For personal use only. FY17 H1 Results. John Croll - Chief Executive Officer Nimesh Shah - Chief Financial Officer 22 February 2017

Transcription

1 FY17 H1 Results John Croll - Chief Executive Officer Nimesh Shah - Chief Financial Officer 22 February 2017

2 Agenda Overview of FY17 H1 Results and Business Performance Strategy Update FY17 H1 Financial Performance FY17 Outlook Q&A John Croll John Croll Nimesh Shah John Croll John Croll & Nimesh Shah FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

3 FY17 H1 Results Overview and Business Performance FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

4 FY17 H1 Result Overview Financial Performance versus FY16 H1 Revenues of $79.6m Total revenue growth of 5% SaaS/VAS revenue growth of 7% - ANZ SaaS/VAS +5% - Asia SaaS/VAS +15% +20% on a constant currency basis Content Marketing revenue decline of 11% EBITDA result of $20.5m ANZ SaaS/VAS EBITDA margin decreased from 45% to 43% Asia SaaS/VAS EBITDA margin increased from 22% to 24% Content Marketing EBITDA loss of $2m in line with previous guidance EBITDA to Operating cash flow conversion of 104% Isentia declares interim dividend of 3.1 cents per share 100% franked A$m A$m FY15 H1 FY16 H1 FY17 H1 FY15 H1 FY16 H1 FY17 H1 SaaS/VAS ANZ SaaS/VAS Asia Content Marketing ANZ/Asia SaaS/VAS (including head office) Content Marketing FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

5 FY17 H1 Operational Outcomes ANZ SaaS/VAS Strong VAS growth supported by higher demand for Insights products Marginal decline in EBITDA reflecting higher copyright expenses that were unable to be fully offset by price increases due to: - Increased competitive environment that impacted November and December client contract renewals - Price increase out of alignment with product innovation cycle Operational efficiencies expected to deliver cost benefits in FY17 H2 Asia SaaS/VAS Strong revenue growth despite impact from FX movements Significant contract wins including large increase in key government contract Successful Korean market entry profitable in Q2 Business performing to plan ANZ/Asia Content Marketing Strategic rationale for King Content acquisition remains sound in relation to: Communique and Mediaportal platform integration Insights to strategy fit Execution needs to improve. Matt Stanton has been appointed CEO Sales pipeline for Content Marketing is developing. However lead times to conversion are longer than expected Previous guidance for EBITDA breakeven for FY17 will not be achieved FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

6 Investing for Future Growth Optimise platform for growth Data intelligence platform Phase 2 delivered with integrated social listening Enhanced real-time alerting Search algorithms and technology delivering highly relevant results Cross-selling Increased product penetration to Isentia clients Investment in cross selling resources delivering promising revenue opportunities Appointment of global director of strategic partnerships Operational efficiencies Content Hubs delivering production efficiencies DaaS delivering efficiencies through technology Enhance product offering Media Intelligence mobile app Version 1 delivered to market in November 2016 Downloads have been strong Alignment to reducing client churn Mediaportal Recharge New version of Mediaportal shipped in February Many new and improved features Will deliver revenue growth in FY18 in ANZ and Asia through: - Pricing of client contracts - Reduced churn - Client wins in Asia Mediaportal Storyview On time to be shipped in Q4 Integrated social and mainstream monitoring and alerting Social media listening bundled in for all Mediaportal clients Will deliver revenue growth in FY18 in ANZ and Asia Invest in high growth markets Asia market and client growth Investing in skills with large wins in government and corporate clients in a number of countries Asian acquisitions in FY16 provided market entry into South Korea and market share improvements In FY17 H1, Isentia extended its Asian media database capabilities with the platform and technology acquisition of China Newswire Bolt on acquisitions remain part of the strategy in Asia FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

7 Recently launched SaaS development Key Points The new and improved Mediaportal to launch in Q3 and the native mobile app launched Q2 New interface for Mediaportal to create a more flexible platform for future development Additional new features include: Built on cloud for speed and reliability Greater and more flexible search functionality A fully responsive design to ensure seamless access from all device types Simplified navigation and stronger metadata against media items Love it!!! No more scrolling! Corporate Thanks, love the new look. Corporate Much better and definitely easier to read! Corporate Thanks, great improvement on the UX design, feels very intuitive. Government The team have downloaded your new app and are loving it so far. Finding it really easy to use and beneficial for on their way into work etc. My boss used his train ride this morning to collate a coverage wrap - Government FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

