Hosted Unified Communications: A Driver for M&A Activity Moderator: Gerry DeHaven, Partner, Q Advisors LLC Panelists: Ian Blasco, General Partner, Riverside Partners Leslie Ferry, VP Marketing, Broadsoft Dan Weirich, CFO, 8x8 Tuesday, March 12, 2013 9:00 a.m. to 10:00 a.m. M&A COMPTEL PLUS Spring 2013 Las Vegas
Q Advisors Overview Firm Profile Recent Transactions Founded in 2001 as an investment banking boutique focused on the technology, media and communications sectors Significant experience in structuring and negotiating financing and M&A transactions for private and public companies Debt and equity financings Sell-side and buy-side engagements Strategic financial advisory engagements Serve clients globally Closed over 100 transactions since inception Total transaction value approaching $6.0 billion Average transaction size of approximately $56 million Offices in Denver, San Francisco and Princeton Team of 16 professionals 2
Hosted Unified Communications Market Overview
Hosted Unified Communications Market Overview Public Trading Comparables Hosted Communications & Communications Software Trading Multiples as of 3/7/2013; (US$ in Millions) Operating Metrics Margins TEV Multiple Comparable Companies TEV Market Cap. LTM Revenue CY 2012 Revenue LTM EBITDA CY 2012 EBITDA Gross Profit EBITDA LTM Revenue CY 2012 Revenue LTM EBITDA CY 2012 EBITDA Hosted Communications & Communications Software Citrix Systems, Inc. $12,913.7 $13,842.4 $2,586.1 $2,971.7 $609.8 $925.4 87.5% 23.6 % 5.0x 4.3x 21.2x 14.0x Acme Packet, Inc. $1,659.7 $2,018.0 $274.4 $301.8 $9.1 $69.5 80.0% 3.3 % 6.0x 5.5x 183.0x 23.9x j2 Global $1,598.4 $1,677.1 $371.4 $508.7 $184.3 $222.8 82.0% 49.6 % 4.3x 3.1x 8.7x 7.2x BroadSoft, Inc. $610.8 $687.0 $164.8 $184.6 $31.0 $44.8 80.3% 18.8 % 3.7x 3.3x 19.7x 13.6x Interactive Intelligence Group Inc. $789.2 $858.1 $237.4 $286.4 $10.8 $18.5 66.5% 4.6 % 3.3x 2.8x 72.8x 42.6x Premiere Global Services $672.5 $510.5 $505.3 $531.1 $81.4 $96.1 57.4% 16.1 % 1.3x 1.3x 8.3x 7.0x Vonage Holdings Corporation $545.5 $584.5 $849.1 NA $123.2 NA 68.1% 14.5 % 0.6x NA 4.4x NA Sonus Networks, Inc. $433.3 $680.7 $254.1 $268.8 ($20.5) NA 56.1% (8.1)% 1.7x 1.6x NA NA 8x8 $446.3 $492.9 $103.2 $121.2 $13.8 $22.4 67.8% 13.4 % 4.3x 3.7x 32.4x 19.9x Amcom Telecommunications Ltd. $438.1 $429.2 $160.2 $176.5 $36.5 $44.8 31.3% 22.8 % 2.7x 2.5x 12.0x 9.8x Sources: Capital IQ, SEC Filings, Press Releases Mean 67.7 % 15.9 % 3.3x 3.1x 40.3x 17.2x Median 67.9 % 15.3 % 3.5x 3.1x 19.7x 13.8x Hosted communications and communications software companies are trading at significantly higher multiples than they were one year ago 4
Hosted Unified Communications Market Performance Hosted Communications and Communications Software Companies vs. S&P 500 Index 35.0% S&P 500 Index Hosted Communications & Communications Software 25.0% S&P 500 +19.0% 15.0% 5.0% -5.0% Hosted Comm. & Comm. Software +16.3% -15.0% -25.0% Hosted communications and communications software companies have outperformed the market in the past, but have had mixed performance over the last several months 5
A Closer Look at Communications Software Communications Software (8x8, Broadsoft) vs. S&P 500 Index EGHT, BSFT + 61.8% S&P 500 +19.0% Players with a proprietary platform have continued to outperform the market. Additionally, Intermedia just bought Telanetix at 1.7x LTM Revenue, in part for its proprietary platform 6
Communications Software Continues to Drive Valuation Buyer Target Rationale Transaction Value Broadened the scope of Intermedia s cloud offerings to SMBs with Telanetix s proprietary platform Expansion of cloud and managed services to the enterprise segment 1.7x LTM Revenue NA Obtained full compliment of cloud-based UC, SIP Trunking, mobility and custom integration services Enhanced suite of video collaboration products NA 2.1x LTM Revenue Expanded offerings to include hosted VoIP and UC 3.8x LTM Revenue Call center platform boosted 8x8 s service offerings 3.0x LTM Revenue Introduced Smoothstone as a cloud division to West s voice and data solutions 4.0x LTM Revenue 7
