JMP Securities Technology Conference ICG Investor Presentation March 3, 2014

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Hilary Henry
5 years ago
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2 Forward-Looking Statements The statements contained in this presentation that are not historical facts are forward-looking statements that involve certain risks and uncertainties, including, but not limited to, risks associated with the effect of economic conditions generally, capital spending by our customers, our ability to retain existing customer relationships and secure new ones, our ability to compete successfully against alternative solutions, our ability to timely and effectively respond to technological developments, our ability to retain key personnel, our ability to have continued access to capital and to deploy capital effectively and on acceptable terms, our ability to maximize value in connection with divestitures, and other risks and uncertainties detailed in ICG s filings with the Securities and Exchange Commission. These and other factors may cause actual results to differ materially from those projected ICG Group, Inc. All Rights Reserved. / 2

3 Non-GAAP Financial Measures Non-GAAP net income (loss) and non-gaap net income (loss) per diluted share are non-gaap financial measures and have no standardized measurement prescribed by GAAP. When referring to non-gaap financial measures, the term adjusted is used interchangeably with the term non-gaap by ICG s management and the two have identical definitions. Non-GAAP net income (loss) is GAAP net income (loss) attributable to ICG, including acquired businesses deferred revenue and excluding share-based compensation, amortization of intangibles, impairment-related and other, other (income) loss, net, equity loss and income tax expense (benefit)-deferred amounts and impact of discontinued operations. Non-GAAP net income (loss) per diluted share is non-gaap net income (loss) divided by (1) GAAP shares, including the any impact of incremental dilutive securities (in the case of income) or (2) GAAP shares, excluding any impact of incremental dilutive securities (in the case of loss). ICG's core consolidated companies are Bolt, GovDelivery and MSDSonline. Please note the following: - Bolt became a consolidated company on December 27, ICG has deemed Bolt s operating results for the final four days of 2012 insignificant for consolidation purposes. Therefore, Bolt is included in equity loss for all 2012 periods presented, and Bolt s results are presented in ICG s consolidated results beginning on January 1, MSDSonline's results are not included in ICG's results for periods prior to Q as ICG did not acquire an ownership stake in MSDSonline until March 30, CIML s (primarily mylist s) continuing operating results are included in ICG s consolidated results from July 11, 2012 to February 20, 2013 as ICG owned 51.6% and controlled CIML during this period. CIML was an equity method company for periods prior to July 11, 2012 and, accordingly, was included in the equity loss line item. ICG s ownership in CIML was diluted as part of the Channel Intelligence sale described below, and CIML became an equity method company on February 20, 2013 for periods going forward. - Channel Intelligence, Investor Force and Procurian were sold in Q1, Q1 and Q4 2013, respectively, and are presented as discontinued operations under GAAP. Their results are presented within our non-gaap measures as Impact from discontinued operations. ICG's management believes these non-gaap financial measures provide useful information to investors and potential investors that enables them to view ICG s business in a similar manner as ICG's management and provides meaningful supplemental information regarding ICG s operating results as they exclude amounts that ICG excludes as part of its monitoring of operating results and assessment of the performance of its business ICG Group, Inc. All Rights Reserved. / 3

5 ICG: The Multi-Vertical Cloud Company Markets Re-imagined Cloud-smart Vertically Specialized Leadership A pioneer of cloud computing, we know how to grow platforms in change-ready markets. We bring the power of the cloud to industry-specific vertical markets We aim to be #1 in the markets we serve and choose to enter 2014 ICG Group, Inc. All Rights Reserved. / 5

6 Cloud Computing Business Model Cloud ICG 2013 Actual ICG 2014 Goal Computing Index Median * Recurring Revenue % Retention Rates % 87% ** N/A. 95% ** N/A Y-o-Y Revenue Growth - Organic 38% 31-35% 27% Gross Margins 70% 70%+ 72% S&M Spend % of Revenue 47% ~50% 43% G&A Spend % of Revenue (Exc SBC) 42% ~25% N/A R&D Spend % of Revenue 15% ~15% 17% * BVP Cloud Computing Index 9/20/13 & CAPIQ Analysis. ** Goal is to at least maintain these rates ICG Group, Inc. All Rights Reserved. / 6

