Harnessing the Power of Open Source Disruption

Transcription

1 Harnessing the Power of Open Source Disruption A Differentiated Business Model Pete Cittadini President and CEO Actuate Corporation August 13,

2 Safe Harbor Statement The statements contained in this presentation that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of These including statements regarding Actuate s expectations, beliefs, hopes, intentions or strategies regarding the future. All such forward-looking statements in this presentation are based upon information available to Actuate as of the date hereof, and Actuate disclaims any obligation to update or revise any such forward-looking statements based on changes in expectations or the circumstances or conditions on which such expectations may be based. Actual results could differ materially from Actuate s current expectations. Factors that could cause or contribute to such differences include, but are not limited to, the general spending environment for information technology products and services in general and Business Intelligence, Performance Management and Reporting Application software in particular, quarterly fluctuations in our revenues and other operating results, our ability to expand our international operations, our ability to successfully compete against current and future competitors, the impact of future acquisitions (including the performancesoft, Inc. acquisition) on the company s financial and/or operating condition, the ability to increase revenues through our indirect channels, general economic and geopolitical uncertainties and other risk factors that are discussed in Actuate s Securities and Exchange Commission filings, specifically Actuate s 2006 Annual Report on Form 10-K filed on March 20, 2007, Form 10-Q for the quarter ended March 31, 2007 filed on May 10, 2007 and Form 10Q for the quarter ended June 30, 2007 filed on August 8, Use of Non-GAAP Financial Measures The non-gaap financial measures are included in this presentation to provide an additional analytical tool for understanding the Company s financial and operating performance, and to facilitate comparability of financial results between historical financial reporting periods, among other reasons. Non-GAAP financial measures discussed in this presentation exclude the amortization of purchased technology and other intangibles, write-off of in-process R&D, restructuring costs, stock-based compensation expense, nonrecurring legal costs and an adjustment to the tax provision. It is management s belief that these items are not indicative of ongoing operations and as a result, non-gaap financial measures that exclude such items provide additional insight for investors in evaluating the Company s financial and operational performance. However, these non-gaap financial measures should not be considered in isolation or as a substitute for the Company s GAAP results. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company s GAAP and non-gaap financial results is provided in our press releases, as well as in the investor relations section of Actuate s website at Investors are advised to carefully review and consider this information strictly as a supplement to the GAAP financial results that are disclosed in the Company s SEC filings. 2

3 2007 Actuate Analyst Day Harness the Power of Open Source disruption to advance Actuate s leadership in Business Intelligence Actuate s Open Source Strategy Open Source initiatives to date High-growth business model Partner Presentations IBM Rational and FireScope BIRT Exchange Sneak Preview Q&A Lunch Afternoon Breakout Sessions 3

4 Harnessing the Power of Open Source Disruption First-Mover Advantage First company to harness Open Source disruption in Business Intelligence New BI Market Landscape Advantage Open Source BI adoption by customers changing the rules 24% currently using Open Source BI 31% likely to consider using Open Source BI solutions Source: 2007 Actuate Open Source Software Survey of 617 respondents Competitive Advantages Two- to three-year head-start on BI incumbents Market expansion at lower sales and marketing costs Significant advantage over Open Source BI entrants Proven vendor with large installed base and record of expansion 4

5 Actuate s Open Source Initiatives Founded Eclipse BIRT (Business Intelligence and Reporting Tools) Open Source Project BIRT 1.0 Actuate BIRT 1.0 BIRT 2.0 BIRT becomes foundation for product line with Actuate 9 Exceeded 1 million Eclipse BIRT downloads New products provide on-ramps for Open Source developers to to commercial products Actuate BIRT, iportal and iserver Interactive Viewing and BusinessReport 5

6 Eclipse: A Dominant Force Eclipse is the worldwide leader and standard 66% of developers use Eclipse framework 87% among organizations with more than 50 developers Source: BZ Research 2006 Eclipse Adoption Studies Eclipse SDK Downloads by Country (Source: Eclipse Foundation) Actuate is the only BI provider with access to the Eclipse market 6

7 Actuate s Differentiated Business Model Open Source / Enterprise Software Global Market Expansion Revenue Acceleration From Eclipse elopers Higher Earnings Growth From Installed Base Lower Sales and Marketing Costs 7