Recent VC Investments in Unified Communications Company Profile Recent Activity Cloud based video conferencing services Amount Raised: $25.0M Series C Year: 2012 Internet and mobile based unified communications solutions Designs and develops online video solutions for consumers and enterprises Public: OTCPK:CLWA Amount Raised: $20.0M (Private Placement) Year: 2012 Amount Raised: $25.0M Year: 2012 Cloud-based unified communications services Amount Raised: $17.0M Year: 2012 Web based audio and video conferencing provider Amount Raised: $15.0M Series B Year: 2012 Telepresence solutions for video conferencing Amount Raised: $2.0M Existing shareholders Year: 2012 8
Identifying Service Gaps in UC Cloud Solutions for SMBs Cloud Solutions CRM Content Publishing Collaboration Renting Server HW Invoicing Project Management Hosted SW Platform 20.0% 14.8% 14.4% 10.0% 9.4% 9.1% 4.1% Surplus Capacity, Increase in Price Pressure Excess Supply Many cloud service offerings have increasingly marked adoption rates As pricing pressure increases, these solutions risk becoming commoditized Email Services Renting Hosted DB Data Backup Web Conferencing -3.2% Video Conferencing -3.2% Hosted VoIP -6.4% Audio Conferencing -6.9% Accounting -11.2% Storage and Backup -15.2% Security -22.5% Industry Verticals -24.4% 3.9% 2.1% 2.0% SMB Supply Demand Gap Supply Shortage, SMB Opportunity Shortage in Offerings SMBs are requesting: Vertical industry solutions with storage and backup More UC solutions offered in a cloud environment, specifically, video and web conferencing 9 Source: 1.) Techaisle: Agrawal, Anurag
Ability to Execute Hosted Unified Communications in the Enterprise Segment Gartner s Magic Quadrant for Unified Communications Challengers Leaders Gartner s recent study of the Enterprise segment named Avaya, Cisco, Microsoft and Siemens as 2012 UC market leaders 1 Cisco Alcatel-Lucent NEC Microsoft Avaya Huawei IBM Shoretel Siemens Enterprise Mitel Aastra Technologies Interactive Intelligence Digium Toshiba Niche Players Visionaries Completeness of Vision Integration of on-premise UC systems with cloud and hybrid UC services will play an important role for unified communications as a service (UCaaS) products in the future Gartner noted that UCaaS is introducing new players into the market, such as Google 1 10 Source: 1.) Gartner Magic Quadrant for UC
Panelist Introductions
Tech Valley Communications Overview Presented at the CompTel panel for Hosted Unified Communications: A Driver for M&A Activity March 2013
Riverside Overview Boston-based private equity firm investing in founder-owned, middle market, technology and healthcare companies since 1988 Principals have managed more than $500 million in investments in over 50 companies Currently investing out of Riverside Fund IV, LP and Riverside Fund V, LP Growth oriented investors Operational approach Within technology, telecommunications is a major area of focus Superior results for our investors Working together with our portfolio companies management teams, we have generated 30+% gross IRRs and greater than 4x multiple on realized investments 13
TVC Overview Tech Valley Communications ( TVC ) is a facilities-based CLEC in upstate New York and northern New England Initial Riverside investment in October 2010. At the time, focused in Albany, NY Region. Significant acquisition in 2011, doubled size of the business and expanded business in NH,VT, MA and Maine Today, TVC serves wholesale, carrier, and enterprise customers Provides data, internet, voice, backhaul, and co-location services Managed by founder and CEO Kevin O Connor Broad/Deep fiber networks 200,000 fiber miles; 1,000 lit buildings Customers include many of the top U.S. wireless carriers and hundreds of enterprise customers including medium and large businesses, colleges, hospitals, public safety agencies, and governments 14
