Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software...
Transcript of Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software...
InvestorPresentationQ32020
ASymbolofLeadership
SafeHarbour
The statements in this presentation relating to matters that are not historical fact are forwardlooking statements that are based on management's beliefs and assumptions.
Such statements are not guarantees of future performance, and are subject to a number ofuncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc.serves, the actions of competitors, major new technological trends and other factors beyond thecontrol of Tecsys Inc., which could cause actual results to differ materially from such statements.
All names, trademarks, products and services mentioned are registered or unregistered trademarksof their respective owners.
2
OurPurpose:Toempowergoodcompaniestobegreat.
OurPosition:Toclarifyuncertaintyinthesupplychain.
OurMission:Toequipsupplychaingreatness.
OurVision:Thatgoodcompanieshavethespacetothrive.
Ourstoryisallaboutourcustomers
3
Visionaryproviderofsupplychaintechnologyfor theworld’smostcomplexsupplynetworks
8Times“Visionary”inGartner’sWMSMagicQuadrant
Top3inGartner’s2018HealthcareSupply
ChainTop25“Masters”
36Yearsofcomplexsupply
networkexperience
4
E-Commerce
PointofUse
End-to-endIntegratedSupplyChainManagementSolutions
FinancialManagement 3RD PartyBilling
ANALYTICS
Healthcare – Distribution – Retail –3PL
CUSTOMERSPARTNERSSUPPLIERS ENTERPRISESYSTEMS
TransportationWarehouseProcurement&Inventory
DemandPlanning
Collaboration
5
Delivering end-to-end solutions with technology & services tailored to key industries
SolutionsBuiltonExperience
6 3/23/20
Complex Supply Networks Retail
Third Party Logistics Healthcare
GlobalReach
1,000+ Customers
$100M Revenue*
56% USA 24% Canada 20% ROW
(primarily Europe)
$42MAnnual Recurring
Revenue**
481 Employees
7 * Last twelve months, January 31, 2020** At January 31, 2020
ExtendingourReachinHealthSystems
92% 8%
Market Opportunity Current Share
MarketOpportunity:
$9.6B
83%
17%
Market Opportunity
OpportunitywithCurrentBase:
$610M+
500TargetHealthSystems
48%ofTotalBookingsinFY19
HealthSystemsMarketShare
BaseAccountPenetration
8
B2BandB2CMarketplaceConvergence
§ Businesses/tradingpartnersexpectthesame
§ Extraordinarypressureonsupplychaintodeliver
Result: SupplyChainManagementisatacrossroadsandinneedofanswersOpportunity: Tecsys iswellpositionedtosolvethesechallenges
§ Seismicshifthappeninginretail
§ Consumersdemandproductsfaster
9
EvolutionofAnnualRecurringRevenue(ARR*)
16%Q3 YTD 2020 ARR growth, annualized
2017 2018 Q3 YTD 2020
$26.3$26.7
$42.5
*RefertoJanuary31,2020ManagementDiscussionandAnalysis“KeyPerformanceIndicators”
10
2019
$37.9Amounts in January 31, 2020 constant CAD millions
AnnualRecurringRevenueNetRetentionRate
107%LTM Q3 2020 Recurring Revenue Net Retention Rate
2017 2018 LTM Q3 2020
98% 98%
107%
NetRetention= (Existingcustomerexpansionlesschurn)dividedbyBeginningperiodARR
11
2019
106%
ShareholderValueGrowthThroughSaaSMigration
WhySaaS?