Non-GAAP Net Income/Share Q1 Q2 Q3 Q4 Q1 Q2

9 Q4 Highlights Emerged as a high-growth, high-margin, vertical pure-play cloud company following Procurian sale Increased ownership in insurance platform, Bolt, from 53% to 70% Continued to achieve strong organic growth, exceeding our guidance for Q4 and posting 38% organic revenue growth for the year, compared to 2012 Successfully closed the Procurian sale in mid-december, realizing $328 million of cash, $16.5 million of which is being held in escrow Made measurable investments to accelerate growth and broaden overall addressable market, spending $28.1 million on sales and marketing, as compared to $12.4 million in ICG Group, Inc. All Rights Reserved. / 9

Non-GAAP Net Income/Share Improvement $(0.

12 ICG Market Characteristics Attractive Market Size & Growth Opportunities > $ Billion + market, growing >20% Pursuing markets we can transform Big Data, Network Effect Early Cloud Adoption Proven customers, yet < 10% total market penetration Attractive Competitive Dynamics Clear market leadership 2014 ICG Group, Inc. All Rights Reserved. / 12

ICG s Platforms DRAFT Audience Building. Efficiency. Actionable Insight. $ 1B+ Public Sector Communications Market Safety. Compliance. Regulatory Reporting.

13 ICG s Platforms DRAFT Audience Building. Efficiency. Actionable Insight. $ 1B+ Public Sector Communications Market Safety. Compliance. Regulatory Reporting. $ 1B+ EHS Compliance Market Access. Retention. Distribution. $ 30B Insurance Market $ 30+ BILLION Total Addressable Market 2014 ICG Group, Inc. All Rights Reserved. / 9 13

14 ICG s Platforms DRAFT Enabling public sector organizations to connect with more people and get those people to take action Today serving 1000 public sector organizations and reaching close to 60 million subscribers Technology enables them to reach the right people, which yields powerful communication, action, and impact Example: FEMA increased traffic to FEMA.gov from <100,000 to > 1 million and significantly increased participants in its National Preparedness program 2013 ICG Group, Inc. All Rights Reserved. / 14

15 Q4 Highlights GovDelivery Achieved revenue growth of approximately 30% compared to 2012 Added 94 new customers in 2013 Investing in sales and product development to maintain pace of strong growth Serving well over 1,000 government agencies; more than 60 million subscribers now receive government communications via our platform, up from 39 million in Q ICG Group, Inc. All Rights Reserved. / 15

16 ICG s Platforms DRAFT Transforming Environmental Health and Safety compliance for mid-sized companies, universities and health systems Our software platform electronically manages the chemical compliance process for our customers Serving 8,000 customers today out of a market of 500, ,000 companies 5 million Material Safety Data Sheet forms OSHA requirements for 30 years for chemicals used and stored on-site Global Harmonization Standards passed in 2012 require implementation of stricter guidelines around safety data by ICG Group, Inc. All Rights Reserved. / 16

17 Q4 Highlights MSDSonline Exceptional year, increased revenues 33% from 2012 Added 1,900 new customers to platform in 2013, a 43% increase over the prior year, bringing total customer count to 8,620 Expect continued growth given very large addressable market of approximately 600,000 targets Continue to aggressively build out sales and marketing resources to capitalize on that opportunity 2014 ICG Group, Inc. All Rights Reserved. / 17

ICG s Platforms DRAFT Serves the Personal and Commercial P&C Small Business Sector Provide a multi-channel, multi-carrier software platform that enables customers to retain and grow revenue through a

18 ICG s Platforms DRAFT Serves the Personal and Commercial P&C Small Business Sector Provide a multi-channel, multi-carrier software platform that enables customers to retain and grow revenue through a comprehensive insurance solution Automates a highly fragmented, inefficient process with a low-cost technology platform An integrated insurance offering through multiple carriers the Holy Grail Example: Direct insurers spend billions of dollars going after their customer base for one line of insurance; imagine if they had access to a platform that allowed them to fulfill the other insurance needs of those customers? 2013 ICG Group, Inc. All Rights Reserved. / 18