Key Initiatives for 2013 Network expansion Complete existing fiber builds efficiently and on schedule Continue to win attractive carrier / wholesale contracts Continue to invest in the network to deepen fiber footprint Network monetization Deepen relationships with key carrier accounts Drive on network revenue growth New products and services within network (managed services, hosting, etc) Network management Recently added two key senior hires; continue to expand team where appropriate Opportunistically pursue strategic add-on acquisitions 15
UCC Overview UCC holds the promise of unifying communications across network, devices, and platforms Current Business Communications Key Pain Points: UCC holds the promise of unifying heterogeneous multi-vendor multi-device environments in order to provide a seamless user experience and increase employee productivity Multiplying devices (BYOD) Multiplying IDs Non integrated presence / location Multi-vendor environments Multiple service providers Large amount of legacy infrastructure 16
UCC Market Trends Market expects growth but barriers exist. While there are concerns about integration and product maturity Barriers to UC&C Adoption CIOs expect to deploy more tightly integrated solutions in the next 24 months Enterprise UC&C Deployment Methods Cost of Integration 42% 8% 10% Multiple Vendors Not Integrated Applications License Cost 40% 44% Waiting for the Business Models and Portfolios to Mature 26% 60% Tightly Integrated Multi-vendor Solutions Waiting for the Technologies to Mature 17% 48% 30% Single-Vendor Solution Ease of Implementation 12% 2011 2013 Sources: Frost & Sullivan, November 2011
UCC: Key Valuation Drivers Value can be created in different ways UCC in a box Simple, easy to implement solutions Rapid growth Little support cost profitable model Eventually, scale will be the key differentiator Complex, valuable solutions Characterized by high stickiness and low churn Customization expense justified by premium pricing Identification and exploitation of niche opportunities is critical Business models still evolving Integrated model another product for network providers to sell into existing customer relationships Best of breed Fundamentally allows a separation of transport and service add-ons Business model likely less critical than execution of that model Financial opportunity not strategic necessity Key questions What are the pain points and what will growth really be? How many long term strategic acquirers are there? Which capabilities are hard to replicate? 18
BroadSoft, Inc. 19
Welcome to BroadSoft Empowering service providers to deliver cloud-based communication services over their broadband networks. BroadSoft Annual Revenue Growth $165 In millions $138 $96 $62 $69 2008 2009 2010 2011 2012 20
BroadSoft Overview IP Communications Applications Focus Solely focused on communications applications for service providers Industry Leadership *30% revenue market share in VAS 20 of the top 25 carriers, based on revenue 500+ customers in over 60 countries People Over 600 people in 21 countries 250+ people in R&D Ecosystem 500+ technology partners 5,000+ developer partners *Infonetics Research
Customers 500+ Customers Deployed in 61 Countries
Hosted Unified Communication Trends Addressable Market Revenue (US$ Billions) The Big Picture: Hosted VoIP/UC revenue forecast to reach $10.4 billion in 2016 $12 Hosted IP PBX/UC Market Size and Forecast by Region $10 $8 $6 $4 $2 $0 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 North America EMEA Asia Pacific CALA Source: Infonetics Research VoIP and UC Services and Subs Market Forecast 2012
Unified Communications are Now Mobility User s top-ranked UC services all contain elements of mobility. UC Services Most Helpful in Your Daily Job Ranking - UC Services by Business Benefit #1 #2 #3 #4 #5 One familiar application to access voice, video, messaging, web collaboration, that works across multiple devices Extend desk phone to mobile devices Make and receive business calls on personal mobile devices using business identity Integrated / searchable personal contacts and business directory on one device Reduce email and voicemail using messaging (IM&P and Text) #6 Ability to see presence and time zones of colleagues
Key Initiative 2013: BroadSoft UC-One The Unified Communications platform for Service Providers.
