Integrated Research Limited Annual General Meeting 24 November 2021 Peter Lloyd Chairman ONLINE ATTENDEES – TEXT QUESTION PROCESS When the question function is available, the messaging tab will appear at the top of the screen To submit a question, type your question in the “Ask a question” box and press the send arrow Your question will be sent immediately for review Received 334-906-770 ONLINE ATTENDEES – AUDIO QUESTION PROCESS When the audio questions line is available, a link will appear on the home tab titled Asking Audio Questions You will be prompted to enter your name and the topic of your question before being placed in the audio questions queue 334-906-770 If you would like to ask an audio question, pause the meeting broadcast and click on the link 334-906-770 When open, the vote will be accessible by selecting the voting tab at the top of the screen To vote simply select the direction in which you would like to cast your vote. The selected option will change colour For Against Abstain ONLINE ATTENDEES – VOTING There is no submit or send button, your selection is automatically recorded. You can change your mind or cancel your vote any time before the poll is closed Peter Lloyd Chairman Peter Adams CHIEF FINANCIAL OFFICER FY21 Annual results review (A$M) New product launches and sales execution drive 2H recovery following weak 1H 96.4 78.8 Jun-20 Jun-21 REVENUE 29% NPAT 67% NPAT IN CONSTANT CURRENCY CASH RECEIPTS FROM CUSTOMERS OPERATING CASH FLOW NET CASH 51% 18% 16% 4.7 5.5 Jun-20 Jun-21 24.2 21.1 Jun-20 Jun-21 110.9 78.5 Jun-20 Jun-21 24.1 11.9 Jun-20 Jun-21 24.1 7.9 Jun-20 Jun-21 13% 7 2H FY21 Results (A$M) Improved 2H performance - revenue and profit recovery 38.9% 38.5% 13.0% 39.4% 1H FY20 2H FY20 1H FY21 2H FY21 11.8 12.3 2.9 9.0 1H FY20 2H FY20 1H FY21 2H FY21 REVENUE EBITDA MARGIN NPAT IN CONSTANT CURRENCY OPERATING CASH FLOW 13.2 11.0 11.3 9.8 1H FY20 2H FY20 1H FY21 2H FY21 53.2 57.7 34.1 44.4 1H FY20 2H FY20 1H FY21 2H FY21 26.4 PT 14% 210% 30% Note: growth metrics represent FY21 2H vs FY21 1H 8 Business model evolution 9 Charts are based on a hypothetical example assuming Total Contract Value of $360k for a three year period that is renewed for the same value for a further three years. The on-premise licence example assumes cash paid in three equal instalments. The hypothetical example is to illustrate revenue and cashflow differences between the models. It does not represent actual or intended pricing or other commercial realities. It ignores the time value of money. The charts are not forecasts. Summary: – No changes to accounting policies – Compliance with International Financial Reporting Standards (IFRS) – New cloud solutions recently released – Cloud revenues expect to grow faster than on-prem revenue – Introduce new SaaS metrics as business becomes more material Established model (refer bars on charts): – Licence revenue recognised upfront – Maintenance revenue over time Emerging model (refer lines on charts): – SaaS revenue recognised over time – Timing of cashflows expected to be similar to established model Geographic and Product revenue analysis Group proforma subscription revenue was US$52.1 million (down 3% on prior year) Note: Proforma subscription revenue is a non-statutory alternate view of term licence and maintenance revenue (unaudited); refer appendix for calculations Geographic Product 0 10 20 30 40 50 60 2015 2016 2017 2018 2019 2020 2021 Americas - US$M Proforma subscription Statutory 0 2 4 6 8 10 12 14 16 18 20 2015 2016 2017 2018 2019 2020 2021 Asia Pacific - A$M Proforma subscription Statutory 0 2 4 6 8 10 2015 2016 2017 2018 2019 2020 2021 Europe - £M Proforma subscription Statutory 0 10 20 30 40 50 60 70 2015 2016 2017 2018 2019 2020 2021 Collaborate $M Proforma subscription AUD Proforma subscription USD Statutory AUD 0 5 10 15 20 25 30 35 2015 2016 2017 2018 2019 2020 2021 Infrastructure $M Proforma subscription AUD Proforma subscription USD Statutory AUD 0 5 10 15 20 2015 2016 2017 2018 2019 2020 2021 Transact $M Proforma subscription AUD Proforma subscription USD Statutory AUD 10 TCV and Cash Operating Expenses (A$M) Key measures of underlying performance going forward 11 46.7 53.2 99.9 29.2 45.8 75.1 1H FY20 2H FY20 FY20 1H FY21 2H FY21 FY21 TCV 30.0 36.0 66.0 28.3 26.8 55.1 1H FY20 2H FY20 FY20 1H FY21 2H FY21 FY21 CASH OPERATING EXPENSES Total Contract Value (TCV) - a key driver of underlying momentum - is not an accounting measure - represents “in year” contract signings for new and renewal business (excluding residual values) - will be reported semi annually with results release - 2H is strongest half for both FY21 and FY20 Cash operating expenses - a key operating metric - represents total expenditure (excluding D&A) - monitored relative to TCV performance - Ratio of TCV to cash operating expenses for 2H FY21 was 1.7 (FY20 2H ratio was 1.5) 12 Investment in innovation …the key to future growth Cloud Collaborate 25% Cloud Transact 2% Cloud Platform 36% On-prem 37% R&D Investment Innovation 94% Maintenance & Currency 6% Key takeaways: • IR remains firm to innovation agenda • FY21 development spend was $12 million • High investment initiative to cloud (~63%) • Four new products released during the year • Cloud platform supports multiple markets • Cloud platform to facilitate new market segments • Continued investment is key to growth 4.7 21.1 12.0 6.5 1.9 5.5 0 10 20 30 Opening net cash Cash from operations Development spend FY20 Final dividend FX, Interest & other Closing net cash A$M Net cash flow analysis Positive operating cash flow funds growth investments Strong balance sheet – no debt Strong balance sheet – net cash $4.7M Free cashflow 1 (ex growth investments) $18.5 million 100% cash collection conversion rate