8 Project Storyview Q4 launch Key Points Benefits for the client A world s first view of the connectivity, context and chronology in a story The story, not the media type, becomes the focus of Isentia s media intelligence - Including fully integrated print, broadcast, online and social media items Reduced time and effort to understand the core, depth and velocity of a story Media intelligence feeds directly into strategic decision making Benefits for Isentia Shifting the revenue model for both old and new media types - Any new content sources feed seamlessly into the story to drive SaaS revenue uplift Technological competitive advantage for premium clients - Create a distinct market position and dissonance for the proposed mid-tier product Shift revenue creation to high value intelligence from content volume FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

9 FY17 H1 Financial Performance FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

10 FY17 H1 Results Overview $M FY17 H1 FY16 H1 VARIANCE $M VARIANCE % Revenue % ANZ SaaS - Media Intelligence % VAS % Content Marketing (1.1) (21%) Total ANZ % Asia & Rest of the World SaaS - Media Intelligence % VAS % Content Marketing % Total Asia & Rest of the World % Expenses Copyright expenses (8.9) (6.4) (2.5) 39% Other expenses (50.2) (46.0) (4.2) 9% Total Expenses (59.1) (52.4) (6.7) 13% EBITDA (2.9) (13%) EBITDA Margin 26% 31% NPATA % Underlying NPATA* (2.5) (17%) Earnings per share (cents) (1.2) (17%) * Underlying NPATA excludes the impact of non-recurring items of $10.3m (net) mainly relating to addback of King Content earn out provision FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

11 SaaS/VAS Revenue Growth of 7% Revenue By Product/Service Line $M Key Points % (11%) 17% 4% SAAS/ VAS 7% Content Marketing VAS SaaS Group revenue growth of 5% ANZ and Asia SaaS/VAS revenue growth of 7% SaaS revenue growth of 4% - ANZ SaaS growth of 3% - Asia SaaS growth of 11% VAS revenue growth of 17%. Strong growth in Insights products - ANZ VAS growth of 15% FY16 H1 FY17 H1 - Asia VAS growth of 21% Revenue By Geography $M Content Marketing revenue decline of 11% % (11%) 15% 5% Content Marketing SaaS/VAS Asia SaaS/VAS ANZ FY16 H1 FY17 H1 FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

12 SaaS/VAS - Australia/New Zealand Results $M FY17 H1 FY16 H1 VARIANCE % Revenue SaaS - Media Intelligence % VAS % Total SaaS/VAS % EBITDA (1%) EBITDA margin 43% 45% Key Points VAS growth of 15% underpinned by strong performance of Insights revenue SaaS growth of 3% reflecting FY16 price increase inclusive of copyright passthrough Fixed price contracts make up 83% of total SaaS revenue Continued ARPC growth to $34K, reflects 3 year CAGR of 11% Client churn at 6% of client numbers and 2% of client revenue with impact in November/December Stable SaaS/VAS EBITDA of $23.7m ANZ Annualised Average SaaS/VAS Revenue Per Client ARPC ($) VAS Penetration of ANZ Unique Customers (%) , FY14 H1 34,397 33, , , ,094 27, Data Base Social Insights 16.7% 17.3% 14.9% 14.4% 10.0% 7.0% 13.2% 5.5% 7.1% 8.0% 4.2% 4.9% 21.0% 21.5% 18.2% 13.5% 13.5% 12.1% 9.3% 10.7% 11.6% FY14 H2 FY15 H1 FY15 H2 FY16 H1 FY16 H2 FY17 H1 FY14 H1 FY14 H2 FY15 H1 FY15 H2 FY16 H1 FY16 H2 FY17 H1 FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

13 SaaS/VAS - Asia Results $M FY17 H1 FY16 H1 VARIANCE % Revenue SaaS - Media Intelligence % VAS % Total SaaS/VAS % EBITDA % EBITDA margin 24% 22% Key Points SaaS/VAS revenue growth of 15% (20% on constant currency basis) reflecting: - Churn maintained at 6% of client numbers - VAS clients increase to 419 from Successful market entry into Korea with profitability achieved in Q2 - Large client wins in Singapore late in Q2 Asia Annualised Average SaaS/VAS Revenue Per Client ARPC ($) , , , ,141 ARPC of $17.1K increased 13% YoY, with a 3 year CAGR growth of 14% VAS ARPC increased 8% to $35.5K SaaS/VAS EBITDA growth of 24% (29% on a constant currency basis) EBITDA margin increased to 24% from 22% 7500 FY14 FY15 FY16 CY16 FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