The Four UC-One Elements
Summary: UC-One Differentiators The most comprehensive UC platform designed to meet the unique needs of service providers. Single platform supports multiple market segments Broadest range of integrated UC services The only true open software platform Most extensive solution for mobile UC Go-to-Market expertise gained from over 500+ successful deployments
Why BroadSoft? Company Market leader in IP communications - trusted partner with over 500 service providers Focus and Commitment 100% focused on service providers and communications applications Largest VoIP application R&D team in industry - 250 people Innovation and Evolution New business models and offers through acquisitions and increased R&D Multimedia features, user experience applications, cloud services Experience Extensive IMS and VoIP application expertise - 70 IMS TAS deployments Feature Breadth and Openness VoLTE, RCS, Video, Unified Communications, SIP Trunking Open APIs and interoperability for quick and easy integration Scalability and Reliability Platform reliability greater than five 9 s and scalability to 100 million + subscribers 28
Thank You 29
8x8, Inc. (Nasdaq: EGHT) March 12, 2013 2013 NASDAQ-LISTED: EGHT
Safe Harbor Statement During the course of this meeting, and any question and answer and demonstration period afterwards, representatives of the Company may make forward-looking statements regarding future events or the future financial performance of the Company, including statements about future events based on current expectations, potential product development efforts, near and long-term objectives, potential new business, strategies, organization changes, changing markets, future business performance and outlook. Such statements are predictions only, and actual events or results could differ materially from those made in any forward-looking statements due to a number of risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to, customer acceptance and demand for our VoIP products and services, the reliability of our services, the prices for our services, customer renewal rates, customer acquisition costs, actions by our competitors, including price reductions for their telephone services, potential federal and state regulatory actions, compliance costs, potential warranty claims and product defects, our needs for and the availability of adequate Financial working capital, Summary our ability to innovate technologically, the timely supply of products by our contract manufacturers, potential future intellectual property infringement claims that could adversely affect our business and operating results, and our ability to retain our listing on the NASDAQ Capital Market. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Risk Factors in the Company s reports on Forms 10-K and 10-Q, as well as other reports that 8x8, Inc. files from time to time with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by this cautionary statement, and 8x8, Inc. undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future. Please refer to our most recent filings with the Securities and Exchange Commission which contain and identify additional information covering factors that could cause the results to differ materially from those contained in our projections or forward-looking statements. 31 l 8x8 Inc. NASDAQ-LISTED: EGHT
