Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software...

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Investor Presentation Q3 2020 A Symbol of Leadership

Transcript of Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software...

Page 1: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

InvestorPresentationQ32020

ASymbolofLeadership

Page 2: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

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.

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Page 3: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

OurPurpose:Toempowergoodcompaniestobegreat.

OurPosition:Toclarifyuncertaintyinthesupplychain.

OurMission:Toequipsupplychaingreatness.

OurVision:Thatgoodcompanieshavethespacetothrive.

Ourstoryisallaboutourcustomers

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Page 4: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

Visionaryproviderofsupplychaintechnologyfor theworld’smostcomplexsupplynetworks

8Times“Visionary”inGartner’sWMSMagicQuadrant

Top3inGartner’s2018HealthcareSupply

ChainTop25“Masters”

36Yearsofcomplexsupply

networkexperience

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E-Commerce

PointofUse

End-to-endIntegratedSupplyChainManagementSolutions

FinancialManagement 3RD PartyBilling

ANALYTICS

Healthcare – Distribution – Retail –3PL

CUSTOMERSPARTNERSSUPPLIERS ENTERPRISESYSTEMS

TransportationWarehouseProcurement&Inventory

DemandPlanning

Collaboration

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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

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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

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ExtendingourReachinHealthSystems

92% 8%

Market Opportunity Current Share

MarketOpportunity:

$9.6B

83%

17%

Market Opportunity

OpportunitywithCurrentBase:

$610M+

500TargetHealthSystems

48%ofTotalBookingsinFY19

HealthSystemsMarketShare

BaseAccountPenetration

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Page 9: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

B2BandB2CMarketplaceConvergence

§ Businesses/tradingpartnersexpectthesame

§ Extraordinarypressureonsupplychaintodeliver

Result: SupplyChainManagementisatacrossroadsandinneedofanswersOpportunity: Tecsys iswellpositionedtosolvethesechallenges

§ Seismicshifthappeninginretail

§ Consumersdemandproductsfaster

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Page 10: Investor Presentation Q3 2020...Leading market position in Scandinavia within hardware and software for warehouse management and logistics Est. 1990; organic and acquisition growth

EvolutionofAnnualRecurringRevenue(ARR*)

16%Q3 YTD 2020 ARR growth, annualized

2017 2018 Q3 YTD 2020

$26.3$26.7

$42.5

*RefertoJanuary31,2020ManagementDiscussionandAnalysis“KeyPerformanceIndicators”

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2019

$37.9Amounts in January 31, 2020 constant CAD millions

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AnnualRecurringRevenueNetRetentionRate

107%LTM Q3 2020 Recurring Revenue Net Retention Rate

2017 2018 LTM Q3 2020

98% 98%

107%

NetRetention= (Existingcustomerexpansionlesschurn)dividedbyBeginningperiodARR

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2019

106%

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ShareholderValueGrowthThroughSaaSMigration

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WhySaaS?

Agility ofDeployment

Accelerated Upgrades

Managed Security and

Certifications

Mature Cloud Data Security

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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

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SaaSBookingsGrowingRapidly,andincreasingasaProportionofTotal(License Equivalency Basis)

Amounts in CAD millions

2017 2019 Q3 YTD 2020

$5.9

$6.7

$12.7

SaaS

License

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$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

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SaaSBookingsFuelRecurringRevenueGrowth

20%Average Organic SaaS Quarterly Revenue Growth*

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* 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

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RecentAcquisitions

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§ Strengthenportfoliowithastrongretailcapabilitytoexpandaddressablemarket

§ ExpandfootprintinEurope

§ Acquisitionsthatarecompatiblewithourcultureandvalueproposition

KeyAcquisitionsStrategy

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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

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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

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CorporateInformation

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FinancialHighlights,inCAD000exceptEPS

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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”

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24¢DividendperYear

CorporateOverview

$200MMarketCap13.1MS/O

Symbol

TCS29%

InsiderOwnership

BrokerageCoverage

BeaconSecurities

CormarkSecurities

EchelonPartners

StifelNicolaus

HaywoodSecurities

LBSecurities

NationalBank

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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.

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Questions&AnswersThankyou