Agility ofDeployment
Accelerated Upgrades
Managed Security and
Certifications
Mature Cloud Data Security
13
0
200
400
600
800
1000
1200
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
License SaaS
PerpetualLicensevs.SaaSPricingModelCrossOver
SaaS typically priced at 2.5xperpetual license maintenance
SaaS Annual Contract Value (ACV) typically equals .5x license
In year 4 (at ~40 months) SaaS cumulative revenue crosses over perpetual license cumulative revenue*
Net gain over perpetual maintenance revenues
*SaaScontractstypically5yearsindurationwithautorenewalthereafter
14
SaaSBookingsGrowingRapidly,andincreasingasaProportionofTotal(License Equivalency Basis)
Amounts in CAD millions
2017 2019 Q3 YTD 2020
$5.9
$6.7
$12.7
SaaS
License
15
$8.8
2018
60%Q3 YTD 2020 license equivalency bookings growth, annualized
74%Q3 YTD 2020 SaaS Bookings, % totalFY19 full year: 33%
License equivalency booking = License booking plus 2x SaaS ARR bookings
SaaSBookingsFuelRecurringRevenueGrowth
20%Average Organic SaaS Quarterly Revenue Growth*
16
* CAGR Last three quarters through Q3 FY20
Amounts in CAD millions
23%Q3 FY20 SaaS as a percentage of total Cloud, Maintenance and Subscription Revenue (up from 20% in Q2)
Q1 FY19A Q2 FY19A Q3 FY19A Q4 FY19A Q1 FY20A Q2 FY20A Q3 FY20A
QuarterlySaaSRevenueGrowth
Total SaaS Revenue Total Cloud, Maintenance and Susbscription Revenue
$0.9
$1.4
$1.7$2.1
$2.4
RecentAcquisitions
§ Strengthenportfoliowithastrongretailcapabilitytoexpandaddressablemarket
§ ExpandfootprintinEurope
§ Acquisitionsthatarecompatiblewithourcultureandvalueproposition
KeyAcquisitionsStrategy
18
OrderDynamics§ Complementarytechnology;§ StrengthensTecsys’competitiveposture– DOM
capabilities;§ Opportunitytoexpandomnichanneldistribution
capabilitiesforecommercecustomers;§ StrengthensTecsys’offeringforthe3PL,retailand
servicepartsmarkets;§ LeverageOD’sglobalpresenceanditsgrowingSI
partners. National Retailers & International Brands
§ Founded in the early 2000s§ Fast-growing leader in
out-of-the-box cloud-based Distributed Order Management (DOM)
§ 50 employees§ Acquired November 14, 2018
ExpandingtheTecsysPortfolio
19
PCSYSA/S§ StrongfoundationforcontinuedEuropean
expansion;§ Expertiseandexperienceinsupplychainandlocal
Europeanmarketstoserve&supportcustomers;§ Portfolioofsoftwareproducts:WMS&TMS;
§ Goodrelationshipwithadiversecustomerbase;§ Strongmanagementdrivingstablegrowthand
profitability. In the last 3 years, PCSYS has served more than 1,000 customers from different industries
§ Headquarters: Copenhagen, Denmark§ Develops and supplies logistics and warehousing
solutions§ Leading market position in Scandinavia within
hardware and software for warehouse management and logistics
§ Est. 1990; organic and acquisition growth§ Retention rate: 95 to 99%§ 33 employees§ Acquired by Tecsys Feb. 1, 2019
StrengtheningTecsysGlobally
20
CorporateInformation
FinancialHighlights,inCAD000exceptEPS
22
Q3, 2020 Q3, 2019 Δ YoY Q3, 2020 TTM Q3, 2019 TTM Δ YoY