8x8, Inc. Business Overview Description Investors Headquarters Financials IP Target Market Service provider offering business communication services, including a full business phone service, call center solutions, unified communications (for web and mobile phones), conferencing, and video services. All services delivered via a monthly subscription. NASDAQ: EGHT; listed since 1997; ~ $500M market cap San Jose, California (all customer service in California) >$100M annual revenue run rate; $27.3M in revenue for December quarter (growing organically 22% year-over-year); recurring revenue business model (no data pipe revenue); 14% non-gaap net income margins, $46M+ in cash, no debt Awarded 85 United States patents to date. Owns all core software technology used to deliver services. SME; more than 30,000 business customers to date 32 l 8x8 Inc. NASDAQ-LISTED: EGHT
$ MILLIONS 30% AGR in Revenue from Business Customers Revenue from Business Customers, Fiscal Years Ending March 31 33 l 8x8 Inc. NASDAQ-LISTED: EGHT
Consistent Quarterly Subscriber Growth Net Ending Business Customer Count (by quarter) 34 l 8x8 Inc. NASDAQ-LISTED: EGHT
Typical 8x8 Prospect Quote 35 l 8x8 Inc. NASDAQ-LISTED: EGHT
Typical 8x8 Prospect Quote 36 l 8x8 Inc. NASDAQ-LISTED: EGHT
Mid-Market Customer 8x8 vs. ABC Co. Existing Telecom Services Phone Product Calculation Phone Rebate Phone Qty Phone Cost Per Phone Pri ce - Pol y IP335 for Pl a nts $39.99 $25.00 475 $21,370.25 Per Phone Pri ce - Pol y IP550 for Offi ce $109.00 $50.00 150 $17,100.00 Shi ppi ng/phone $5.00 N/A 625 $38,470.25 Phone Rebate $6,250.00 Total Cost = $32,220.25 Prior long distance spend ~$42K/mo. 8x8 Cost Analysis Qty Ext Pdt. Price Month Year 1 Year 2 Year 3 Total Ini tia l Phone Purcha s e $32,220.25 $32,220.25 Provi s i oni ng 625 $10.00 $6,250.00 $6,250.00 Profes s i ona l Servi ces 1 $11,000.00 $11,000.00 8x8 VoIP Servi ce (i ncl taxes etc.) 625 $20.50 $12,812.50 $153,750.00 $153,750.00 $153,750.00 $461,250.00 Ca l l Recordi ng 475 $2.50 $1,187.50 $14,250.00 $14,250.00 $14,250.00 $42,750.00 Vi rtua l Number (1 per pl a nt or offi ce) 200 $4.99 $998.00 $11,976.00 $11,976.00 $11,976.00 Ri ng Group (1 per pl a nt) 150 $5.00 $750.00 $9,000.00 $9,000.00 $9,000.00 $27,000.00 Tol l-free mi nutes 1,500 $40.00 $480.00 $480.00 $480.00 $1,440.00 Total $15,788.00 $238,926.25 $189,456.00 $189,456.00 $581,910.25 Current System Cost Analysis Month Year 1 Year 2 Year 3 Total Professional Services - incl Install $0.00 Phone Servi ce & Long Di s tance $41,667.00 $500,004 $500,004 $500,004 $1,500,012 Conference Ca l l i ng $0.00 $0 $0 $0 $0.00 WebEX $0.00 $0 $0 $0 $0.00 Cel l Phones $0.00 $0 $0 $0 $0.00 Tol l-free mi nutes $0.00 $0 $0 $0 $0.00 On-Prem Equi pt Ma i ntena nce $0.00 $0 $0 $0 $0.00 Opera tions & Admi ni s tra tion $0.00 $0 $0 $0 $0.00 Lea s e Pa yments $0.00 $0 $0 $0 $0.00 Total $41,667.00 $500,004.00 $500,004.00 $500,004.00 $1,500,012.00 Savings per Year $261,077.75 $310,548.00 $310,548.00 $918,101.75 % Savings 52% 62% 62% 61% 37 l 8x8 Inc. NASDAQ-LISTED: EGHT
Huge Untapped Market for Business UC U.S. Market for IP-Based Business Access Lines 12/31/2009 12/31/2010 12/31/2011 62,064,000 61,485,000 60,525,000 Total U.S. Business Lines 3,574,000 4,614,000 5,753,000 Total IP Business Lines 5.8% 7.5% 9.5% IP Telephony Penetration (balance is circuit-switched) Source: FCC Form 477 Filing Data - Local Telephone Competition: Status as of December 31, 2011, dated January 2013 38 l 8x8 Inc. NASDAQ-LISTED: EGHT
