Investor Presentation

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Transcription:

Investor Presentation September 2016 2016 Actua Corporation / All Rights Reserved / 1

Forward-Looking Statements The statements contained in this presentation that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties, including, but not limited to, risks associated with our ability to compete successfully in highly-competitive rapidly-developing markets, the effect of economic conditions generally, capital spending by our customers, our ability to retain existing customer relationships and secure new ones, developments in the markets in which we operate and our ability to respond to those changes in a timely and effective manner, the availability, performance and security of our cloud-based technology, particularly in light of increased cybersecurity risks and concerns, our ability to retain key personnel, our ability to deploy capital effectively and on acceptable terms, our ability to successfully integrate any acquired business, the impact of any potential acquisitions, dispositions or other strategic transactions, our ability to have continued access to capital and to manage capital resources effectively, and other risks and uncertainties detailed in Actua's filings with the U.S. Securities and Exchange Commission. Those and other factors may cause actual results to differ materially from those projected. 2016 Actua Corporation / All Rights Reserved / 2

Non-GAAP Financial Measures Non-GAAP net income (loss), non-gaap net income (loss) per diluted share, adjusted EBITDA, adjusted cost of revenue, adjusted sales and marketing, adjusted general and administrative and adjusted research and development 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 Actua s management, and the two have identical definitions. Non-GAAP net income (loss) is GAAP net income (loss) attributable to Actua, including acquired businesses deferred revenue and excluding share-based compensation, amortization of intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, and current non-cash income tax benefit on discrete items. 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). Adjusted EBITDA is GAAP net income (loss) attributable to Actua, including acquired businesses deferred revenue and excluding share-based compensation, amortization of intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, current non-cash income tax benefit on discrete items, interest expense (income), net, current, cash income tax expense and depreciation expense. Adjusted cost of revenue is cost of revenue operating expenses, excluding share-based compensation. Adjusted sales and marketing is sales and marketing operating expenses, excluding share-based compensation. Adjusted general and administrative is general and administrative operating expenses, excluding share-based compensation. Adjusted research and development is research and development operating expenses, excluding share-based compensation. Actua's consolidated businesses are BOLT, FolioDynamix, GovDelivery and VelocityEHS (formerly MSDSonline) as of March 31, 2016. Please note that FolioDynamix became a consolidated business on November 3, 2014 and, therefore, is included in Actua s consolidated results beginning on November 1, 2014. The results of FolioDynamix for the first two days of November 2014 are insignificant for consolidation purposes. Actua's management believes these non-gaap financial measures provide useful information to investors and potential investors that enables them to view Actua s business in a similar manner as Actua's management and provide meaningful supplemental information regarding Actua s operating results as they exclude amounts that Actua excludes as part of its monitoring of operating results and assessment of the performance of its business. 2016 Actua Corporation / All Rights Reserved / 3

Overview BRINGING THE POWER OF THE CLOUD TO INDUSTRY-SPECIFIC VERTICAL MARKETS 2016 Actua Corporation / All Rights Reserved / 4

Overview Multi-vertical cloud software platform Operate cloud software solutions in four sectors: Government Communications Environmental Health and Safety Wealth Management Property and Casualty Insurance Total addressable market = multi-billion dollar opportunity Leader in each market, and each market is at early stage of cloud adoption Investing for growth with emphasis on sales and marketing, product development and tuck-in acquisitions Management team has been at the forefront of building technology companies for the last 30 years, with a focus on SaaS since 1996 2016 Actua Corporation / All Rights Reserved / 5

Evolution of Cloud Computing Space 1 ST WAVE 2 ND WAVE Emergence of SaaS Data and functionality moved to the cloud Business comfortable with the model Faster ramp, lower TCO, pay for what you use Rapid product evolution Dozens of examples of horizontal cloud companies: Salesforce, Concur, NetSuite, etc. Vertical SaaS Deep industry solutions with significant leverage More capital efficient Attractive competitive moats Few new market entrants Sticky customer relationships Automating areas outside the enterprise 2016 Actua Corporation / All Rights Reserved / 6

