Lawson Software 2007 Annual Meeting of Stockholders. October 18, 2007

Transcription

1 Lawson Software October 18, 2007

2 Use of Forward-Looking Statements This presentation contains forward-looking statements that contain risks and uncertainties. These forward-looking statements contain statements of intent, belief or current expectations of Lawson Software and its management. Such forward-looking statements are not guarantees of future results and involve risks and uncertainties that may cause actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by this presentation. Such risk factors include, among others: uncertainties in Lawson s ability to realize synergies and revenue opportunities anticipated from the Intentia acquisition; changes in conditions in the company s targeted industries; increased competition; whether the company can successfully develop new products and the degree to which these gain market acceptance; global military conflicts, terrorist attacks, pandemics and any future events in response to these developments. Actual results may differ materially from those contained in the forward-looking statements in this presentation. Additional information concerning these and other risk factors is contained in the Risk Factors section of Lawson Software s most recently filed Annual Report on Form 10-K. Lawson Software undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this presentation. Page 2

3 Product Roadmap Disclaimer This document is not a promise by Lawson or any other company to develop, deliver or market any specific product, functionality or service. Lawson makes no representations or warranties, about the contents of this document, and specifically disclaims any express or implied warranties of merchantability or fitness for any particular purpose. Further, Lawson reserves the right to change it s future products or services offerings and to change this document, at any time, without obligation to notify anyone of those changes. Page 3

4 Use of Non-GAAP Information In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, this presentation includes non-gaap financial results. These non-gaap results exclude amortization of all acquisition-related intangibles, Intentia integration costs, restructuring charges, certain stock-based compensation expenses and other expenses. Lawson s management believes the non-gaap measures used in this presentation are useful to investors because they provide supplemental information that analysts frequently use to analyze software companies that have recently made significant acquisitions. Management uses these non-gaap measures to evaluate its financial results, develop budgets and manage expenditures. The method Lawson uses to produce non-gaap results is not computed according to GAAP, may differ from the methods used by other companies, and should not be regarded as a replacement for GAAP measures. Page 4

5 GAAP to Non-GAAP Reconciliation: Revenue Q106 Q206 Q306 Q406 FY06 Q107 Q207 Q307 Q407 FY07 Q108 GAAP: License Maintenance Services Total GAAP Revenue Non-GAAP Adjustments Purchas Accounting Impact - Maintenance Purchas Accounting Impact - Services Total Adjustments Non-GAAP Revenue License Maintenance Services Total Non-GAAP Revenue Page 5

6 GAAP to Non-GAAP Reconciliation: Operating Margin Q106 Q206 Q306 Q406 FY06 Q107 Q207 Q307 Q407 FY07 Q108 GAAP: License Maintenance Services Total GAAP Revenue Non-GAAP Adjustments Purchas Accounting Impact - Maintenance Purchas Accounting Impact - Services Total Adjustments Non-GAAP Revenue License Maintenance Services Total Non-GAAP Revenue GAAP Operating Income (4.4) 16.6 (16.6) (2.7) (8.4) 9.0 (18.6) 5.4 Purchase Accounting Impact on Revenue Purchase Accounting Impact on Cost of Consulting Integration Related Purchased Maintenance Contracts Non-Cash Stock Based Comp Restructuring 0.0 (0.0) (0.0) (0.1) Numbercraft Write-Off Amortization Non-GAAP Operating Income GAAP Operating Margin 2.3% 9.5% 11.9% -3.4% 4.2% -10.3% -1.4% -4.4% 4.2% -2.5% 2.9% Non-GAAP Operating Margin 13.5% 13.7% 15.2% 5.3% 11.2% 3.1% 7.0% 8.7% 9.9% 7.4% 8.2% Page 6

7 GAAP to Non-GAAP Reconciliation: EPS Q106 Q206 Q306 Q406 FY06 Q107 Q207 Q307 Q407 FY07 Q108 GAAP Net Income (4.8) 16.0 (15.8) (3.5) (9.8) 8.1 (20.9) 5.6 Purchase Accounting Impact on Revenue Purchase Accounting Impact on Cost of Consulting Integration Related Purchased Maintenance Contracts Non-Cash Stock Based Comp Restructuring 0.0 (0.0) (0.0) (0.1) Numbercraft Write-Off Amortization Other (0.4) (0.4) Tax (5.5) (1.4) (3.0) 0.7 (9.2) (1.3) (6.9) (4.0) (5.7) (17.9) (3.0) Non-GAAP Net Income GAAP EPS $ 0.04 $ 0.06 $ 0.09 $ (0.03) $ 0.14 $ (0.08) $ (0.02) $ (0.05) $ 0.04 $ (0.11) $ 0.03 Non-GAAP EPS $ 0.08 $ 0.08 $ 0.09 $ 0.05 $ 0.29 $ 0.02 $ 0.03 $ 0.06 $ 0.08 $ 0.19 $ 0.07 Weighted Average Shares - Basic Weighted Average Shares - Diluted Page 7

