Corporate Presentation

Transcription

1 Corporate Presentation May 7, 2015 TSX: RKN

2 DISCLAIMER This presentation does not constitute or form part of any offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities or to form the basis of or be relied on in connection with any contract or commitment. This is not, and under no circumstances is to be construed as, a prospectus, an offering memorandum, an advertisement, an offer, an invitation or a solicitation to enter into a transaction or other investment business. No representation or warranty is made to the fairness, accuracy, completeness or correctness of these materials. Each recipient or reader must make their own investigation and assessment of the matters contained here. In particular, no representation or warranty is given, and no responsibility or liability is accepted, as to the achievement or reasonableness of any future projections or the assumptions underlying them, or any forecasts, estimates, or statements as to prospects contained or referred to in these presentation materials. Certain statements may constitute forward-looking statements and are prospective. Forward-looking statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Redknee to be materially different from any conclusion, projection or future results, performance or achievement expressed or implied by such forwardlooking statements. Actual events may differ materially from expectations embodied in forward-looking statements and depend on a number of factors and risks, some of which may be beyond the company's control. New risk factors may arise from time to time. It is not possible to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of Redknee to be materially different from those contained in forward-looking statements. These risks and uncertainties include rapid technology change, changes in customer architecture and equipment deployment requirements, the risks and uncertainties of new product introductions, economic and commercial conditions, exchange rate fluctuations, competitive forces, dependence on key supplies and like factors that may cause actual results, performance or achievement to differ materially from those implied by such forward-looking statements. Given these risks and uncertainties, investors and readers should not place undue reliance on forward-looking statements as a prediction of actual results. No responsibility or liability is accepted by any person for any loss howsoever arising from any use of, or in connection with, these presentation materials or their contents or otherwise. In issuing these materials, Redknee does not undertake any obligation to update information or to correct any inaccuracies which may become apparent in these materials. These materials are supplied to you for your own information and may not be distributed, published, reproduced or otherwise made available to any other person, in whole or in part, for any purpose. In particular, they should not be distributed to or otherwise made available to persons where such distribution or availability may lead to a breach of any law or regulatory requirements. < 2 >

3 WHAT WE DO Redknee is the largest independent provider of next-gen, real-time converged billing, customer care & analytics software for service providers. (On-premise & cloud-based solutions) 200+ CUSTOMERS ACROSS 90 COUNTRIES 1,400 EMPLOYEES $241M REVENUE (TTM) < 3 >

4 REDKNEE S REAL-TIME CONVERGED BILLING Real-time Billing Invoicing Order Management & Provisioning Customer Usage Real-time Promotions Loyalty Program Interactive Business Intelligence Customer Self-Care Customer Care Real-time Service Policy < 4 >

5 WHY CHOOSE REDKNEE? Increase Revenue per Subscriber 20-30% increased usage through real-time promotions Flexible bundles, promotions & charging options Shape subscriber behavior: educate, segment, recommend Decrease Subscriber Churn & Cost to Support Subscribers Reduce churn by 25%+ Eliminate bill shock & provide real-time alerts Reduced subscriber support costs by 50%+ Social enabled care through Facebook & Twitter Decrease Total Cost of Ownership (TCO) SaaS & private cloud, and on-premise delivery options Multi-tenant architecture: postpaid, prepaid & corporate, multiple brands & currencies Fully configurable product replacing uncompetitive legacy software T1 Caribbean Overall 7% revenue increase 5x postpaid subscriber acquisition T1 NA T3 CALA Overall 10% revenue increase T1 APAC FASTEST to launch replacement Replaced a legacy billing system in 13 weeks FASTEST to onboard On boarded a new MVNO to Redknee s hosted InBill system in 2 weeks 50% increase in ARPU over market average 20% increase in data revenue < 5 >

6 REDKNEE: HIGHEST RANKED OSS/BSS PROVIDER Demand for revenue management products, particularly integrated policy control and online charging platforms, has put Redknee at the top of the list Redknee Top 10 BSS Vendors 2Q13-1Q14 Others 58% 13% Comverse Equinox Ericsson Amdocs CSGi Digitalk 4% 4% 4% 3% 3% 3% NetCracker 3% CBOSS 2% DigitalRoute 3% Not only is policy and charging a growth area, but the telco IT market is no longer the sole preserve of the large infrastructure vendors. < 6 >

7 Million USD Million USD Q2 FY15 HIGHLIGHTS Revenue: $53.7M (Q2 FY14: $72.4M) QTR REVENUE AND ADJUSTED EBITDA FX Adjusted Revenue: Order Backlog: FX Adjusted Order Backlog $61.1M Gross Margin: 61% $157.2M $175.8M % 8% 50-13% 0 Q2 13 Q2 14 Q2 15 Revenue Adj. EBITDA ORDER BACKLOG 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% Recurring Revenue: 46% of total 200 Adjusted EBITDA: $10.5M or 20% of Revenue (Q2 FY14: $5.7M 8% or Revenue) Cash: $105.8M 50 0 Q2 13 Q2 14 Q2 15 Copyright Redknee Inc. Inc < 7 >

