Descartes Uniting Business in Commerce

Transcription

1 Helping customers deliver Descartes Uniting Business in Commerce May 2013 : DSGX : DSG

2 Safe Harbor Certain statements made today and in this presentation including, but not limited to, statements addressing economic uncertainty; investment in areas of Descartes business with high strategic value and growth potential; our future operating performance; software-as-a-service business model; strategy, market opportunity and vision; Descartes position and opportunity to lead its industry with its business model; solution functionality and benefits derived therefrom; network penetration; ability to complete acquisitions and contribution of completed acquisitions to Descartes operations; anticipated churn in revenues; and competition constitute forward-looking information for the purposes of applicable securities laws ( forward-looking statements ). These forward-looking statements are subject to risks, uncertainties and assumptions that may cause future results to differ materially from those expected. Factors that may cause such differences include, but are not limited to, departures of key customers; the ability to attract and retain key personnel and transition when key personnel depart; variances in our revenues from quarter to quarter; Descartes ability to integrate acquired companies and personnel; fluctuations in fuel prices or shipment volumes; fluctuations in international currency exchange rates; exposure to greater than anticipated tax liabilities; changes in electronic customs filing regulations; the factors discussed under the headings Risk Factors or Certain Factors That May Affect Future Results in documents filed with applicable securities commissions and the documents incorporated by reference into such documents. If any of such risks actually occur, they could materially adversely affect our business, financial condition or results of operations. In that case, the trading price of our common shares could decline, perhaps materially. We provide forward-looking statements solely for the purpose of providing information about management's current expectations and plans relating to the future. You are cautioned that such information may not be appropriate for other purposes. Except as required by law, we do not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based. 2

3 Agenda Uniting Business in Commerce Proven Record of Execution Defined Mission Relevant Vision Ingrained Culture A Defined Plan Defined Strategic Plan Defined Go-to-Market Strategy Key Metrics 3

4 Adjusted EBITDA per Share Adjusted EBITDA per Share Reset Plan Proven Record of Execution Defined Adjusted EBITDA per Share metrics used for planning: Target: 10-15% annual growth Actual: 20% CAGR over 7-year period 0.40 First 5-Year Plan 0.70 Second 5-Year Plan >66% Actual Plan Actual Reset Plan FY06 FY07 FY08 FY09 FY FY11 FY12 FY13 FY14 FY15 First 5-Year plan generated an incremental 66% of Adjusted EBITDA/Share Second 5-Year plan reset baseline for growth planning. We re more than one year ahead of plan at the end of FY13 - with an incremental 17% of Adjusted EBITDA/Share generated. 4

5 Proven Record of Execution Thousands Adjusted EBITDA is a non-gaap financial measure provided as a complement to GAAP financial measures to help investors understand operational trends in our business. However, Adjusted EBITDA should not be used in preference to or instead of any GAAP financial measure. For a definition of Adjusted EBITDA and a reconciliation to Net Income as determined in accordance with GAAP, please see our May 30, 2013 press release. 5

6 Defined Mission Unite Business in Commerce Making the world a better place through logistics by improving the productivity, efficiency and security of commerce 6

7 Relevant Vision A State of Things United A global community united in commerce via a multi-party platform >10,000 Customers >146,000 Connected Parties Thousands of logistics service providers (air, ocean, ground, rail, intermediaries) Millions of potential users and mobile assets in customer base, with about half a million users and mobile assets currently live Over 4.5 billion messages processed each year 7

8 Ingrained Cultural Framework One Networked Enterprise Listen Educate Articulate Research Network Transparency Entrepreneurial Spirit Accountability Metrics-focused on results ONE LEARNing TEAM Shareholders Customers Employees Partners 8

9 A Defined Plan Defined Strategic Plan Exploit Convergence Creating a new category - RiMMS Leverage Moore s and Metcalfe s Laws Buy & Build Defined Go-to-Market Strategy Customers Innovation Solution Delivery Partners 9

10 Defined Strategic Plan Exploit Convergence; Focus on Congruent Intersection Market Convergence Business Process Convergence GTC SCE My Processes Your Processes Holistic Business Processes MRM Congruent Intersection Third-Party Processes Business Network & Agility RiMMS Hardware Software SaaS 2.0 Web 2.0 Time to Value Networks BPO People, Technology & Process Technology Convergence Delivery Model Convergence 10

11 Defined Strategic Plan Creating a new category: RiMMS Resources in Motion Management Systems RiMMS: the convergence of 3 markets 11

12 Defined Strategic Plan RiMMS State of Things United RiMMS: The Logistics Technology Platform Applications Community Network 12

13 Defined Strategic Plan RiMMS Sub-Communities of Interest RiMMS: Sub-Communities of Interest Logistics Network Retail Network Delivery Network Congruent Network etc. Network 13

14 Defined Strategic Plan: Focus on Congruent Intersections GTC Solutions MRM Solutions - Cargo security filings - Declaration and fiscal compliance - Ocean regulatory services - Government solutions - Route planning - Route execution - Mobile Applications - Telematics - Driver compliance SCE Solutions - Transportation management - Forwarder and broker back office systems - Logistics flow control - B2B integration-as-a-service 14

15 Degree of Multi-Standard Encapsulation Descartes Leveraging Moore s and Metcalfe s Laws Content Management Federated Networking Moore s Law & Federated Networks: The regular doubling of computer capacity allows same services to be delivered at a lower cost over time. Metcalfe s Law & Federated Networks: The value of the network increases exponentially for each node that you add to the network. On Premise ERP & Renting Software SaaS 1.0 Best of Breed Point to Point Exchanges Descartes & Federated Networks: Network designed to leverage both laws, by reducing prices for same services over time while increasing revenues per unit by buying, bundling and building additional customers and services. Dept. Enterprise Extra Enterprise Inter Enterprise 15