8 Lawson Software Harry Debes, President and CEO October 18, 2007

9 Agenda Company overview Fiscal 2007 Recap Fiscal 2008 Priorities Page 9

10 Company Overview Page 10

11 Lawson is a Legitimate Global Competitor Americas EMEA Asia-Pacific 1,850 Customers 1,830 Customers 325 Customers Revenue $820M-$830M in FY2008 Truly Global (for the 1 st time) Offices in 30 countries 3,800 employees, 4,000 customers More than 200 partners 33 year history in ERP Page 11

12 Our Customer Profile 5% 20% Annual revenues greater than $1 billion Annual revenues between $250 million and $1 billion 75% Annual revenues less than $250 million Signed 125 new customers in FY % of our license revenue is from new customers Page 12

13 Lawson s Vision is to be the global ERP leader in each of our target markets We will achieve this Vision by: 1. Focusing our development and go to market efforts in our target markets 2. Offering our customers a superior experience 3. Achieving world-class performance in each of our functional disciplines Page 13

14 It s about our focus on vertical Markets Product-Centric Service-Centric Manufacturing Trade Service Providers Fashion Food & Beverage Distribution Retail Financial Services Healthcare Public Sector General Fabrication Equipment & Service Rental Asset-Intensive Services Professional Services Page 14

15 ..with more attention to sub-segments Fashion Intimate Apparel Sportswear Footwear Apparel Manufacturing Page 15

16 Example - Lawson Healthcare in the United States Healthcare ERP U.S. Market Share Top 50 Integrated Delivery Networks1 Lawson serves over 500 healthcare customers 8 of the top 10 largest IDNs 6 of the top 10 largest Catholic healthcare systems 8 of the top 14 hospitals profiled in America s Best Hospitals Ranking One-third of healthcare s 100 Most Wired Hospitals 9 of the 19 healthcare systems listed in the Information Week 500 Page 16

17 Solutions for our Vertical Markets Fashion Food & Beverage Wholesale Distribution Equipment & Service Rental General Fabrication Healthcare Retail Public Service Financial Services Professional Services Page 17

18 Total Cost of Ownership Advantage: Service Industries *TCO = ICO + (2 years of post-implementation costs) SAP Oracle PeopleSoft JD Edwards o o o o o o o o o o o Lawson Top Performing Categories Total Cost of Ownership Time to Implement Post Implementation Costs Product Performance Product Flexibility Unique/Critical Capabilities Ease of Integration with Other Products Product Training Requirements Vendor Stability Product Reputation Vertical Experience Source: META Group, 2003 Deriving Value From 21 st Century ERP Application Page 18

19 Total Cost of Ownership Advantage: Manufacturing Industries 1, Total Cost Per User Per Percentage Point of Improvement Lawson Top Performing Categories o o o o o Reduction in inventory costs Reduction in manufacturing operational costs Reduction of administrative costs Improved complete and on-time shipments Improved manufacturing compliance Oracle SAP QAD Infor All Others Epicor Source: Aberdeen Group, July 2007 The Total Cost of ERP Ownership in Mid-Sized Companies Page 19

20 Full Range of Services and Support Options Lawson Professional Services Portfolio Business Consulting Services Learning Services Implementation & Upgrade Services Packaged Services Managed Services Professional Services 1,600 Lawson consultants 200 Offshore consultants Growing Partner eco-system New Benefits Managing Cost Certified Partner Network Application Outsourcing Full Range of Maintenance Offerings Bronze: Upgrades, corrections, self service Silver: + How-to, 24x7 critical issue support Gold: + Installs, support of customer mods Platinum: + Full Application Hosting Application Management Enhanced Support Base Maintenance Bronze Silver Gold Platinum Page 20

21 Lawson is More Customer-Centric 4,000 customers is not 40,000+ customers Bigger Fish in smaller pond When customers talk, we listen Partnership not Customer-Vendor relationship Executive access and project oversight Page 21

22 Fiscal 2007 Recap Page 22

23 Fiscal Transition Year Accomplishments Business Growth Pipeline growth 30% sales force growth based on pipeline Delivered new M3 and S3 products Expanded services offerings Result: Quarterly Sequential Revenue Growth Operating Efficiency Global leadership and organizational structure Workforce balancing leverages offshore capacity Building a European Shared Services Center Driving operating margin leverage Result: Quarterly Sequential Margin Expansion Financial Structure Reduced OpEx annual run rate by $25M-$30M Repurchased $54M of shares in FY07 ($106M total) Convertible notes raised capital at historic low rate Result: Improved Financial Efficiency Page 23

