st Half Results

Transcription

1 st Half Results Melbourne, Australia 24 August 2010 H Overview Six months ended 30 June (A$) H1 10 H1 09 % Revenue $98.1m $104.4m -6% EBIT $10.0m $9.3m 8% NPAT $7.0m $6.3m 11% Basic EPS % Operating Cash $14.1m $8.1m 74% Interim Dividend (Fully franked) Unchanged Deferred Gross Margin $31.8m $30.9m 3% Slide 2 1

2 First Half Overview First half revenue of $98.1m ($109.4m on constant currency basis using 2009 rates) Strong Australian Dollar relative to US and European currencies continues to impact results Revenue actually grew 5% on constant currency basis using 2009 rates EBIT of $10.0m, up 8% on H H1 EBIT excluding transformation costs is $10.6m (up 14% on H1 2009) H1 dividend maintained at 7c, unchanged from H Deferred gross margin up 3% to $31.8m Cashflow returned to a more normal result Y-o-Y as H was adversely affected by timing differences on payments (H1 2008: $13.8m) Net debt remains modest at $28.9m Transformation strategy on track and on budget Challenging market conditions in Europe and US persist Slide 3 First Half Overview IT services revenue remains our growth focus 60.4% of total H1 revenue is IT services H1 international slowdown will impact the FY performance of DBS DBS most affected by strong Australian Dollar relative to US and European currencies DBS customer integration is 98% complete Advantate now absorbed into SMB division, forecast break-even in H2 FTR management change addressing poor start to H1 and building momentum for H2 Effective tax rate of 26% Total NUM down 4.6% to 5.27m due to lower international partner renewals High yielding NUM for SMB and DBS increased 8% year on year from 969k to 1.04 million in H1 Low yielding NUM for GPS down 11% year on year from 4.7 million to 4.2 million in H1 Tight cost controls maintained to counter FX impacts Slide 4 2

3 Financial Performance Revenue ($m) 120 $98.1m H1 08 H2 08 H1 09 H2 09 H1 10 EBIT($m) $10.0m H1 08 H2 08 H1 09 H2 09 H1 10 NPAT($m) $7.0m H1 08 H2 08 H1 09 H2 09 H1 10 Slide 5 Operating Cash ($m) $14.1m H1 08 H2 08 H1 09 H2 09 H1 10 Constant Currency Performance H1 Revenues $40 $35 $30 $34.0m 3% $31.3m +6% H1 09 Revenue H1 10 Revenue (-6%) H1 10 Revenue restated at 2009 FX (+5%) 2009 FX Adjusted Actual $104.4m $98.1m $109.4m Millions $25 $20 $15 $10 $5 $ $21.5m $22.0m +2% $21.7m +1% $35.2m $28.8m 18% $29.3m $26.2m 11% $12.2m $17.3m +42% $5.8m $4.5m 22% H1 09 H1 10 H1 09 H1 10 H1 09 H1 10 H1 09 H1 10 H1 09 H1 10 SMB GPS DBS ES FTR $4.0m 31% Slide 6 3

4 Constant Currency Performance H1 Deferred Revenues $25 $20 $20.2m 3% H1 09 Deferred revenue H1 10 Deferred revenue (-4%) H1 10 Deferred revenue FX (+3%) 2009FX Adjusted $57.7m $55.4m $59.3m Actual Millions $15 $10 $22.9m $23.9m +4.5% $20.8m $17.4m 16% $12.4m +9% $5 $11.4m $11.3m 1% $ SMB GPS DBS $2.5m ES $2.7m +8% H1 09 H1 10 H1 09 H1 10 H1 09 H1 10 H1 09 H1 10 Slide 7 Industry Update Appetite for new domains continues Successful.co launch has attracted 449,138 registrations globally to date Deloitte and Unicef have joined Canon in publicly indicating intentions to secure their.brand top level domain Melbourne IT is in discussions with more than 70 multi-national organisations that are considering applying for a.brand gtld Expect applications for new.brand gtlds to begin 2011 Aust SMBs continue to innovate online Melbourne IT ebiz Review found SMBs using social media tend to make higher revenues online 34% using social media, further 15% plan to SMBs looking for trusted online partners understanding how to do business online effectively cited as 3 rd biggest issue facing SMBs online Slide 8 4

