Forward Looking Statements

Transcription

1 Velti 1

2 Forward Looking Statements The information contained herein includes certain estimated and unaudited financial information. Some of the information has been derived by the application of adjustments to our historical financial statements or to give effect to our recently completed acquisitions. This unaudited information is presented for illustrative purposes only and may not be indicative of future results. The information is based upon available information and certain assumptions that we believe are reasonable. This presentation contains forwardlooking information about the Company s business and financial outlook. Forward-looking information addresses matters that are subject to risks and uncertainties. In addition to the risks associated with developing complex technology, the Company s future results will depend on a variety of factors, including global financial conditions and uncertainties; the ability to convert accounts receivable to cash; the ability to develop new customers; the ability to bring new products to market; technological advances and the ability to manage intellectual property and data rights in a rapidly changing environment; potential liability resulting from pending or future litigation; and other competitive factors. For further discussion of risks and uncertainties relating to the Company, please see the Company s filings with the Securities and Exchange Commission. 2

3 Purpose The purpose of the material contained herein is to provide greater details into the composition of certain of our assets, our DSO calculation, and to clarify perceived misunderstandings about the quality of our receivables and our ability to convert revenue to cash. 3

4 Perspective from Q Q Velti had great quarter and increased annual guidance Velti reiterated the cash flow projections for this year and is confident on its execution. Velti is on the cutting edge of an exponentially growing industry with top agencies and brands as our clients. Velti is in a rapid growth phase that requires significant investment and creates execution challenges that we recognize and address. 4

5 DSO in our market Q Velti is selling to CMOs (longer cycles than CIOs), has similar DSOs to other organizations that sell to CMOs, and our comprehensive DSOs are at 272 days CMOs to buy more tech than CIOs within 5 years according to Gartner For instance, according to Jefferies, companies with large international operations have higher DSOs (WPP is at 229 days, IPG at 260 days, and Publicis at 388 days) 5

6 Comprehensive DSO Trend Q Q Q (preliminary target) 6

7 Q4 to Q1 trends Comprehensive ARs consistently rise, even if sequential revenue goes down Comprehensive DSO only increased by 4% QoQ Q Q Q Q Comprehensive AR Revenues 7

8 Customer A Example Monthly Reconciliation, Invoicing and Collection START November December January February March April May June July August September October PROJECT EXECUTION Cash Conversion Cycle Low Range High Range November December Revenue Recognition Monthly Reconciliation $50k $50k $50k Reconciling: $50k First Period Reconciling: $50k Second Period Reconciling: $50k Third Period Monthly Invoicing Collection after invoicing Invoicing : $50k First Period Invoicing: $50k Second Period Invoicing: $50k Third Period Collecting: $50k Collecting: $50k Collecting: $50k First Period Second Period Third Period Low Range Scenario Revenue Accrued Contract Trade A/R Cash

9 Customer B Example Reconciliation at the end of the project Cash Conversion Cycle Low Range High Range START December January February March April May June July August September October November December January PROJECT EXECUTION Revenue Recognition $50k $50k $50k $50k Total Revenue: $200k Final Reconciliation Reconciling: $200k Total Period Invoicing Invoicing: $200k Total Period Collection after invoicing Collect cash $200k Total Period Revenue Accrued Contract Trade A/R Cash

10 Comprehensive Receivables Composition Quarter Ended March 31, 2012 Quarter Ended December 31, 2011 Actuals Adjustments Pro Forma Actuals Adjustments Pro Forma Trade receivables $ 85 $ (17) $ 68 $ 71 $ (20) $ 51 Accrued contract receivables 103 (19) (16) 83 Other receivables and current Assets 56 (18) (11) 39 Comprehensive receivables $ 245 $ (55) $ 190 $ 219 $ (47) $ 172 Trade Receivables: Revenue recognized and invoiced; Accrued Contract Receivables: Revenue recognized, but not yet invoiced; Other receivables and current assets include the following: a) Notes Receivable: Checks that are legally enforceable short term promissory notes under local laws; b) Factored Receivables: Receivables submitted for factoring Please see the following slide for a description of adjustments. 10

11 Description of Adjustments MIG Gross receivables vs. net revenue In accordance with US GAAP, we recognize certain revenues net of 3 rd party costs; additionally, we are required to present the full amount of the related receivables and payables on our balance sheet. Most MIG revenue is booked on a net basis. Accordingly, the adjustments to trade receivables and accrued contract receivables eliminate amounts not recognized as revenue. The adjustments to other receivables and current assets exclude the following: VAT receivables Government grant receivables Income tax receivables Deferred 3 rd party costs Deferred tax assets and other current assets 11

12 Comprehensive DSO Calculation For the Period Ending 3/31/12 12/31/11 Comprehensive Receivables $ 190 $ 172 Trailing Twelve Months Revenue (1) $ 252 $ 237 X Days in Period = Comprehensive Days Sales Outstanding (1) Includes revenue of acquired companies as though they had been consolidated for the entire twelve month period. 12

13 Trade AR Aging breakdown 39% 21% 15% 7% 5% 3% 10% 1-30 days days days days days days 180 days+ As of March 31 st. The age of our trade receivables as presented above is derived from the individual aging of our material subsidiaries. For certain amounts which we have historically tracked based on due date, we have made certain estimates in adjusting to present these items based on the age from the invoice date, to achieve consistent global presentation. 13

14 Cash Conversion Cycle Our Comprehensive DSO is 272 days at March 31, As revenue spikes in the fourth quarter, we expect most collections to occur in third quarter. On average, we are invoicing after 4 months and collecting cash 5 months later for a total of 9 months or 272 days Based on our historic data Q1 Comprehensive DSO is higher than our Q4 Comprehensive DSO due to seasonality. 14

15 Q2/Q3 Expectations Projected Q2/Q3 cash balance range: $20-30 million Cash balance expected to trough by the end of Q3 We are targeting Comprehensive DSO improvement of 50+ days within the next 6 months, to around 220 days. 15

16 Greek Default Scenario Scenario Impact on Velti 2012 Greece Default Revenue will be reduced slightly EBITDA Greece is ejected from the Euro EBITDA will increase by more than revenue decrease Drachma reintroduced with devaluation of 40% relative to the Euro Net positive profitability impact Revenue 16

17 Summary Q Our current cash balance is higher than our Q1 reported cash balance. Re-iterating Free cash flow by Q4 and operating cash flow positive by Q3. We are very confident on our execution. In the last 12 years we had less than $1 million of bad debt write-offs. We have 77% revenue from existing customers and more than 90% customer retention rate. We are selling to the CMO and have DSO levels very similar to other companies that are selling to the same organizations, their DSO s being to the range. Insiders are buying shares after the announcement 17