14 Content Marketing Results - ANZ/Asia $M FY17 H1 FY16 H1* VARIANCE % Revenue ANZ (21%) Asia/Rest of World % Total Revenue (11%) EBITDA (2.0) 1.0 NM EBITDA margin % (28%) 12% *King Content was acquired on 20 August 2015 Key Points Revenue decline of 11% reflecting the loss of a number of clients Management initiatives to improve performance include the implementation of a new organisational structure, the integration of the Content Marketing sales team with Isentia and the appointment of Matthew Stanton who commenced as CEO of King Content on 7 February 2017 The sales pipeline is developing in all markets to support improved revenue momentum. However conversion is taking longer than expected Total expected consideration for the King Content acquisition expected to be $34.2m, lower than the original consideration due to the structure of the earn out agreement FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

15 Key Operating Expenses $M FY17 H1 FY16 H1 VARIANCE $M VARIANCE % Cost of sales(incl. copyright) % Employee expenses % Other operating expenses % Total operating expenses % Total operating expenses excluding Content Marketing % Key Points Reported operating expenses increased 13% Operating expenses excluding Content Marketing increased 10% reflecting a $2.5 million step-up in copyright expenses and increased investment in: - Transition to cloud technology - Continued investment in R&D roles to deliver world leading SaaS platforms Total operating expenses excluding Content Marketing and Copyright step-up % FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

16 FY17 H1 Results Overview $M FY17 H1 FY16 H1 VARIANCE $ VARIANCE % Revenue % SaaS % VAS % Content Marketing (0.9) (11%) ANZ (incl. Content Marketing) % Asia (incl. Content Marketing) % Expenses (59.1) (52.4) (6.7) (13%) Cost of sales (19.0) (16.0) (3.1) (19%) Employee costs (34.2) (31.0) (3.2) (10%) Other operating expenses (6.0) (5.4) (0.5) (10%) EBITDA (2.9) (13%) EBITDA margin 26% 31% Depreciation and amortisation (2.5) (2.2) (0.2) 10% EBITA (3.2) (15%) Amortisation of acquired intangibles (5.5) (4.5) (1.0) 22% EBIT (4.2) (25%) Finance costs (1.5) (1.3) (0.2) 12% Profit/(loss) before tax (4.3) (28%) Tax (2.7) (3.9) 1.2 (32%) Effective tax rate 24% 25% Underlying NPAT (3.1) (27%) Amortisation of acquired intangibles (net of tax) % Underlying NPATA (2.5) (17%) Non-recurring items (net of tax) 10.3 (1.7) 12.0 n/a Reported NPATA* % Underlying Earnings per share (cents) (1.2) (17%) Dividend per share (cents) (0.6) (17%) * Underlying NPATA excludes the impact of non-recurring items of $10.3m (net) relating to addback of King Content earn out provision FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

17 Operating Cash Flow $M FY17 H1 FY16 H1 EBITDA Net working capital 0.6 (4.6) Non-cash items Operating cash flow Cash conversion % 104% 80% Capex (both PPE and intangibles) (5.6) (3.3) Acquisitions (8.0) (26.6) Other Key Points Operating cash flow conversion of 104% for FY17 H1, an improvement from 80% in FY16 H1 Improvement in working capital from reduced debtor days and higher prepaid revenues Capital expenditure at 6% of revenue reflecting continued investment in 2020 Strategy and technology platforms Interim dividend is declared of 3.1 cents per share - 50% payout ratio - 100% franking Operating cash flow after capex 7.7 (10.9) Proceed/ (Repayment) of borrowings Dividends paid (8.9) (7.6) Net interest (1.6) (1.3) Tax Paid (4.5) (3.2) Non-recurring items (1.3) (1.7) Net cash flow % 80% 104% FY15 H1 FY16 H1 FY17 H1 0 Operating cash flow Cash conversion FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