Actua Platform Advantage: the Intersection of Vertical IP and SaaS IP Being part of the Actua Platform provides: Public company advantage strong balance sheet provides solid foundation and stability Accelerated market share and adoption Over 800 experts in industryspecific vertical SaaS Building blocks for a strong foundation to fuel growth and operating leverage by enhancing: Management team Technology platform Go-to-market strategy SaaS IP Vertical IP 2016 Actua Corporation / All Rights Reserved / 7

Actua Market Characteristics Attractive Market Size & Growth Opportunities > $ Billion, market, growing >20% Pursuing markets we can transform Highly fragmented, unautomated, slow to innovate Early Cloud Adoption Proven customers, yet < 10% total market penetration Attractive Competitive Dynamics Clear competitive moat via big data and network effect 2016 Actua Corporation / All Rights Reserved / 8

Figures shown in millions Revenue Growth $170.0 2016 Guidance Range: $155.0M - $160.0M $140.0 $110.0 $80.0 $50.0 $20.0 2013 Actual 2014 Actual 2015 Actual 2016 Guidance 2016 Actua Corporation / All Rights Reserved / 9

Figures shown in millions Cash Flow From Operations $10.0 $5.0 2016 Guidance Range: $3.0M - $8.0M $0.0 ($5.0) ($10.0) ($15.0) ($20.0) 2013 Actual 2014 Actual 2015 Actual 2016 Guidance 2016 Actua Corporation / All Rights Reserved / 10

Financial Profile 2014 2015 Q2 2016 Long-Term Target Gross Margin 72% 71% 70% 75% Sales and Marketing 45% 35% 37% 25% - 30% General and Administrative 32% 27% 26% 10% - 12% Research and Development 17% 21% 20% 12% - 16% Adjusted EBITDA (9%) (5%) (6%) 20% - 30% %s of revenue determined excluding stock-based compensation and deferred revenue adjustments from purchase accounting 2016 Actua Corporation / All Rights Reserved / 11

Long-Term Target Model 5 year model Assumes 15-20% organic revenue growth in the out years Expect to see slow, steady improvement on the gross margin line to 75% (on an annual basis) Expect to see continued leverage in R&D and G&A (R&D uptick in 2015 and 2016 as we invest in platforms) Sales and marketing investment levels will be predicated on the return we can realize (difficult to predict timing; but expect it to decrease over time to 25-30%) Accretive tuck-ins are an important part of the strategy to help drive growth and leverage 2016 Exiting investment mode; entering profitable growth mode 2016 Actua Corporation / All Rights Reserved / 12

Actua s Verticals Government Communications Market Environmental, Health and Safety Market 133 million citizens receive updates through the platform Insurance Market 59,000+ users receiving ~ 3 million quotes $1.5 billion of premium on the platform > $20 BILLION Total Addressable Market Over 8 million users on the platform Wealth Management Market 90,000+ advisors using the platform $5 billion of regulatory assets under mgmt. 2016 Actua Corporation / All Rights Reserved / 13

Bolt Provides a multi-channel, multi-carrier software platform that enables insurance distributors to retain and grow revenue through a comprehensive insurance solution Important metrics:* Revenue Growth: flat in Q2 2016 compared to Q2 2015 Bookings: $3 million of YTD annual recurring revenue booked compared to low 6-figures in the prior-year period Pipeline: 15 deals Users on the platform increased from 56,000 at the beginning of the quarter to 59,700 at quarter end Opportunities of qualified risk going through the platform climbed to 3 million at the end of Q2 Total premiums on the platform are $1.5 billion Competitive Moat: Platform is integrated into 99 of the largest insurance carriers and has 5,340 carrier connections, creating the largest source of insurance flow for direct carriers, agents, agencies and alternative insurance distributors Multi-year/multi-million dollar contracts * As of 6/30/16 unless otherwise noted 2016 Actua Corporation / All Rights Reserved / 14

Key Operating Metrics Customer utilization of the Bolt Platform is significantly increasing: 3 2 1 0 Annualized Opportunities (M) 2012 2013 2014 2015 Opportunities on platform represents each month s total new quoted risk, annualized for a full year run-rate One opportunity could represent more than one transaction (e.g., home and auto) 1.5 1 0.5 0 Platform Premiums ($B) 2012 2013 2014 2015 Insurance premiums on the platform have experienced a significant increase, resulting from recent carrier distributor integrations, increased agents and related opportunity quotes 5 4 3 2 1 0 Platform Integrations (000s) 2012 2013 2014 2015 Number of carrier, state and line of business integrations on the BOLT platform 2016 Actua Corporation / All Rights Reserved / 15