Competitors: 8x8 Leads UC Industry in Vision Gartner Magic Quadrant for Unified Communications as a Service, North America published November 19, 2012 8x8 recognized as a Leader based on ability to execute and completeness of vision Positioning also recognizes company as most visionary Source: http://business.8x8.com/ol-research-gartnermagicquadrant.html?source=ol-research-gartnermagicquadrant 39 l 8x8 Inc. NASDAQ-LISTED: EGHT
Competitors: 8x8 Leads UC Industry in Installed Lines Top 14 Providers by Installed Lines (North America), 2011* 1. 8x8 2. Comcast 3. West IP Communications 4. Verizon 5. RingCentral 6. Vocalocity 7. Megapath 8. Thinking Phone Networks 9. Fonality 10. WVT 11. Broadview 12. M5 13. Vantage Communications 14. Broadvox * From North American Hosted IP Telephony and UC Services Market Report, Frost & Sullivan, July 2012 40 l 8x8 Inc. NASDAQ-LISTED: EGHT
8x8 UC Deployments Rival On-Premise Competitors 8x8 Ranks #6 Among On-Premise Business Deployments in 2011 Rank Manufacturers Total % Share 1 Cisco 42,113 20.9% 2 Avaya 24,815 12.3% 3 NEC 23,632 11.7% 4 Mitel 15,445 7.7% 5 Toshiba 13,640 6.8% 6 Samsung 6,492 3.2% 7 ShoreTel 4,307 2.1% 8 Iwatsu 1,574 0.8% 9 Siemens 270 0.1% 10 Aastra 241 0.1% Others 69,025 34.2% Grand Total 201,555 100.0% 8x8 in CY 2011 11,291 New Businesses Source: IntelliCom Analytics, IntelliCom Market Performance Dashboard SM, 2011 North American New Business Deployments 41 l 8x8 Inc. NASDAQ-LISTED: EGHT
8x8 Customers Previous Service Provider Survey Previous Provider # Responses (greater than 2) % Customers AT&T 37 22.7% Verizon 14 8.6% None/New Business 12 7.4% Ring Central 8 4.9% Vonage 8 4.9% CenturyLink 6 3.7% Comcast 6 3.7% Cox Communications 6 3.7% Frontier 5 3.1% Google Voice 4 2.5% Windstream 4 2.5% Cbeyond 3 1.8% Optimum 3 1.8% Skype 3 1.8% Fairpoint Communication 2 1.2% Integra 2 1.2% Qwest 2 1.2% Sprint 2 1.2% Source: Survey of 163 respondents that were new customers of 8x8 Virtual Office service as of July-August 2012 42 l 8x8 Inc. NASDAQ-LISTED: EGHT
Non-GAAP Reconciliations (unaudited) Three Months Ended Nine Months Ended In thousands, except per share amounts December 31, 2012 December 31, 2012 2012 2011 2012 2011 Net Income $ 1,920 $ 2,586 $ 12,278 $ 5,365 Gain on patent sale (11,965) Non-cash tax adjustments 780 7,359 (336) Amortization 357 357 1,071 431 Stock-based compensation expense 765 418 1,827 1,013 Acquisition-related expense 241 727 Facility exit expense 140 305 140 Non-GAAP Net Income $ 3,822 $ 3,742 $ 10,875 $ 7,340 Weighted average number of shares Diluted 74,988 73,214 74,483 69,013 GAAP net income per share - Diluted 0.03 0.04 0.16 0.08 Gain on patent sale (0.16) Non-cash tax adjustments 0.01 0.10 Amortization 0.01 0.01 Stock-based Compensation expense 0.01 0.01 0.03 0.01 Acquisition-related expense 0.01 Facility exit expense 0.01 Non-GAAP net income per share - Diluted 0.05 0.05 0.15 0.11 GAAP net income percentage of revenue 7% 11% 16% 9% Gain on patent sale -15% Non-cash tax adjustments 3% 9% -1% Amortization 1% 1% 1% 1% Stock-based compensation expense 3% 2% 2% 2% Acquisition-related expense 1% 1% Facility exit expense 1% 1% Non-GAAP net income percentage of revenue 14% 16% 14% 12% 43 l 8x8 Inc. NASDAQ-LISTED: EGHT
www.8x8.com 44 l 8x8 Inc. NASDAQ-LISTED: EGHT
Q&A Session
Consolidators Across the Telecom Industry Cable Traditional Telecom Software & New Media Managed Services and Hosting Comm. Equipment Vendors VARs Infrastructure Who are the ultimate consolidators? 46