5 Industry Update Companies remain vigilant on defending their brands an average 250 brands per month were victims of phishing attacks globally in H1 2010, a 12% increase on H Global Software as a Service (SaaS) market predicted to grow 14% to be worth $8.5 billion in 2010 Flurry of Australian companies announcing forthcoming cloud computing services Cloud computing is essentially multi-tenant or shared hosting, with a PAYG billing model Multi-tenant hosting is in our DNA: 10+ yrs experience Multi-tenant hosting is difficult for new market entrants to master Billing and support infrastructure is crucial for success not just the technology IDC predicts global public cloud services spending to hit $55.5bn USD by 2014 Slide 9 Sources: Gartner, Forecast Analysis: Software as a Service, Worldwide, RSA, Online Fraud Report July 2010 IDC, Worldwide and Regional Public IT Cloud Services Forecast Transformation Update Investing for Future Growth Key partners HCL and Oracle announced early H1 Tender for preferred vendor to support OSS transformation project on track Global design phase completed on schedule On track to have New Zealand live on new systems in Q with Australia to follow in 2011 Well within budget at end of first half H1 opex $565k Foresee no issue in H2 that will cause budget to be exceeded Slide 10 5

6 Divisional Performance Six months ended 30 June (A$) H1 10 H1 09 % Revenue $98.1m $104.4m -6% Digital Brand Services $26.2m $29.3m -11% SMB ebusiness Solutions $21.7m $21.5m 1% Enterprise Services $17.3m $12.2m 42% Global Partner Solutions $28.8m $35.2m -18% For The Record $4.0m $5.8m -31% Interest and Other Income $0.3m $0.3m Unchanged EBIT $10.0m $9.3m 8% Digital Brand Services $2.6m $1.5m 73% SMB ebusiness Solutions $4.8m $5.0m -4% Enterprise Services $1.6m $0.3m 433% Global Partner Solutions $4.3m $4.0m 8% For The Record - $1.1m -100% Corporate Overhead -$2.8m -$2.1m 33% Transformation Investment -$0.6m - N/A NB Figures may not total exactly due to rounding Slide 11 Digital Brand Services (DBS) Number 1 global digital brand manager H1 10 H1 09 Change Revenues $26.2m $29.3m -11% Contribution Margin $2.6m $1.5m 73% Challenging market conditions in Europe and US Strong AUD is masking underlying revenue growth H1 revenue grew 6% Y-o-Y on constant currency basis using 2009 exchange rate Deferred revenue decreased 1% Y-o-Y to $11.3m; on constant currency basis grew 9% Y-o-Y to $12.4m Advanced product revenue continues to grow as a proportion of DBS revenue now 18% of total revenues, up from 13% in H Brand & Reputation Protection Services H1 revenues grew 25% Y-o-Y to $4.3m Brands under management rose 13.3% to 581k from 513k Y-o-Y New customers added in H include JB Hi-Fi, Lufthansa Systems, Tabcorp Holdings, Linde AG, Detica and Deloitte Slide 12 3,300+ customers 99.9% client retention 6

7 Digital Brand Services H2 Outlook Expect revenues and EBIT to improve with increased marketing and sales campaigns planned around higher margin services in H2 and operational focus on closing fulfilment gap between bookings and revenue realisation Expect market conditions in Europe and North America to remain challenging; expect strong AUD to continue to impact on revenues Digital Brand Services to outperform FY 2009 but down on expectations EBIT likely l to be in $7-8m range for FY 2010 Short term opportunities and longer term growth potential existing at start of 2010 still remains despite market challenges Slide 13 SMB ebusiness Solutions Australia s number 1 SMB hosting company H1 10 H1 09 Change Revenues $21.7m $21.5m 1% Contribution Margin $4.8m $5.0m -4% H1 revenue and EBIT flat Y-o-Y Hosting customers switching to lower priced plans impacting revenues and margins Domain revenue maintained Y-o-Y at $11.1m while IT services revenue up 2% Y-o-Y to $10.6 million H1 ebusiness Centre sales grew 9% to $10.2m Y-o-Y Premium , SEM and SaaS services sales continue to grow H1 up 10% to $3.24m from $2.95m Y-o-Y Slide ,000+ customers 3 market leading brands 7

8 SMB ebusiness Solutions H2 Outlook New products, product upgrades and improvements to customer web interface due in H2 High-margin g product offering will expand in H2 with launch of Managed Exchange 2010 and social media consulting Revamped hosting plans and marketing activity planned for H2 to arrest hosting churn Expect new plans and products to contribute to improved margin in H2 Expect Advantate to break even in H2 Strengthens SEM capabilities and product offerings Stronger focus on new customer acquisition strategies through marketing Release new retail websites for Melbourne IT and WebCentral Slide 15 Enterprise Services H1 10 H1 09 Change Revenues $17.3m $12.2m 42% Contribution Margin $1.6m $0.3m 433% Solid half with revenues and EBIT improving Y-o-Y Signed significant contract for next generation Internet content filtering service with Qld Department Education & Training Other new customers signed in H1 include Thomson Reuters and TransLink Transit Authority Service delivery improvements and investments helped deliver hosting platform stability of % in H1 3 enterprise-class data centres Slide enterprise technology partners 8