8 Revenue Acceleration from Existing Customers Grow revenues by rapidly increasing the number of reporting applications in large enterprises Organizations are choosing BIRT and its lower TCO to develop new applications Support for Open Source, Eclipse and BIRT is skyrocketing BIRT developer communities are growing rapidly Integrators and outsourcers are moving to BIRT BIRT supports both Open Source and commercial application stacks 8

9 Large Actuate Customers Adopting BIRT 9

10 Global Market Expansion: Open Source elopers Goal: Capture Every Application that Requires Reporting Potential global use by: SIs and outsourcers ISVs, OEMs and VARs Enterprises of all sizes Java elopers PHP elopers Report elopers BIRT BIRT is only product that can capture these markets 10

11 Rapid Growth of a Global BIRT Ecosystem Rat l Java Rat l Rat l Java Java Rat l Rat l SAP Java Rat l Prod Java SAP Rat l Java Rat l Rat l Java Java Service providers BEA BEA BEA Training providers BEA BEA SAP BEA BEA IBM BEA Online portals BEA php php BEA News forums php php php SAP php Zend OEMs php php php FireScope Eclipse 11

12 Attracting New Customers from Many Industries Healthcare Financial Services Public Sector Manufacturing Retailing Higher Education ISVs 12

13 Lowering the Cost of Sales Traditional Enterprise Software Sales High Touch, Low Volume Revenue Direct Sales Costs Initial Contact First Sales Call Download Software Demo Proof of Concept Selection Initial Contact Purchase Open Source Software Sales Low Touch, High Volume Revenue BIRT-Exchange - Self Service Community Support Almost No Cost of Sales Telesales Costs 13

14 Leverage Points of Actuate s Business Model Market Expansion Open Source community Java developers More industries More geographies Larger ecosystem More higher quality leads More opportunities Eclipse Foundation elopment standard Eclipse community Integration in Eclipse projects Eclipse plug-ins Integration in commercial products based on Eclipse 14 Sales and Marketing Productivity Community-based marketing Self-service trial and evaluation Shorter sales cycles Higher close rate of opportunities More deals per rep Higher quotas per rep Revenue Acceleration Installed base of large customers More developers More projects and applications Establish as a standard

15 Impact of More Leads, Shorter Sales Cycle and Higher Close Rate on Operating Margin Q2 07 Actuals Increase Quality Leads Decrease Sales Cycle Increase Close Rate License Revenue ($ million) $14.1 $16.9 $16.2 $15.5 Combined Effect $21.4 Increase in License Revenue +20% +15% +10% +52% Sales and Marketing Expense 40% 38% 39% 39% 36% Non-GAAP Operating Margin 20% 25% 24% 23% 31% Increase in Operating Margin +25% +19% +13% +57% Each Rep Closes One More Deal Per Year (60 Reps) for $100K for $250K for $500K License Revenue ($ million) $15.6 $17.9 $21.6 Increase in License Revenue +11% +27% +53% Sales and Marketing Expense 39% 38% Non-GAAP Operating Margin 23% 26% Increase in Operating Margin +14% +32% 36% 31% +58% 15

16 BIRT Partners Embedding BIRT Reporting 16

17 IBM Rational Mike Fox, Reporting Technical Lead 17

18 FireScope Mark Lynd, President FireScope provides actionable business intelligence concerning the health and security of all critical IT assets across operating systems and platforms. BIRT Solution Profile Systems My My SQL database Linux OS OS Actuate software All All products including Version 9 SP1 of of Actuate iportal and BIRT One product includes Actuate BusinessReports Studio 18

19 BIRT Exchange Sneak Preview Online Community for BIRT elopers and Report elopers 19

20 BIRT Exchange: Expanding the BIRT Community BIRT Exchange Self-serve community site sponsored by Actuate for BIRT developers to learn, evaluate, download and purchase Actuate products Expand BIRT community Increase market share Raise Actuate revenues Reduce sales and marketing costs 20

21 Questions and Answers 21

22 Harnessing the Power of Open Source Disruption A Differentiated Business Model August 13,