Recommendations Grouping and Clustering Forensics Prescriptive Strategies Self Documenting Strategy Trees Real-Time Alerts and Notifications Next Best Action Pluggable Visualization Hybrid Deployment 4

5 Validated by a growing global customer base 14,000 Diversified Across All Key Verticals Fortune 100 / 500 Clients 75+ Large customer base in 100 countries Financial Services, Healthcare, Government, Retail, and Others Serves more than half of the Fortune 100 and Fortune 500 Partners worldwide in 50 countries Industry Use Cases Selected Clients Financial Services 5300 call report, general ledger reconciliation, loan production, debit & credit card reconciliation, core banking, ATM transactions Healthcare Revenue cycle management, 835/837 files, claim denial reimbursement, EMR report conversion to excel Government Transaction reconciliation, internal and external audit, regulatory compliance reporting, PDF & report conversion to excel Retail Lead de-duplication, dashboards from disparate systems, AdWords campaign analysis, lead conversion rates, survey data Other Industries Transaction reconciliation, internal and external audit, regulatory compliance reporting, PDF & report conversion to excel, total compensation analysis, actual vs budgeted salary tracking, HR analytics 5

6 Broadening portfolio is expanding our market opportunity Self-service data preparation is increasingly an element of data discovery platforms and data science platforms The cloud is where vendors will find the agility, flexibility and ability to combine external and internal data to dramatically scale up their innovation in analytics Data Preparation $1.5B Cloud Analytics $12B Predictive Analytics $6B Streaming Analytics $8B 19% Growth 38% Growth 11% Growth 35% Growth Sources: Gartner, Market Opportunity Map: Analytics and Business Intelligence, Worldwide, June 2017 ; Gartner, Data Preparation Forecast Snapshot, Feb 2016 ; MarketsandMarkets, Streaming Analytics Global Forecast, July

7 Datawatch Snapshot Publicly Traded NASDAQ DWCH Founded 1985 Headquarters Innovation Financial Pioneer in self-service data extraction & blending and real-time visual data discovery recurring revenue ~60% 85-90% customer renewal rates 195 Worldwide 70% YoY subscription revenue growth Regional Offices New York Bedford, Massachusetts Employees Stockholm Brands London Toronto Manila Customers Monarch Swarm Panopticon 14,000+ global customers of every size, including half of The Fortune 500 Angoss Datawatch is the data intelligence solutions partner that fuels your business. MORE MORE MORE DATA TRUST MINDS 7

8 Why We Win Breadth of Data Intelligence Portfolio Unmatched Business Usability We Unlock More Data Faster! Deeply Loyal and Sticky User Base Our Innovation DNA Datawatch Monarch Swarm provides reliable and adaptable data preparation that can be secured and governed, and, most importantly, it takes a productive and collaborative approach to utilize data anywhere at any time. Mark Smith CEO AND CHIEF RESEARCH OFFICER VENTANA RESEARCH 8

9 Datawatch Growth Strategies Bring our world class Monarch customer base on a journey to the Cloud with Monarch Swarm Invest in our indirect sales channel to take full advantage of Monarch Swarm and Angoss Leverage Panopticon s unique real-time visualization capabilities in capital markets and IoT Cross-sell Angoss into the Monarch customer base with vertical and horizontal use cases 9

10 Datawatch Sales Strategy DIRECT SALES FORCE POWERFUL DISTRIBUTION PARTNERS O U T S I D E S A L E S I N S I D E S A L E S C H A N N E L P A R T N E R S Industry-aligned, selling enterprise deals including Expands and real-time visualization solutions. Focused on larger dollar deal opportunities Industry-aligned, selling enterprise deals including Expands and real-time visualization solutions. Focused on larger dollar deal opportunities Strategic Analytic Vendors / Resellers: IBM, Dell VAR s and MSPs: Fiserv, Nasdaq, Broadridge, Vertex, ASG Complimentary ISV s: Tableau, Qlik, Microsoft 50 person sales operations organization Domain experts in data preparation, predictive and fast analytics 3 sales offices across 2 continents Self-service data prep for Watson Analytics, Cognos Analytics, and content mgmt. systems Data preparation and visualization for advanced and predictive analytics Faster data preparation, data migration and accelerated implementation times Sales Offices Bedford, MA New York, NY United Kingdom Toronto Embedded real-time visualizations and fast analytics for trade surveillance 10

11 Experienced Team of Leaders and Innovators Average team member 20+ years data & technology experience with premier companies Management & Board stock ownership approximately 16%, interest aligned with shareholders Michael Morrison PRESIDENT & CEO Ken Tacelli CHIEF OPERATING OFFICER Jon Pilkington CHIEF PRODUCT OFFICER James Eliason CHIEF FINANCIAL OFFICER Brigid MacDonald VP HUMAN RESOURCES 11

12 Consistent Revenue Growth Revenue Growth 18% 23% 19% 16% 26% License Growth 34% 34% 24% 28% 38% $12.0 $10.0 $1.6 $8.0 $6.0 $3.9 $4.2 $4.3 $4.0 $4.2 $4.0 $2.0 $4.9 $4.9 $5.9 $5.6 $5.2 $0.0 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 License Maintenance & Services Non-GAAP Total non-gaap revenue up 26% Y/O/Y in FY18YTD Non-GAAP license revenue up over 38% Y/O/Y in FY18YTD RR is approaching 60% of total revenue YTD vs 51% in FY17 12

13 Back To EBITDA Profitability $0.4 $0.2 $0.2 $0.3 $0.2 $0.2 $0.0 -$0.2 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 -$0.1 -$0.4 -$0.6 -$0.8 -$1.0 -$0.9 EBITDA of approximately ($200K) in FY17 Almost a $7.0M improvement from FY16 Essentially breakeven on a non-gaap basis in FY18 YTD EBITDA numbers above exclude one-time acquisition & severance costs 13

14 Subscription Business continues to Grow Ratable License Revenue Total Ratable Revenue $0.4 $0.5 $1.3 $1.2 $1.1 $1.0 $0.9 $0.8 $0.7 $ $6.0 $4.8 $4.8 $4.9 $4.5 $4.5 $4.3 $4.0 $4.0 $4.0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q2FY18 includes two months of Angoss results, after purchase accounting 14

15 Positive Cash Trends $35.0 $30.0 $27.8 $29.4 $30.5 $29.8 $25.0 $20.0 $15.0 $14.8 $10.0 $5.0 $0.0 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Ending Cash Generated over $2.4M of cash in FY17 Q2 cash burn due to Angoss acquisition 15

16 Deferred Revenue Growing $20.0 $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $2.6 $2.9 $3.0 $3.1 $9.1 $6.0 $4.0 $2.0 $0.0 $7.5 $8.1 $8.6 $9.2 $9.0 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 * Maintenance Subscription * Includes ~ $5.3M DR from Angoss purchase Deferred revenue growth of 79% Y/O/Y FY17 Very sticky product with high retention rates Approximately 58% of total revenue is recurring in nature Maintenance up ~20% Subscription up ~250% Subscription license ~90% Enterprise maintenance ~85% Desktop maintenance ~80% Maintenance 40% Subscription 18% 16

17 Long Term Target Model Non-GAAP Margins (% of GAAP revenue) FY 16 FY 17 FY 18 YTD Long Term Target Gross Profit 90% 91% 90% 90% Sales & Marketing 64% 51% 51% 45% Research & Development 26% 23% 26% 17% General & Administrative 26% 20% 20% 13% 17 Note: Fiscal year ends September 30. Ratios exclude IP/Intangible Assets Amortization, Stock Based Compensation and Acquisition related costs.

18 Thank You 18