16 Defined Strategic Plan: Buy & Build; Create New Category Descartes has a defined plan to create a new industry category and business model focused on the congruence of 3 markets - RiMMS Descartes solutions are delivered through its Logistics Technology Platform Descartes is using a Buy & Build strategy to execute and bring solutions to market faster 3 Converging Markets Descartes Focuses on Congruent Intersections RiMMS Market Dynamics Slow growth High profits Negative/no growth Stable profits High growth Profits elusive 16

17 Defined Go-to-Market Strategy (Customers) 17

18 Defined Go-to-Market Strategy Lead with Innovation Command of Operations Social Federation Community Cloud Logistics Technology Platform Real-time Routing, Mobile + Telematics Logistics + Customs Network Based Multi -Party Apps Multi-modal Network Time

19 Defined Go-to-Market Strategy Solution Delivery The Fusion of: 1. The Global Logistics Network Applications Community 2. The industry s broadest array of modular interoperable web and wireless logistics management solutions Network 3. The world s most extensive global multi-modal logistics community Descartes Logistics Technology Platform 19

20 Defined Go-to-Market Strategy - Partners Academia Hardware Partners Software Partners United by Design Ecosystem Partner with leading hardware providers, software providers and networks C.O.I.N.s Network Providers Descartes opens its federated network via Open SCIs (Standard Collaborative Interfaces) Channel Partners Technology Partners Service Partners * C.O.I.N.S = Community of Interest Networks 20

21 Uniting Business in Commerce How are we Doing? Metrics-Driven, Focused on Results Financial Excellence 34 consecutive quarters of profitability 8 years of record operating results Adjusted EBITDA per Share CAGR - 20% (7-year period) Scale 10,000+ customers 800+ employees globally World s largest logistics messaging network Inherent Infrastructure The Global Logistics Network Trucking Companies Sea Ports Ocean Carriers Air Carriers Airports Customs Authorities Freight Forwarders Retailers Distributors Manufacturers Over 146,000 connected parties 3PLs Over 4.5 billion messages processed each year 21

22 Strong Quarterly Operating Results Summary of Unaudited Results (US$ millions) $ % Q1 Q4 Q Q/Q Q/Q 2013 $ YoY % YoY Revenue $34.0 $33.8 $0.2 1% $29.9 $4.1 14% Service Revenue $30.1 $30.1 $0 0% $27.7 $2.4 9% Service as a % of Rev. 89% 89% 93% Gross Margin 69% 68% 65% Net Income $2.8 $7.8 ($5.0) (64%) $2.6 $0.2 8% Adjusted EBITDA $10.4 $10.3 $0.1 1% $8.7 $1.7 20% Adjusted EBITDA as a % of Rev. 31% 30% 29% Adjusted EBITDA per Share % % Cash Generated from Ops $9.6 $14.1 ($4.5) (32%) $4.4 $ % DSO (3) 58 (6)

23 Strong Annual Operating Results Summary of Audited Results (US$ millions) $ % Revenue $126.9 $114.0 $ % Service Revenue $116.8 $105.7 $ % Service as a % of Rev 92% 93% Gross Margin 67% 66% Net Income $16.0 $12.0 $4.0 33% Adjusted EBITDA $38.2 $33.0 $5.2 16% Adjusted EBITDA as a % of Revs. 30% 29% Adjusted EBITDA per Share % Cash Generated from Ops $30.3 $23.9 $6.4 27% 23

24 Q4FY05 Q1FY06 Q2FY06 Q3FY06 Q4FY06 Q1FY07 Q2FY07 Q3FY07 Q4FY07 Q1FY08 Q2FY08 Q3FY08 Q4FY08 Q1FY09 Q2FY09 Q3FY09 Q4FY09 Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Adjusted EBITDA ($M) Adjusted EBITDA per Share Adjusted EBITDA per Share $12.0 $ Year CAGR Adjusted EBITDA 26% Adjusted EBITDA per Share 20% $0.18 $0.16 $0.14 $8.0 $0.12 $0.10 $6.0 $0.08 $4.0 $0.06 $0.04 $2.0 $0.02 $0.0 $0.00 Adjusted EBITDA Adjusted EBITDA per Share 24

25 Strong Cash Generation Cash generated from operations in FY13 increased 27% over FY12 Generated $9.6 in cash from operations in Q1FY14 up from $4.4 in Q1FY13 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - FY07 FY08 FY09 FY10 FY11 FY12 FY13 Adjusted EBITDA Cash Generated from Ops 25

26 Baseline Calibration as of May 2 (post KSD) Figures per Qtr Beginning of Q4 FY09 Beginning of Q4 FY10 Beginning of Q4 FY11 Beginning of Q4 FY12 Beginning of Q4 FY13 Beginning of Q1 FY14 Beginning of Q2 FY14 Baseline Revenues Baseline Operating Costs Baseline Calibration Baseline Calibration as a % of Baseline Revenues $15.5 $18.0 $25.0 $27.5 $31.6 $31.8 $35.5 $12.2 $13.9 $19.2 $21.0 $24.0 $24.1 $27.7 $3.3 $4.1 $5.8 $6.5 $7.6 $7.7 $7.8 21% 23% 23% 24% 24% 24% 22% Baseline revenues = visible, contracted and recurring revenues. Baseline revenues is not a revenues projection as it excludes sales concluded in the period Baseline operating costs = operating costs, less stock-based compensation, restructuring and acquisitionrelated costs, depreciation and amortization. Baseline operating costs are not a cost projection as they exclude expenses associated with new sales in the period.