FolioDynamix Enables the delivery of client-centric, innovative, scalable wealth management solutions through secure, cloudbased, fully integrated, advisory products and services Important Metrics:* Revenue Growth: Essentially flat for Q2 2016 compared to Q2 2015 Bookings: Added approximately $2.9 million in annual recurring revenue YTD ($1.5 million in Q2) New Signings: Signed 4 new customers in Q2, one of which represents 7-figures per year Pipeline: The pipeline for new deals and upsells continues to build nicely, with several of these deals in the 7-figure range on an annual basis Competitive Moat: Comprehensive, client-centric technology platform with integrated proprietary advisory products; upcoming release 8.0 will add significant enhancements to the user interface and additional capabilities such as e-signature, customer portals, and a new modular architecture Operating cash flow positive for 2016 Multi-year/multi-million dollar contracts $5.3 billion in regulatory assets under management *As of 6/30/16 unless otherwise noted 2016 Actua Corporation / All Rights Reserved / 16

FolioDynamix Platform Capabilities Information flows across processes and applications to ensure everything works together. Take advantage of a secure, cloud-based technology platform for managing the full advisor lifecycle Benefits: Improved workflow efficiency Stronger compliance oversight Enhanced client service for faster growth Eliminates technology silos Increased transparency across accounts Easy on-boarding and advisor-friendly interface Reporting Trade Order Management Proposal Generation Shared Platform Portfolio Accounting and Rebalancing Advisory and Research Performance Analytics 2016 Actua Corporation / All Rights Reserved / 17

GovDelivery ** Digital communications and marketing platform that enables public sector organizations to effectively reach citizens and drive action Important metrics:* Revenue Growth: 20% in Q2 2016 compared to Q2 2015 Bookings: Increased 25% compared to Q2 2015; closed 30% more recurring revenue year-to-date compared to the same period in 2015 New signings: Closed 34 deals in Q2, 26% of which were with existing customers; already closed 2 important upsells totaling more than $1 million subsequent to Q2 Total Customers: Now serving 1,200 federal, state, local and UK government agencies Competitive Moat: More than 133 million citizen subscribers create network effect, significantly expanding reach and audience for each customer Only digital communications solution that is FedRAMP compliant Operating cash flow positive for 2016 * As of 6/30/16 unless otherwise noted 2016 Actua Corporation / All Rights Reserved / 18

GovDelivery Platform Capabilities FOUNDATIONAL SOLUTIONS GovDelivery Network The GovDelivery Network connects federal, state, and local governments with over 130 million citizens. Drive more traffic to your resources Send more people to your programs Connect with hard to reach audiences GovDelivery Communications Cloud The GovDelivery Communications Cloud enables 1,200+ government organizations to inform and engage their audiences. Reach people on top channels Automate & streamline workflow Track key performance indicators Target and segment audiences ADDITIONAL SOLUTIONS Advanced Package for Communications Cloud Interactive Text Messaging Learning Data Accelerate & streamline usage of your services. Standardize repeatable campaigns Use segmentation to foster one-to-one relationships Refine and inform your messaging strategy with A/B testing Share immediate conversations with your audience. Notify or remind to reduce missed appointments Get actionable feedback Recruit and enroll program participants Change behavior Track outcomes Transform training with interactive learning. Create high impact learning experiences Support learning cycles with a better LMS Deliver modern learning with custom course development Increase access to critical data resources. Publish and manage data Create visualizations of performance and outcomes Build with flexibility Remove barriers to make data more accessible to any audience 2016 Actua Corporation / All Rights Reserved / 19