Development spend includes SaaS platform 13 Note 1: Free cashflow (ex growth investments) means cashflow from operations, less tax, interest and maintenance capex John Ruthven CHIEF EXECUTIVE OFFICER Self-funding a new SaaS product suite to complement established on-prem business What is driving the change in business model; 1. Enhance our leverage to structural market changes – hybrid working and cashless payments 2. Expand our market opportunity 3. Enhance competitive strengths and increase customer relevancy 4. Deliver new products to market faster 5. Build for scale to accelerate growth and profitability 15 Transition underway Executing clear plan to transition to higher quality growing SaaS based subscription revenues Product New SaaS products Extend and Enhance Expand into new segments Revenue Upfront revenue recognition Growing share of subscription revenues Higher level of ARR Key metric Proforma subscription revenue TCV & free cash flow SaaS metrics FY21 innovation new products FY22 execution new business FY23+ scale market share 16 Increasing leverage to structural market changes - hybrid working On-premise monitoring & trouble-shooting Hybrid monitoring & trouble- shooting Cloud monitoring & trouble- shooting Predictive analytics & AI Digital employee experience What we do Trends driving the market change Use cases Monitor & troubleshoot the quality of user experience Proactively identify & resolve experience impacting issues Predict & resolve potential issues before they occur Optimize employee productivity through intelligent insights a) Flexible work is here to stay b) Majority of employers are re-designing workspaces for hybrid work c) Hybrid work has extended the workplace boundary 17 Products >2 years old Products <2 years old Future roadmap Enabling enterprises to deliver hybrid working Order management tools – start with evaluating vendor tools Chaos do whatever it takes – use existing tools, work-arounds Phased take-up Innovation new and emerging use cases, convergence Proof points employees now use collaboration tools from multiple vendors ear-to-ear – there are at least 11 points of failure between receiver & sender increase in office collaboration space devices to accommodate hybrid working 18 ‘Although these [vendor] tools are helpful, they offer less breadth and detail than specialised UC monitoring tools, such as those offered by IR (Prognosis) …’ Source : Guidance for Migrating to UCaaS Solutions – Gartner, 5-JAN-21 Total market 550M UC users Collaborate market and opportunity IR well placed to leverage move to ’hybrid work’ 19 Conference users 185M users Market growth 7% CAGR 1. Long-tail with existing on-premise customers as well as new prospects 2. MS Teams, Zoom and Webex up-sell and cross-sell to existing, as well as new prospects 3. Expand our TAM – collaboration spaces, emerging new and sophisticated use cases opportunity Source: Gartner UC Market Forecast 4Q20 – Jan 2021 Increasing leverage to structural market changes – cashless payments Infrastructure monitoring Payments monitoring & trouble- shooting Card payments analytics Real-Time & High- Value payments Predictive analytics and AI What we do Trends driving the market change Use cases Monitor the availability and throughput of payment channels and partners Provide insights into payment flows to maximise business value Ensure rapid detection of blockages in high value payment processing Actionable dashboards for next generation real-time payment types a) Massive shift in consumer buying behaviour b) Major advances in technology and connected devices c) Government policies and regulations 20 Products >2 years old Products <2 years old Future roadmap global non-cash txn’s 785B Transact market and opportunity IR is well placed to benefit from cards growth and new payment types 21 cards 586B real-time 87B market growth 18.6% CAGR 1. Grow with our customers – payment volumes are increasing 2. Expand our base – new payment types (RTP & High-Value) 3. Increase our value – Insight and Data use cases opportunity Note: Data is for 2020, source “World Payments Report 2021”, Capgemini and “Prime Time for Real-Time Report 2021”, ACI Worldwide Product strategy New product launches expand addressable market and leverage to long term growth trends 22 wide smart deep cloud edge legacy predictive analytics intelligence marketplace open API’s new vendors A$1.2B TAM Quality customer base Long-term, high value relationships based on mission critical solutions Customer Tenure 15+ years Contract Length 3+ years Service Providers New Logos 23 Confidential Internal Only – Do not share externally to partners, vendors or customers FY22 customer wins validate enhanced value proposition Supporting large enterprise on their journey – on-prem, hybrid & cloud new customer through service provider new to existing new customer expansion >$1.0M <$500K >$500K <$500K hybrid hybrid on-premise on-premise Collaborate Collaborate Collaborate Transact & Infrastructure Collaborate Premium + MS Teams added MS Teams Collector to existing contract PCA replacement; mission-critical environment expansion of existing foot-print 145,000 users on-premise Avaya environment 20,000 Cisco endpoints Non-stop & Base24 24 FY22 key performance indicators update Customer growth & retention KPI New customer acquisition KPI Product innovation KPI Business Model Transition KPI TCV from new products & capacity to existing customers 20% New customers 75 Percent of TCV from products released in the last 5 years 15% Growth in cloud deferred revenue backlog 100% A little behind plan Tracking to plan Behind plan A little behind plan Proforma subscription Revenue retention 92% TCV from new customers 30% Extend 3 rd party strategic relationships Systems & process readiness to report SaaS metrics Ahead of plan Ahead of plan Good progress Good progress Customer retention 95% Development spend to TCV 14% Right on plan Ahead of plan 25 Trading update & summary 1. FY22 YTD TCV up on pcp - new products, 'hybrid' traction 2. Reported revenue and NPAT broadly in line with pcp – impact of change in revenue mix as SaaS contracts are recognised over time 3. Positive FCF, solid balance sheet supports on-going product roadmap 4. Strategy to enhance leverage to structural market changes – hybrid working and cashless payments 5. Transition underway: self-funding a new, SaaS offering to complement established on-prem solutions ? increases relevancy ? expands addressable market ? increases speed to market ? accelerates revenue growth and profitability 26 SUMMARY INFORMATION This document and the associated transcript (together “the presentation”) has been prepared by Integrated Research Limited (ABN 76 003 588 449) (IRI). The presentation provides general background Information about IRI's activities current at the date of preparation. IRI is not responsible for updating, and does not undertake to update, the presentation. It contains information in a summary form and does not purport to be complete. It should be read in conjunction with IRI's other announcements released to ASX (available at www.asx.com au). NOT INVESTMENT ADVICE The information contained in the presentation does not constitute investment or financial product advice or a recommendation to acquire shares or other financial products. It does not take into account the investment objectives, financial situation or needs of any particular investor. Investors should consider these factors, with professional advice if appropriate, before making an investment decision. FINANCIAL INFORMATION All dollar values are in Australian Dollars (A$) unless stated otherwise. All financial information is presented in respect of the year ended 30 June 2021 unless stated otherwise. The presentation contains certain non-IFRS financial measures that IRI believes is relevant and appropriate to understanding its business. The presentation uses proforma subscription revenue, which is used consistently without bias year on year for comparability and to present a clear view of underlying results. A number of figures, amounts and percentages in the presentation are subject to the effect of rounding. FORWARD LOOKING STATEMENTS The presentation contains certain "forward-looking statements”. The words “anticipate”, "believe", “expect”, "project", "forecast”, “estimate”, “likely”, "intend”, “should", “could", "may", "target", “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. While due care and attention has been used in the preparation of forward-looking statements, they are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors, some of which are beyond the control of IRI, that may cause actual results, conduct, performance or achievements to differ materially from those expressed or implied in such statements. There can be no assurance that the actual outcomes will not differ materially from these statements. You are cautioned not to place undue reliance on forward-looking statements, particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by the outbreak of COVID-19. Neither IRI nor any other person gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in the presentation will actually occur. All forward looking statements in the presentation reflect views only as at the date of this presentation. Except as required by applicable law or the ASX Listing Rules, IRI disclaims any obligation or undertaking to publicly update any forward-looking statements, whether as a result of new information or future events or otherwise. PAST PERFORMANCE Statements about past performance are not necessarily indicative of and should not be relied upon as an indication of, future performance. NOT AN OFFER The presentation is for information purposes only and is not a prospectus, product disclosure statement or other disclosure or offering document under any law. The presentation does not constitute or contain an offer, invitation, solicitation, recommendation, advice or recommendation with respect to issue, purchase, or sale of any shares or financial products in any jurisdiction. The presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States or to any 'US person’ (as defined in Regulation S under the US Securities Act of 1933, as amended (Securities Act) (US Person)). Securities may not be offered or sold in the United States or to US Persons absent registration or an exemption from registration. IRI shares have not been, and will not be, registered under the Securities Act or the securities laws of any state or jurisdiction of the United States. GENERAL Each of IRI, its related bodies corporate and their respective affiliates, officers, employees, agents and advisers, to the maximum extent permitted by law, expressly disclaim any and all liability in respect of any expenses, losses, damages or costs (including indirect or consequential loss) arising from or in connection with this presentation or the information contained in or omitted from it, including, without limitation, any liability arising from fault, negligence or otherwise. No representation or warranty, express or implied, is made as to the fairness, currency, accuracy, reliability or completeness of information contained in the presentation. The information in the presentation remains subject to change without notice. Disclaimer 27 Integrated Research Limited Annual General Meeting 24 November 2021
More from Integrated Research Limited
Join Listcorp to create a personalised news feed, follow your favourite companies, save useful news, and more.