8 Million USD GROSS MARGIN SUMMARY 160 Gross Profit Gross Margin 60% % % 50% 51% 52% 55% 50% TTM Q TTM Q FY 2014 TTM Q TTM Q GROSS MARGIN 61% Q2 FY % Copyright Redknee Inc. Inc < 8 >

9 REVENUE BREAKDOWN BY QUARTER (US$ MILLIONS) Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 $ Change % Change Software (7.8) (29%) % of revenue 12% 20% 37% 25% 23% 32% 35% Services (1.6) (14%) % of revenue 26% 17% 16% 19% 20% 22% 19% Third Party (6.1) (72%) % of revenue 7% 9% 12% 5% 12% 7% 4% Support (3.3) (13%) % of revenue 55% 55% 36% 51% 45% 39% 42% Total Revenue (18.7) (26%) Recurring Revenue (1.1) (4%) % of revenue 57% 55% 36% 51% 47% 44% 46% 1 Recurring revenue includes support and maintenance agreements, term based product licenses, subscription, and long term service agreements. *The above noted information is based on management estimates and is unaudited Copyright Redknee Inc. Inc < 9 >

10 Q2 FY15 FX ADJUSTED REVENUE (US$ MILLIONS) Q2 FY15 FX IMPACT NORMALIZED Q2 FY15 Q2 FY14 $ CHANGE % CHANGE Software & Services 28.8 (4.9) (4.5) (12%) % of Revenue 54% 55% 53% Third Party 2.4 (0.3) (5.8) (68%) % of Revenue 5% 4% 12% Support & Subs (2.2) (1) (4%) % of Revenue 42% 41% 36% Total Revenue 53.7 (7.4) (11.3) (16%) Recurring Rev (2.6) (1.1) (4%) % of Revenue 46% 45% 36% Order Backlog (18.6) % Copyright Redknee Inc. Inc < 10 >

11 STRONG BALANCE SHEET & BACKLOG (US$ MILLIONS) Q2 FY15 Q1 FY15 % CHANGE Cash and Investments $105.8 $ % A/R $74.9 $76.0 (1%) DSO 113 days 107 days 6 days Unbilled Revenue $30.7 $43.6 (30%) Deferred Revenue $20.5 $21.0 (2%) Working Capital $129.4 $131.9 (2%) Backlog $157.2 $171.0 (8%) CASH FLOW FROM $13M OPERATIONS Q2 FY 2015 Copyright Redknee Inc. Inc < 11 >

12 MEDIUM TERM MANAGEMENT PRIORITIES Capitalizing on the opportunity in front of us: 1 IMPROVE 2 DRIVE 3 SUPPORT VALUE FOR OUR CUSTOMER BASE UPGRADES WITHIN CURRENT CUSTOMER BASE UP SELL CUSTOMERS < 12 >

13 LONG TERM GROWTH STRATEGY LONG TERM TARGET $1B REVENUE $200M+ EBITDA FOCUSED Acquisitions GROWING Market Opportunity NEW Market Verticals EXPANDED Global Sales Team UPSELL Current Customers IMPROVE Support Value DRIVE Upgrades to Customer Base $241M TTM REVENUE T O D A Y < 13 >

14 REDKNEE SOLUTIONS (TSX:RKN) KEY STATS Stock Price 05/05/15 C$4.11 Revenue (ttm) $241M 52 Week Low/High Shares Outstanding Public Float, est. Avg Daily Vol (3 mo) C2.82 $ M 61.2M 366,869 Adj. EBITDA (ttm) Book-to-Bill Backlog (mrq) Recurring revenue (ttm) $24.1M 1.1 $157.8M 47% Market Capitalization C$448.5M Cash (mrq) $105.8M Enterprise Value (mrq) EV/Revenue (ttm) Annual Revenue C$378.7M 1.3X Total Assets Long-Term Debt Institutional Holdings¹ Insider Holdings, est.² Headcount Founded / TSX Listed Fiscal Year End $266.4M $42.8M 24% ~30% 1, /2009 Sept $ Millions USD *All revenue figures in U.S. dollars unless otherwise noted; ¹Capital IQ, TSX & Ipreo; ²Represents Redknee s founders, execs, board of directors and long-time employees, per most recent filings & company data TTM Q2 15 mrq = most recent quarter; ttm = last twelve months mrq & ttm figures as of FY Q ended March 31, 2015 Copyright Redknee Inc. Inc < 14 >

15 SUMMARY $241M TTM Revenue TTM Recurring Revenue: 47% TTM EBITDA Margin: 10% Balance Sheet: $106M Cash Focused on Executing on our Strategy

16 THANK YOU Company Contact David Charron Chief Financial Officer Redknee Solutions Inc Matheson Blvd East Mississauga, ON Canada L4W 4Y9 Investor Relations: TMX Equicom Robert Kelly +1 (416) Ext. 253 < 16 >

17