Safe Harbor Statement

Transcription

1 BroadSoft, Inc. 1

2 Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of These forward-looking statements may be identified by their use of terms and phrases such as believe, will, estimate, continue, anticipate, intend, should, plan, expect, predict, could, potentially or the negative of these terms or other similar expressions and include statements concerning future financial and operating performance. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company s dependence on the success of BroadWorks and on its service provider customers to sell services using its applications; claims that the Company infringes the intellectual property rights of others; the Company s dependence in large part on service providers continued deployment of, and investment in, their IP-based networks; and the Company s ability to expand its product offerings, as well as those factors contained in the Risk Factors section of the Company s Form 10-K for the year ended December 31, 2011 filed with the SEC on February 29, 2012 and in the Company s other filings with the SEC. All information in this presentation is as of June 7, Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statement made herein to conform the statement to actual results or changes in the Company s expectations. 2

3 BroadSoft, Inc. Providing innovative business and consumer communications applications that enable telecommunications service providers to monetize their fixed and mobile broadband networks Service providers are transforming their business models through the delivery of IP-based applications 3 BroadSoft, Inc. 2012

4 Seasoned Team with Telecommunications Expertise Michael Tessler President and CEO Scott Hoffpauir Chief Technology Officer James Tholen Chief Financial Officer David Bukovsky VP, Products Sam Hoffpauir VP, Engineering Leslie Ferry VP, Marketing Ken Rokoff VP, BroadCloud Robert Weidenfeller VP, Operations Craig Decker VP, Sales EMEA Jonathan Reid VP, Sales APAC Greg Callanan VP, Sales Americas Greg Pounds VP, Cloud R&D Mary Ellen Seravalli VP, General Counsel 4 BroadSoft, Inc. 2012

5 Market Trends Accelerating Opportunities Evolution of communications networks to IP and broadband rollout Growing awareness, acceptance and adoption of cloud-based services by enterprises Explosion of smart communication devices 5 BroadSoft, Inc

6 Opportunity to Win the End-User Exceed expectations by providing a seamless user experience for all communication services, across all networks 6 BroadSoft, Inc. 2012

7 Service Provider Challenges & Advantages Challenges Declining average revenue per user Growing mobile network build out costs Scale Advantages Customer low cost of sale Support efficient & cost effective Network quality of service for differentiated services 7 BroadSoft, Inc. 2012

8 BroadSoft Value Proposition High-demand consumer and business services Drives higher average revenue per user Unique branding opportunities on desktops, smartphones and tablets Increases customer retention Cost-effective delivery model Strong financial return, which can be reinvested in the business 8 BroadSoft, Inc. 2012

9 Service Provider Market Offers The breadth of our communications applications enable service providers to design offers that meet the needs of each target market Large Ent Mid-market seats Small Business <100 seats Micro Business <10 seats Consumers 9 BroadSoft, Inc. 2012

10 Carrier Case Study #1 BroadSoft Solution Target Market Customer Service Status Value to Service Provider Why we Won SIP Trunking and Hosted Unified Communications Small, Medium & Large Enterprise Large North American Competitive Carrier Deployed Opportunity to extend product portfolio Address a new market segment Trusted partner relationship thanks to longevity Product breadth Fixed/Mobile convergence capability 10 BroadSoft, Inc. 2012

11 Carrier Case Study #2 BroadSoft Solution Target Market Customer Service Status Value to Service Provider Why we Won Hosted Unified Communications Small & Medium Enterprise Multi-country European carrier with fixed & mobile assets In development; Q4 12 market introduction Comprehensive Unified Communications services to meet the wide-range of enterprise user needs Comprehensive Unified Communications services User-interface integration Platform extensibility with 3 rd -party products 11 BroadSoft, Inc. 2012

12 Carrier Case Study #3 BroadSoft Solution Target Market Customer Service Status Value to Service Provider Why we Won Full Hosted Unified Communications, including Call Center Small, Medium & Large Enterprise & Call Center Vertical Asia Pacific incumbent carrier Deployed Target market expansion Network cost savings Extensive call routing capabilities Enhanced user interfaces and reporting 12 BroadSoft, Inc. 2012

13 $10B + Total Addressable Market (5 Year Cumulative Outlook) $8B per year PBX business 1 migrating to hosted/cloud solutions Over 600m PBX/key system connected phones Assume 25% penetration for hosted voice Believe majority of remaining PBX trunks move to IP/SIP by M LTE subscribers by LTE drives both consumer and enterprise opportunity Consumer Fixed VoLTE Consumer VoLTE Enterprise Hosted UC SIP Trunking 13 1 Infonetics 2 Strategy Analytics Other figures are BroadSoft estimates BroadSoft, Inc