VelocityEHS Environmental, Health and Safety compliance platform that enables organizations to meet stringent and costly OSHA requirements Important Metrics:* Revenue Growth: 21% in Q2 2016 compared to Q2 2015 Bookings: Grew recurring SaaS bookings 22% in the quarter, compared to Q2 2015, with June 2016 marking record-setting month for new bookings value New Signings: Added over 500 customers, pushing total customer count to over 12,000, representing over half of the Fortune 1000 Pipeline: Growth continues to accelerate quarter after quarter, with strong representation of both mid-market and marquee Global 500 organizations. Additionally there has been positive response to the new Ergonomics offering Competitive Moat: Database of more than 10 million material safety data sheets is a comprehensive web-based library that ensures 100% compliance for companies and continues to expand as new customers come onto the platform Operating cash flow positive for 2016 * As of 6/30/16 unless otherwise noted 2016 Actua Corporation / All Rights Reserved / 20

VelocityEHS Platform Capabilities VelocityEHS Platform Core Applications SDS/ Chemical Mgmt Health & Safety Environment Sustainability Risk Mgmt Performance Mgmt Compliance Mgmt Incidents Audit & Inspections Mgmt Training Mgmt Reporting & Dashboards Content Safety Data Sheets / Chemical Regulatory Lists Workplace Training Courses EHS Regulatory Information Ergonomics Training 2016 Actua Corporation / All Rights Reserved / 21 21

Investment Highlights Large market opportunity 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 2016 Actua Corporation / All Rights Reserved / 22

Appendix 2016 Actua Corporation / All Rights Reserved / 23

Consolidated Income Statements (In thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenue $ 36,709 $ 33,536 $ 71,319 $ 64,128 Operating Expenses Cost of revenue (a) 10,840 9,783 21,032 19,515 Sales and marketing (a) 13,808 12,163 26,967 23,399 General and administrative (a) 13,561 15,966 28,057 31,402 Research and development (a) 7,653 7,373 15,203 14,466 Amortization of intangible assets 4,108 3,706 8,172 7,722 Impairment related and other 117 489 348 835 Total operating expenses 50,087 49,480 99,779 97,339 Operating income (loss) (13,378) (15,944) (28,460) (33,211) Other income (expense): Other income (loss), net (67) (102) (223) 1,435 Interest income 39 35 87 54 Interest expense (71) (31) (117) (68) Income (loss) before income taxes (13,477) (16,042) (28,713) (31,790) Income tax benefit (expense) (81) (1) (228) (178) Net income (loss) (13,558) (16,043) (28,941) (31,968) Less: Net income (loss) attributable to the noncontrolling interest (817) (761) (1,869) (1,921) Net income (loss) attributable to Actua $ (12,741) $ (15,282) $ (27,072) $ (30,047) Basic and diluted net income (loss) per share: Income (loss) attributable to Actua common shareholders $ (0.35) $ (0.41) $ (0.73) $ (0.81) Shares used in computation of diluted income (loss) per share 36,760 37,123 37,027 36,983 (a) Includes equity-based compensation of: Cost of revenue $ 31 $ 29 $ 72 $ 55 Sales and marketing 88 79 192 137 General and administrative 3,851 6,887 8,625 13,980 Research and development 112 126 236 171 $ 4,082 $ 7,121 $ 9,125 $ 14,343 2016 Actua Corporation / All Rights Reserved / 24

Consolidated Balance Sheets (In thousands) June 30, December 31, 2016 2015 ASSETS Cash and cash equivalents $ 43,222 $ 76,313 Restricted cash 1,669 2,206 Accounts receivable, net 21,921 19,902 Prepaid expenses and other current assets 6,484 4,876 Total current assets 73,296 103,297 Fixed assets, net 10,627 8,781 Goodwill 226,189 226,034 Intangibles, net 83,782 89,395 Cost and equity method investments 18,646 18,146 Deferred tax asset 2,848 2,900 Other assets, net 1,618 1,591 Total Assets $ 417,006 $ 450,144 LIABILITIES AND EQUITY Short-term debt $ 1,320 $ 1,320 Accounts payable 9,569 11,301 Accrued expenses 11,076 10,979 Accrued compensation and benefits 8,063 12,251 Deferred revenue 45,861 40,282 Total current liabilities 75,889 76,133 Deferred revenue 1,353 2,038 Deferred tax liability 266 266 Other liabilities 7,282 3,230 Total Liabilities 84,790 81,667 Redeemable noncontrolling interest 6,362 10,506 Total Equity 325,854 357,971 Total Liabilities, Redeemable noncontrolling interest and Equity $ 417,006 $ 450,144 2016 Actua Corporation / All Rights Reserved / 25