9 Enterprise Services H2 Outlook Pipeline and momentum remains strong forecast to outperform on FY 2009 revenue and EBIT Expect trend of larger deal sizes with fewer customers to continue Expect platform stability and service delivery improvements to maintain low churn rate New products including Hosted Desktop and Managed Exchange 2010 will launch in H2 Slide 17 Global Partner Solutions Number 1 global domain reseller provider H1 10 H1 09 Change Revenues $28.8m $35.2m -18% Contribution Margin $4.3m $4.0m 8% Strong AUD still impacting revenues adjusted H1 10 revenue was $34.0m (-3%) on a 2009 like-for-like exchange rate basis Further risk minimised through USD hedging International partner revenues down on slower renewal rates and lower pricing Strong EBIT performance due to focus on higher margin products and lower cost of sales Volume rebates received from suppliers in H1 but not expected in H2 6,900+ resellers Slide countries 9

10 Global Partner Solutions H2 Outlook Continue focus on expanding availability and sales of higher margin products both in Australia and internationally ti New partner recruitment with focus on India to continue in H2 Slide 19 ForTheRecord (FTR) Number 1 courtroom digital recording company H1 10 H1 09 Change Revenues $4.0m $5.8m -31% Contribution Margin - $1.1m -100% Difficult H1 due to major US public sector budget cuts At least seven US states have closed court houses to lower costs Significant customer wins outside US including a country-wide deal in Europe and a large contract with Australian Federal Parliament Introduced FTR Touch and updated flagship FTR Reporter product in H1 positive customer reception Strategy and operational changes made in early H1 having positive effect Slide 20 New EVP, Daniel Bennett, appointed late January Re-engagement with Partner network, including new training certification and incentive programs 22,500+ installed solutions 200+ global resellers 10

11 ForTheRecord H2 Outlook Second half will still be impacted by US public sector budget pressures New sales plans being rolled out to capture new business in H2 Expect partner re-engagement to begin boosting revenue in H2 New reseller plan, incentives and training being rolled out to partner network Attracting new major partners FTR Touch generating widespread interest H2 will see first major sales Overall sales pipeline built for H2 is much stronger than H1 and up Y-o-Y Expect revenue and EBIT improvement in H2 Slide 21 Investments Update Continued upgrade of systems and processes to cater for new domain launches -.co, new IDNs Data centre consolidation and upgrade program continues Exited ageing East Brisbane facility successfully H1 Investing in dedicated space at new facility to cater for growth New high density storage technology now fully provisioned across global data centres New global employee learning management portal built in H1 to go live H2 Slide 22 11

12 Full Year Outlook As the difficult economic environment in the northern hemisphere has extended longer than anticipated and combined with a very strong Australian Dollar (against the US Dollar and European currencies), Melbourne IT is now forecasting the reported EBIT result for FY 2010 (after transformation costs) will be similar to FY 2009 We expect that underlying EBIT growth (before transformation costs are expensed) to be around 10% higher than for FY 2009 Expect dividend to be maintained Confident of return to stronger net growth (after expensing of transformation costs) in Robust growth DBS and ES Continued growth SMB, GPS and FTR Slide 23 Appendix: Company Overview SMB ebusiness Solutions Enterprise Services Domains, website hosting & IT services for SMBs in Australia & NZ Managed hosting & advanced online services for enterprises and government organisations in Australia Digital Brand Services Optimises, protects and manages brands online globally Global Partner Solutions Resells domains and SMB IT services through global partners ForTheRecord Digital recording provider to judicial and civic venues globally 12

13 Appendix: Glossary Industry Terminology ARPU Average Revenue Per User CRM Customer Relationship Management DDOS Distributed Denial of Service (an attack method used by criminals online) DNS Domain Name System FX Foreign Exchange NUM Names Under Management SaaS Software as a Service SEM Search Engine Marketing TLD Top Level Domain Melbourne IT Divisions & Initiatives DBS Digital Brand Services DBMS VeriSign Digital Brand Management Services (acquired by Melbourne IT) ES Enterprise Services (previously named Corporate & Government) FTR - ForTheRecord GPS Global Partner Solutions SMB SMB ebusiness Solutions (previously named Business & Consumer) Slide 25 Disclaimer This document has been prepared based on management s current expectations and beliefs and is relevant only up to the date of this presentation. The presentation may contain unaudited information, forward looking statements or comments which are subject to a number of factors and uncertainties. All statements and comments are made in good faith and every effort has been made to ensure the accuracy of statements and comments. However, future operations and performance inherently involves certain risks, uncertainties and assumptions. No statement or comment provided as part of this presentation should be construed as a guarantee or predictor of the operations, performance or position of Melbourne IT Limited. Similarly, no warranty is provided by Melbourne IT Limited or by any employee or Director of Melbourne IT Limited as to the contents of this presentation. This presentation is not an offer for the sale of securities. Slide 26 13

14 st Half Results Melbourne, Australia 24 August