14 Unified Communications Services 2014 Forecast Reaches $8.6B Contact Center 00 Mobility (FMC/mobile PBX) 00 Enterprise Social Networking Integrated/Team Collaboration 00 Video Conferencing Web Conferencing 00 Messaging ( /im/um) $ IP Telephony Source: IDC 14 BroadSoft, Inc. 2012

15 Large Opportunity for Further Customer Penetration Remains Customers in the Top 30 Customers with >6 service launches BroadSoft, Inc

16 Significant Competitive Advantages Carrier class scale/reliability Alcatel BroadSoft Lucent Ericsson NSN Huawei Metaswitch Genband Cisco Microsoft Full IMS Compliance Interoperability across IMS cores IMS/NGN seamlessness PBX feature set UC feature set Interoperability/Openness complementary client SW Single platform for enterprise/consumer Telecom regulatory compliance Cloud delivery model 16 BroadSoft, Inc. 2012

17 BroadSoft Unique Advantages Large addressable market in early stage Customers that have great scale advantages Outpacing competition through product innovation BroadSoft, Inc. 2012

18 18 BroadSoft, Inc Our Technology

19 Our Vision To provide innovative communications applications that enable global telecommunications service providers to offer differentiated, competitive business and consumer services 19 BroadSoft, Inc. 2012

20 BroadSoft Core Communications Platform Suite of complementary network software, cloud services & user-experience applications Focusing on the telecommunications service provider market Enabling innovative and incremental revenue-generating communications services Supporting an open partner ecosystem 20 BroadSoft, Inc. 2012

21 BroadWorks is Central to the Breadth of our Services Carrier-grade infrastructure software hosted by the service provider Proven scalability Five-nines reliability Broadest feature set Standards Compliant/Future Proof seamless integration with next-generation networks IMS VoLTE SIP Connect 21 BroadSoft, Inc. 2012

22 BroadWorks Solutions Hosted PBX PBX functionality delivered from within the carrier network Includes features expected by businesses Calling, IVR, call centers, conferencing and unified messaging Solutions range from small-to-medium business to enterprise apps SIP Trunking VoIP connection between a service provider and enterprise Next-generation connectivity for IP PBXs using SIP-based call control Extends cloud-based services to existing PBX customers; mobile extensions, disaster recovery, bursting, etc. Consumer Mobile VoLTE Fixed-line, triple-play IP voice call control and applications 22 BroadSoft, Inc. 2012

23 BroadCloud Simplifies Service Delivery Complementary Unified Communications applications hosted by BroadSoft Services branded and taken to market by our service provider customers Extends benefit of cloud/saas to carriers, in addition to end-users Rapid time-to-market Lower initial and operating costs for carriers 23 BroadSoft, Inc. 2012

24 BroadCloud Services Instant Messaging and Presence Web collaboration Video conferencing Text messaging PacketSmart Quality of Service Monitoring 24 BroadSoft, Inc. 2012

25 BroadTouch Focuses on the User Experience User experience for BroadWorks & BroadCloud services Consistent interface across smartphones, tablets, laptops and desktops Empower users to communicate using preferred service anywhere at anytime White-label strategy enables carrier to brand the user experience 25 BroadSoft, Inc. 2012

26 BroadTouch Applications Standalone and integrated services applications Enables fixed/mobile convergence Calling, collaboration and messaging services seamlessly moved between devices Smartphone to PC to tablet Enables business identity on a user s own device (BYOD support) 26 BroadSoft, Inc. 2012

27 Product and Technology Direction Innovate in new growth areas IMS/VoLTE; IMS Express Expand Unified Communication services Leverage cloud delivery model benefits for new, innovative services Extend to include BroadWorks functionality Deliver an intuitive, seamless user experience for all services, across all communication devices 27 BroadSoft, Inc. 2012

28 Delivery Platforms BroadSoft Cloud Web Collaboration IM & Presence Texting Messaging Video Conferencing Carrier Network BroadWorks R 18 Carrier-Branded End-Customer BroadTouch Applications 28 BroadSoft, Inc. 2012

29 Expansion of Cloud Services BroadSoft Cloud BroadWorks Web Collaboration IM & Presence New Apps Texting Messaging Video Conferencing Carrier Network BroadWorks R 19, 20 Carrier-Branded End-Customer BroadTouch Applications 29 BroadSoft, Inc. 2012

30 Key Industry Trends Availability of abundant broadband Acceptance of cloud services Explosion of smart devices Seamless user experience across devices Unified communications is the new dial tone 30

31 Our Strategic Elements Xcelerate Xtended Service Provider BroadWorks BroadSoft BroadCloud BroadTouch Devices 31

32 32 Financial Overview

33 Financial Performance Revenue ($mm) $158- $133 - $ $30 $32 $36 $41 $38 $36- $38 $96 $138 $62 $69 Q1: 11 Q2: 11 Q3: 11 Q4: 11 Q1: 12 Q2: 12E E 1 1 Non-GAAP diluted EPS $0.18 $0.29 $0.38 $0.38 $0.29 $0.17-$ Non-GAAP diluted EPS $(0.43) $(0.18) $0.48 $1.23 $1.22 -$ Guidance as of 5/7/ BroadSoft, Inc