Consolidated Statements of Cash Flows Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2016 2015 2016 2015 Operating Activities Net income (loss) $ (13,558) $ (16,043) $ (28,941) $ (31,968) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,117 4,829 10,059 10,069 Equity-based compensation 4,082 7,121 9,125 14,343 Impairment related and other 179 166 394 340 Other (income) loss 67 101 223 (1,436) Deferred tax asset 57 89 52 76 Contingent consideration 16 324 32 496 Changes in assets and liabilities, net of effect of acquisitions: Accounts receivable, net 6,559 1,676 (2,100) 1,014 Prepaid expenses and other assets (1,609) (121) (1,590) (757) Accounts payable (299) (952) (2,751) (1,503) Accrued expenses (1,219) (415) (1,012) 474 Accrued compensation and benefits 1,327 1,634 (4,331) (396) Deferred revenue (1,100) 2,030 5,091 4,785 Other liabilities 1,839 555 4,043 1,051 Cash flows provided by (used in) operating activities 1,458 994 (11,706) (3,412) Investing Activities Capital expenditures, net (770) (1,579) (1,765) (3,919) Change in restricted cash 699 (72) 551 68 Proceeds from sales/distributions of ownership interests - - 46 1,415 Ownership acquisitions, net of cash acquired (303) (700) (2,471) (1,957) Cash flows provided by (used in) investing activities (374) (2,351) (3,639) (4,393) Financing Activities Acquisition of noncontrolling interest in subsidiary equity - - (5,515) (3,952) Contingent consideration payments (1,464) (1,870) (1,464) (1,870) Borrowings of long-term debt 900-5,574 820 Repayments of long-term debt and capital lease obligations (5,096) - (5,241) (24) Purchase of treasury stock (5,485) - (9,533) (1,704) Tax withholdings related to equity-based awards (7) (364) (1,536) (3,858) Cash received for stock options exercised 36 (73) 36 (8) Cash flows provided by (used in) financing activities (11,116) (2,307) (17,679) (10,596) Effect of exchange rate on cash (38) 6 (67) (111) Net increase (decrease) in cash and cash equivalents (10,070) (3,658) (33,091) (18,512) Cash and cash equivalents at beginning of period 53,292 88,280 76,313 103,134 Cash and cash equivalents at end of period $ 43,222 $ 84,622 $ 43,222 $ 84,622 2016 Actua Corporation / All Rights Reserved / 26

Revenue (Millions) Quarterly Revenue $38.0 $36.7 $36.0 $34.0 $33.5 $34.1 $35.2 $34.6 $32.0 $30.0 $30.6 $28.0 $26.0 $26.6 $24.0 $22.0 $20.8 $20.0 $18.0 $18.4 $19.0 $16.0 $14.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2016 Actua Corporation / All Rights Reserved / 27

Quarterly Non-GAAP Net Income (Loss)/Share $0.12 $0.08 $0.04 $0.00 -$0.04 -$0.03 -$0.08 -$0.07 -$0.07 -$0.08 -$0.12 -$0.10 -$0.11 -$0.12 -$0.10 -$0.11 -$0.10 -$0.16 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2016 Actua Corporation / All Rights Reserved / 28

Operating Cash Flow (Millions) Quarterly Non-GAAP Cash Flows From Operations $15.0 $12.0 $9.0 $6.0 $4.7 $3.0 $0.0 $1.2 $2.6 -$3.0 ($1.7) -$6.0 ($4.3) -$9.0 -$12.0 -$15.0 ($12.9) 2015 2016 2015 2016 2015 2016* 2015 2016* Q1 Q2 Q3 Q4 *future period placeholder no data provided 2016 Actua Corporation / All Rights Reserved / 29

Percentage of Revenue 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Gross Margin Sales and Marketing General and Administrative Research and Development Gross Margin remains consistent Sales and Marketing reduces over time General and Administrative reduces over time R&D technology initiatives are reducing as nearing roll-outs 2016 Actua Corporation / All Rights Reserved / 30

Investor Presentation September 2016 2016 Actua Corporation / All Rights Reserved / 31