SMB Supply Demand Gap Cloud Solutions CRM Content Publishing Collaboration Renting Server HW Invoicing Project Management Hosted SW Platform Email Services Renting Hosted DB Data Backup Web Conferencing -3.2% Video Conferencing -3.2% Hosted VoIP -6.4% Audio Conferencing -6.9% Accounting -11.2% Storage and Backup -15.2% Security -22.5% Industry Verticals -24.4% 20.0% 14.8% 14.4% 10.0% 9.4% 9.1% 4.1% 3.9% 2.1% 2.0% Excess Supply Many cloud service offerings have increasingly marked adoption rates As pricing pressure increases, these solutions risk becoming commoditized Shortage in Offerings SMBs are requesting: Vertical industry solutions with storage and backup More UC solutions offered in a cloud environment, specifically, video and web conferencing Do service gaps exist in cloud UC offerings for SMBs, that if addressed, would command a premium in M&A going forward? 47 Source: 1.) Techaisle: Agrawal, Anurag
SIP Trunking & Hosted Unified Communications SIP Trunking and hosted VoIP will drive the cumulative $377 billion growth in spending on business and residential VoIP services from 2012-2016 1 One of the key capabilities of UC is that it allows users to freely mix communications modes (voice, video, etc.) and seamlessly move between them Traditional communications services are often ill equipped to deliver this flexibility, which may ultimately increase the demand for SIP-based services that provide this capability As the multi-vendor environment becomes more tightly integrated, the need for standards-based interoperability via SIP Trunking and other related protocols will increase SIP Trunking suggests growth, but how should it be viewed in terms of value and longevity? 48 Source: 1.) Infonetics Research 2.) Webtorials State of the Market report
Communications Software Value Drivers Communications Software (8x8, Broadsoft) vs. S&P 500 Index EGHT, BSFT + 61.8% S&P 500 +19.0% As a communications software company with a proprietary platform, what are the key functionality and development initiatives to create value moving forward? 49 Source: CapIQ, annual reports, and press releases
Applications Interoperability Devices Connection Mobility and Hosted Unified Communications Fixed Mobile Convergence Smart mobility will be a dominant trend for the foreseeable future Fixed mobile convergence (FMC) is 3G & 4G Wi-Fi Fixed happening across devices, UC applications, and service-control mechanisms Smart Phones & Tablets E-Mail & Messaging PCs Business Applications/CRM Printers, Scanners, Data Storage, etc. Voice, Video, Collaboration, Etc. According to Frost and Sullivan, roughly 71% of companies use mobile gadgets, but only 44% of decision makers provide full support for these platforms 1 How will the robust future of mobile applications and devices be harnessed through UC to ultimately drive valuation? 50 Source: 1.) Frost and Sullivan
International Market Trends The global unified communication services market is forecast to increase at a compound annual growth rate (CAGR) of approximately 25% over the next five years, rising from a valuation of $2.5 billion in 2013, to hit a market value of $7.6 billion by the year 2018. 1 North America Europe Asia Pacific Latin America Middle East & Africa What regional markets are ripe for growth in UC and will draw M&A interest from international carriers going forward? 51 Source: 1.) MarketsandMarkets
CONTACT TODAY S SPEAKERS Gerry DeHaven, DeHaven@qllc.com Ian Blasco, IBlasco@Riversidepartners.com Leslie Ferry, Lferry@Broadsoft.com Dan Weirich, Dan.Weirich@8x8.com M&A COMPTEL PLUS Spring 2013 Las Vegas
THANK YOU FOR ATTENDING! M&A COMPTEL PLUS Spring 2013 Las Vegas