18 Balance Sheet and Capital Structure $M DECEMBER 2016 JUNE 2016 Current assets Cash and cash equivalents Trade and other receivables Other Total current assets Non-current assets Property, plant and equipment Intangibles Other Total non-current assets Current Liabilities Borrowings Trade and other payables Contingent consideration Other Total current liabilities Non-current liabilities Borrowings Contingent consideration Other Total non-current liabilities Total equity Key Points Leverage ratio of 1.17x which is comfortably within 3.25x facility covenant providing leverage headroom of 64% and balance sheet flexibility Total facility of $75m $8.6m cash and cash equivalents Reduction in contingent consideration reflects reversal of King Content earnout provision Remaining contingent consideration mainly reflects Asian acquisitions $M FACILITY COMMITMENT DRAWDOWN Facility A Facility B Total debt Cash and cash equivalents and prepayments 8.6 Net debt 56.4 Leverage ratio 1.17x FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

19 FY17 OUTLOOK FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

20 FY17 Outlook ANZ and Asia SaaS/VAS (including head office) - Revenue growth in mid to high single digit range - EBITDA growth low single digit range supported by: Continued strong growth in Asia Operational efficiencies in ANZ in FY17 H2 - FY17 H2 EBITDA to be double digit growth versus FY17 H1 Content marketing - FY17 EBITDA loss of $3 million FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

21 Q&A FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

22 APPENDIX FY17 H1 RESULTS PRESENTATION 22 FEBRUARY 2017

23 Reconciliation of Reported NPATA to Underlying NPATA $M FY17 H1 Total comprehensive income attributable to the owners 16.7 Less: Other comprehensive income Net change in fair value of cash flow hedges taken to equity, net of tax (0.2) Exchange differences on translating foreign operations, net of tax 2.2 Profit after income tax expense 18.7 Add: Amortisation of Customer relationships and contracts 4.3 Amortisation of Acquired software 0.9 Net of tax on Amortisation of customer relationship/contracts and acquired software (1.2) NPATA 22.7 Add: non-recurring items relating to addback of King Content earn out provision (10.3) Underlying NPATA 12.4 FY17 H1 RESULTS PRESENTATION 22 FEBRUARY

24 DISCLAIMER This presentation contains general information about the activities of Isentia s Holdings Pty Limited (ACN ) (Isentia or Company) which is current as at 22 February It is in summary form and does not purport to be complete. It presents financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with the International Financial Reporting Standards (IFRS) as well as information provided on a non-ifrs basis. This presentation is not a recommendation or advice in relation to Isentia or any product or service offered by Isentia s subsidiaries. It is not intended to be relied upon as advice to investors or potential investors, and does not contain all information relevant or necessary for an investment decision. It should be read in conjunction with Isentia s other periodic and continuous disclosure announcements filed with the Australian Securities Exchange, and in particular the Half Year Results for the period to 31 December These are also available at No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted by law, Isentia, its subsidiaries and their respective directors, officers, employees and agents disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted with this presentation. No recommendation is made as to how investors should make an investment decision. Investors must rely on their own examination of Isentia, including the merits and risks involved. Investors should consult with their own professional advisors in connection with any acquisition or securities. The information in this presentation is for general information only. To the extent that certain statements contained in this presentation may constitute forward-looking statements or statements about future matters, the information reflects Isentia s intent, belief, or expectations at the date of this presentation. Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, Isentia disclaims any obligation or undertakings to disseminate any updates or revisions to this information over time. Any forward-looking statements, including projections, guidance on future revenues, earnings and estimates, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Isentia s actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Any forward-looking statements, opinions and estimates in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. For example, the factors that are likely to affect the results of Isentia include, but are not limited to, general economic conditions in Australia and Asia, exchange rates, competition in the markets in which Isentia will operate and the inherent regulatory risks in the business of Isentia. Neither Isentia, nor any other person, gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. In addition, please note that past performance is no guarantee or indication of future performance. This presentation does not constitute an offer to issue or sell, or solicitation of an offer to buy, any securities or other financial products in any jurisdiction. The distribution of this presentation outside Australia may be restricted by law. Any recipient of this presentation outside Australia must seek advice on and observe any such restrictions. This presentation may not be reproduced or published, in whole or in part, for any purpose without the prior written permission of Isentia. All amounts are in Australian dollars. All references starting with FY refer to the financial period ended 30 June. For example, FY17 H1 refers to the period ended 31 December FY17 H1 RESULTS PRESENTATION 22 FEBRUARY