34 BroadSoft Revenue/Billings Dynamics 2011 Geography* APAC 14% EMEA 24% Americas 62% 2011 Customer Diversity Applications Mix* 80% Customer Tiers* 70% Other Customers 60% Top 10 Customers 40% 60% 50% 40% 30% 20% 10% 31% 24% 37% 35% ** Hosted UC SIP Trunking Consumer 0% Tier 1 Tier 2/Cable 34 * Based on Total Billings ** Hosted UC includes applications and other products BroadSoft, Inc

35 Business Model Review Primary Model: SW perpetual license fee + maintenance BroadWorks traditional license model majority of revs today Per-seat perpetual license ASPs vary greatly by end-market application Success-based capital can differ from traditional enterprise SW model Most orders are shipped for revenue within the same quarter as received Maintenance & Services can fluctuate qtr-to-qtr from both revenue recognition and professional services impacts Small but growing SaaS component Monthly recurring revenues 35 BroadSoft, Inc

36 Common Investor Questions Following Q1 Does a decline in deferred revenue signal a lower quality pipeline? What are your expectations for deferred revenue going forward? What is your visibility today and how has it changed from last year? Why is Q2 opex going up and why is that not the correct run-rate to use going forward? Do you expect to see margin leverage in the near-term on a y-y basis? 36 BroadSoft, Inc

37 Vectors of Growth: 2011 View UC add-ons SIP Trunking Hosted PBX Consumer Fixed-Line Time 37 BroadSoft, Inc

38 Vectors of Growth: 2012 and Beyond Mobility/VoLTE BroadCloud PBX UC add-ons SIP Trunking Hosted PBX Consumer Fixed-Line Time 38 BroadSoft, Inc

39 BroadCloud PBX Drives Additional Customer Delivery Option Carriers Choose: Traditional SW Model Well understood implementation model Leverage own capital base at scale High and leverage-able margin model OR BroadCloud PBX Model Limited capex investment Pay-as-you-grow Faster go-to-market Option to transition to traditional model at scale Strong LT margins with limited initial margin impact Benefits to BroadSoft: High margin SW license revs plus recurring maintenance Embedded deeply into customer s backoffice BSS/OSS Increases speed of time-to-market Expands universe of customers and projects Provides revenue balance to traditional BroadWorks model Preferred delivery model for new entrants 39 BroadSoft, Inc

40 Business Model Comparison: Current Model vs Cloud Delivery Current Model Cloud Delivery Prototypical Mid-Size Carrier 3 Year Aggregate Revs $2.5m $3.0m+ Gross Margin Target 84-85% 70-80% Operating Margin Target 28-30% 40 BroadSoft, Inc

41 Long Term Profit Model 2011 GAAP 2011 Q1:12 Q1:12 Long Term Non-GAAP* GAAP Non-GAAP** Model Gross Margin 82% 84% 79% 81% 82-85% Operating Expenses Operating Income 62% 57% 66% 59% ~54-55% 20% 26% 13% 23% 28-30% * 2011 excludes stock compensation of $7.2M and amortization expense of $1.3M. ** Q1:12 excludes stock compensation of $3.2M, amortization expense of $0.6M. Note: Figures may not sum due to rounding 41 BroadSoft, Inc

42 GAAP / Non-GAAP Reconciliation For the three months ended March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011 March 31, 2012 GAAP net income per diluted common share $ 0.13 $ 0.57 $ 0.26 $ 0.19 $ 0.06 Plus: Adjustment for preferred stock conversion Stock-based compensation expense Amortization of acquired intangible assets Non-cash interest expense on convertible notes Tax provision (benefit) related to valuation allowance release/non-cash tax provision 0.01 (0.36) Non-GAAP net income per diluted common share $ 0.19 $ 0.29 $ 0.38 $ 0.38 $ 0.29 For the twelve months ended December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011 GAAP net (loss) income per diluted common share $ (1.81) $ (1.25) $ 0.32 $ 1.15 Plus: Adjustment for preferred stock conversion Stock-based compensation expense Amortization of acquired intangible assets Non-cash interest expense on convertible notes Tax provision (benefit) related to valuation allowance release/non-cash tax provision (0.32) Non-GAAP net (loss) income per diluted common share $ (0.43) $ (0.18) $ 0.48 $ NOTE: With respect to non-gaap diluted EPS for the second quarter and full year 2012 appearing on slide 33, a reconciliation of estimated non-gaap diluted EPS to GAAP diluted is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges that are excluded from these non-gaap measures. In particular, the measures and effects of non-cash income taxes, which are extremely difficult to project as a result of our tax status in a number of foreign jurisdictions and stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results. BroadSoft, Inc