Investor Presentation

Transcription

1 Investor Presentation 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, 2012 filed with the SEC on February 27, All information in this presentation is as of May 6, 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

4 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 4

5 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 5

6 What We Do: Enabling Key Transitions in Communications On-premise PBX for voice communications Legacy TDM-connected PBX BroadSoft Software and Services Service provider-hosted Unified Communications Fixed-mobile convergence Video, IM&P, web collab + voice IP Centrex SIP-connected PBX Reduced trunking costs DR/FMC functionality TDM wireline consumer voice VoLTE and IP-based voice for consumer triple play 6

7 Strategic Areas of Focus Mobile Fixed-Mobile convergence solutions for 2G/3G networks 4G Voice-over-LTE for enterprise and consumer Client Key enabler to deliver Unified Communications to end-users Seamless experience across devices smartphone, tablet, and PC Cloud Rapid time-to-market for service providers Low initial investment and locked-in margin for service providers 7

8 Millions of Lines Significant UC Growth 25.0 Hosted IP Voice/UC Lines E Hosted Voice/UC Lines vs PBX Line Shipments - 1H 12 vs 1H CALA 35% 30% 33% 15.0 APAC EMEA 25% NA 20% % % 5% 2% E 0% Hosted Voice/UC Lines PBX Lines Data source: Infonetics 8

9 $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 9 1 Infonetics 2 Strategy Analytics Other figures are BroadSoft estimates.

10 BroadSoft Market Leadership: 19 of the top 25 Global Carriers and More Over 520 Customers in More Than 69 Countries 10.

11 11. Our Offerings

12 The BroadWorks Solution Core Network: Mobile/FIxed/Cable OSS/BSS 12.

13 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 13

14 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 14

15 BroadWorks Solutions Hosted PBX PBX functionality delivered from within the carrier network Includes features expected by businesses Calling, auto-attendant, 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 15

16 BroadCloud Simplifies Service Delivery Full suite of 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 16

17 BroadCloud Services Business VoIP/IP centrex Instant Messaging and Presence Web collaboration Video conferencing Text messaging PacketSmart Quality of Service Monitoring 17

18 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 18

19 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) 19

20 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 20

21 BroadSoft UC One: A Comprehensive UC Platform Go-to-Market Openness Mobility User-experience 21

22 Verizon UC, SIP Trunking & FiOS Triple Play Target: Consumers Small, mid-size & multinational enterprises SMB BroadSoft Services: 2004: Hosted Unified Communications 2007: IP (SIP) Trunking 2009: FiOS Digital Voice - Consumer Triple Play 2010: FMC rollout in Europe 2012: Virtual Communications Express 22

23 Telstra Hosted UC Offering Target for UC offering: Multi-site enterprises Government Expanding to SMBs BroadSoft Services Hosted UC Telstra IP Telephony (TIPT) and Digital Business Microsoft OCS rollout SIP Trunking Call Center Hosted Video Conferencing 23

24 XO SIP Trunking and Hosted UC Target: Small, mid-size & large enterprises BroadSoft Services: IP Flex - Integrated access for SMBs XO SIP - SIP trunking for SMBs XO Enterprise SIP SIP trunking for large enterprises XO Anywhere Fixed-Mobile Convergence XO Enterprise Cloud Communications Hosted UC 24

25 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 Go-To-Market Support 25

26 BroadSoft Advantages Large addressable market in early stage Customers that have great scale advantages Outpacing competition through product innovation 26

27 Why We Win Pure Application-Layer Focus Independent of core switching platforms Consumer, enterprise, and mobile service offerings Rapid application delivery Carrier Grade Reliability Broadest Unified Communications Stack Continuous Innovation Reference base 19 of top 25 worldwide carriers Five 9 s reliability TL 9000 certification Call Control Collaboration: HD voice & videoconferencing, online content sharing, Instant Messaging, etc. Mobility extension BroadWorks BroadCloud BroadTouch 27

28 BroadSoft Best-in-Class in Operating Margin and R&D investment Operating margin and R&D percentages are based on non-gaap or non-ifrs figures Cisco CY 12 figures are for the four-quarter period ended January 2013 Ericsson operating margin figure is ex-jv contribution 28

29 Seasoned Team with Telecommunications Expertise Michael Tessler President and CEO Scott Hoffpauir Chief Technology Officer James Tholen Chief Financial Officer Patrick Joggerst VP, Global Sales 29

30 30 Financial Overview

31 Financial Performance Revenue ($mm) $181-$189 $165 $ $138 $96 $62 $ E 1 $(0.43) $(0.18) $0.48 Non-GAAP diluted EPS $1.23 $1.44 $ Guidance as of 05/06/

32 Billings and Revenue Growth 32

33 BroadSoft 2012 Billings Dynamics Geography 1 APAC 17% EMEA 22% Americas 61% Customer Diversity 1 Applications Mix 2 Customer Tiers 2 Top 10 Customers, 36% Trunking Residential Other 25% Tier 1 43% Other Customers, 64% Hosted* Tier 2/Cable 31% * Hosted UC includes applications and other products 33 1 Based on total billings 2 Based on software billings

34 Business Model Review Primary Model: SW perpetual license fee + maintenance BroadWorks traditional license model majority of revenue 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 quarter-to-quarter due to both revenue recognition and professional services impacts Small but growing SaaS component Monthly recurring revenues 34

35 Growth Dimensions Additional Applications New Applications Subscriber Growth New Customers 35

36 Vectors of Growth: 2012 and Beyond Mobility/VoLTE BroadCloud PBX UC add-ons SIP Trunking Hosted PBX Consumer Fixed-Line Time 36

37 Long Term Profit Model 2012 GAAP 2012 Long Term Non-GAAP** Model Gross Margin 82% 83% 82-85% Operating Expenses Operating Income 65% 57% ~54-55% 15% 26% 28-30% * 2011 excludes stock compensation of $7.2M and amortization expense of $1.3M. ** Q3 12 excludes stock compensation of $3.3M and amortization expense of $0.7M. Note: Figures may not sum due to rounding 37.

38 GAAP / Non-GAAP Reconciliation March 31, 2012 June 30, 2012 For the three months ended September 30, 2012 December 31, 2012 March 31, 2013 GAAP net income per diluted common share $ 0.06 $ 0.08 $ 0.11 $ 0.17 $ (0.08) Plus: Stock-based compensation expense Amortization of acquired intangible assets Non-cash interest expense on convertible notes Non-cash tax provision (benefit) (0.11) Non-GAAP net (loss) income per diluted common share $ 0.29 $ 0.33 $ 0.35 $ 0.47 $ 0.18 December 31, 2008 December 31, 2009 For the twelve months ended December 31, 2010 December 31, 2011 December 31, 2012 GAAP net (loss) income per diluted common share $ (1.81) $ (1.25) $ 0.32 $ 1.15 $ 0.43 Plus: Adjustment for preferred stock conversion Stock-based compensation expense Amortization of acquired intangible assets Non-cash interest expense on convertible notes Non-cash tax provision (benefit) (0.32) 0.21 Non-GAAP net (loss) income per diluted common share $ (0.43) $ (0.18) $ 0.48 $ 1.23 $

39 GAAP / Non-GAAP Reconciliation (cont d) Billings Calculation NOTE: With respect to non-gaap diluted EPS for the full year 2013 appearing on slide 31, a reconciliation of estimated non-gaap diluted EPS to GAAP diluted EPS 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. 39.