19 Q4 Highlights Bolt Continued to experience growth in excess of 50%, compared to 2012 Added two large platform customers in 2013, Citizens Property Insurance and a top ten carrier Successfully launched the Citizens clearinghouse, a very complex initiative, in late January, only five months after signing contracts Continued to invest aggressively in R&D and expanded sales organization from one full team (sales lead, support, etc.) at the beginning of the year to four full teams as of Q Hired new CFO and Head of Services to broaden management team as company grows 2014 ICG Group, Inc. All Rights Reserved. / 19

21 Go-To-Market Expansion Market-Leading Brands B2B Demand Generation Sales & Marketing Team Marketing Automation CRM Processes & Best Practices people $28.1 m people $40 m ICG Group, Inc. All Rights Reserved. /

22 Innovate & Scale Deep Domain Knowledge Cloud Computing Architectures Product / R&D Team Agile Development Public Sector Multi-Tenant Architecture 119 people 143 people Compliance Massive Scale $9.0 m $12.0 m Insurance Cloud Security & Redundancy 2014 ICG Group, Inc. All Rights Reserved. / 12

23 Corporate Development Strategy New Market Entry Criteria: Market that has seen little, if any, automation Cloud computing business model Ability to be clear market leader $10+ million recurring revenue business growing 20+ percent Strong renewal rates and compelling value proposition Unique solution with big data or network effect moats World-class management team with deep domain knowledge 2014 ICG Group, Inc. All Rights Reserved. / 23

24 Investment Highlights Large market opportunity aligned Clear market leader in each vertical market Strong recurring revenue base Demonstrated record of outstanding revenue growth Proven track record of successfully entering and scaling cloud-ready markets 2014 ICG Group, Inc. All Rights Reserved. / 24

26 Consolidated Income Statements (In thousands, except per share data) Three Months Ended Year Ended December 31, December 31, Revenue $ 17,680 $ 9,031 $ 59,201 $ 26,640 Operating Expenses Cost of revenue 4,935 2,942 17,757 9,459 Sales and marketing 8,335 3,835 28,129 12,355 General and administrative 7,085 8,257 30,960 28,408 Research and development 2,306 2,921 9,032 8,807 Amortization of intangibles 2,259 1,519 8,470 4,837 Impairment related and other 3, ,292 1,130 Total operating expenses 28,445 19,808 98,640 64,996 Operating income (loss) (10,765) (10,777) (39,439) (38,356) Other income (expense): Other income (loss), net (4,032) 24,971 (4,210) 57,820 Interest income Interest expense (408) (6) (1,484) 16 Income (loss) before income taxes, equity loss and discontinued operations (15,128) 14,282 (44,906) 19,877 Income tax benefit (expense) 17,833 (39) 17,803 (108) Equity loss (1,044) (1,526) (2,963) (8,672) Income (loss) from continuing operations 1,661 12,717 (30,066) 11,097 Income (loss) from discontinued operations 196,453 2, ,107 12,484 Net income (loss) 198,114 14, ,041 23,581 Less: Net income (loss) attributable to the noncontrolling interest (2,067) 175 (7,018) 592 Net income (loss) attributable to ICG $ 200,181 $ 14,662 $ 209,059 $ 22,989 Amounts attributable to ICG common shareholders: Net income (loss) from continuing operations $ 3,035 $ 13,451 $ (25,437) $ 12,703 Net income (loss) from discontinued operations 197,146 1, ,496 10,286 Net income (loss) attributable to ICG common shareholders $ 200,181 $ 14,662 $ 209,059 $ 22,989 Basic net income (loss) per share: Income (loss) from continuing operations attributable to ICG common shareholders $ 0.08 $ 0.38 $ (0.70) $ 0.35 Income (loss) from discontinued operations attributable to ICG common shareholders Income (loss) attributable to ICG common shareholders $ 5.46 $ 0.41 $ 5.72 $ 0.64 Diluted net income (loss) per share: Income (loss) from continuing operations attributable to ICG common shareholders $ 0.08 $ 0.37 $ (0.70) $ 0.35 Income (loss) from discontinued operations attributable to ICG common shareholders Income (loss) attributable to ICG common shareholders $ 5.18 $ 0.40 $ 5.72 $ 0.63 Shares used in computation of basic net income (loss) per common share attributable to ICG common shareholders Shares used in computation of diluted net income (loss) per common share attributable to ICG common shareholders 36,664 35,840 36,536 35,890 38,680 36,912 36,536 36, ICG Group, Inc. All Rights Reserved. / 26