$ % $ % $ % $ % $ % $ %Total Revenue $26,847 100.0% $18,792 100.0% $8,055 42.9% $100,296 100.0% $72,166 100.0% $28,130 39.0%Cloud, Maintenance and Subscription Revenue $10,575 39.4% $8,095 43.1% $2,480 30.6% $39,780 39.7% $28,817 39.9% $10,963 38.0%Cost of sales $14,013 52.2% $9,354 49.8% $4,659 49.8% $51,965 51.8% $36,069 50.0% $15,896 44.1%Gross margin $12,834 47.8% $9,438 50.2% $3,396 36.0% $48,331 48.2% $36,097 50.0% $12,234 33.9%
Sales & Marketing $5,451 20.3% $4,612 24.5% $839 18.2% $19,824 19.8% $15,831 21.9% $3,993 25.2%General and Administration $2,363 8.8% $3,007 16.0% ($644) -21.4% $10,020 10.0% $8,068 11.2% $1,952 24.2%Research and Development $3,625 13.5% $3,506 18.7% $119 3.4% $14,790 14.7% $11,410 15.8% $3,380 29.6%Restructuring costs $0 0.0% $0 0.0% $0 0% $420 0.4% $0 0.0% $420 100.0%Operating expenses $11,439 42.6% $11,125 59.2% $314 2.8% $45,054 44.9% $35,309 48.9% $9,745 27.6%
Profit (loss) from operations $1,395 5.2% ($1,687) -9.0% $3,082 182.7% $3,277 3.3% $788 1.1% $2,489 315.9%
Net income (loss) $834 3.1% ($1,429) -7.6% $2,263 158.4% $2,050 2.0% $982 1.4% $1,068 108.8%
Adjusted EBITDA $2,648 9.9% ($98) -0.5% $2,746 2802.0% $9,004 9.0% $4,399 6.1% $4,605 104.7%
EPS (basic) $0.06 ($0.11) $0.17 154.5% $0.16 $0.07 $0.09 128.6%
Bookings $29,941 $17,098 $12,843 75.1% $91,046 $58,694 $32,352 55.1%License Bookings $1,524 $1,587 ($63) -4.0% $4,575 $7,915 ($3,340) -42.2%SaaS ARR Bookings $1,952 $503 $1,449 288.1% $5,698 $659 $5,039 764.6%
Backlog $98,166 $69,323 $28,843 41.6% $98,166 $ 69,323 $28,843 41.6%Annual Recurring Revenue $42,471 $32,665 $9,806 30.0% $42,471 $ 32,665 $9,806 30.0%Professional Services Backlog $24,262 $23,855 $407 1.7% $24,262 $ 23,855 $407 1.7%
RefertoJanuary31,2020ManagementDiscussionandAnalysis“KeyPerformanceIndicators”
RefertoJanuary31,2020ManagementDiscussionandAnalysis“Non-IFRSPerformanceMeasure”
24¢DividendperYear
CorporateOverview
$200MMarketCap13.1MS/O
Symbol
TCS29%
InsiderOwnership
BrokerageCoverage
BeaconSecurities
CormarkSecurities
EchelonPartners
StifelNicolaus
HaywoodSecurities
LBSecurities
NationalBank
23
ManagementTeam
PeterBreretonPresidentandCEO
MarkJ.BentlerChiefFinancialOfficer
BillKingChiefRevenueOfficer
Peterinitiallyledthecompany’ssoftwaredevelopment,productmanagement,salesandmarketing.In1998,hewasappointedCEOandwaslargelyresponsibleforthecompany’sInitialPublicOffering.HerepositionedTecsysinthesupplychainexecutionindustry,andleveragedthecompany’sstrengthsintechnologyandsupplychainexpertisetoachievesignificantgrowthandbecomealeaderinitsmarkets.
MarkjoinedTecsysin2018aschieffinancialofficer.Markhasmorethan20yearsofinternationalexperienceandwaspreviouslyChiefFinancialOfficerforAptosRetail.Inadditiontoplayingasignificantroleintheformationandgrowthofthecompany,heledthesuccessfultransitionofthebusiness’retailmanagemententerprisesolutionstoacloud-centricplatform.PriortohisworkatAptosRetail,heservedasVicePresident,FinanceforEpicorRetail.
BillhasledTecsys’go-to-marketstrategyandexpansionsinceJanuary2019.PriortojoiningTecsys,heheldexecutivesalesleadershippositionsatOracleintheNorthAmericanSalesorganization,mostrecentlyasvicepresidentofkeyaccountsandpreviouslyasgroupvicepresidentofNorthAmericaStorageSales.PriortoOracle,BillwaswithFujitsuforoveradecadeandheldavarietyofexecutivemanagementpositions.
24
Questions&AnswersThankyou