24 Revenue Trending Non-GAAP Trailing Twelve Month $ in Millions $340 FY06 Annual $393 M $346 $351 $393 FY07 Annual $762 M $676 $571 $472 FY08 Guidance $ M $762 $783 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Lawson s fiscal year ends May 31 Intentia acquisition completed April 25, 2006 (late in Q4 06) Page 24

25 Non-GAAP Operating Margin Trending FY06 Annual 11% FY07 Annual 7% Q408 Guidance ~15% 13% 14% 15% 5% 3% 7% 9% 10% 8% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Lawson s fiscal year ends May 31 Intentia acquisition completed April 25, 2006 (late in Q4 06) Non GAAP excludes non-cash amortization, restructuring, and non-cash stock option expenses See Lawson s website and quarterly press releases for a complete reconciliation Page 25

26 Non-GAAP EPS Trending FY06 $0.29 FY07 $0.19 FY08 Guidance $ $0.08 $0.08 $0.09 $0.05 $0.06 $0.08 $0.07 $0.02 $0.03 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Lawson s fiscal year ends May 31 Intentia acquisition completed April 25, 2006 (late in Q4 06) Non GAAP excludes non-cash amortization, restructuring, and non-cash stock option expenses See Lawson s website and quarterly press releases for a complete reconciliation Page 26

27 Q1 Fiscal Year 2008 Financial Summary for quarter ended Aug 31, 2007 Q1 FY2008 Q1 FY2007 Y-O-Y Change Total Revenues $188 million $166 million + 13% (non-gaap) License Revenues $26 million $17 million + 52% (GAAP) Maintenance Revenues $79 million $73 million +9 % (non-gaap) Services Revenues $84 million $77 million + 8% (non-gaap) Operating Margin (non-gaap) 8.2% 3.1% basis points EPS $0.07 per share $0.02 per share + 250% (non-gaap) Page 27

28 Why is our Financial Turnaround Sustainable? 1. Market Opportunity 2. Experienced Management Team 3. Focus on Execution Page 28

29 1. Market Opportunity Market consolidation has created opportunity for Lawson Fewer competitors Acquired customer sets seek better relationships Microsoft customers - seek scalability, functional depth, global support Infor customers seek a future Oracle customers - want to be loved; IBM technology SAP customers -seek simplicity Lawson global pipeline growth 50,000 prospective customers in our addressable market M3 pipeline strength and Global HCM potential opportunity Page 29

30 2. Experienced Management Team Harry Debes President & CEO Guenther Tolkmit Product Development Rob Schriesheim CFO Jim Anderson Global Services Dean Hager Product Management Eduardo Sanchez Global Sales Travis White Marketing Bruce McPheeters Legal Kristin Trecker HR Page 30

31 3a. Improving Execution - Margin Delivering growth in revenues and operating margin Services margin improvements steady improvement Maintenance margin steady improvement Manila facility beginning to provide increased capacity at lower costs Shared services center in Europe reduces redundancy and lowers taxes Upgrades of internal systems -> reduce G&A expenses Page 31

32 3b. Improving Execution - Revenue More AEs = Global pipeline growth Sales productivity improvements Cross selling successes New services and maintenance offerings Expanding eco-system of resellers and services partners M3 and S3 product innovation. Page 32

33 M3 7.1 Technology and Applications New releases of Technology Foundation and Applications Announced March 2006, Available today Addresses a $6 billion global market opportunity Global capabilities 100% Java and superior middleware technology Robust Smart Client and enhanced industry-specific functionality First new M3 product in 4 years Page 33

34 Strategic Human Capital Management Solution Beta product debut Oct 11, 2007 Addresses a $1 billion global market opportunity Best-of-Suite Global capabilities Delivered SaaS Created using Landmark Application Developer Now installed at 4 beta sites General Availability targeted for early calendar 2008 Talent Acquisition Benefits Performance Management Incentive Compensation Management Global HR Payroll Succession Management Learning and Development Workforce Planning Absence Management Page 34

35 Financial Priorities and Model Page 35

36 Fiscal 2008 Priorities Continued focus and execution of our plan Deliver on commitments to customers and stockholders Growth in revenue and profitability Allows for continued investment in sales, services & infrastructure for long-term benefits Page 36

37 3-Year Operating Margin Improvement Goals 5% 17%-19% 2% 7% 1% 1% 1% 1% 10+ percentage points of Improvement within 3 years FY07 Normal Deferred Roll-in Revenue Mix (shift away from services) Maint Margin: Reduce 3 rd party Service Margin: Reduce 3 rd party, Increase rates OpEx Reduction: Off-shore and Optimization 3 Year Model Time 3 Years Page 37

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