28 Quarterly Consolidated Income Statements (In thousands, except per share data) Three Months Ended March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, Revenue $ 4,211 $ 5,400 $ 7,998 $ 9,031 $ 11,974 $ 13,476 $ 16,071 $ 17,680 Operating Expenses Cost of revenue 1,232 2,396 2,889 2,942 4,198 4,123 4,501 4,935 Sales and marketing 1,547 3,125 3,848 3,835 5,682 6,541 7,571 8,335 General and administrative 6,350 6,405 7,396 8,257 8,803 7,220 7,852 7,085 Research and development 1,157 1,904 2,825 2,921 2,246 2,331 2,149 2,306 Amortization of intangibles 398 1,409 1,511 1,519 2,491 1,544 2,176 2,259 Impairment related and other ,525 Total operating expenses 10,684 15,380 19,123 19,808 23,590 21,886 24,719 28,445 Operating income (loss) (6,473) (9,980) (11,125) (10,777) (11,616) (8,410) (8,648) (10,765) Other income (expense): Other income (loss), net 157 1,470 31,222 24,971 (64) (46) (68) (4,032) Interest income Interest expense (10) (9) - (6) (321) (385) (370) (408) Income (loss) before income taxes, equity loss and discontinued operations (6,202) (8,437) 20,235 14,282 (11,970) (8,785) (9,023) (15,128) Income tax benefit (expense) (1,150) (39) (73) (56) 99 17,833 Equity loss (2,303) (3,236) (1,608) (1,526) (701) (923) (295) (1,044) Income (loss) from continuing operations (7,899) (11,198) 17,477 12,717 (12,744) (9,764) (9,219) 1,661 Income (loss) from discontinued operations 1,031 5,856 3,477 2,120 28,226 2,448 4, ,453 Net income (loss) (6,868) (5,342) 20,954 14,837 15,482 (7,316) (4,239) 198,114 Less: Net income (loss) attributable to the noncontrolling interest (387) 175 (3,586) (458) (907) (2,067) Net income (loss) attributable to ICG $ (7,020) $ (5,994) $ 21,341 $ 14,662 $ 19,068 $ (6,858) $ (3,332) $ 200,181 Amounts attributable to ICG common shareholders: Net income (loss) from continuing operations $ (7,860) $ (11,132) $ 18,243 $ 13,451 $ (11,426) $ (9,025) $ (8,022) $ 3,035 Net income (loss) from discontinued operations 840 5,138 3,098 1,211 30,494 2,167 4, ,146 Net income (loss) attributable to ICG common shareholders $ (7,020) $ (5,994) $ 21,341 $ 14,662 $ 19,068 $ (6,858) $ (3,332) $ 200,181 Basic net income (loss) per share: Income (loss) from continuing operations attributable to ICG common shareholders $ (0.21) $ (0.31) $ 0.51 $ 0.38 $ (0.31) $ (0.25) $ (0.22) $ 0.08 Income (loss) from discontinued operations attributable to ICG common shareholders Income (loss) attributable to ICG common shareholders $ (0.19) $ (0.17) $ 0.60 $ 0.41 $ 0.52 $ (0.19) $ (0.09) $ 5.46 Diluted net income (loss) per share: Income (loss) from continuing operations attributable to ICG common shareholders $ (0.21) $ (0.31) $ 0.50 $ 0.37 $ (0.31) $ (0.25) $ (0.22) $ 0.08 Income (loss) from discontinued operations attributable to ICG common shareholders Income (loss) attributable to ICG common shareholders $ (0.19) $ (0.17) $ 0.59 $ 0.40 $ 0.52 $ (0.19) $ (0.09) $ 5.18 Shares used in computation of basic net income (loss) per common share attributable to ICG common shareholders Shares used in computation of diluted net income (loss) per common share attributable to ICG common shareholders 36,156 35,917 35,650 35,840 36,713 36,468 36,303 36,664 36,156 35,917 36,273 36,912 36,713 36,468 36,303 38, ICG Group, Inc. All Rights Reserved. / 28